True! Typically that would require the market price at the time to be in excess of the exercise price, right?
Please look at the following, which is from the warrant agreement, and tell me if it makes sense to you:
X = Y [A-B/A].
X = the number of shares of Common Stock.
Y = the number of Warrants being exercised (prior to the Cashless Exercise).
A = the average of the closing bid and asked prices on the primary trading market on which the Company's Common Stock is then listed or quoted for the five (5) trading days immediately prior to but not including the Exercise Date. If the Common Stock is not so listed or quoted and bid and ask prices are not reported, the fair market value shall be the price per share as determined in good faith by the Company's Board of Directors.
B = the Exercise Price.
Here's my problem with it: (A-B/A) seems to call for a fraction to be subtracted from a price...I don't think that's possible. Shouldn't it be X = [Y(A-B)]/A ?