Hey German. Wanted to run something by you as far as the structure, note, and warrants. Just checking my understanding.
It looks to me that the way they set this up Garnock will buy the warrant shares in direct proportion to the notes being converted. In other words as the note converts, instead of the shares being sold into the float as would be typical of conversion, Garnock will purchase the shares by exercising the warrant. The conversion price has been set to to sell at the same price as the exercise price of the warrant to buy. 10% discount of lowest share price for 30 days preceding conversion and exercise.
"No Public Sale or Distribution . Buyer (i) is acquiring the Note and Warrant, (ii) upon conversion of the Note will acquire the Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of the Warrant will acquire the Warrant Shares issuable upon exercise thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein"
This is a very relevant as the effect on the publicly traded stock will be minimal as these conversions will not be dumped into the bid. They have also given Garnock the authority to broker his own transactions as well as block trades.
I also noticed that the amount of shares held by Garnock, though stating a 9.99% cap on ownership, is up to Garnock, not Verus which means he could buy and hold all of the converted shares as well as the remaining warrants, up to 925 mill. That is what he did with Pharmcann. He held a 3.5 million investment which is now worth almost 70 mill.
The conversion of the Note may be subject to a cap of 9.9% of the Issuer’s total outstanding Common Stock, which cap is invocable by the holder in its discretion.
As you have already pointed out the amount of shares convertible was established at February 8th and is not what the actual conversion will equal when it is converted.
"the Note would have been convertible into 925,925,925 shares of Common Stock at issuance."
As the share price rises the amounts of shares needed to convert the note will lesson dramatically. If Garnock chooses to exercise the warrants in excess of the converted shares in will be as a cash purchase.
Am I understanding all this correctly? If so I would say this is by far the best arrangement I have ever seen in the OTC. Whatever Anshu has lined up it must be good.
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