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Gold/Mining/Energy : Arcon Energy (MIDL Presently) The Ultimate Sleeper -- Ignore unavailable to you. Want to Upgrade?

To: Dave Bissett who wrote (815)	5/26/1998 7:00:00 PM
From: Kurt N	Read Replies (1) \| Respond to of 4142

My outlook is that the warrants are dragging the common down. If the common gets dragged down, then the preferred follows suit. Suppose I am a MM and I can sell at the ask and buy at the bid. One doesn't have to be a MM, but it is a lot easier. MIDL bid/ask 1.4375 by 1.4687 MIDLW bid/ask .50 by .5625 Lets say I am the MM on the ask with NO shares in inventory, and somebody places a buy order. I would sell the MIDL at the ask (in effect being short) for $1.4687, and then buy the MIDLW at the bid $.50. If I exercised the warrant to cover my short position I would pocket ($1.4687 - $.50 for warrant - $.50 to exercise) = .4687/share Other MM's want a piece of this action too, so they lower their ask so they are the MM on the inside bid/ask. The way I look at this is the MIDLW is in effect the shares available in MM's inventory. Buying up the warrants limits the MM's supply of shares OR if you buy the common the MM will buy the warrant. With all the new MM's in MIDLW/MIDL and even MIDLP, they have to be getting there shares somehow. Once the supply of warrants shrinks from buying, the price of the warrant taking into account the $.50 exercise should equal the common, then there is no advantage from the MM perspective of shorting the common and covering with the warrants. Kurt

To: Dave Bissett who wrote (815)	5/26/1998 10:49:00 PM
From: Ga Bard	Read Replies (1) \| Respond to of 4142

Ok ... Would you explain (perhaps again) what this means and why it's so...is it because of the reduction in float? Answer: Exercising the warrants serves the following reasons... 1.) It reduces the float of the warrants limiting the amount available to arbitrage with. 2.) Once exercised any short position and we all know there are always short positions on OTC stocks, those positions will have to be covered. Also, when would one want to exercise the warrants? Answer: that is a judgement call on each investor Someone earlier said they're good until 2001 or the co. can call them if the common price stays above 2.50 for 10 days. Answer: that is correct. However to hold them in your account they can be shorted against Anything preventing one from NOT exercising the warrants for, say, 12 months as the common appreciates? Answer: I guess nothing really except the target price with time variable and fear of a recall. GB