Replies to post #91788 on JB and ZJMY Holding Co (JBZY)

[Stock Farmer]

Employee share warrant vs. Open Market.

Let's go back to the source: April 7, 2017 PR.

http://otce.finra.org/DLSymbolNameChanges

Dolat Ventures acquired by China Based Battery Manufacturer

As part of the acquisition the company will be offering to current and future employees based in the Peoples Republic of China the opportunity to purchase new JB&ZJMY common stock units for $0.10 (Ten Cents USD) per share with one warrant attached exercisable for two years at $0.15 (Fifteen Cents USD) for a total of 10,000,000 (Ten Million) units pursuant to a Regulation S offering on a best efforts basis expiring on July 17th 2017.

I've been saying the warrants are like options. Rereading the Press Release, you appear on point and we can say these key points:

1 - JB&ZJMY offering their employees shares at $0.10 cents per common stock unit.
2 - One warrant(similar to an option)attached to each unit of common stock.
3 - One Warrant is exercisable for 2 years at $0.15 (fifteen cents USD).
4 - Stock and warrant offering pursuant to Regulation S, meaning JB&ZJMY doesn't have register it under the Securities Act (see below).
5 - The share and warrant offering expires July 17th, 2017.

My interpretation.

The Deadline for employees to decide if they want in on the JB&ZJMY share/warrant offering is July 17th. Employees will buy a specific number of common shares at 10 cents. Employees who join(buy the 10 cent common shares) can buy the same number of warrants as they have common shares within 2 years of July 17, 2017. It is a 1 for 1 deal. One common stock unit at 10 cents = one warrant at 15 cents exercisable for 2 years). 15 cent Warrants expire July 17, 2019.

Let's assume PPS is 5 cents a share by July 17th, 2017 (to make it simple). Lets assume the employee buys 100 ten cent common shares. Lets assume the company is not charging a commission.

Back to math story problems, yikes!

Simple example to show comparison with employee who buys on the open market: *in USD.

Employee A buys 100 shares at $0.10/share by July 17th with attached warrants. 100 shares*$0.10/share = $10

Another employee, employee B buys 100 shares of DOLV on open market. 100 shares * $0.05/share = $5.

Price drops to zero. Employee A does not exercise his warrants. Employee B loses less, since he had smaller investment, but both lose.

Price rises to $0.20 USD per share within 2 years. Employee A exercises his 100 warrants and buys 100 warrant shares at $0.15 USD per share (even though price is at $0.20 per share). 100 shares * 0.15 = $15 USD. Total investment for Employee A is $10 (100 shares) + $15 (100 warrants) = $25 for 200 total shares.

Employee B recognizes the rising PPS and not to be outdone buys 100 more shares at the market price of $0.20 per share. 100 shares at $0.20/share = $20 for 100 more shares. Total investment for Employee B is $5 (100 shares) + $20 (100 more shares) = $25 for 200 total shares.

Price rockets to $1 dollar within 2 years. Employee A still pays $25 for 200 shares. Employee B pays $105 for the same 200 shares. Employee A wins big time.

Given 5 cent pps on July 17th, share warrants (Employee A) have the advantage over buying on the open market for a future pps greater than 20 cents. For PPS < 20 cents but > 5 cents, Employee B has the advantage.

Neglecting commission (wouldn't that be nice),
Employee A's break even point is 0.125/share (200 shares * 0.125/share = $25, the investment cost).
Employee B's break even point is 0.05/share.




https://media2.mofo.com/documents/faqs-regulation-s.pdf

What is Regulation S?
Regulation S provides an exclusion from the Section 5
registration requirements of the Securities Act of 1933,
as amended (the “Securities Act”), for offerings made
outside the United States by both U.S. and foreign
issuers. A securities offering, whether private or public,
made by an issuer outside of the United States in
reliance on Regulation S need not be registered under
the Securities Act. The Regulation S safe harbors are
non-exclusive, meaning that an issuer that attempts to
comply with Regulation S also may claim the
availability of another applicable exemption from
registration. Regulation S is available for offerings of
both equity and debt securities.