Happy New Year everyone!! Very excited for Gen 3 QRR to commencement in the next quarter. Here is Bernard's comment on incentive stock options...he sounds very confiden and demonstrated it with pegging the strike price of his options at a 117% permium. Long and strong HPQ!!!!
Agoracom: Small Cap Investment - HPQ-Silicon Resources Inc. - Dilution and the rationale of our incentive stock options distribution
Dilution and the rationale of our incentive stock options distribution
I have chosen to take this opportunity and write the following blog to address these issues more broadly.
First, one must realize that talking about dilution is like talking about religion or politics, people have their pre-set opinions on the subject...
Secondly, my years in the business have thought me that for some investors, (and for FUD agents especially), there are simply no good reasons for dilutions.
Regardless of how management structures the dilution and whatever the reason for doing it, for them, dilution is never acceptable, and incentive stock options grants are the worse...
What continues to surprise me, and this since I started in the business, is the fact that people that make a conscious decision to invest in explorations or R&D companies, like HPQ, fundamentally non-revenue entities, complain about dilution...
In addition to having great projects, managing dilution is the key to success, not managing the share prices... When you invest in a non-revenue entity, you also invest in Management's ability to raise the funds required to advance the projects.
I am not certain if everybody realizes it, but stock option issuance and their subsequent exercise represent the cheapest way for a Corporation to raise funds. When all the options granted in December 2021 are exercised, the company will collect over
$ 5,307,500 within two years and another $5,335,000 within the next 5 years...
That is $10,642,500 raised at an average price of $0.71... That is a 54% premium to today's close...
Now I understand that for some, the absolute number of 14,985,000 options being granted by HPQ may seem large, the fact is that this only represents a 4.5% (14,985,000/331,752,267) dilution and it is our first new incentive stock options distribution since 2017, as we were barred until know from issuing new options under the covenants of the IQ debenture.
So, looking at HPQ performance since 2018, it is clear that our incentive stock options distribution is justified.
Furthermore, as the largest beneficiary of the incentive stock options distribution, I chose to have 3,000,000 of my options with an exercise price of $1.00, a 117% premium to today close, as I wanted to send a clear message that my interests are aligned with the best interest of the Company and its investors.
The fact is that I believe so much in the long term potential of HPQ, that I choose to forgo $1,349,999 in potential short term gains ($1.00-$0.55=$0.45 *3,000,000) ... but that is not a point that FUD agents active on social media will never acknowledge... So I decided to point it out...
Finally, let me wish you all my best wishes for a happy and prosperous 2022.
Regards
Bernard Tourillon