TSXV:WEE.H - Post by User
Post by
otcmoonboundon Apr 27, 2010 1:59pm
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Post# 17036035
Does Wavefront really need
Does Wavefront really needto issue FULL warrant coverage at a very modest premium to market to raise cash?
Let's use the assumptions the company used in the last interim report to value the options.
Volatility: 122%
Interest rate: 2.6%
Fair value is then 98c!!! Even if we lower the volatility assumption to 50%, it is still 33c. Combine that with the >10% discount to the stock price and these investors got a real bargain. Retail investors in Canada get such a raw deal.
I get that the company is expanding and needs capital. And I understand that the warrants can be called possibly giving the company extra cash at price that is higher than it is currently. The problem is, it is deals like this that seriously cap the ultimate upside on this stock. By my calculations, the diluted share count has gone from ~78 million to 99 million. That's dilution of 27%. Ugh.