Q3 Fully Diluted Share countHello fellow Verde shareholders.
As a retired Chartered Accountant and former Chartered Financial Analyst charterholder I enjoy looking through the details in the financial statements and Management Discussion and Analysis (MD&A) documents issued by the companies in my portfolio. Regular readers of this board will be aware of this particular habit of mine, and the impact it can have on the information shared by a company with its shareholders when a mistake or error is uncovered.
During the process of updating my tracking and forecast models with the just released Q3 2021 data I noticed the MD&A reported the following information regarding the Company's common shares (on page 24):
Ordinary shares issued and outstanding: 50,378,619
Warrants outstanding nil
Stock options (currently vested) 3,103,808
Stock options (not yet vested) 744,711
Fully diluted share count at Sept 30, 2021 54,227,128
If a reader continues through the MD&A to page 29 and reads the section headed Dilution, you will see the following:
"The Group currently has 50,378,619 Ordinary Shares outstanding and 51,676,785 on a fully diluted basis."
My understanding of Fully diluted is the total number of common shares of a company that will be outstanding and available to trade on the open market after all possible sources of conversion, such as convertible bonds and employee stock options, are exercised. Fully diluted shares include not only those which are currently issued but also those that could be claimed through conversion. This number of shares is needed for a company’s earning per share (EPS) calculations because applying fully diluted shares increases the share basis in the calculation while reducing the dollars earned per share of common stock.
Given this definition I do not understand where the Company derived the figure of 51,676,785 shown on page 28, instead of using the 54,227,128 from the calculation on page 24.
Perhaps just another "typographical error"?
Cheers,
S.