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Interview with Mehran Ehsan, President & CEO, Permex Petroleum Corporation

Earlier this month, Peter Murray of Kiyoi Communications, sat down with President and CEO of Permex Petroleum Corp. (CSE:OIL), Mehran Ehsan, to discuss the dynamics of the oil markets; how Permex has navigated growing in a challenging environment and where he sees Permex’s opportunities to continued growth.

Peter Murray (PM)  We’re going to discuss a range of topics, including the state of North American oil markets and how to make money in the current environment.  But let’s begin by having you explain who Permex Petroleum is and the company’s strategy for making the most of opportunities in your industry.  What makes Permex different?

Mehran Ehsan (ME) Permex Petroleum is a uniquely positioned junior oil and gas company with assets and operations across the Permian Basin of West Texas, and the Delaware sub-basin of southeast New Mexico.  We own and operate on state, federal and private land.

The unique value proposition that Permex offers is a reflection of three main factors.

Number one is the timing of our acquisitions.  The company began acquiring assets in one of the worst cycles in history.  During the downturn of the past three years Permex picked up a hawkish position by targeting companies with quite a bit of leverage.  Typically, we were purchasing assets at 10 cents to 20 cents on the dollar.

The second aspect that makes us unique is geography and geology.  As for location, we are in the Permian, and the Permian is the most superior basin in the world.  Most of the investment made by the oil industry during the downcycle was in the Permian, and Permex has been in the Permian since we began.  From a geology standpoint, the best-producing formations in the Permian Basin are the Bone Springs, the Wolfcamps, and the San Andres.  Having these formations within your reservoir is key to succeeding in this region.  Permex has all three of these within its various properties.

The final thing that makes Permex unique, and ahead of our competition in the junior space, is our structure.  Every entrepreneur and CEO thinks they have a good structure, and they quite well might.  With ours, we have 35 million shares outstanding, we have absolutely no debt, and I think we are truly undervalued given where we’re headed.

(PM) How did you develop your insight and strategy for the company?  Was it a single member of the team who had this vision, or was it more of a group decision?

(ME) The board and executive team have over 240 years of combined experience in the oil and gas sector.  Some of us have been through multiple cycles and we’ve seen big peaks and valleys.  And with each valley we’ve witnessed devastation within the industry, but on the flipside is opportunity.  However, these opportunities do not come every year.  They only come every eight years or every 10 years.  For Permex, the timing has been excellent to take advantage of market conditions.  Everyone in the company sees it.

(PM) Can you give us an example of a deal that you’ve done and how it reflects that approach of trying to take advantage of conditions within the industry?

(ME) Let’s look at our most recent acquisition.  We took an approximately 48% working interest in the ODC and Taylor unit in Gaines County, West Texas.  The other main partner on the field is Occidental Petroleum.  What we ended up paying for this asset was about US$1.9 million.  The field is already in production.

To illustrate the value we were able to add, you essentially divide the price paid for the total field by the amount of production you get, and this yields a number called “per flowing barrel.”  We ended up paying $11,000 to $15,000 per flowing barrel.  To put that in context, the market right now is around $45,000.

Currently in our area, you see acreage going anywhere from $500 to as high as $10,000 per acre, yet we paid $500 to $700 per acre.  That is another testament to us entering the market during a downcycle and buying it at a discount.

(PM) That seems an obvious strategy – buy low and sell high.  Why don’t lots of other entities do what Permex does?

(ME) Actually, I think quite a few companies do use a similar approach.  You don’t have to look far for a good example.  Ring Energy started in 2002 and has just grown and grown.  In the last downturn it expanded substantially by taking advantage of the cycle.

The main reason we don’t see this happening all the time is that it is not simply a matter of buying low and selling high – there is more to it.  You can buy low in the wrong environment and the wrong location and it doesn’t matter if the market comes back up because you won’t benefit from it.

To give you an example, in the Canadian environment right now there is too much regulation, too much red tape, and taxes are too high.

(PM) Can you give us some insight into the different regional oil markets in North America?  What would be your Top 3 jurisdictions and are there some areas or types of plays you would avoid?

(ME) First of all, we don’t do anything offshore.  Looking at opportunities onshore, we are quite biased toward the Permian Basin, and I’ll give you valid reasons why we think that way.  Out of 22 billion barrels of proven reserves in the United States, 9.8 billion belong to the Permian Basin, or over 44%.  Looking at US production, 3.2 million barrels a day is produced in the Permian, compared to 10 million to 11 million in the entire US.  That means that around 30% of production in the United States comes from the Permian, which is just a portion of West Texas.

Looking at the number of rigs now actively drilling, which indicates where investment is going, in the Permian it’s 471 rigs, which represents over 42% of rigs in the US, and over 22% of global rigs.  That is why the Permian is our top choice.  This is the gem of the United States, if not North America.  There is nothing comparable to it.  In fact, the Ghawar Field in Saudi Arabia would be the first comparison that comes to mind, and some believe this is a better field even than that.

The next one we would look at is the Scoop/Stack play of Oklahoma.  There has been some development there, some horizontal drilling within those formations and basins and they are quite lucrative.

And lastly, we would consider the Bakken.  The Bakken has become more efficient, although the grade of oil is a little different.  It is not as high a grade, so refining can be an issue at times.  That would be an area we would review.

Unfortunately, there is no Canadian play in our Top 3, and the reason is geopolitics, red tape, and not enough infrastructure to take your product to market.  As a result, junior companies cannot compete with juniors operating in the Permian.  The only ones in Canada that will continue to be successful are mid-caps and large-caps which monopolize this market and take advantage of what the government puts out there to block juniors.

Canada has abundant reserves in the ground and we would love to tap into them to benefit the Canadian economy as well as Permex and our shareholders.  But until some of the governmental agencies change and we begin to see some federal and provincial agreements, we won’t be willing to move into the domestic market.  As a junior we just cannot get involved, unfortunately, because at the end of the day it is the bottom line that matters for shareholders.

(PM) What is the medium- to long-term outlook for Permex?  And how large can the company ultimately become?

(ME) Our focus right now is on developing our fields.  Scaling up production, in other words.

The second goal will be continuing to build reserves by adding landholdings and leaseholds.  In the medium term, we believe the company can reach a market capitalization far higher than where we currently stand with an appropriate injection of capital into various sectors within our development plays.

The long-term goal is for Permex to rank among midsize producers, or perhaps even alongside the big boys.  There are many companies that six or seven years ago started on the same path and followed the same formation, and they are now reaching that $800-900 million market cap.  Ultimately, either a large-cap takes us out, or we become one ourselves.

(PM) You mentioned earlier the depth of experience on the Permex team.  Are there any new lessons you have learned since Permex was established?

(ME) One of the main things I would point out is what we think is the Achilles heel for many oil companies, which is not having the ability to be flexible during a downcycle.  Many companies fail not because their operations are bad or they are too leveraged, but because they cannot quickly adapt to a lower-price environment.  Being fluid and flexible is the key to surviving in this industry.  In our opinion, you need to have a lean company and a low burn rate to be able to weather some of these storms, and if you don’t then there are real issues.

(PM) Do you have any advice for entrepreneurs who are looking at the oil market – or any type of business for that matter – and trying to determine the best way to move forward on an opportunity that they have perceived?

(ME) I consider myself a contrarian, so I do not have a herd mentality whatsoever and I believe that if an entrepreneur wants to get into any sector they have to have a unique value proposition and showcase why their project and their company is ahead of the curve.  This is particularly true in the oil industry, as our deliverables are much closer at hand than in many other businesses.  Oil companies really need to be on top of their game in terms of defining and demonstrating a unique value proposition.

FINANCIAL IMPACT OF A REVERSE TAKEOVER WITH A SHELL CORPORATION

One of the popular ways for private companies to obtain a listing status on the Canadian Stock Exchange (“CSE”) is through a reverse takeover (“RTO”) with an existing listed entity. The most common version of an RTO is when a private operating entity merges with a listed (more or less) shell corporation, effected by way of exchange of equity interests, which typically results in owners of the private entity gaining control of the combined entity after the transaction.

Understanding how the financial records of the resulting combined entity shape up is an essential factor for the leadership of the private entity to gauge the breadth of such a transaction. It is however often overlooked amidst other regulatory requirements. The International Financial Reporting Standards (“IFRS”) and its interpretation, provides specific guidance around this area, which is the subject of this piece.

Despite the public shell corporation issuing shares, from an accounting perspective these transactions are considered to be capital transactions of the private entity looking to obtain the listing status of the non-operating shell corporation. They are therefore equivalent to the issuance of shares by the private entity to acquire the net assets of the public shell corporation. Unlike a straight acquisition achieved through exchange of equity interests, where the accounting records are a continuation of the entity issuing shares, in an RTO, the historical financial records of the private entity are retained. The RTO is accomplished by recognizing, in the financial statements of the private entity, the net assets of the publicly listed shell corporation in return for shares “deemed” to be issued by the private entity to obtain a control position in the combined entity. The equity structure however, (that is, the number and the type of equity instruments issued) of the combined entity, reflects the equity structure of the publicly listed shell corporation, including the equity instruments exchanged in the RTO.

The deemed shares issued by the private entity, which is the consideration it has paid for the acquisition of the public shell corporation, are recognized at fair value and any difference between the fair value of these deemed shares and the fair value of the acquired net assets of the public shell corporation, represents a cost to the private entity. The Interpretation Committee of the IFRS points out that, for the private entity, this difference in fair values is considered to be a payment for service of a stock exchange listing for its shares, and therefore should be expensed through its profit or loss. This is in contrast to the usual treatment of cost of issuing capital, which reduces the value of the capital raised. The leadership of the private entity therefore needs to understand this and evaluate if this is an acceptable impact on their financial reporting.

Although this is a simplistic introduction of what to expect if you choose to obtain a listing on a stock exchange by way of an RTO with a listed shell corporation, accounting for such acquisitions can be quite complex. This could include determining the fair value of the consideration for the transaction (i.e. the value of the deemed shares issued by the private entity), the fair value of the net assets of the public shell corporation, non-controlling interest considerations, earnings per share calculations, to name just a few. The key thought is to ensure to involve your accounting advisors, amid other consultants, at the right time in the whole process so you have a complete picture of the impact of your desired transaction.

This story was featured in Service Providers magazine.

Learn more about Avisar at http://avisar.ca/ and on the CSE website at http://thecse.com/en/services/services-for-listed-companies/avisar.

Canamex Gold: Gold-backed tokens start this company’s cryptocurrency revolution

Cryptocurrencies remain a hot topic in financial markets in the opening quarter of 2018, and Canamex Gold Corp. (CSQ) is moving to become the first company to issue a crypto-token backed by gold, and from its own project in Nevada no less.  The team is also looking at working with other companies in or near production to help them finance with crypto-token gold and silver royalty streams, instead of traditional debt and/or equity financing.

It is a new concept and takes some explaining, but the potential to eliminate further dilution for equity holders and create new models for valuation is both vast and fascinating.  Canamex Gold Corp. Chief Executive Officer David Vincent recently gave Proactive Investors a look inside this new funding paradigm.

Canamex Gold Corp. is literally taking currency back onto a gold standard with the introduction of its gold-backed token with an offering currently underway.  We’ll get to your pioneering business structure in just a moment, but first, the Bruner gold project underlies the token.  Tell us about Bruner and the plans there.

We’ve got Bruner to the stage where we need to complete the engineering studies, the environmental permitting and then we should essentially be at the Preliminary Feasibility Study stage, for a mine financing decision.  We hope to be at that point around the fourth quarter of this year.  At that time, we will make a funding decision to construct the operation.

The intention is to use the crypto-token model as the funding mechanism for the mine construction, which means it would be a non-dilutive financing for shareholders.  So instead of doing a traditional equity and/or debt financing, we’ll be doing a crypto-token financing, backed by a gold royalty stream off the project

It’s a win-win situation for shareholders and for token holders.  Token holders will be buying the tokens at a significant discount to the spot gold price, and the tokens will be tradeable on the Ethereum blockchain, potentially at a significant premium to their issue price, including a speculative premium that we can’t define until it’s actually trading.

This is a pioneering concept and has not been done by anyone else to my knowledge.  Where did the idea come from?

It came from looking at gold streaming royalty models, which traditionally is an agreement between two parties: one is the project owner and the other is the royalty buyer.  Royalty buyers include such companies as Franco Nevada, Silver Wheaton Precious Metals and Royal Gold.

Our concept is to take a gold royalty on the Bruner property, which has a small portion of the PEA defined resource, and tokenize it.  Instead of the royalty being purchased by one party, it is purchased by many parties who hold the tokens and these will then have liquidity on the Ethereum blockchain.

You announced an offering earlier this month for US$5 million.  Are you at liberty to give us some insight on how that is going?

It is going very well.  There is a lot of interest, particularly out of the United States and Europe.  We are receiving application forms and cheques.  We’ll keep the private placement offering open until the full amount is raised and then launch a pre-ITO (Initial Token Offering) on the back of it.

The advantage of coming in on the token offering now is that the buyers get a priority allocation into the pre-ITO  at a discount.

For those new to the cryptocurrency world and the concept of this offering, can you walk us through the steps?  An investor commits to the current private placement offering and you are talking about an ITO.  How do the two fit together?

They are similar in many respects.  The current private placement offering is more of a traditional financing mechanism under the current regulations and instead of being issued gold royalty crypto-tokens they will be issued a gold royalty token certificate.  The names and details will be held in a register.  Then the difference with the ITO is that the certificates can be converted to crypto-tokens at a price discount into the pre-ITO, and then they become tradeable on the Ethereum blockchain.  And at that point the tokens have liquidity.

So, chronologically, you close the offering and then there is an ITO.  What happens next, and what will you use the proceeds for?

The intention is to close the offering and go into pre-ITO, which would be priced accordingly and dependent on the spot price of gold at the time.  But again, the pre-ITO offer price will be at a significant discount to the spot price.  Looking at the monthly price chart of gold it appears very bullish.  We expect that the price of gold could be over $1,400 an ounce in two or three months, then it means the pre-ITO price would be higher than the current private placement offering.  Perhaps 10% higher.  So, coming in now has distinct early mover advantages.

The funds from the private placement and pre-ITO will be used to fund the company for the balance of this year to get to the mine financing stage in Q4.  We may not do the main ITO until the third quarter.  The advantage is that by that time we will know what the speculative premium is for these tokens on the blockchain, and then we can price the tokens according to the market price, and not the spot gold price.  If there is a significant speculative premium the price of the tokens in the ITO won’t be anywhere near the levels we are offering in this private placement.  Investors coming into the current placement are coming in at what could prove to be a very low price.

The work you have done on the token to date affords you rights to do this for other asset owners, does it not?

Correct.  We are looking at a number of possible business models.  We might set up a subsidiary newco, for example, that becomes like a royalty company and it raises capital via crypto-token issues.  It might have a number of royalty streams in North America and other safe jurisdictions and the capital raised to purchase those royalties would be via crypto-token issues, backed by the gold and silver royalty streams.

We’ve already deployed six exclusive token names on Ethereum.  They have been deployed but not issued yet.  So, we could use those tokens to fund additional royalties in the future through a royalty aggregation model.

You are also a highly respected technical analyst of financial markets.  What do you see for gold, and why?

I look at long-wave analysis and currently we are in what is called a fifth K-wave, which is a Kondratieff wave.  K-waves last 60 years, so we are on the fifth one of the last 300 years.  This wave should peak in 2027, which is where I expect this current gold bull cycle to start topping out.  We should see a mid-cycle correction in 2023.  I suspect the price will move up toward the previous high of around $1,900 over the next five years, correct and then in the last part of the cycle into 2027 move much higher than $1,900.  Basically, a full-on bull market. The fifth wave of the fifth K wave, which should generate a big move higher.

And if you look at the fundamental background it is not good.  Interest rates have been too low for too long and there is lots of debt out there, much of which will not be paid back, so defaults are on the horizon.  Interest rates thus rise because of a global debt default scenario, where lenders demand a higher interest rate risk premium.  What’s this going to do to the gold price?

And silver is even more undervalued than gold.  Silver has greater leverage to the upside.  You could see Canamex launch a silver crypto-token before long, again using a royalty streaming model.

Aside from Bruner, are there any projects in the Canamex portfolio investors should be aware of?

We have the Silverton gold exploration project.  It has similar geology to Newmont’s Long Canyon in Nevada.  Long Canyon is a dolomite breccia.  Our geologist Greg Hahn, who has built three mines in his career, thinks Silverton has tremendous upside and part of the money raised in this placement will be used for an initial drill program on the Silverton project.

Any other insights from the intersection of cryptocurrencies and hard assets before we bring our discussion to a close?

Just that I think we have tremendous value inherent in Canamex Gold Corp.  We have three pillars to the business model: the Bruner gold development project, the Silverton gold exploration project and the cryptocurrency model for funding.  Based on our updated Preliminary Economic Assessment, which came out in January 2018, the net present value (NPV) at the current gold price of Bruner is about $1.60 per share, using the current shares on issue.  The stock trades at around $0.20, or an 88% discount to NPV.  Where are you going to find better value than this in the market?

This story was originally published at www.proactiveinvestors.com on March 6, 2018 and featured in The Public Entrepreneur.

Learn more about Canamex Gold Corp. at https://canamexgold.com/ and on the CSE website at http://thecse.com/en/listings/mining/canamex-gold-corp.

Interview with John Belfontaine from Phivida

Earlier this year, Peter Murray of Kiyoi Communications, sat down to interview the President of Phivida Holdings Inc. (CSE:VIDA), John Belfontaine, to discuss how the company was launched, what the drivers were behind going public, where Phivida sees opportunities in the cannabis space and more. Scroll down to read the full interview.

Peter Murray (PM) Talk to us about the genesis of Phivida.  How did you choose your focus with the CBD-infused consumables market still in its infancy?  And as you built the company, what measures did you take to establish the right corporate culture?

John Belfontaine (JB) We have an interesting origin story.  We began as a wholesale company that would broker CBD (cannabidiol) hemp oil from a European supplier to packaged goods companies and fell in love with the idea of creating a whole-plant nutraceutical company, taking our base oils and putting them into packaged goods both for the mass market and the professional clinical market.

Our team consists of consumer packaged goods experts, so it was natural to transition to that type of company from the wholesale realm.  We then renamed the company Phivida and created a three-division structure.  Phivida Organics continues the wholesale, Phivida Nutrition creates functional foods and natural health products that incorporate CBD using a non-encapsulated CBD hemp oil, and Phivida Enhanced is for professional clinical grade products.

As we built the company, we wanted to never lose the spirit of health and wellness – our slogan is Health and Wellness and Harmony.  We have a philosophy of goodwill and benevolence and want to maintain and never lose our original intention, which is to help patients.

We are a company of doctors, a company of functional food and natural health product specialists, and nutritionists.  We want to always keep the focus of Phivida’s direction on bettering the lives of our patients and giving practitioners the tools they need to give their patients a product which will help in their everyday lives.

As a result, we developed a platform called Phivida Families which focuses on education, research and sponsorship.  It underpins our education efforts and marketing for all products.  Every single one of our executives and operational personnel and partners subscribes to that goodwill community-based spirit.

As an example, we launched a subsidy program where families with children under 18 or parents over 65 with a diagnosed disorder can receive free product if they share their experience with us.

And a key reason we were able to assemble such a strong team is that we all have a story where cannabinoids have helped a loved one.  This affects us personally and makes it more than an individual pursuit – it’s a crusade.  And really being part of a paradigm shift, a shift away from pharmacology and back to our roots of traditional plant medicine.  Nothing heals like Mother Nature.

(PM) Tell us about your products and how you differentiate them and the brand now and into the future as the momentum of legalization draws new players into the hemp/cannabis marketplace.

(JB) Phivida has a strategic portfolio of full-spectrum CBD hemp oil extract-based products.  Phivida’s nutrition line focuses on preventative health, using functional foods and natural health products as a vehicle to prevent hospitalization and reduce chronic inflammation for everyday consumers and active individuals.  Phivida Enhanced, on the other hand, creates clinical grade products for professional practitioners.

In terms of our key differentiators, the first is quality standards.  We have dedicated ourselves to GMP (Good Manufacturing Practices).  All of our products are quality and safety tested, both at the batch level and finished stage.  All ingredients are premium, certified organic ingredients.  We try to adhere to a no-sugar-added approach, and if there is packaging better than what we are using we will adopt it.  So, we are looking to develop a product that is the most professional, premium quality product in the industry – the global golden benchmark for quality standards.

Ours is still a cottage industry and not all manufacturers hold themselves to the high standards we are used to.  We apply Health Canada-based standards to a US-operated company with no real regulation.  So, the quality assurance is where we set ourselves apart.

Beyond that we use a special technology with our products called encapsulation.  We use both micro and nano-encapsulation.  Encapsulation simply means that cannabinoids, which we derive from hemp, are lipid-based – they are a fat.  And fats are not soluble in water, but when you encapsulate these molecules on a nano-molecular level, we create a polymer shell around each molecule and it protects that it as it is ingested orally, into your gastro intestinal tract.

The benefit is that the product becomes soluble, so we can put it into a functional beverage format which creates ease of use and a more enjoyable delivery method.

But more importantly, encapsulated cannabinoids are faster acting and longer lasting.  They bypass first-pass metabolism and have a higher uptake into the bloodstream.  They penetrate the blood-brain barrier at a rate up to 600% higher than normal.  So, you receive five to six times the medicine for the same price at a higher quality standard.  That is the Phivida promise – that we give you more medicine, more value, and the highest quality products in the marketplace.

(PM) Tell us about a few products in detail.

(JB) In the consumer line we have created a holistic mind-body-soul line of CBD-infused vitamin juices, and these target certain conditions – from cognition to the immune system to moods.

Phivida Protect is an immunity booster that has a high level of antioxidant and anti-inflammatories.  Phivida Relax brings down anxiety and induces healthy sleep.  That would be the most popular in terms of where our distributors are demanding product for consumers.  And the products are all vegan-based.

On the clinical side, our hard cap pills have a special blend for muscle, bone and joint placement.  We put cannabidiol in with MSM chondroitin and glucosamine to repair and rebuild muscle tissues, which is ideal for patients with osteoporosis or those going into a later stage of their life with deterioration from chronic inflammation.

Those are our two flagship products at this point.  But we are really focused on innovation and building our portfolio of SKUs.  We are at about 30 now and see product innovation as a key component of our long-term growth.

(PM) Discuss your experience dealing with investors in a private setting, and then during your effort to go public.

(JB) We are extremely fortunate to have a strong, sophisticated and well-connected shareholder base.  Our shareholders are the who’s who of the cannabis industry.  Our go-public round could not have gone better.  We facilitated the go-public strategy through a long-form prospectus offering, which is not the fastest or easiest way to go public.  But we feel the hard way is sometimes the right way.

You save dilution by not doing a reverse takeover with an existing public vehicle.  And we were beholden to a higher level of disclosure, which we welcome because we know we have done our homework, we have a strong business plan, a strong team, and our business model is contrarian to the typical cannabis story you see.

We owe a lot to our investment bankers.  We were led by Canaccord Genuity in a syndicated offering with Mackie Research and Haywood Securities, and they did an excellent job of stewarding our story into the retail marketplace.  But we also owe a lot to our key strategic advisors, John Di Girolamo at Liberty North Capital, as well as Donato Sferra and Mark Attanasio, principals of Hillcrest Merchant Partners, who were responsible for leading us through the capital markets strategy and navigating us through proper transaction structuring.

(PM) You opted for the Initial Public Offering route to go public.  What business objectives did you hope to achieve by listing on a securities exchange?

(JB) We debated internally whether to stay private or look to access the capital markets through a public transaction.  We decided at the end of the day that the needs of the shareholders are paramount.  We were able to structure a transaction that would be beneficial and minimize equity dilution in the company.  That would add value for shareholders, and from a business perspective that is the primary concern.

We chose the go-public route to capitalize the company with a minimum of dilution, and we were fortunate to open our IPO at an ideal time.  We opened it days after the World Anti-Doping Agency (WADA) removed CBD from schedule, allowing it to be used by athletes for the first time in the history of competitive sports.  And shortly after, the World Health Organization (WHO) released a report that said CBDs were not only safe and nontoxic and non-psychoactive, but in fact medicinal.

We received so much interest from the institutional investment community that we had 300% to 400% more demand than we were able to take.  We closed the IPO in a matter of days with gross proceeds of $5.75 million.

(PM) In selecting a marketplace to list the company, what stood out about the CSE? What was your experience during the application process, and how have your first few weeks on the exchange been?

(JB) There was only one option for us to list, and that was the CSE.  The Canadian Securities Exchange really caters to the entrepreneur, and that is the spirit of what Phivida is.  The CSE values innovation.  We are a biotech/food and drug company that is about nurturing new ideas and developing new markets based on innovation and product development and concept development, so the CSE was the perfect platform for us.

Our experience listing on the CSE was seamless.  From the service level through the application process through assisting in understanding filing and regulatory requirements.  And immediate response.  When we began trading it was, I understand, the highest volume trading day in the history of the exchange.  Even so, their service was uninterrupted – it was the utmost professionalism and we were extremely impressed and satisfied with the experience and highly recommend it to other private companies.

(PM) The stock market has been reacting well to hemp stories for a couple of years now, but you took your time and built the company privately before making the move to go public.  Talk to us about that strategy.  What advice would you have for companies considering a public listing?

(JB) I believe the timing we chose to launch our IPO was ideal.  Had we considered opening our IPO this time last year I don’t think the markets were as strong.  As we enter 2018 you see major market catalysts.  We saw the WADA announcement.  We saw the WHO put out their positive report.  We also saw Constellation Brands purchase 9.9% of Canopy Growth, the largest cannabis company in the world, to get into the cannabinoid-infused functional beverage market, which we’d been operating in and developing for several years.  So that validated our business model.

And I feel the timing was ideal in terms of how we launched and stewarded and properly educated the marketplace on the offering.

(PM) Talk about the team you assembled around the company to prepare for going public.

(JB) That was plenty of discussion as to whether we wanted to take on a public listing or keep the company private.  But we were fortunate in the sense that we were able to build a public company support team we felt comfortable could navigate the requirements and do a public offering.

First and foremost, our back office and bringing on Carmelo Marelli and DSA who were our corporate secretary.  Our legal counsel, by adding Peter Simeon, a partner at law firm Gowlings WLG, to the board gave us strong legal counsel and a national presence at one of the largest law firms in the country, specialized in publicly traded companies.  And on business advisory, adding Bill Ciprick, Senior Vice President of Business Development at the Business Development Bank of Canada.  He is another component of good corporate governance, which is critical to the development of a young public company.  Good governance, we think, is lacking in the Canadian capital marketplace and we really encourage that approach.

And in terms of having leadership on consumer packaged goods, adding Jim Bailey, former President of Red Bull Canada, to our board gave us strength and vision on how to develop a functional beverage product.  He understands that we are not an adrenaline-based function but a health and wellness function, yet the same model fits.

And on top of this, we have a tremendously strong clinical scientific team plus, again, a team of directors who have done it before in terms of building both natural health product-based consumer packaged goods offerings as well as food and beverage.

(PM) Looking at the industry landscape, how big can your sector get and where are the best opportunities?  What must participants be aware of from a legal perspective?  Are there challenges to selling product in the United States?

(JB) Phivida has the opportunity to expand globally, and we anticipate being a globally recognized brand and setting the gold standard in CBD hemp oil-infused products in coming years.  We’ve already signed agreements into Asia, expanding our reach into the Japanese market, which is one of the largest nutraceutical-buying markets in the world.  We will continue to pursue new opportunities and markets in North America, Europe, South America, and Asia.

In fact, in the first two weeks of 2018 we have announced a licensing deal in Oregon that opens access to an additional 500 locations for us, and a Global Digital Reseller-Supply Agreement that expands our online reach into Germany and Australia.  And those come on top of the Japan agreement I just mentioned, which we announced January 5.

In the United States, we are excited to be covered by section 7606 of the Federal Farm Bill.  We source our product through farms that receive permits from the state-level departments of agriculture.  We are a federally compliant product which gives us an advantage to be sold as a functional food.  This is unique in the cannabis/hemp space and should be recognized and celebrated.

We recognize and support medical cannabis companies, but we are THC-free – all the medicine, none of the side effects.  And because we focused on hemp-derived full-spectrum oils, it gives us the opportunity to penetrate mainstream markets such as grocery stores and naturopathic clinics.

(PM) What makes Phivida attractive for investors at its current market value and stage of corporate development?

(JB) Phivida is in a rapid growth phase in its corporate development life cycle.  This is a very interesting time for investors to hear the story.  Our comparables in the marketplace have huge valuation multiples compared to where we are.  When we were at a pre-money valuation we were around $10 million market capitalization at the IPO level, and our closest comparable, Isodiol, was at $450 or $500 million market capitalization.  So, we were very undervalued compared to our closest comparable.

We are a growing company with huge potential for acquisitions of new technologies as well as capturing leading share in new markets.  California, Washington, Oregon, Colorado – across the western United States is our foothold, but we have new partnerships globally and we continue to pursue development of globally distributed brands.  As a result, this is a great time for investors to look at a rapid growth company which is well managed with premium quality products that is extremely well structured – fewer than 45 million shares outstanding with almost $8 million cash and no debt.  Management, offering, structure and financial health – we stack up well.

CSE, OTC Markets Return to Israel for Second Joint Business Development Visit

Fourth visit by CSE over past 18 months

The Canadian Securities Exchange (CSE) and OTC Markets Group  are pleased to announce a joint business development visit to Israel from April 29th through May 3rd for meetings with local entrepreneurs and advisors interested in accessing growth capital in North America.

Senior executives from the exchanges will be present to discuss a program for international issuers that promotes the multiple benefits of a combined CSE listing and OTCQX or QB quote in the US. This model provides an efficient framework for companies seeking public capital and liquidity in North America by leveraging the unique benefits of both marketplaces.

This is the second joint visit to Israel by the CSE and OTC Markets Group, following a successful series of meetings over five days in November 2017.  This will be the fourth trip to Israel by the CSE in the past 18 months.

Also participating in the visit, to lend insight into the current state of North American capital markets and the logistics of raising public capital, will be investment banking executives from Canadian dealers Leede Jones Gable and Echelon Wealth Partners.

“We are eager to continue building relationships with entrepreneurs in Israel’s business community, as the country remains an important centre of innovation and many of its companies are a natural fit for our listing model,” said Richard Carleton, CEO of the Canadian Securities Exchange.  “The strategic alliance between the OTC Markets Group and the CSE offers international growth companies a unique opportunity to access public capital in the United States and Canada.  We believe it is important for entrepreneurs, and for regional economies, to recognize that embracing a comprehensive public market presence in North America has the potential to benefit growth companies on a number of important fronts.”

MGX Minerals acquires zinc air battery developer ZincNyx Energy Solutions Inc.

Jared Lazerson, chief executive of MGX Minerals Inc (CSE:XMG, OTCQB:MGXMF), tells Proactive they’ve furthered their reach into the emerging energy space with the acquisition of ZincNyx Energy Solutions Inc.

Canadian group ZincNyx Energy Solutions has developed a modular energy storage system (ESS) designed for energy storage in the 5 kW to 1 MW range for extended periods..

Its technology consists of three main systems each using zinc and air to store energy in the form of zinc particles.

This story was originally published at www.proactiveinvestors.com on December 15, 2017 authored by Andrew Scott and featured in The Public Entrepreneur.

Learn more about MGX Minerals Inc. at https://www.mgxminerals.com/ and on the CSE website at http://thecse.com/en/listings/mining/mgx-minerals-inc.

CSE and OTC Markets Connect with Entrepreneurs in Israel

CSE had the pleasure and honour of visiting the beautiful country of Israel from November 5th to 10th. The visit was a collaboration between CSE, OTC Markets, and OTC Israel. Also joining CSE on the trip were Bernard Pinsky of Clark Wilson LLP, and David Danziger of MNP LLP.

One of the primary goals of the visit was to connect with the Israeli business community and gain a deeper understanding of the capital markets needs of their world-class medical and technology startup ecosystem.

On the docket for this trip were meetings with local business influencers including funders, law firms, accountants, and advisors. Within just a few interactions, however, it became readily apparent that there was a high degree of alignment between the Israeli start-up ecosystem and the Canadian capital markets. The ability of the CSE to serve as a conduit for North American public venture capital was a message that resonated throughout many of the interactions during the visit.

Nowhere was this more evident than at the “Raising Capital and Taking your Company Public in North America” session which attracted a full room of technology company operators and various professional advisors. Engagement during the event was extremely encouraging and the wealth of follow-up and follow-on interest has set the stage for continued efforts to explore building bridges in the future.

However, the most encouraging insight from the trip was the demonstration of intellect and inspiration driving many of the projects that we had the pleasure of reviewing. As the Exchange for Entrepreneurs, it was clear to the CSE team that the entrepreneurial spirit and drive were thriving in Israel’s startup communities and these were also responsible for advancing many of the projects we reviewed.

Whether it was an innovative application of cannabis oils, crowdsourced intelligence and collaboration using SAAS, or surgical implants, there was no shortage of innovation on display during our short stay.

CSE looks forward to its next visit to Israel which will undoubtedly occur in the very near future. We look forward to continuing to build bridges with the “Startup Nation” and are once again appreciative of the positive response and hospitality shown during our visit.

To view more pictures and highlights from our visit, click here.

CSE and Stockpools team up to launch the Cannabis Investment Challenge

The Canadian Securities Exchange, along with Stockpools and the Lift Cannabis Expo, are excited to announce the launch of the first ever Cannabis Investment Challenge – an innovative fantasy online stock trading competition focused entirely on the cannabis sector.

The Cannabis Investment Challenge is a unique opportunity for the public to participate in today’s hottest market sector and compete for prizes without any cost or financial risk to the user.

How it Works

Stockpools is like fantasy sports, but for stocks. The Stockpools platform enables users to choose a simulated portfolio and to compete against other participants’ portfolios in an online environment that mimics the concept of traditional fantasy sports. It offers curious investors a completely risk-free platform to have fun exploring the stock market, while potentially winning real cash or other prizes should their portfolio outperform the competition.

How to Participate

This competition is 100% free and available to anyone over the legal consent age. For more information on registration, visit the CSE Cannabis Stock Picking Challenge page on Stockpools.com

Competition partner Lift Events is also welcoming delegates to register at the Lift Cannabis Expo from May 26 – 28. Guests can come to booth 345 for more details and to register in person.

When does it Start?

The competition begins July 3rd 2017 and runs until September 15th 2017. Registration for the competition is now available online at the CSE Cannabis Stock Picking Challenge page on Stockpools.com.

This is the first collaboration between the CSE and Stockpools. As noted by CSE Director of Listed Company Services Barrington Miller,  “CSE is excited to co-launch this initiative with Stockpools. Cannabis-related companies have been a huge driver on our market recently and the amount of participation we’ve seen from investors has been staggering. We hope this competition inspires more people to learn about the stock market while having fun in a simulated investing environment.”

Noted Anil Mall, President of Stockpools, “Launching this initiative with the CSE has been a natural fit – they bring an entrepreneurial spirit to what they do which is in great alignment with Stockpools. Just as important are the numerous Cannabis-related clients listed on the CSE, of which the entire competition is based upon.”

Both organizations believe the Cannabis Investment Challenge competition can enable a new generation of investors to explore the world of investing and publicly traded cannabis markets via an accessible and engaging platform.

For more information, contact

Anil Mall
President
Stockpools Inc.

T: 604-684-2444
C: 604-653-6578
W: www.stockpools.com

Record third quarter for CSE continues momentum through Q3 2016

CSE is proud to present its most recent quarterly update video and press release below highlighting the record third quarter of the year at the Canadian Securities Exchange:

Multiple Industry Sectors Push CSE Trading Volume, Financings to New Records in Third Quarter of 2016

CSE Posts Record Activity in Q3 of 2016

The Canadian Securities Exchange (CSE) today released performance metrics for the third quarter of 2016 highlighting continued strong growth, particularly in trading volume and capital raised by CSE listed companies. Both measures rose to the highest levels ever recorded by the exchange.

Key Statistics

  • Trading volume in CSE listed securities climbed 138% compared to the third quarter of 2015 to 1.27 billion shares;
  • Companies listed on the CSE conducted 85 financings for gross proceeds totaling $109 million, an increase of 222% over the same period a year earlier;
  • The CSE finished the July-September quarter with 315 listed securities, 13 more than at September-end 2015;
  • Trading on the CSE platform in securities listed on other exchanges totaled 811 million shares, higher year on year by 59%.

Metrics for January through September also set records, with the 3.27 billion shares traded in CSE listed securities outpacing the total for all of 2015 (2.48 billion shares). CSE listed companies raised $226 million in the first nine months of the year, compared to $195 million in full-year 2015.

Trading volume continues to gain momentum in the fourth quarter, with a record 99,704,073 shares trading in CSE listed securities on October 6. Over the past 30 days the CSE has set new records for both daily trading volume and number of trades on seven occasions.

Several CSE issuers ranked among the most actively traded public companies in all of Canada during the quarter as investor interest increased across most industry sectors, and particularly for life sciences companies. The CSE also welcomed one of the few Initial Public Offerings completed in Canada this year when Glance Technologies Inc. (GET) made its trading debut on September 7.

Toward the end of the quarter, the exchange announced several important executive level appointments, and the addition of a highly experienced financial industry executive to its Board of Directions (http://thecse.com/en/news/cse-announces-senior-appointments-to-board-of-directors-compliance-and-listings-teams). The appointments were made to expand business development coverage and deepen the pool of expertise in the listings review group.

The CSE team remained hard at work connecting with entrepreneurs, hosting events in Vancouver, Calgary, Montreal and Toronto during the quarter, as well as presenting and exhibiting at the first ever Mines and Money conference held in North America. Senior exchange staff also travelled to China and Mongolia to continue outreach efforts in growing overseas markets.

The exchange is pleased to report that it will soon implement a new trading system technology featuring execution services for all equities listed in Canada. Related to this, a commitment to heightening the visibility of companies listed on the CSE through continued investor events and publications (including the CSE Quarterly magazine), plus support for market-making and other activities, will assist with further advances in volume and liquidity.

“The CSE is firing on all cylinders, with an improved capital markets backdrop helping our issuers to meet, and in some cases exceed, their financing targets,”

said Richard Carleton, CSE Chief Executive Officer.

“Having added several talented executives to our team, the CSE is positioned even more strongly to facilitate access to growth capital for entrepreneurs at the lowest possible cost, while providing liquid and accessible trading services for investors anywhere in the world.”

The CSE Quarterly – Issue 10 is Now Live!

CSE Quarterly Issue 9The CSE Quarterly – Issue 10 is Now Live

The CSE is proud to present the latest edition of the CSE Quarterly.

The Canadian Securities Exchange is proud to present our tenth edition of the CSE Quarterly.

The impact of technology and innovation is all around us.  As the CSE continues to grow to well over 300 listings, technology and innovation have become bigger components to our story, both behind the scenes and our listings board.

This issue of the CSE Quarterly highlights the stories of several listed issuers who are using technology in creative an innovative ways to advance their respective businesses and industries.

The companies profiled in this issue include:

Carl Data Solutions Inc. (CSE:CRL)
ParcelPal Technology Inc. (CSE:PKG)
FanDom Sports Media Corp. (CSE:FDM)
Hello Pal International Inc. (CSE:HP)
Bitrush Corp. (CSE:BRH)
Peak Positioning Technologies Inc. (CSE:PKK)

In addition, to these stories of innovation, the latest message from the Canadian Securities Exchange CEO, Richard Carleton, has updates on how the CSE is leveraging technology and innovation to improve the performance of the Exchange for Entrepreneurs.

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Thanks again to our advertiser Davidson & Company LLP.