Equity Raises:

• On August 12, 2024, Greenlane (GNLN: Nasdaq) announced a securities purchase agreement for $6.5M with an unnamed institutional investor.
• The transaction contemplates the investor purchasing 2.36M units at a price of approximately $2.75 per unit.
• Each unit consists of either a common share or pre-funded warrant, along with two five-year warrants at a $2.50 exercise price.
• The company had pre-investment fully diluted shares of 1.56M, according to FactSet. So, doing the simple math, one can calculate that the new fully diluted shares should be 8.64M shares, and the new investor would end up owning approximately 82% of the company!
• And here is where it gets interesting. After closing on Friday, August 9 at $2.47, the shares shot up to $11.5M on 8/12/24 with an enormous volume of 47M shares (90-day avg volume is about 0.5M shares)
• What is driving the stock? And do the people buying the stock at over $9 today understand that the company cut a deal to sell a controlling interest at less than $3?
• The only other two pieces of news that could potentially explain the stock performance are:
  • Greenlane signed a non-binding letter of intent to become the exclusive distributor of Safety Strips’ fentanyl, xylazine, and drink spike detection test strips in the U.S. While this is undoubtedly good news, it does not account for the jump. A company I.R. spokesperson commented, “We think it is significant but does not change the main course of our business.”
  • Greenlane announced that its CEO, Barbara Sher, purchased 12,500 shares between 8/5/24 and 8/9/24 at an average price of $2.66 per share. While an insider purchase is always a good thing, we don’t think a $37k purchase by the CEO is enough of a signal to take the stock from under $3 to over $10.
• So what’s the right thing to do when you all of a sudden find yourself to be a meme stock? Sell. More. Shares !!!

Public vs. Private Raises: 

• Greenlane (GNLN: Nasdaq).

Equity vs. Debt Cap Raises:

• Equity accounted for 100% of the week’s capital raise activity.