RE:Reserved shares? - can someone please explainNewbills wrote: Found this investor note on the cse website and i'm a little confused. Can someone please explain. Are these 100 mil shares going to be used for future take overs? Won't this largely dilute the current 9 mil shares?
I'm looking to invest to get some US exposure and i'm just doing my DD.
Investor Note: In addition to the 9,468,109 Subordinate Voting Shares that are listed and trading, there are 100,342,791 shares reserved for issuance pursuant to the conversion rights attached to the Super Voting Shares and Multiple Voting Shares that are issued and outstanding but not listed. The total number of issued shares assuming all are converted into the listed class would be 109,810,900.
https://thecse.com/en/listings/life-sciences/trulieve-cannabis-corp-subordinate-voting-shares
Really how many times we have to go over this issue ???
Its all over the same with all USA weed companies:
1- Trade on CSE not TSX cause TSX they wont take federally illegal companies (same reason they cant still go NYSE or NASDAQ yet).
2- In order to circumvent having to report to SEC which would get USA WEED company insiders in deep trouble they have to go "Foreign private issuer" route. See point 3
3- Companies that qualify as a “foreign private issuer” benefit from many special exemptions under the US securities laws. Among other things, foreign private issuers are not required to file quarterly reports on Form 10-Q or current reports on Form 8-K, are exempt from Section 16 beneficial ownership reporting and short swing profit rules, are exempt from the US proxy rules, benefit from relaxed tender offer rules, are not subject to the detailed compensation disclosure rules, can file financial statements prepared in accordance with IFRS as adopted by the International Accounting Standards Board or, if reconciled to US GAAP, local GAAP or non-IASB IFRS, are exempt from Regulation FD, and have a later deadline to file their annual report (on Form 20-F) than domestic companies. In addition, Regulation S (the securities law exemption for sales of securities outside the United States) provides greater flexibility in some aspects for foreign private issuers compared to domestic issuers.
In order to obtain these benefits, a company must satisfy the definition of “foreign private issuer” contained in the US securities laws. The SEC rules define a foreign private issuer as any corporation or other organization incorporated or organized under the laws of a foreign country (other than a foreign government), unless both of the following two tests are met as of the last business day of the issuer’s most recently completed second fiscal quarter (or, for a first time registrant, within 30 days of filing an initial registration statement with the SEC):
Shareholder Test: more than 50 percent of the outstanding voting securities of the issuer are directly or indirectly owned of record by “US residents”; and
Business Contacts Test: any of the following apply:
the majority of the executive officers or directors are “United States citizens or residents”; or
more than 50 percent of the “assets of the issuer are located in the United States”; or
the business of the issuer is “administered principally” in the United States.
https://knowledge.freshfields.com/m/Global/r/1768
4) So, clearly as they have their assets and management in USA they HAVE to avoid having more than 50% of OUSTANDING voting shares in hands of US citizens to avoid SEC reporting.
5) As such all these companies (not only TRUL but CURA Medmen HARV ACRG.U etc etc..) have gone out public selling common shares on IPO and reversing all previous held shares by owners into a special class of shares (supervoting and multiple voting) that preserve their voting power and ability to
get dividends protarrated on their % of benefitial owerwship YET not being part of the OUTSTANDING public float.
6) As long as weed is federally illegal there is no way these shares can be converted into public float but in a small amount. See conversion clausules (same on all these USA weed comapanies) :
Conversion Limitations. The Corporation is to use commercially reasonable efforts to maintain its status as a “foreign private issuer” (as determined in accordance with Rule 3b-4 under the Exchange Act. Accordingly, the Corporation shall not affect any conversion of Multiple Voting Shares, and holders of Multiple Voting Shares may not convert any portion of the Multiple Voting Shares to the extent that after giving effect to all permitted issuances after such conversions of Multiple Voting Shares, the aggregate number of Subordinate Voting Shares, Super Voting Shares and Multiple Voting Shares held of record, directly or indirectly, by U.S. Residents would exceed 40% (the “40% Threshold”) of the aggregate number of Subordinate Voting Shares, Super Voting Shares and Multiple Voting Shares issued and outstanding after giving effect to such conversions (the “FPI Protective Restriction”); provided the Board may, by resolution, increase the 40% Threshold to an amount not to exceed 50%.
Meaning in this particular TRUL case give or take only about 60k super voting shares can be converted into 6M Subordinate Voting shares (the ones traded) . Above that amount US Insiders of TRUL would be forced to fill with SEC, something you font want to do while weed is federally ilegal.
Also tou have to know DILUTION is priting NEW shares, converting this multiple voting shares to common ones would not be dilution albeit increasing the PUBLIC FLOAT. So far with the great cash flow TRUL is making AND the very frugal cost of their expansion in MA and CA it doesnt seem like TRUL is going to need much dilution if any.
7) To answer your last question: no, these shares are not slated for adquisitions. They belong to the founders of the company, they either loaned money and/or ran the company and/or sold their nurseries into the company. They are sacrificing their liquidity (ability to dispose of them) due to fed illegality in order to list the company on CSE and move on with expansion. They are OWNERS and as such have the best interest for thecompany. These shares are not some award greedy management and CEOs gave to themselves as some turds want you to believe. They have great assets very much desired by Canadian turds LPs who cant invest in USA directly due to Fed illegality. Someday once FED illegality falls they might sell those shares or part of them to the best bidder amongst big weed comanies, USA insto funds or big alcohold pharma etc companies.... basically all those that now CANT touch weed co in USA
8) Thank God for Fed policy which allows RETAIL like you or me to be able to buy these assets at these bargain prices. Its the only reason why you can buy TRUL at rock bottom ridiculous 1B US mkt cap.