Eric ~ The warrants have an exercise price. Most, if not all are at $1.35 ea. This is the price that the owner has to pay to trade their warrants for shares of stock. Mrs. X has 100,000 warrants exercisable at 1.35. Let's say the stock price at the time she exercises her warrants is 3.00. She has to come up with $135,000 to exercise all of her warrants ($1.35 x 100,000 = $135,000). Of course, if the share price is $3, she now has value of $300,000. If she had to borrow the 135k and decides to pay that off, she would still net $165,000. (300k - 135k = 165k). There is also an additional condition that if the stock price is above $4, the person exercising must pay an additional 30% of anything above that price.
For instance, if the price happens to be 4.90 (I wish), they would have to pay the $1.35 + .30 for a total of $1.65. (30% of the .90 would be .30), then add this back to the exercise price of 1.35.
It seems it would benefit Franklin to have the price as high as possible at the time because that extra 30% goes to their coffers.
If I have mis-stated anything, someone please correct me and I hope this made sense. |
