We considered using PUTS and CALLS as an additional way of profitable trading in Shfl.However, since this is a very tricky way to make money, we took no action.
For the novice investor:
A CALL gives you the right, but not the obligation, to BUY Shfl at an agreed upon price and time frame.
A PUT gives you the right,but not the obligation, to SELL Shfl at an agreed upon price and time frame.
Both CALL and PUT agreements can be purchased,but they will expire usually in 90 days-thus you will lose the purchase fee. If you can catch the market just right you can make big profits with a small initial outlay.
Usually the novice investors all take long positions, and don't know the differance between a trade and investment.For the past 21/2 years, virtually all longs have lost money.Like NOBRAINBIGHAM, they bought high and sold low.
The warrant exercise price reduction game probably did not end with the Bricoleur warrants.
In "Section 4. Certain Adjustments." of the SECURITIES PURCHASE AGREEMENT ( http://sec.gov/Archives/edgar/data/1004673/000114420406047790/v057555_ex10-3.htm ) between Vendingdata and Elixir appears:
"h) Voluntary Adjustment by Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. "
What a red flag! VNX longs should brace themselves for an Elixir warrant exercise price reduction.
"'Adverse Disclosure' means public disclosure of material non-public information, which disclosure in the good faith judgment of a majority of the Board of Directors of the Company after consultation with counsel to the Company would have a material adverse effect on the ability of the Company to consummate a material acquisition, disposition or other comparable extraordinary transaction."
"...if the filing of a Registration Statement in respect of a Demand would require the Company (A) to make an Adverse Disclosure or (B) if the Company has already commenced a bona fide financing plan through a formal �all hands� meeting or comparable action, and, in the good- faith business judgment of a majority of the Board of Directors, a Demand registration at the time and on the terms requested would have a material adverse effect on the ability of the Company to obtain such financing, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing of such Registration Statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose;..."
What a red flag! Why would a little truth and sunshine "have a material adverse effect" on VNX's ability to obtain financing? Will the 10-K give us a clue?
bobshfl's post is an excellent one.
"5) VNX has stayed afloat by selling stock not by selling products."
VNX is so desperate to raise cash that it has dropped the exercise price of the Bricoleur warrants.
In the June 30, 2006, 10-Q ( http://sec.gov/Archives/edgar/data/1004673/000114420406033086/v050075_10qsb.htm ) appears:
"On May 2, 2006, the Company closed on an $18 million financing transaction with four investment funds. The $18 million financing consists of $13 million of 8% senior secured promissory notes and a $5 million equity put agreement that can be exercised from time to time at the Company�s option. The senior debt placement includes detachable warrants to purchase 3.2 million shares at $2.50 per share, some of which are recallable based on early retirement of $6 million of the debt portion of the transaction."
In the September 30, 2006, 10-Q ( http://sec.gov/Archives/edgar/data/1004673/000114420406033086/v050075_10qsb.htm ), the last sentence has changed:
"The senior debt placement included detachable warrants to purchase 3.2 million shares at $2.50 per share, some of which are recallable based on early retirement of $6 million of the debt portion of the transaction. In September 2006, the amount of detachable warrants were reduced to 2.6 million shares at $2.00 per share, some of which are recallable based on early retirement of $6 million of the debt portion of the transaction."
Warrants to buy 2.6 million shares at $2.00 each are more valuable than warrants to buy 3.2 million shares at $2.50 each.
A warrant with a $2.00 strike price is more likely to be exercised than a warrant with a $2.50 strike price, too. That would be the hope of VNX management, at least.
I don't think that Bricoleur will be at all quick to exercise the warrants, though.
I think that Bricoleur should first of all sell every share that it has received under the $5 million equity put agreement. Then, Bricoleur should go on to sell short at least 2.6 million shares, using the 2.6 million warrants with the $2.00 exercise price as a hedge, to give itself a five-million-dollar consolation in case of default on the $13 million loan and collapse of the common stock's share price.
Your post http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_S/threadview?m=tm&bn=16483&tid=37202&mid=37223&tof=1&rt=2&frt=2&off=1 is a must-read for anyone considering buying Vendingdata stock.
Looking back at 3 year chart it is easy to see that shfl likes the 25-30 channel. Going long at 25 and shorting at 30 will make you a nice living. Same with calls and puts. Puts are much easier. Stocks usually drop faster than they go up. When reality hits, people sell and run. Yiihaa. I can't wait for SHFL to get north of 30 again. One of these times its going to drop into the teens.
The day revenues stop increasing, this company is going to drop like a rock. As it is now, revenues rising, profits dropping and Yoselhoffs selling more and more.
Strong buy is to encourage the fool hardy to buy so I can short.
"Strong buy is to encourage the fool hardy to buy so I can short."
Since Schwab cannot borrow any VNX shares nowadays without passing through exorbitant fees, there's no reason for me to try the same trick on the VNX board.
The difficulty of borrowing VNX shares to sell short--not an upward share price blip--is the sign of times to come.