I think the $2.04M is what the warrant holders paid to PEIX, not what the inducement was. Notice that in that entire section, they refer to "certain holders." I suspect it distinguishes the exercise of one group of warrant holders from the other.
During the three and six months ended June 30, 2013, certain holders exercised warrants and received an aggregate of 267,700 shares of the Company’s common stock upon payment of an aggregate of $2,064,000 in cash.
If you divide the cash by the number of warrants, you get the average exercise price paid for those 267,000 warrants.
Notice that in the next paragraph, they state what the total actual inducements paid was for the 6 months as of June 30th:
During the three and six months ended June 30, 2014, the Company paid an aggregate of $800,000 in cash to certain warrant holders as an inducement to exercise their warrants and recorded an expense of $800,000.
The ones since June 30th, they received a $1.4M incentive on the exercising of $20.8M value in shares. In other words, the average exercise price was reduced by $0.55/warrant.
From July 1, 2014 through August 13, 2014, certain holders exercised warrants in cash for an aggregate of 2,673,290 shares of the Company’s common stock for aggregate cash payments to the Company of $20,868,034. Also during that period, the Company paid an aggregate of $1,471,000 in cash to certain warrant holders as an inducement to exercise their warrants.
I think if the warrants are all gone by the end of the quarter, we'll be glad. Otherwise the FVA would of been harsh. With an average exercise price of $7.81 and a current share price of $20.80, the FVA liability on those 2.67M warrants would of been brutal. I think that would explain the motivation for the inducement.
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