DEF 14C: Greater Cannabis Company to Enact Reverse Stock Split and Issue New Series B Preferred Stock

The Greater Cannabis Company is set to implement a one-for-1,500 reverse stock split and create a new class of Series B Convertible Preferred Stock, granting voting control to the CEO.

Summary

• The Greater Cannabis Company intends to amend its Articles of Incorporation to effectuate a reverse stock split at a ratio of one-for-1,500.
• The company will also create a new class of preferred stock, designated as Series B Convertible Preferred Stock, consisting of 1,000 shares.
• These actions were approved by the sole director and holders of approximately 50.3% of the company's voting stock on or about April 4, 2025.
• The reverse stock split will become effective upon filing an amendment with the Florida Secretary of State.
• Following the reverse stock split, the Series B Preferred Shares will be issued to CEO Aitan Zacharin in exchange for waiving $20,000 in unpaid compensation, giving him voting control of the company.
• Each Series B Preferred Share is convertible into 100,000 shares of common stock.
• The Series B Preferred Shares will give Mr. Zacharin 51% of the total voting power of the company.
• As of April 7, 2025, the company had 1,074,888.436 shares of common stock and 9,411,998 Series A Preferred Shares issued and outstanding.

Sentiment

Score: 5

Explanation: The document outlines corporate restructuring actions. While the company expresses optimism about the potential benefits of the reverse stock split, the issuance of super-voting shares to the CEO and the exchange of shares for unpaid compensation raise concerns about corporate governance and financial stability.

Positives

• The company believes the reverse stock split could improve the marketability and liquidity of its common stock.
• The reverse stock split may assist the company in attracting future investment capital.
• The company anticipates that the increased market price of its common stock, resulting from the reverse stock split, could encourage interest and trading in its shares.

Negatives

• The reverse stock split will result in some shareholders owning odd-lots of fewer than 100 shares of common stock, which may incur higher transaction costs.
• The issuance of Series B Preferred Shares will give the CEO voting control of the company, potentially diluting the influence of other shareholders.
• The company is issuing shares to the CEO in exchange for waiving $20,000 in unpaid compensation, which may indicate financial constraints.

Risks

• There is no assurance that the market price for the company's common stock will increase in the same proportion as the reverse split or that such price will be maintained.
• The reverse stock split may not increase the price of the company's common stock to a level that is attractive to brokerage houses and institutional investors.
• The increased voting power of the CEO could lead to decisions that are not in the best interests of all shareholders.

Future Outlook

The company intends to implement the reverse stock split and issue the Series B Preferred Shares, but has no specific plans to raise additional capital beyond making shares available for issuance pursuant to the conversion of outstanding convertible debt and the exercise of outstanding options and warrants, if applicable.

Management Comments

• The Company believes that implementation of the reverse stock split is desirable because it could improve the marketability and liquidity of our common stock, and assist us in attracting future investment capital.

Industry Context

Reverse stock splits are often used by companies with low stock prices to increase their appeal to institutional investors and avoid delisting from exchanges. The creation of a new class of preferred stock with super voting rights is a less common tactic that can be used to consolidate control within a company.

Comparison to Industry Standards

• Reverse stock splits are a relatively common practice among companies with low share prices, particularly in sectors like cannabis where market volatility is high.
• Companies like Sundial Growers and Hexo Corp have previously implemented reverse stock splits to maintain exchange listing requirements.
• The issuance of preferred stock with super voting rights is less common but has been used by companies like News Corp to maintain control within the Murdoch family.
• The specific terms of the Series B Preferred Shares, such as the conversion ratio and voting power, would need to be compared to similar issuances to determine if they are favorable to the company and its shareholders.

Related Party Transactions

• Issuance of Series B Preferred Shares to CEO Aitan Zacharin in consideration of waiving $20,000 in accrued but unpaid compensation.

Stakeholder Impact

• Shareholders will experience a reduction in the number of shares they own due to the reverse stock split.
• The market price of the common stock may be affected by the reverse stock split.
• The CEO will gain increased voting control of the company.
• The company's ability to attract future investment capital may be influenced by these actions.

Next Steps

• File the Reverse Stock Split Amendment with the Florida Secretary of State.
• File the Series B Amendment with the Florida Secretary of State after the Reverse Stock Split Amendment.
• Issue the Series B Preferred Shares to Aitan Zacharin upon filing of the Series B amendment.
• Contact the Company's transfer agent to exchange share certificates.

Key Dates

Keywords

reverse stock split, Series B Preferred Stock, corporate governance, voting rights, capital structure, shareholder approval, Aitan Zacharin, The Greater Cannabis Company, amendment to articles of incorporation, cannabis