RE:The Warrants....Hang on, I think there is an error in my calculations, and this is a correct model. As you can see how the profit can grow with the increases in Stock Price;
8000 shares x $5 = $40,000 - $8,000 (initial investment) =
$32,000 profit 80,000 warrants/8=10,000 shares x 72 cents = $7,200 + $8,000 (initial investment)
$50,000 - $15,200 =
$34,800 profit 8000 shares x $10sp = $80,000 - $8000 =
$72,000 profit 80,000 warrants X $10sp = $100,000 - $15,200 =
$84,800 profit 8000 x $15sp = $120,000 - $8000 =
$112,000 profit 80,000 x $15sp = $150,000 - $15,200 =
$134,800 profit 8000 x $20sp = $160,000 - $8000 =
$152,000 80,000 x $20sp = $200,000 - $15,200 =
$184,800 profit skier59 wrote: .....give you a hedge for the future. If you wanted to buy 10,000 shares today it would cost you basically $10,000. So let's say you don't have that available but you have 80,000 warrants which will convert to 10,000 shares. So you buy 80,000 warrants at say 10 cents = $8000. Now you will have to convert those 80,000 warrants into shares at some point, or sell them. 80,000/8=10,000 x .72 = $ 7,200
Initial investment $8,000 + exercise price $7,200 = $15,200 which equates to a SP of $1.52 as your break-even. It is after that point where the warrants will become explosive once the SP climbs above $1.52
So if the SP goes to $5 your additional profit would be as follows;
8000 shares @ $1 = $8000 x $5 = $ 40,000
80,000 warrants converted into 10,000 shares = $50,000
which gives you $10,000 additional profit
SP = $10........$80,000
$100,000..........$20,000 additional profit
So basically if you get the Warrants @ 10 cents or less even better, you will generate $10,000 additional profits for every $5 jump in SP.
So if you think this SP is going over $1.52 within 3 years then the Warrants @ 10 cents are a great Hedge for the future.
Warrants @ 8 cents gives you a break-even at $ 1.36
Warrants @ 12 cents = BE = $ 1.68
14 cents = BE = $ 1.84