Tilt Holdings Cancels 60 Million Options, Issues 9 Million to Departing Founders

Tilt Holdings (CSE: TILT) announced this morning that it’s founders would be forfeiting 60,217,088 stock options that were issued at the time of the business combination. The move, which is the company indicates is a means to reduce future dilution being forced upon company shareholders, also comes with the announcement that several founders will be “separating” from the company.

The move to cancel stock options, while putting up a facade of being in favour of shareholders, is simply a logical move on the part of the founders. These options, issued when the firm was taken public at an extremely inflated valuation, have almost no chance of ever being in the money – the exercise price is C$5.25 per share on most options. Instead, these are being cancelled, which opens up room for further options to be issued.

As a result of several founders leaving, the firm has issued 9,045,690 new common share purchase options, with an exercise price of $1.05 per share and a term of five years. While still out of the money, they are much closer to being in-the-money than the originals ever were. With the cloudy outlook for the firm, it appears that the founders simply did what they could to renegotiate their portion of the company before exiting stage left.

Tilt Holdings however is instead highlighting the financial impact of the move, which would have nearly made their second quarter of 2019 break even, once the $47 million in share based compensation is discounted. Apparently the firm is for the people suddenly after falling 93% from its highs seen last winter.

While it was indicated that several founders would be separating from the firm, no details were given on specifically who would be departing.

Information for this commentary and analysis was found via Sedar and Tilt Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.