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Sparta Commercial Services, Inc. (Pink Open Market: SRCO), a micro-cap company with a market value of approximately $11 million, disclosed on Monday that it has issued stock options to key members of its executive team and board of directors. The move, which involves granting options for an aggregate of 3,000,000 shares, is part of the company’s compensation strategy. According to InvestingPro data, SRCO’s stock has shown significant volatility, returning over 120% in the past year despite maintaining weak financial health metrics.
These options, with an exercise price of $0.18 per share, were awarded to CEO Anthony L Havens and Vice President of Operations Sandra L Ahman. They are set to vest over a three-year period in three equal tranches. Additionally, two independent directors received options for 300,000 shares each as compensation for past service. Employees of the company were also granted options totaling 220,000 shares under similar terms. The company maintains an impressive gross profit margin of nearly 84%, though InvestingPro analysis reveals current short-term obligations exceed liquid assets, with a concerning current ratio of 0.06.
The options have a five-year term and the exercise price represents a 110% premium over the closing price of the company’s common stock for the thirty consecutive trading days preceding the grant date. This calculation only included days where at least 100 shares were traded.
The sales of these securities are considered exempt from registration requirements under the Securities Act, based on Section 4(a)(2), which pertains to transactions by an issuer not involving a public offering. The recipients, who have close relationships with Sparta Commercial, have indicated that their acquisition is purely for investment purposes.
This information is based on a recent SEC filing by the company. The full details of these stock option agreements can be found in the exhibits attached to the company’s 8-K filing.
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