Welcome to the latest issue of Public Entrepreneur magazine, your source for in-depth stories of entrepreneurs from a wealth of different industries.
While social distancing measures in recent months have forced individuals to stay apart, one constant has kept everyone connected: technology. In this issue of Public Entrepreneur, we examine how technology has become more important than ever in the healthcare industry and how it has proven to be vital in fighting COVID-19.
We take a closer look at how visionary leaders and entrepreneurs are harnessing the power of innovation to change the world –from enhancing video conferencing with augmented reality, to monitoring community health, to using rapid-detection technology to quickly test for the virus.
CSE-listed companies featured in this issue include:
First of all, given that Canada remains in varying phases of lockdown due to COVID-19, how is the CSE team doing? Is everyone healthy and adjusted to working on a different basis for the time being?
Yes, everyone is in fact healthy and team morale is excellent. Right now, we have a small number of people at the head office in First Canadian Place in downtown Toronto – one IT person and usually two members of the market operations team, sometimes augmented by our software development group. They are all driving to the office rather than taking public transit.
The building has strict rules in terms of wearing face masks in public areas and distancing in the elevators, but very few people have come back to the office. We are definitely making good use of the various video-calling applications available, so teams are getting together on a daily basis for updates, to share information, and so on. And I’m pleased that people also get together for an occasional social event via video conference. I hear there may even be some games of chance involved one night of the week.
In any event, things have worked out well, and I say that knocking on wood furiously. There was obviously a lot of pressure on the trading systems in late March as Canadian markets experienced record levels of message traffic and close to record levels of trading activity. We weathered that storm quite nicely with a distributed workforce, which is very gratifying.
I will say the fact that many of our current team members were with the exchange during the global financial crisis in 2007 and 2008 really helped us respond to the various challenges, during March in particular. We knew what to look for and what the bottlenecks in the system were likely to be, and we had our eyes out for those issues. I can remember sending an email one Sunday in March saying we were going to see the market really come off the next day and thus needed to review our circuit breaker rules and have all the notices drafted in advance. We had some extra staff in the office that day just in case. We are very happy with the way our teams and all the machines we rely on rose to that particular challenge.
How did the exchange react in March when it became clear to Canadians that special measures would need to be taken to cope with COVID-19?
We were a little ahead of the curve in some respects. Many of us were at the PDAC mining conference in Toronto, and as it became apparent that a number of PDAC attendees had contracted COVID-19, we placed ourselves into voluntary self-isolation right away. As a result, we were about a week ahead of the official lockdown orders, and that put us in good shape because we had already done most of the things we would have been required to do later in the month.
As well, we have various protocols in place that have been rehearsed over the years. These anticipate the Toronto office not being available or the Vancouver office not being available and having to distribute the workload to people working remotely. We had a pretty good idea of what needed to be done.
Now, I don’t think any of us ever anticipated that we would be working like this over the course of many months, but, as I say, we had thought through this in advance and done some rehearsals, so it was really just a case of dusting off the plans and executing them.
The head office sounds quiet for the time being, but what do you anticipate in terms of gradually returning to “normal” or what you envision as your new normal? And what does Richard Carleton’s typical day look like?
People ask me what reopening is going to look like for us, and my answer is that we have been functioning throughout. We have been conducting business across all lines, whether it is trading services, market information, or listings. And as I mentioned, we are quite pleased with how everything has worked. Activity, particularly in corporate finance and listings, has been robust over the past couple of months, to say the least.
With things going as well as they have been, we are in no rush to have everyone return to the offices in Toronto and Vancouver. One of the issues is physical capacity in elevators, because we could undermine our productivity lining up to go upstairs and downstairs multiple times a day. Another issue is that many of our employees use public transit to get to the office, and people are uncomfortable with regular use of public transit right now. I don’t see that opinion changing until we get a better handle on infection rates, particularly in Toronto.
One other thing to consider is that some on our team have school-age children, and it’s not clear at this point what is going to happen in Ontario or British Columbia. Will school be back five days per week? Will it be a partial return? Will significant levels of homeschooling continue? Those are all things we have to be sensitive to when thinking about any return. My sense is we are going to be at less than full capacity, certainly at First Canadian Place, for the foreseeable future.
As for my day, it is kind of interesting. In normal times, I have a lengthy commute morning and night, and that has been replaced by walking to my basement to begin the workday. I have always been an early riser, and there has been no change there. I began using that extra time in March to give people a heads-up on what to expect each day. I scan the global financial press and other information sources every morning and send a note to all staff with thoughts on what we should expect and try to have that out no later than 7:30 in the morning. After that, my workday starts.
How has this environment influenced activity at the exchange, in terms of trading, new issues, the new-issuer pipeline? Are there pluses and minuses?
We saw a tremendous amount of trading activity in March as stocks collapsed and then returned in record fashion in all markets. But financing was slow in April as a result of the uncertainty we saw in late March. There was a strong rebound across all of our business lines in late April and into May, and that has continued right through into July. We are trading on sunny July days at levels that I would have said you were crazy if you told me five years ago that these were the sorts of numbers we were going to be doing.
It may be a function of retail investors playing such a large role in our market. Even if people are getting out a bit more than before, they still have time on their hands, so they’re doing a lot of trading from home. That’s clear from the numbers we see on the turnover front.
On the corporate finance side, our numbers on a year-over-year basis are down a bit in terms of capital raised, and that really was a function of April being quiet. But there have been more deals. So, a little less money, but probably 25% or so more individual financing transactions being completed.
I think we can explain that in a few ways. One is that we obviously don’t have a long list of cannabis issuers raising large amounts of money, as was the case at this time last year. That having been said, I will point out that we are starting to see some of the big multistate operators listed on the CSE raise meaningful amounts of capital again, which is a good sign for the sector.
We are also seeing a lot of interest in precious metals exploration, energy metals, rare earths, and other commodities. Generally speaking, the amounts raised to fund exploration projects are smaller than those that the big cannabis issuers were raising in recent years.
I think through the end of May, CSE issuers had closed nearly 450 transactions, which is more than three per day. New listings have also remained healthy, with April being the exception. And the applications pipeline suggests a continued strong flow of new issues over the next few months. I am a little surprised by that, but we obviously are all very pleased.
Let’s talk about some of the numbers from the first half of 2020 as a whole, and then how the first quarter and the second quarter differed.
Trading volume in the second quarter was considerably higher than in the first quarter due to the market volatility. The corporate finance numbers are a bit skewed, because one of our US cannabis issuers raised US$300 million in January, so the total dollar amount favours the first quarter over the second. But since activity in general started to rebound in late April, the number of financings coming to market has really increased. I’d also say there has been a shift in capital formation from the cannabis space to the mining space, and good interest in technology as well.
I’ll point out again that these are not companies that will raise tens or hundreds of millions of dollars at a time. So, more money raised in the first quarter and really positive in terms of the number of transactions being completed throughout the first half.
One other important number I would highlight is IPOs completed in the first half. There were 17 IPOs across all Canadian exchanges, if you disregard CPCs and SPACs, and 15 of those took place on the CSE. Considering the slow pace of IPOs just a few years ago, this is great to see for Canadian financial markets. The majority of IPOs on the CSE were in the mining sector, which I think is also worth noting.
The creation of a senior tier at the CSE is a topic of importance to both existing and potential issuers. What can you tell us about progress toward establishing the new tier?
We are deep in discussion with the corporate finance staff from the BC and Ontario securities commissions. I am very pleased with the progress we have made to date, and we will look to publish proposed rules for the junior and senior tiers as soon as we have come to an understanding on all of the issues with the securities commissions. When we reach that stage, there will be an opportunity for members of the public, corporate finance professionals, and our issuers to provide specific comments on the proposed rule changes. Things are going well, though, and it is pretty much the biggest undertaking we have going over the course of the summer.
Can you update us on the clearing and settlement platform? That is also a huge undertaking, and it involves a wide range of parties in the financial community who do business with the exchange or for whom the exchange facilitates business.
We have identified partners who will be extremely important in executing this project as we move into the production phase. We are doing an awful lot of work on it, and this summer will be spent getting to the point where we can engage groups from the dealer and vendor communities to work with us on testing.
Let’s discuss changes in the approach to marketing, as the CSE team spent a lot of time on the road right up until the end of February. That is not the case now, nor for the foreseeable future. What new ideas emerged to help the team adapt and ensure marketing activities remained effective?
We have been very active on a variety of social media channels and have transitioned sales and marketing efforts away from individual meetings and conferences for the time being. We have replaced that with active use of Instagram broadcasts, our YouTube channel, and other online media to engage with our audience. We are at the point where we can begin to assess what is working and what is not.
The nice thing is that these activities are considerably less expensive than the kind of work we were doing before. We can fail fast on them, without significant financial impact to the organization, and direct resources to the channels where we are getting engagement. We have been doing a lot of interviews with thought leaders in emerging areas. One of the popular ones recently has been the psychedelics space.
We have also collaborated with MNP and the Aird & Berlis law firm on a series of webinars on various subjects. We’ve done psychedelics and technology, and we’ll have a cannabis update in August. We have been able to engage several hundred people at a time and are starting to see increasing numbers of subscribers to our YouTube channel and people following live on Instagram. Barrington, Phil, Grace, James Anil, Anna – everyone is getting lots of face time on these channels and engaging with different parts of our constituency.
It has been interesting and a great learning experience, and we are definitely figuring out how to better target our efforts. And it is considerably less expensive than doing things the old-fashioned way, which has been good for our bottom line.
The leadership team at a securities exchange has a somewhat unique perspective from which to observe the national business community. What are your thoughts on diversity among small-cap public companies at the management and board levels?
There is no shortage of data to suggest that management, boards of directors, and senior advisors of Canadian small-cap companies tend to be largely male and largely white, and therefore don’t reflect society more broadly. I look at the Canadian Securities Exchange, and our board and senior management team tend to fall into that category.
I am pleased that our workforce is, generally speaking, representative of the populations of Toronto and Vancouver, so it’s very diverse. And one of our challenges is identifying how we get to a greater degree of diversity in our management ranks, and on our board as well. We need to act in ways that see the Canadian Securities Exchange, in a short period of time, represent the demographic of Canada generally, and our home markets in Toronto and Vancouver more specifically.
Is there a specific role for junior capital markets to play in helping the world overcome the COVID-19 crisis?
That’s a bit of a chestnut. Small business is the engine of economic growth and employment growth and innovation in an economy. But they get to be chestnuts because there is a kernel of truth in them. We certainly see companies looking for different applications, whether they are looking for vaccines, or to lessen the severity of COVID-19 symptoms, or to anticipate outbreaks in areas at risk using combinations of data and artificial intelligence.
There are obviously many things the small-cap community is working toward in response to the epidemic. You never know where breakthroughs are going to come from. But there clearly is no shortage of entrepreneurial energy, and significant resources have been made available to help companies try to solve some of these problems.
The CSE’s James Black and Mark Francis were joined by Angela Jackson, Co-Founder and Managing Director of the Portland Seed Fund, Derek Hunter, President and CEO of Bluesky Equities Ltd., and Sean Peasgood, President and CEO of Sophic Capital, for a webinar on May 19th, 2020. In this latest installment of the CSE’s “All Locked Down and Nowhere to Go” conference series, our panel of microcap investment specialists talked about what qualifies technology companies for investment.
In this timely webinar, our guests talked about how they approach companies for early-stage investment, including what criteria companies have to meet, the importance of management having “skin in the game,” how disruptive tech companies can respond to COVID-19, and how their portfolios have adapted or pivoted to meet the current economic crisis.
Following initial presentations, our panel of specialists dove into what specific management qualities they look for, as well as the importance of letting management demonstrate its competence after a first round of investment. Panelists also talked about the effects that COVID-19 has had on setting apart adaptable from stagnant companies, which companies caught a tailwind from the current situation, and the merit in taking a down round in valuation in order to come back stronger.
The CSE’s James Black was joined by Ron Sedran, Managing Director, Equity Capital Markets from Canaccord Genuity, and Chad Schneider, Partner at Blakes Law Firm, for a special webinar on April 28th, 2020. In this latest installment of the CSE’s “All Locked Down and Nowhere to Go” conference series, Sedran and Schneider cover the highly requested topic of “at-the-market” (ATM) programs.
During the thought-provoking webinar, our esteemed guests discuss the background of ATM offerings and their applicability to our current market situation (2:50), the benefits of ATM distributions for issuers (10:36), the simple process of implementing an ATM distribution plan (15:16), and how Canada is looking to emulate American practices with proposed amendments relating to ATM distributions (27:03).
Following the presentation, Sedran and Schneider also provide additional insight on ATM programs by answering conference participants’ questions. Watch until the end for their valuable tips on how corporate clients can effectively communicate their ATM programs, as well as their top picks of Netflix shows to binge-watch during the lockdown.
Kenneth Sam, Partner of Capital Markets at Dorsey & Whitney LLP, joined the CSE in this fourth instalment of our educational conference series, “All Locked Down and No Place to Go.” In this highly insightful webinar, Sam uses his background as a cross-border securities lawyer in Canada and the US to lead the conversation on Regulation A+, also known as Reg A+.
In this comprehensive presentation, Sam discusses the importance of Reg A+ to the global economy and global markets (3:15), the eligibility of issuers for using Reg A+ (10:30), and the advantages of the regulation (12:40). He also talks about how Reg A+ can apply to the CSE, including the reasons CSE-listed companies would look to use this offering (35:34) and how Reg A+ can help US companies that want to go public on the CSE (37:27).
Watch until the end to hear Sam’s valuable answers to the thought-provoking questions from the conference participants, including a question on the reduction and regulatory burden of Reg A+ compared to the normal systems. As well, Sam provides additional resources on the subject.
When: Tuesday, April 28th at 1:15PM PDT / 4:15PM EDT Where: Zoom Video Conference How: RSVP to email@example.com
The CSE looks forward to hosting “A Primer on At-the-Market (ATM) Offerings” on Tuesday, April 28th, 2020.
Part of the CSE’s “All Locked Down and Nowhere to Go” educational conference series, next Tuesday’s webinar will centre on ‘at-the-market’ (ATM) offerings – a financing strategy that is becoming progressively utilized in Canadian public markets as it provides the ability to lower a company’s cost of capital relative to other financing options.
We are pleased to welcome Ron Sedran, Managing Director, Equity Capital Markets from Canaccord Genuity, and Chad Schneider, Partner at Blakes, to highlight the advantages of this funding mechanism and to share their own professional advice on when, and how, to facilitate an ATM offering.
To participate in this insightful discussion, please RSVP by sending an email to firstname.lastname@example.org.
The CSE welcomed Bullfrog Gold Corp. (CSE:BFG) for a Market Open at PDAC 2020 in Toronto on March 2nd, 2020.
Bullfrog Gold Corp. is a junior exploration company that is engaged in the acquisition and exploration of properties for gold, silver, and other metals in the US. Bullfrog currently owns, controls, or has acquired mineral rights on 5,250 acres of federal patented and unpatented mining claims in the South Bullfrog Mining District in Nevada, for the purpose of exploration and potential development of gold and silver. The company is led by highly experienced executive and technical teams with proven track records of success in new discoveries, project feasibility, mine and process engineering, corporate development, and capital funding for exploration, development and production projects.
CEO David Beling remarked that “[trading in Canada on the CSE] has been a tremendous asset for us. It’s given us more liquidity for our shareholders and it’s given us greater positive exposure, globally for that matter.”
In discussing the next exciting advancement for the company, Beling noted, “This project is an advanced project. It’s got a 43-101 on it. It’s got a lot of attributes; it’s amenable to heap leaching… In the past couple of years, we’ve run significant tests and achieved very good recoveries. You add all of these ingredients together and you’ve actually got a very solid project.”
Along with Beling, other key members of the Bullfrog Gold Corp. team were also in attendance at the Market Open at PDAC.
For more information on upcoming Market Opens, please visit the dedicated section of the CSE website, or follow us on social media.
The CSE welcomed FSD Pharma Inc. (CSE:HUGE) to a Market Open at the CSE Media Centre on March 6th, 2020.
FSD Pharma Inc. is a specialty biotech pharmaceutical company that is targeting all legal aspects of the cannabis industry, including cultivation, processing, and manufacturing. As a science-driven company, FSD Pharma’s mission is to leverage their world-leading hydroponic indoor cannabis facility to develop life-saving medicines based on cannabinoid science. It is currently focusing its research and development efforts on novel cannabinoid-based treatments for various ailments, including certain central nervous system disorders, autoimmune skin diseases, and chronic pain. The company is also a licensed producer of medicinal grade cannabis under Canada’s Cannabis Act and Regulation.
“It was indeed a great milestone for FSD Pharma to come back and ring the bell at the CSE,” said CEO Dr. Raza Bokhair, MD. “We have, from what I understand, become your first company that is dual-listed.”
He added, “We have now become one of twelve Canadian domicile companies that are dual-listed in the United States – [the] first CSE company that is dual listed in the United States. And I hope that we will soon be recognized in a league of our own, as the thrust of our business is advancing clinical trials through FDA approved processes.”
Other key executive members of the FSD Pharma team were also in attendance at the Market Open, including Executive Co-Chairman and Founder Anthony Durkacz, and President and Founder Zeeshan Saeed.
View the podcast on this Market Open featuring Dr. Raza Bokhari here.
For more details about the CSE Media Centre, including information on upcoming Market Opens, please visit the CSE website, or follow us on social media.
The CSE welcomed Western Uranium & Vanadium Corp. (CSE:WUC) to open the market from PDAC 2020 in Toronto on March 3rd, 2020.
Western Uranium & Vanadium Corp. is a Colorado-based uranium and vanadium conventional mining company that is focused on low cost near-term production of uranium and vanadium in the western United States, and the development and application of kinetic separation. In addition, the company offers other minerals including brown coal and oxides. Through its acquisitions in 2014 and 2015, Western Uranium & Vanadium has gained uranium and vanadium mineral assets in Western Colorado and eastern Utah, as well as additional uranium properties and ablation technology, respectively. Currently, the company has expanded its horizons and is servicing customers in Canada.
When asked about what it meant to open the market during PDAC, CEO George Glasier remarked, “This is great. We’ve been listed on the CSE for five years and to be able to ring the bell was a real pleasure. Thank you.”
On recent company milestones, he stated, “We actually opened five mines just last summer. And we just finished building the ore patch of these mines and we start moving ore out. We mined ore last summer; we’re ready to start shipping ore. The market is coming back.”
Joining Glasier at the Market Open were fellow members of Western Uranium & Vanadium’s executive team, including Chairman Bryan Murphy and Chief Financial Officer Robert Klein.
For more details about the CSE Media Centre, including information on upcoming Market Opens, please visit the CSE website, or follow us on social media.
The CSE was happy to welcome Rockcliff Metals Corp. (CSE:RCLF) to a special Market Open at PDAC 2020 in Toronto on March 4th, 2020.
Founded in 2005, Rockcliff Metals Corp. is a Canadian resource exploration company based in the Snow Lake area of Manitoba. The company is focused on base metals, gold, and royalties in this area. Currently, Rockcliff Metals is the largest junior landholder of the Flin Flon-Snow Lake greenstone belt, which is home to the largest Paleoproterozoic VMS district in the world, hosting mines and deposits that contain copper, zinc, gold, and silver. The company intends to transform from a junior explorer to a near-term high-grade copper-zinc producer, and it is scheduled to conduct over 70,000 metres of exploration drilling to be completed by the end of 2020.
“For us, it’s actually a nice rounding of nearly our first year in this new form. We were very excited to list on the CSE. They made it very easy for us to regenerate ourselves in this form and, the more we’ve worked with the CSE, it’s been building up nicely as our story has grown. So to be here during PDAC especially, fits very well with us,” remarked CEO Alistair Ross.
When asked about recent accomplishments and upcoming milestones, he stated, “We’ve promised a lot to the markets about timing that has us with a construction decision due in front of the board in December of this year. And all the milestones we need to get there have so far been hit.”
“And what’s even more important, the drill bit is still hitting the good stuff in the ground, so it doesn’t get better than that at the moment,” he added.
Other key members of the Rockcliff Metals team were also present at the Market Open to join in the ringing the opening bell.
For more details about upcoming Market Opens, please visit the CSE website, or follow us on social media.