I like to look at things from different perspectives in what I hope is an objective manner.
Regarding this warrant exchange that has recently been announced, I wonder who holds the outstanding warrants and who stands to benefit from various scenarios?
Insiders holding warrants (if there are)? This offer has no downside because the warrants were awarded, not purchased. The extension of the warrant exercise period stands to be in their favor as it buys more time to further develop product, gain approval, enter the device market.
Investors holding warrants? This is a double edged sword, especially for those holding the $1 warrants. If they sign up for the warrant exchange they stand to gain if the share price increases during the extended timeframe for exercising the warrants. They stand to lose everything they have invested if the company is for some reason unable to deliver. They also stand to lose as a result of potential further dilution. If I were in these warrant holders' shoes I would be very cautious and question whether there were ulterior motives associated with the warrant exchange. At best I could see myself exchanging only a portion and holding onto a portion in their initial status. Otherwise it would be all-in one way or the other, probably exchanging all the warrants.
There are lots of considerations that I am not delving into. The biggest would be that not so long ago the (slightly over 1 year) the share price was barely over 50 cents. Were I a warrant holder I would definitely give strong consideration to maintaining a CYA mentality.
While I see potentially getting uplisted as slightly more advantageous, we have all seen that stocks can go up or down and the causes for such moves are really out of our hands.
On a different note, one must question who reads and who posts on these message boards and what are those individuals motives? I will probably get attacked by both the longs and the shorts for this post. Mean MFs on this board.
I posted some legitimate thoughts and concerns and hoped to get some insightful feedback.
Thanks for those who responded in such a manner.
Not that it matters, I did not create/change my account or my screen name at any point recently. I have only one account and name. I made a couple of posts on this message board in June of last year under my old screen name. No posts since then until now. That's it. Period. End of story.
I don't know where you dig up when someone created an account. Wherever that info is located, it is not accurate. With all the issues I've seen regarding upgrading Yahoo message boards it should not surprise anyone that such data is incorrect. This board definitely has some kooks posting with malicious intent. I am not one of them.
Good points above. As a warrant holder who recently converted all, our upside is to based around the fortification of the companies cash position and getting the company solidly on the road to commercialization. Regardless of a most probable institutional led 2ndary after NASDAQ uplisiting, The warrants were an added bonus attached to the risk of investing in a Private Placement. Its upside from here. Even as i continue to add to my position, this is more than just a trade but built around solid multi year ROI based objective.
Sentiment: Strong Buy
i know you guys are gonna slam me, but here goes.
the company needs some of the warrants to be cashed in so that they can get some money to pay the bills. if this dosent happen, then we are in for a secondary down the road. it will come sometime after the uplisting. this is just my gut feeling. the fact is, they dont have enough cash to see this through as things stand today.
I'm not slamming. You're right that some of the warrants will need to and probably will be cashed in. The company was predicting something like a 90/10 split but it could even be 80/20. Who knows at this point. But this is good because they will still reach their objectives and cash will flow into the coffers. Looks like win-win to me. BTW didn't the company state officially that the human trials would only cost $1.5 million? Just 10% of warrants cashed in will more than cover that.
Sentiment: Strong Buy
I am glad you brought this up - if you are misinformed, possibly others are, also. Hopefully, I can clear up any confusion on your part.
1. Typically, insiders get options not warrants. The typical option costs far less than the typical warrant.
2. The "double-edged sword" you imagine does not exist. There is a quid pro quo, but no looming disaster as you suggest. All that is being traded is the antidilutive clause in exchange for two more years. I suppose one could argue that dilution could be bad for warrant holders; however, the CEO holds in excess of 13 million shares, and I do not know how many shares the rest of the insiders hold. Just think about the CEO - if the number of outstanding shares doubled, his 13 million (worth approximately $40 million) would only be worth $20 million. I think you will agree we have little to fear with respect to outrageous dilution.
So, for the warrant holders it appears to be a win/win. That is, it appears they do not really give up much by forfeiting the antidilution clause, but gain an extra two years before they MUST exercise their warrants. Note, currently, they can exercise their warrants anytime they wish until they expire. With the new warrants they are given an extra two years in which to make that decision. Surely, you cannot believe giving investors a longer time frame in which to exercise their options is a bad thing? (Well, it's not!)
3. Uplisting to a major exchange is not, as you say, "slightly more advantageous." It is HUGE. Mutual funds, State Employee Retirement Funds, and a whole host of other investment management groups would be able to invest. That is not "slightly advantageous."
Taking everything into account, the warrant exchange is great for warrant holders! I hope I have cleared up your confusion. Thanks again for giving me the opportunity to address these issues.
Thanks for your reply. I highly endorse respectful dialog. I appreciate your insight but still don't feel totally warm and fuzzy.
I still believe that when you take away the anti-dilutive clause something is definitely being lost or the offer to extend the exercise period would not be made. In this case it appears some level of asset protection is being traded for potential further gains. This appeals more to the greed side than the protect side. Not entirely Win/Win.
I would also counter that an individual (the CEO for instance) whose assets are $40 million can weather the storm better if their assets drop to a mere, still super-wealthy, $20 million than can some individual investor trying to make the transition from building their meager nest egg to achieving true financial security.
I also wouldn't say that uplisting is HUGE. Stocks rise and fall on all exchanges. One mis-step sends nacent biotechs plummeting by 80%. We have all seen that happen regardless of exchange.
There's definitely risk here. We all hope there is reward.
I think enough warrants will be exercised or exchanged to meet the uplisting requirements and am curious to see what transpires. I still question motives. There is probably more going on than meets the eye.
If I were a warrant holder I would consider just exercising the warrants now. A 300% gain in less than 3 years is pretty damned good. Hold or sell the stock at my leisure. Sell half and play with the house's money maybe. Exercising the warrants now achieves the company's same goal as removing the anti-dilutive clause.
Also the share price hasn't dipped below 1.28 since 2011 and most of us know what caused that dip to 1.28 in October..."unsubstantiated internet rumors" that have since been dispelled.
Sentiment: Strong Buy
This is no attack and I am not the one who gave you a thumbs down. Just wanted to clarify one thing. This (and much more important data) can be found on the SEC website under Invivo Therapeutics regarding the warrants...
"If I choose to participate in the Offer, do I have to tender my entire Eligible Warrant or can I just tender a portion of the warrant?
Yes, if you elect to participate in the Offer, you must tender all of your Eligible Warrant and cannot partially tender your Eligible Warrant"
Also, I personally spoke with IR and was told that the responses tto the offer that they have received so far have been positive. The exchange offer only stands for a couple more weeks, so we should hear the results soon.
Sentiment: Strong Buy
If the intent is truly to "upgrade" to a larger market then realistically only a fraction of the outstanding warrants need to be exchanged to meet the criteria.
Still seems like a more positive potential outcome for insiders rather than investors holding warrants.