Shareholders from FMS get very little!Focus Graphite and Grafoid
So does being an investor in Focus Graphite (OTCMKTS:FCSMF) provide you with an investment in Grafoid? The answer is yes but very little. While previously Focus was a majority holder in Grafoid, dillutive financings by the latter brought Focus’s ownership of Grafoid to 13% as of December 2013. Focus values this investment at $1,882,924 . With Focus Graphite having a current market cap of $52 million, an investor who owns Focus Graphite will have minimal exposure to Grafoid through their Focus shares. Given that the Grafoid investment represents just 6% of Focus Graphite’s current $30.82 million in assets of which 19% is cash and 60% is exploration and evaluation assets as well as exploration properties, an appreciation in the Grafoid investment will have minimal impact to the bottom line at least for now. While investors may not achieve meaningful exposure to Grafoid by investing in Focus Graphite, at least the financials which value the Grafoid holding will provide some sort of proxy as to the valuation of Grafoid going forward. A 13% investment valued at $1.88 million would give Grafoid an implied valuation of around $14.5 million.
UPDATE: On January 31, 2014, Focus Graphite announced that its Board of Directors has approved the conversion of a $1,500,000 loan provided to Grafoid into 3,000,000 common shares in Grafoid at $0.50 per share. At face value this brings the Grafoid investment to $3.38 million which would then represent 11% of total assets.
Link: Article
Guess who will profit most from Grafoid? Did you have a chance to participate in the private equity offering? Surely not the retail shareholders from FMS. Moreover, FMS is facing dilution going forward through public share offering.
imo.