Agoracom: Small Cap Investment - HPQ-Silicon Resources Inc. - Todays news release - what does this bit mean?
Hi A-G,
Regarding your question:
"If the Exchange approves the conversion of the interest in common shares, IQ will hold just over 10% of the Company's capital.
Does this mean that IQ owns >10% of HPQ's shares or >10% of the cash reserves?"
Don't take this the wrong way since this not just address to you A-G, but in my mind, a little financial literacy should be a pre-requisite before investing.
The term Company capital represents the section of the balance sheet that accounts for what is the property of the shareholders, or the EQUITY of the company (page 6 of the 2020 audited financial statement).
In HPQ's case, following the conversion of the debenture, our equity section is composed of the 3 following headings, Share Capital, Contributed surplus and Retained Deficit.
So the Capital of the corporation has no direct relation to the cash assets of the corporation, therefore IQ owns a % of HPQ.
Now the reason why the sentence was written that way is simple, in 2018, when the financing was concluded (at a 50% premium to market) we received the approval of the TSX-V for the conversion of the debenture and the exercise of the warrants. Therefore today, we could and did issue to IQ 31,636,636 shares, but the remaining 452,072 will only be issued once we received the approval of the TSX-V for the payment in shares of the interest.
While this may be nothing more than a mere formality, the fact is that until does shares are issued, IQ share ownership in HPQ is only 9.996151%. Only after we received the approval of the TSX-V will IQ ownership >10%... So IQ requested that we write the sentence that way...
Hope that clarifies your question
PS, For those curious, IQ is a long term and patient investor, and they did the early conversion of the debenture to show support for what we are doing, so don't buy the BS posted on BB about IQ selling their shares in the market to make a quick $.
Regards
Bernard
NEWS RELEASE: Agoracom: Small Cap Investment - HPQ-Silicon Resources Inc. - HPQ Silicon Strengthens Its Balance Sheet and Solidifies Its Position as an Innovative Manufacturer of Silicon Materials for Lithium-ion Batteries