DEFA14A: Two Hands Corporation Seeks Shareholder Approval for Change of Control, Name Change, and Share Consolidation

Two Hands Corporation is holding a special meeting to seek shareholder approval for a prior share issuance that resulted in a change of control, a proposed name change, and a share consolidation.

Summary

• Two Hands Corporation is convening a special meeting of shareholders on March 31, 2025, to vote on several key proposals.
• The primary proposals include ratifying a prior issuance of 3,000,000,000 common shares to Emil Assentato, which resulted in a change of control, approving a name change for the company, and authorizing a share consolidation on a basis of one post-consolidation share for every 20,000 existing shares.
• The share issuance to Mr. Assentato was in consideration for the conversion of US$300,000 in outstanding convertible promissory notes.
• If the change of control is not approved by disinterested shareholders, the transaction will be unwound, and trading of the company's shares will remain halted.
• The company intends to exit its legacy business and focus on new opportunities in the artisan crafted denim and premium combed Pima cotton yarns space, and will be designated as an inactive issuer by the CSE until a new business is initiated.
• The board recommends shareholders vote in favor of all resolutions.
• The meeting will be held in a hybrid format, both in person and via teleconference.

Sentiment

Score: 3

Explanation: The document suggests a company undergoing significant restructuring and facing challenges. The high share consolidation ratio and shift in business focus indicate potential financial distress. The sentiment is negative due to the lack of current business operations and the need for shareholder approval to ratify past actions.

Positives

• The change of control transaction allowed the company to discharge approximately US$605,000 of indebtedness without reducing cash.
• Appointment of new management may provide the Company with new opportunities for growth of the Companys legacy business, or transition to a more viable strategy.

Negatives

• The company's share price has experienced an overall decline over the past 3 years.
• The company has no active business or any definitive plans to enter a business as of the date of the circular.
• The company will be designated by the CSE as an inactive issuer until such time as the legacy business is resumed or a new business is initiated.

Risks

• If disinterested shareholder approval for the change of control is not obtained, the transaction will be unwound, and trading of the common shares will remain halted.
• As an inactive issuer, the company will be subject to certain restrictions set out in CSE Policy 3.
• The share consolidation may materially affect any Shareholder's percentage ownership in the Company (and in fact may reduce such Shareholder's ownership to zero).
• The share consolidation may materially affect any Shareholder's proportionate voting rights (as the effect of such Consolidation may reduce such Shareholder's ownership to zero).

Future Outlook

The company intends to allocate resources and focus on new business opportunities in the artisan crafted denim and premium combed Pima cotton yarns space, but as of the date of the Circular the Company has no active business or any definitive plans to enter a business.

Management Comments

• The Board believes that it is in the best interests of the Company to complete the Consolidation.
• The Consolidation will more closely align the issued and outstanding share capital of the Company with its current financial valuation and market conditions.
• The Board believes that due to market conditions that have made it challenging to raise capital, the Consolidation is necessary to provide a share structure that will better attract capital financing and enhance future growth opportunities.

Industry Context

The company's shift in focus to artisan crafted denim and premium combed Pima cotton yarns suggests an attempt to capitalize on niche markets within the broader textile industry. This may be a response to challenges in the company's legacy business and a desire to find a more viable and profitable strategy.

Comparison to Industry Standards

• The proposed share consolidation of 20,000 to 1 is a drastic measure, typically seen in companies facing significant financial distress or seeking to attract new investment at a higher share price.
• Such high ratios are not common and suggest the company's share price was extremely low prior to the announcement.
• The shift to artisan denim and Pima cotton yarns is a move towards higher-value, niche markets, similar to how some textile companies have focused on sustainable or specialized materials to differentiate themselves.
• However, without existing operations or definitive plans, it is difficult to compare Two Hands to established players in these markets.

Management Changes

Stakeholder Impact

• Shareholders face potential dilution or reduction of their ownership percentage due to the share consolidation.
• Employees may be affected by the shift in business focus and potential restructuring.
• The company's creditors may be impacted by the change of control and potential financial restructuring.
• The CSE is impacted by the company being designated as an inactive issuer.

Next Steps

• Shareholders need to vote on the resolutions by the specified deadline.
• The company will await the outcome of the shareholder vote to determine the next course of action regarding the change of control, name change, and share consolidation.
• If the resolutions are approved, the company will proceed with implementing the changes and pursuing new business opportunities.
• The company will need to develop and execute a business plan for its new focus on artisan crafted denim and premium combed Pima cotton yarns.

Key Dates

Keywords

shareholders, consolidation, control, proxy, shares, meeting, company