On Friday evening, Cannabis One Holdings (CSE: CBIS) levied some heavy charges against an advisor. The brief corporate update was released late in the day, and thus it largely went unnoticed. However, the significance of the release should not go unmentioned.
In short, the company stated that they had received poor direction from a new financial adviser, which resulted in the company accelerating the expiration of its options. This information was then used by the advisor against Cannabis One, which resulted in the advisor forming a syndicate that went heavily short against the company, thus allegedly causing the price of the equity to free fall.
“Without indulging speculation, Cannabis One received poor capital markets advice from a newly introduced financial advisor that insisted on a reduction in future dilutive securities to better facilitate additional capital raises moving forward. Instead of then assisting the Company with raising capital, Cannabis One later learned that this advisor improperly facilitated a syndicate of structured short selling that clearly impacted the trading price of Cannabis One’s listed shares, which naturally resulted in the immediate termination of this relationship.”
Jeffery Mascio, Cannabis One Chief Executive Officer
As a result of their findings, Cannabis One has taken the unusual step of cancelling the acceleration of warrants. The company has also gone one step further, stating that they intend to reinstate any warrants that were exercised over the period and that they will return the shares to treasury in good faith. The terms of the warrant indenture previously in place will not change.
It is important to note that, with over 17 acquisitions in our immediate pipeline, the Company will continue to increase its actual revenues and still anticipates facilitating the growth necessary to achieve management target of over US$100 million in annualized run rate revenue (resulting in management estimated forward looking EBITDA projected to be approximately US$15 million to US$20 million) by the end of December 2019.
Lastly, the company also announced within the release that Bernard Radochonski has resigned from Cannabis One’s board of directors. Taking his place will be Frank Sur, a partner at Growling WLG, an international law firm with offices in eight countries globally and over 1400 experienced lawyers. Sur is an expert on the area of mergers and acquisitions, which will be utilized by Cannabis One as the firm continues to expand.
Cannabis One Holdings closed Friday’s session at $1.10, closing flat on the day.
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