Stocks, calss b and c warrant stocks Best answer on the web
I am a 21 year old, who has been investing into the stock market for
the last 5 months. I have some knowledge, but limited, of the stock
market. I conduct about 18 trades per month.
I currently own stock, in a up and coming company Isonics Corp. (SYM: ISON)
Recently the CFO has put out this statement:
GOLDEN, Colo.--(BUSINESS WIRE)--Oct. 14, 2004--Isonics Corporation
(NASDAQ: ISON) provided guidance today with respect to various classes
of warrants. Specifically, the Company noted that its Class B and
Class C warrants are not presently exercisable due to the fact that
the related Form SB-2 registration statement is not current. The
warrants may still be traded on the Nasdaq SmallCap market and are
listed under the symbols ISONL and ISONZ, respectively. The
announcement was made by John V. Sakys, vice president and CFO of
Isonics.
The Company indicated that it expects to file an updated Form SB-2
with the SEC within 10 business days. Upon effectiveness of the
post-effective amendment, the Company will announce that the warrants
are again exercisable.
A Class B warrant is exercisable for $1.50 and results in one common
share and one Class C warrant. A Class C warrant is exercisable for
$2.50 and results in one common share. Both warrants expire December
31, 2005. This announcement does not constitute the offer of any
Isonics securities for sale.
END OF STATEMENT...........................
Please explain to me the difference between the 3 different classes of
stocks that Isonic is talking about. Also what does it mean when it
says "A Class B warrant is exercisable for $1.50 and results in one
common share and one Class C warrant. A Class C warrant is exercisable
for $2.50 and results in one common share. Both warrants expire
December 31, 2005. This announcement does not constitute the offer of
any Isonics securities for sale" Please explain thoroughly the
differences and advantages.
thank you
"If you own one of these, you can give it to Isonics with $2.50 and they will give you one share of their common stock in return."
What is the value of the common stock? Will it be more than what you paid for the warrant plus the $2.50 ?
Generally, a warrant is a financial instrument that represents some kind or promise or commitment. Typically, a warrant gives the holder the right to buy a certain amount of a particular stock at a fixed price, within a time limit.
The Isonics Class C warrants work like that. If you own one of these, you can give it to Isonics with $2.50 and they will give you one share of their common stock in return. This is called "exercising" the warrant, just like exercising an option. If you have a warrant and the stock price goes above the exercise price, you can exercise the warrant and get the stock for less than the going rate, so you can then sell it at a profit. If the stock doesn't go above the exercise price, you can refrain from exercising the warrant, and not lose any more than whatever you paid for the warrant.
The Class B warrants are a little trickier. If you have a class B warrant, you can give it to Isonics with $1.50 and Isonics will give you back a share of common stock and a Class C warrant. Then you have a choice of holding on to the Class C warrant or exercising it to buy another share of stock for another $2.50.
Warrants may be traded, but they are not shares of stock themselves.
Both classes of warrants expire December 31, 2005, which means that the company is only committed to this warrant plus cash for stock deal until then. After that, the warrant is just a piece of paper.
Additional Links
Article on stock warrants in The Investment FAQ
http://invest-faq.com/articles/stock-warrants.html
Stock warrant ABCs on SmartMoney.com
http://www.smartmoney.com/ask/index.cfm?story=19990608
I hope this explanation is helpful. If it's not clear enough, please ask for a clarification.
--efn
It depends on the market for the warrants. Say the stock is selling for $3 a share and you have a warrant to buy some shares for $2 a share. The warrant should be worth at least $1 per share, because you could exercise it and immediately sell the shares for that much profit. But if some speculator thinks the stock is going to go up, he may be willing to pay more than $1 a share for the opportunity to buy the stock at $2 in the future without committing $3 a share now.
> We know the exercise price of the C class warrant is $2.50 but what
are the "conditions" ?
I don't know what the specific conditions for the Isonics warrants are beyond what ryanwegner posted.
> Is it one warrant for one share, or one warrant for two shares, etc?
There are two ways to talk about warrants. If you have the right to buy 1,000 shares at some prices, you could refer to it as one warrant for 1,000 shares or 1,000 warrants for one share each. I don't know which way is standard or more common. The news story ryanwegner quoted used the form that assumes one warrant per share.
> If the warrant is trading above $2.50, lets $4.00. When the warrant is exercised are the shares converted for the exercise price or the current market price of $4.00?
The warrant gives someone the right to buy shares at the exercise price, so when you exercise it, that is the price you pay. The market price for warrants is relevant only to buying and selling warrants, not to exercising them.
--efn
"As an example of a "condition," there may be an exchange privilege which lets you exchange 1 warrant plus $25 in cash (or even no cash at all) for 100 shares of common stock in the corporation, any time after some fixed date and before some other designated date. (And often the issuer can extend the "expiration date."
We know the exercise price of the C class warrant is $2.50 but what are the "conditions" ? Is it one warrant for one share, or one warrant for two shares, etc? Anything better than 1 for 1 makes the idea of exercising a warrant more attractive?
I invented the procedural details based on my experience with stock options, so they may not be accurate, but the substance of the transaction is.
The company said it will use its proceeds from the warrant exercises for "working capital purposes related to our semiconductor division, the continued development of products in our homeland security division and for general working capital purposes." "
what does this all mean about the warrants? What is the difference from a normal ISON stock?
If the warrant is trading above $2.50, lets $4.00. When the warrant is exercised are the shares converted for the exercise price or the current market price of $4.00?
Thank you VERY much!!