You are correct they are treated as a cost to the business as they are given to parties as compensation. The Black Scholes model is a standard method of valuation of these options and though there is no cash cost to the business, they book an expense and also book a capital reserve (see page 7 of the report) that effectively sum to zero in the capital account. Sorry probably lost most sane people a while back, unfortunately I had to account for these in a previous life .
You are also correct that the consultant options confer a right to buy 1,750,000 shares at $0.50 per share on or before the 14th of November 2021. There are 2 tranches of directors options of 400,000 each that Terry Sweet (200,000), Ian Roger Moore (100,000) and Paul House (100,000) are entitled to exercisable at $0.50 and $0.67 each. Right now these options are out of the money and the consultants are not even entitled to their options until the shares trade above $0.45 per share for 20 days. The consultants would have to pay $875,000 to exercise all their options and the directors would have to pay $200,000 for the 50c options and $268,000 for the 67c options. Total of $1,343,000 in cash to be collected by the company before the shares are issued.
I hope that adds a minuscule amount of light to a not very clear accounting way of dealing with a real world issue.
PIQ Price at posting:
32.5¢ Sentiment: Buy Disclosure: Held
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