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Pastimes : The Perils and Pitfalls of Investing With "Friends"
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To: Done, gone. who wrote (15)10/26/2004 1:19:23 AM
From: Done, gone.  Read Replies (2) of 377
 
And later, details...

OK, you can check out the company on Edgar. It is called Xxxxxxx
Acquisitions.

Here is a brief outline of the concept. One million shares go to friendly
hands. With those one million shares go 5 million warrants. Nobody sells the
warrants. When the stock trades above a dollar, we *exercise* our warrants,
which means we pay a dollar (the exercise price) and we get a share of stock
for each warrant. The warrants will be freely trading, but what these guys
want to do is keep all the warrants in friendly hands. The exercise of the
warrants is what is going to be the major funding of the company.

It's pretty cool. If you did not know, you can exercise warrants with no
money under certain circumstances. If the stock is trading above the
exercise price of the warrants, the brokerage firm will loan you the money
to exercise the warrants and then sell the stock and pay their loan back,
and you pocket the difference. They are happy to do this because it is a no
risk deal and they get a commission.

So the way this will work if it works is that liquidate the warrants and the
stock over a period of time. The key is that the stock has to be trading
above a dollar. If it goes really well, like the stock goes above 2 or 3
bucks, we could really make a nice score on this.
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