Bit of a sell off today & last Friday, I can only assume a few holders are spooked by the AGM's resolutions.
I'll briefly go through them hopefully to allay any fears. The bulk of the shares being issued are for acquisitions already announced, some of which have already been issued.
#1 & #2 just standard renumeration & reelection of a Director
#3 Appointment of Natham Lude as Director - this is good, further cements Freshero deal
#4 Just enables resolution #5 #11, which I've mentioned below
#5 Issue of 10m shares + 20m performance shares for Rotogro inc, tech.
This was announced on August 6
4 million have already been issued - Aug 4 (I think, not 100% sure)
Performance shares will lapse if sales targets not met
This is required to do business with Freshero who want exclusivity
Freshero is potentially worth 100s of millions of dollars to us
Note this acquisition was announced 2 weeks before the Freshero deal
Also enables Gibio exclusivity + other potential customers
Assuming targets met, 30m @ todays price 25c = $7.5m - cheap
#6 2.25m shares already issued to Valens for Supra DL
#7 16.65m shares to be issued to Valens after milestones reached
DLs aren't cheap, this will enable the very lucrative MJ cultivation this year.
#8 180k shares to Valens deal advisors - better than cash
deemed issue price 40c
Only $45k at present prices - hardly worth mentioning
#9 1.33m shares to mj acquisition advisors,
as per #8, this is the balance outstanding yet to be issued
Deemed issue price 40c
#10 These shares for Hanson acquisition already issued
#11 Hanson have to reach EBITDA targets for these to vest.
Only 5m shares over 5 years.
Hanson acquisition vital to RGIs MJ & Perishables
#12,13 Simply ratifies past placement. These shares already issued
#14 Broker options. I assume issued in lieu of reduced fees
They paid $258k in fees for the recent placement - slightly cheap
So not really sure what these are for - will need clarification
8.8m 65c options, so worthless till sp above 65c
#15 10% placement facility - most companies do this, gives them options
This was also in last years resolutions
Does not mean this will be used & issued
#16 Issue of up to 15m shares - placement within 3 months
see commentary below
As I said in my previous post, current cash is sufficient for the next 6 months even if they don't receive any more unannounced orders or any orders from Gibio or Freshero. The shares to be issued under resolution #5 are very necessary for these big fresh foods deals with Gibio & Freshero. When they listed they had exclusive rights for marijuana only, which was their business plan at the time. Gibio 1st approached Rotogro Inc, they passed on the deal to us. 10m shares + possibly 20m performance shares is dilutive, however fresh foods looks like being 75% of our business.
The Hansons shares are already issued, the performance shares will pay for themselves if issued. Profits from Hansons (GFS) will easily negate the possible extra 5m perf shares over 5 years.
Again buying a Dealers License is expensive. We will have a cash cow up & running by years end. The other alternative is to go through the 2 year plus application process or not do it at all.
Resolution 16 allowing a placement of up to 15m shares, I think is a back stop to allow the fast tracking of their cultivation facility & possibly take a larger stake in Gibio by way of reduced costs for equipment. As I said earlier, they will not issue shares at 25c, not sure why they stipulated 3 months unless extended by asx, possibly a listing rule. They certainly don't need funds in the next 3 months. Yes they will need to do a raising to pay for the cultivation facility etc, but further down the track.
I think this is the resolution that has spooked some holders who think a raising is imminent. If they are going to raise it will only be after some big announcements such as Gibio or Freshero orders or an off radar announcement. Just speculating, what would happen if Qatar ordered 1500 machines?
