RE:New corporate presentation Dec 2016 Neat tidbit I took out of this presentation...
On page 21 - 22 (Note 15) of the latest Sedar financials for period ending Nov 30th, the company had 8,957,300 warrants outstanding at an excercise price of $0.25
On Page 18 of the new corp presentation you see there are only 8,129,932 of those warrants remaining as at December 29th...
This means that 827,398 warrants were excercised in December for proceeds of $206,850 to the company. If you look at the share price history, most of December traded above this $0.25 line allowing these warrants to be excercised "in the money".
Now let's look at January... to me, I see approximately 10 trading days where the price traded at or above $0.25. And it has not traded there since mid January, despite good news of the financials that are showing increased revenues on increased sales Q over Q and Year over Year.
Now back to page 18 of the new corp presentation... Looks like 1,496,767 need to be exercised by March 5th and an additional 6,633,165 by July 28th otherwise they expire. So here are my questions..
Does the company need the money? Is it in their best interests to let the warrants expire and therefore have less dilution? Or is it in their best interests to work hard to get shareprice above $0.25 to reward the initial investors that helped the company get going off the ground?
I have no doubt in my mind that this warrant pressure is creating downward pressure on the stock price. If I owned these warrants, would it not be wise to short the stock at any price over $0.25 and then fill the short with your warrant? Last time I checked, shorting causes selling pressure.. For those warrant holders that may not be comfortable shorting, they could just sell any price over $0.25 for profit.
IMO, GSI will see relatively flat increase in share price until these warrants expire (or get excercised) until July. Hopefully the company can continue sales and execute their plans... and based on Q1 results of $1.3 million, we are off to a good start. Increased sales in Canada combined with a newly signed contract in Georgia is all good news that the company is maintaining its momentum.
So here is more good news in my mind and a prediction.
The good news is that as warrants get excercised, the company gets cash flow. If the warrants are not excercised, current shareholders have less dilution. And by the end of July, all the warrant pressure is over.
Now to financials and what it could mean to share price (with out warrant pressure)
In anticipation of Year End audited financials, the share price hit as high as $0.335 and on Dec 29th when financials were released at just under $10 million in annual sales, the share price closed at $0.30
If the company can continue modest growth of 50% YOY or $15 million total sales (last year 67%) I think the share price could end up at $0.50+ (Which is a double from these levels). One just has to be patient for a while..
Q1 has already come out with 43% increase so far so they are on their way.
All of this is my own opinion, and if anyone has anything to add would be appreciated.
I am excited about this company. I added an additional 25,000 shares here yesterday at $0.23 and am long this stock.
Good Luck to all!
FI4