Happy to be wrong...Based on the information presently at hand, that these unsecured convertible debentures have been amended to enhance their value by 86% relative to their original issuance value. Going from $0.75 to $0.105 per share.
We might speculate that the reason for doing this is that Sproutly can’t pay the loan at maturity which is probably a fair assumption. A default would potentially cascade into further financial difficulties e.g. the need to raise more equity or worse case start the company on the path to bankruptcy. While debenture holders would take precedence over ordinary shareholders in a liquidation scenario, I doubt there are enough assets to satisfy all creditors. Hence… how to get debenture holders to convert and not seek cash at maturity… amend and enhance.
Now if you or I were holding those debentures we’d probably be arguing the same, that 75 cents is too high and that we deserve a better deal. But the reality is that whoever holds those loans entered into them with the same faith we all did when some of us were first getting in at the $1.00 range and others in that very same 75 cent range etc. The problem of course is that this dilutes the value to all shareholders. All of us who bought in higher get zero compensation of this nature but as we are seeing, insiders are getting similar sweet deals.
I don’t believe there is any one of us who would begrudge management good wages and benefits and even some extra perks IF… and I say IF this company was actually showing results and growing value for its shareholders.
The best thing would be for this to be 100% WRONG and I do not mind being wrong (my wife seems to think I am quite regularly) and come Monday morning there is a game-changer press release that renders all our concerns moot. The JV launches, some big players enter into contracts for Infuz20 (never liked that name), dried flower sales are booming etc. etc.
So, fellow Sproutly fans… good luck and let’s see where the currents carry us next week.