Definitions
The terms used here
Warrant
A contract giving the holder the right to buy shares from the company at a fixed price for a fixed term. Warrants are commonly attached to shares sold in a financing, so a buyer receives both the stock and the right to buy more stock later at a set price.
Pre-funded warrant
A warrant with an exercise price close to zero — in filings described here, $0.001, $0.0001, $0.00008, or $0.00001 per share. Economically it is the stock, purchased in advance. Its usual purpose is disclosed in the offering documents themselves: it is offered to purchasers whose ownership of common stock would otherwise exceed a stated percentage threshold.
Beneficial ownership blocker
A contractual cap preventing a holder from exercising warrants to the extent the holder would own more than a stated percentage — commonly 4.99 percent or 9.99 percent — immediately after the exercise. Warrants that cannot currently be exercised are excluded from the ownership figure reported on the cover page of a Schedule 13D or 13G.
The practical effect is that the percentage a fund reports is not the same as the number of shares it may acquire. Both figures appear in the same filing, in different places.
Warrant inducement
An agreement in which a company reduces the exercise price of outstanding warrants and, in exchange for immediate exercise, issues the holders new warrants. Where the new warrants exceed 20 percent of shares outstanding, exchange rules require stockholder approval before they become exercisable.
Reverse stock split
A combination of outstanding shares into a smaller number, raising the per-share price proportionally. Under Nevada law a board may effect a reverse split without a stockholder vote provided authorized shares are reduced in the same proportion.
Triggered Short™
The author's own descriptive term for a sequence in which favorable news or another announcement is followed by increased volume and price, and then by warrant exercise and selling. It is a model, not a finding, and it is not an established legal, regulatory, or accounting concept. Nothing in the model establishes that any person engaged in the conduct it describes.
Standard of proof
What the evidence establishes
Different sources on this site carry different weight, and they are kept apart deliberately.
Company filings
Statements a company makes in a document filed with the Securities and Exchange Commission are made under the securities laws and signed by an officer. Where this site reports a share count, a fee, an exercise price, or a date, it is taken from such a document and the document is identified.
Regulatory data
FINRA short interest is collected from broker-dealers under Rule 4560 and published twice a month. It is an aggregate figure by security. It does not identify who holds a position and it does not state why a position was opened. A rise in reported short interest is consistent with directional selling, with hedging, with convertible arbitrage, and with market-making inventory.
First-hand accounts
Where the author describes something he saw or did — attending a meeting, sending a demand, receiving a response — it is identified as his own account and the supporting document is placed in the exhibits.
Calculations
Any arithmetic performed on the underlying figures is shown, so a reader can check it. Where a calculation rests on an assumption, the assumption is stated.
Corrections
Corrections policy
Any factual error brought to the author's attention will be reviewed and, where appropriate, corrected here with the date of the correction and what was changed. Corrections are not removed.
Before publication, the parties named in a report are sent the specific statements of fact intended for print and invited to correct them. Responses are published in full and unedited. Where no response is received, that is stated.
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