Page 262 - A Canuck's Guide to Financial Literacy 2020

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Example of Stock Warrants

'Toronto Company' which trades under the symbol TCD on the Toronto Stock Exchange is
looking to expand their Hydro division. They determined that they needed to raise
$2,500,000 to do this and recently had a private placement of $2,500,000 at $0.25 per
share. Participants in this private placement would be entitled to 1 warrant at $0.40 expiring
on December 2023

James was interested in participating in the private placement where the company was
hoping to raise $2,500,000 for the purpose of expanding their Hydro division. James
provided the company with a $50,000 cheque and in return the company gave James,
200,000 shares. ($50,000 / $0.25). In addition to 200,000 shares, James also received
200,000 warrants which enable him to purchase 200,000 additional shares at a price of
$0.40 before December 2023

A year later, the price of the stock was $0.80. James wanted to exercise his warrants and
provided "Toronto Company" with a $80,000 cheque for which they could use towards their
business operations. (200,000 * $0.40). As James exercised his warrants, he ends up with