Emerald Health Therapeutics Inc EMHTF

EMH Cash Flow (Sell EMH shares vs selling PSF shares to VFF)

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This is the current share structure of PSF (before Nov Default payment):

VFF 45M shares (55%)
EMS 37.41M shares (45%)

From the shareholder agreement (dated June 6, 2017) and  the Delta 2 option agreement (dated March 29, 2019) you can see all shares for Delta 3 and 2 have been issued at $1.  So the total value paid in to PSF to date is $82.41M.  VFF wants to exercise their right (assuming default) to makeup the EMH missed payments. But the shares allocated on these new payments will be based on current market value of PSF.  Assuming VFF makes all Delta 2 outstanding payments of $7.55M and assume the current market value of PSF is $250M (conservative).  That would result in the following share structure post VFF payments:

VFF 47.5M Shares (56%)
EMS 37.41M shares (44%)

At a $250M PSF value each new share price is issued at $3.  The option for Delta 2 was only exercised on March 29, 2019 at $1 and in that time the value of PSF will be up 300%.  Anyone owning PSF is benefitting, regardless of the ownership split.

EMH defulting on the Delta 2 payments to preserve cash is a prudent move.  They are giving up 6% of PSF and getting VFF to put $7.55M into the company that they will end up owning 44% of.  That is a better way to manage a cash flow issue vs selling EMH shares today.

EMS is far from done and far from loosing control of PSF.