So that's true. I presume that 805,000 warrants will be worth share price - exercise price, if it ever goes above 65... so I guess you are saying that they had warrants to hedge a short attack that they used to keep price below 65 prior to closing of the deal? I agree, and it seems plausible. Don't get me wrong I am not happy with the cap raise. One major concern I have is that there is no accellerated warrant expiration clause if the price goes above a certain threshhold, which to me was shocking. Another problem, is the same as with emblem corp: there were too many different investment vehicles availaible instead of just shares, which also helped to deflate SP growth. But I still don't think that it is a death knell for the company share price. As someone mentioned, this was a completely different company when they made the deal. In my mind a lot of the inherent risk of aleafia has been removed. I would be very surprised if the stock went down to 40 cents again, so even though it might have been the strategy of the underwriters to try short this stock back into oblivion previously, to me now it seems extremely risky. Then again I have been surprised countless times by this company.
The bears will always find new things to disparage the company. Before it was license, now I've heard people talk about reliance on wholesale being spotty, that they have no brands and rec market presence is weak. But these things were there previously, and as license have come in, much more of the company's performance is now in it's own hands. The question is now whether they can successfully scale what they did last year to the full outdoor grow, and whether they can scale up that extraction facility to actually process all that meat.
Regarding brand presence, I will say this: no one gives a damn, cost is king. Have you seen the pricing on emblem oils in the rec and medical markets? It is literally half of the closest competitor. Brand is important in differentiating products within the same price range, huge changes in price need to be justified by vastly superior quality. Cars people pay more for the status, health products people don't cheap out on, and fine liquor is a treat. Emblem provides a superior product at a much lower cost, so it WILL take market share. Refining is also the perfect antidote to plunging wholesale pot costs: as with energy, whatever the price of crude oil refineries make a mint, why? Because the barrier to entry is so, so, much higher.
stocktracker101 wrote: Mama, Maybe this will shed some light on that question.... This was also part of the deal. How much will 805,000 warrants @ .65 be worth for 36 months? "The Company has paid the Underwriters a cash fee of 6% of the aggregate gross proceeds, and an aggregate of 805,000 non-transferable compensation warrants, with each compensation warrant being exercisable into Units at a price of $0.65 for a period of 36 months following the closing of the Offering"