All About Private Placements - Part 3

So the transfer agent will exercise for you. They'll either drop it inside a DRS advice or the Direct Registration System account held at the transfer agent or they can have it, the paper, shipped to you directly in the mail. But either way you want to get that back to the broker so that they can start the process of being able to prepare those common shares, to be sold for you on the open market.

Maurice Jackson: Are there restrictive legends on the warrants?

Tekoa Da Silva: This is where having a competent broker can come in because the broker may say, "Okay, here's the warrant exercise form, but also here is the legend removal form too. Send to us the legend removal form with the warrant exercise form so that we can have the restrictive legends removed at the same time or build it into our process to save you time." And they may say save you time and I think in most cases they could really mean it because saving time means saving four to six weeks. A question on time, it takes probably two to three weeks to have a warrant exercised and the process complete and have a common stock issued. And then this whole deposit process, my experience has been in that probably takes between four to six weeks to get a physical certificate deposited into a brokerage account and then it cleared through the legal review process.

Maurice Jackson: Are there any benefits of participating in the first tranche versus a second or third tranche?

Tekoa Da Silva: Well, now do you mean if an issuer publishes a press release about a private placement and they say tranche number one will close on, let's say, August 1st and then tranche number two will close on August 20th?

Maurice Jackson: Correct. Because that's a three week window there that the speculator is missing out on should the stock price accelerate and they may risk losing potential gains.

Tekoa Da Silva: That's a really good observation. I think it depends on the exact handling procedure that's going to be taken by the issuer. If the issuer is going to issue all of these private placements, the securities, at the end of the completion of both tranches and they're all going to be issued at the same time, one probably doesn't need to be too concerned about that. But if they are having multiple issuances along the way, you're absolutely right. The date that's printed on the back of your certificate may be the date that it's issued as well as some of the backups, the certificate, the restrictive legend, the four-month hold restrictive legend.

It may say that you may not be able to sell it until November 20th of, let's say, 2019. Your date may actually ended up being a couple of weeks earlier than somebody else down the line. And you're absolutely right that there could be a few weeks of a head start that that person may have on the others. So it really depends on the point on where these date deadlines fall. And then also the handling procedure that the broker that you use, how much time they need to remove the restricted legends. So it depends on the specific circumstances of the deal.

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Disclosure: I or members of my family own shares of Novo Resources.

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