On January 22, we announced a bullish call on Aegis Critical Energy Defence Corp. (QESS.CN)(QESSF) f/k/a Energy Plug Technologies Corp. (PLUG.CN) (PLGGF) with a $0.50 target along with a follow up blog in October related to its partnership with Quantum eMotion Corp. (QNC.V) (QNCCF). We since upgraded that target to $1.50 as our initial $0.50 target was hit before a pullback that we think was largely due to the exercising of warrants. We were initially planning on saving this update for early January, but it is clear to us that with QESS rising 37% to close at $0.405 on Friday and with technology partner QNC hitting new highs, the opportunity to buy is now. The impact of warrant exercises is waning. It wouldn't go up 37% in a day with such little resistance if there was a significant warrant overhang remaining. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1040 followers on here as well as 124 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.
We direct you to two charts that you can find on the company's September 30, 2025 financial statements and MD&A that were filed on November 27 on SEDAR:
As we discussed in our last blog, we thought that the stock price held up quite well given the fast pace of warrant exercises. This data confirms our suspicions. At the end of September, QESS had 32.2 million warrants outstanding, with 24.5 million of them coming due by February 14, 2026. Between September 30 and November 27, 15.3 million warrants were exercised. Presumably these would all be ones due by February 14, so only 9.2 million of those warrants remain.
The company's monthly progress report for November shows 128.6 million shares outstanding as of December 3. Up from 125.7 million disclosed in the above chart on November 27. Assuming that 2.9 million increase in share count came from warrant exercises and not options, the total warrants remaining to be exercised due before February 14 is down to 6.3 million as of December 3. Considering that 2.9 million were exercised in the four business days between November 27 and December 3, one can assume that the vast majority of the remaining 6.3 million would have been exercised between December 3 and December 19.
The largest set of warrants remaining as of September 30, 13 million, are set to expire on December 24. We don't think the 37% move three business days prior on December 19 is a coincidence. Considering the time for funds to clear, today would likely have been the last day that anyone needing to sell QESS shares in order to exercise warrants expiring on December 24 could have comfortably done so without fear of delays causing them to miss the expiry deadline. The biggest warrant overhang hurdle has been cleared, and the market understands that. The remaining 7.7 million warrants expiring in September will likely be exercised at some point in time given how far in the money they are, but that won't take place with any urgency and will be easily absorbed into the float.
Consider that QESS rose 37% and has managed to achieve a $0.40 stock price even with 24.5 million in warrants at $0.10 or $0.25 strike prices creating overhang. Imagine the price performance once that overhang is done? We think it is essentially done, and that's why we are sending this blog out now as opposed to the first week of January where we know it would be done for all the $0.10 strike warrants other than the September ones.
Another thing to consider is the company's improved financial situation. At the end of September, QESS had around $1 million in working capital. The exercise of the 24.5 million warrants due by February 14 will bring in $3.7 million. This reduces the need for further raises in the future, though one should be aware that a startup company is always at risk to raise more capital until a time when it can achieve profitable operations. QESS had a burn rate of about $300,000 for the quarter ended September 30. That would suggest a fairly long cash runway of ten quarters generated by the warrants, though the burn rate might increase in the near term in order to fund growth initiatives that ideally generate revenue shortly thereafter.
With the warrant issue mostly in the rear view mirror and the company well cashed up, we expect it to get off to a strong 2026. Particularly if there are further news releases on collaborations with QNC or other companies. The recent announcement of Tough Bhoy, a quantum-secured energy storage system meant to withstand the cold temperatures of the Arctic being one such example.
Disclosure: We are long QESS.CN. We have been compensated in the past to write about QESS, but have also engaged in open market buying and purchased shares in excess of the value of the compensation.
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