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SHFL entertainment, Inc. Message Board

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  • pjv2xyw9dww4b5 pjv2xyw9dww4b5 Jan 27, 2007 12:48 PM Flag

    POSSIBLE SHFL PROFITS FROM PUTS AND CALLS

    "While you SHFL longs are worried about it potential move to the teens. Us VNX longs are looking to our brighter future. If you made money on SHFL over the years by investing a long time ago--may I suggest that you take some or all of your money and go for the new kid on the block. And believe me, VNX IS the new kid. Can u say up by 7.39% today. Sign of things to come."

    OK, let's talk Vendingdata on the SHFL board.

    In the SECURITIES PURCHASE AGREEMENT ( http://sec.gov/Archives/edgar/data/1004673/000114420406047790/v057555_ex10-3.htm ) between VendingData and Elixir is:

    2.1 Closing. Upon the terms and subject to the conditions set forth herein, at the Closing the Company hereby agrees to issue and sell to each Purchaser, and each Purchaser hereby agrees to purchase from the Company, severally and not jointly, the number of Shares and Warrants set forth on each respective Purchaser�s signature page attached hereto, for the Subscription Amount set forth thereon. The aggregate Subscription Amount shall equal $2,650,000 and the Shares and Warrants shall in the aggregate consist of:

    (b) 1,000,000 Shares; and

    (c) Warrants to purchase the following:

    (i) 6,000,000 shares of Common Stock at $2.65 per share;
    (ii) 4,000,000 shares of Common Stock at $3.00 per share;
    (iii) 2,000,000 shares of Common Stock at $3.50 per share;
    (iv) 1,000,000 shares of Common Stock at $4.00 per share;
    (v) 1,000,000 shares of Common Stock at $4.50 per share;
    (vi) 1,000,000 shares of Common Stock at $5.00 per share; and
    (vii) 1,000,000 shares of Common Stock at $5.50 per share.

    I was wrong on a technicality with my second prediction in http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_V/threadview?bn=25218&tid=4635&mid=4780 . I left out all those warrants!

    What are all those warrants worth?

    In my opinion, next to nothing, so Vendingdata made a good deal in selling one million shares to Elixir at an above-market price with nearly worthless warrants thrown in as an incentive.

    From the point of view of anyone who thinks that the market may be undervaluing Vendingdata, though, those warrants are a huge, huge giveaway. I ran the numbers through an options calculator last year and came up with a total value way above $10 million. Since $2.65 million is a lot less than "way over $10 million," I assume that Vendingdata management's opinion of the company's future is more like mine than like its own shareholders'.

    The calculation could be done in reverse, too. That is, if the package of shares and warrants is assumed to be worth $2.65 million, what does that tell us about the stock? I'd look at it this way: use the same volatility and risk-free rate of return and find out what the current stock price would have to be to make the share/warrant package worth $2.65 million.

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SHFL
23.21+0.02(+0.09%)Nov 22 4:00 PMEST

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