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Technology Stocks : OSFT - Objectsoft

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To: valuehunter who wrote (162)	1/15/1999 12:22:00 PM
From: Ted Gregg	Read Replies (2) of 694

>>Warrant scenario............................................ My understanding is that the warrants expire in 2001 with a strike price of $6.50. If true, what happens in the following scenario?: It's May of 1999 & the stock is trading a $4, while the warrants are trading at $1.50. The company is purchased for $8.00. The common holders would see a $4 appreciation, however, the warrant holders essentially would see nothing ( $8 - $6.50 = $1.50 ). My question is::::: Is there something "written into" the warrants to allow warrant holders to participate in the profit from the buyout? Thanks in advance to anyone who can answer this. << In the above scenario I believe the warrant holder would only get $1.50. Until then the warrant is something like an option. The OSFTW warrant value is based on the relative price of the OSFT common stock to the strike price and a time (till expiration) factor. As we approach the expiration date of the warrants the current "premium" will shrink. We pay this "premium" because we believe OSFT will appreciate AND presently we can leverage this belief by buying about 4 times as many shares of OSFTW as OSFT. Until the warrant expiration both will move approximately $1 for $1. Therefore if OSFT increases from $4 to $5 (25%) OSFTW most likely would increase from $1 to $2 (100%). Of course the opposite is true. If there is momentum then OSFTW could move even faster in either direction. This is the leverage of the warrants. Risk of warrants: If the warrants expire before OSFT hits $6.50 or if OSFT is sold for less that $6.50 then the warrant holder gets wallpaper. Hope this helps, Ted (long OSFTW)

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