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

To: Jack of All Trades who wrote (1469)	5/29/1998 2:20:00 PM
From: Jay Lowe	Respond to of 4142

>> where are all these warrants coming from? Oh, that's simple. The MIDL (common) float as of 2 weeks ago was probably about 1M shares ... an immensely tiny float. Some interest in the warrants, but amount is unknown. As I read it, the company has authorized over 5M warrants with no real currently available information about what's been issued. So these warrants are either coming from the company's treasury (new issue) or from existing holders who picked them up back when they cost a nickel ... it's hard to fault anyone for taking a 10-bagger, eg? With the exercise of these warrants, we are experiencing an effective dilution as the common increases. It may, by the warrant authorization limit, increase by as much as 5M, created a new float as high as 6M common. On the big board, this would be a HORRIBLE event, and Wall Street analysts would line up to pan the stock. In our case, an increase from 1M to 6M float is significant, but if the company performs, then we won't be able to measure any effective result. The only effect will be to possibly create near-term downward pressure on the common price as new common enters the float from the warrants. If people HOLD the new common, there is no effect on the real circulating float. The effective dilution we will experience will be those warrants that are exercised to common and then sold. So the dilution could have a significant effect, but that effect would only be negative in the case that the company fails to increase it's real market valuation to an amount in excess of the dilution. And, since one would only BUY this stock as an investment (that's me) if one planned on holding until the DF-144 story plays out, then the dilution is not a significant event. Can anyone check me on this?