It appears that Red Light Holland (CSE: TRIP) and Pharmadrug Inc (CSE: BUZZ) have entered into a securities exchange agreement with each other. The justification for such an agreement appears to be that both entities operate in the Netherlands in the same segment – however its unclear what benefit the share exchange is actually supposed to provide the two firms.
Pharmadrug’s news release on the matter provides slightly more detail than that of Red Light Holland’s, with Pharmadrug identifying that it is focused on selling truffle products via its Super Smart retail network, while Red Light is focused on growing psychedelic truffles. Pharmadrug then goes on to say, “on a combined basis, the two companies believe they can better execute on educating the market and increasing the profile of psychedelics and psilocybin in The Netherlands at first followed by other markets as they open up.” However, its unclear why such an arrangement requires the need for a share swap between the two firms.
Under the arrangement, the following will occur:
- Pharmadrug will issue 9,333,333 units to Red Light Holland at a price of $0.075 per unit. Each unit contains one common share and 0.9 of a common share purchase warrant, with each whole warrant can be exercised at $0.13 per share for a period of 48 months. It also contains 0.1 of a purchase arrant with an exercise price of $0.08 for a period of 48 months.
- Red Light Holland will issue 4,242,424 units to Pharmadrug at a price of $0.165 per unit. Each Red Light unit consists of one common share and one common share purchase warrant, with an exercise price of $0.26 per share and an expiry of 48 months. An acceleration occurs on the warrants if the volume weighted average price of Red Light exceeds $0.50 for a period of 10 days.
- Red Light will subscribe to a $200,000 placement conducted by Pharmadrug at a price of $0.075 per unit, with each unit consisting of one common share and one common share purchase warrant with an exercise price of $0.08 and an expiry of 48 months.
“We are very pleased to be making a strategic investment into PharmaDrug. It only makes sense, as we would want to house our microdose products in their planned Smart Shops anyway. This expedites our partnership and now we’re pretty much guaranteed prime shelf space when they arrive, as both of our companies shine a light on the Magic Truffles market, in the Netherlands. We look forward to educating and eventually selling to the legal recreational market together.”Todd Shapiro, CEO of Red Light Holland
Largely, the transaction appears to be a means of further funding Pharmadrug so that it can continue operations. The potential justification behind this is that both companies have been brought to the market by or seen heavy involvement from First Republic Capital.
Red Light Holland and Pharmadrug last traded at $0.075 and $0.04 respectively on the CSE.
Information for this briefing was found via Sedar, Red Light Holland and Pharmadrug Inc. Pharmadrug Inc is a former client of Canacom Group, the parent company of The Deep Dive. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.