All posts by Angela Harmantas

CSE Issuer Stories, Magazine

Fathom Nickel: Past-producing property containing several of today’s highly sought-after metals is attracting attention for good reason

Fathom Nickel (CSE:FNI) is, first and foremost, a high-grade story.  There is a reason that the company managed to raise $11.5 million last year before going public on the Canadian Securities Exchange in May 2021. That reason is the historic Rottenstone nickel deposit. 

Nestled in northern Saskatchewan, Fathom’s Albert Lake project is home to the formerly producing Rottenstone mine, which yielded eye-popping nickel grades of over 3% during the 1960s. 

Fathom acquired the property in 2015 during the bottom of the nickel cycle and has since expanded its holdings in the area. Today, Albert Lake consists of over 90,100 hectares, of which more than 80,000 remain virtually unexplored. The company plans to apply modern exploration methods on the property in a bid to prove that those historic grades were no fluke.

Chief Executive Officer Brad Van Den Bussche and Vice President Exploration Ian Fraser founded the company in 2015 with the goal of acquiring highly prospective battery metals projects in favourable jurisdictions. They spent time in the US early on, going from conference to conference in the battery technology space to get a feel for which metals were going to be needed as technology advanced. It was nickel that won the day.

“Ian and I both had some experience with Albert Lake and Rottenstone from years ago, so we knew the asset had had very high-grade nickel, copper, PGE’s (platinum group elements)  and cobalt,” Van Den Bussche explains. “And we were able to get it at the bottom of the nickel market for a very good price. Basically, we picked up the core property for some shares and a royalty that we recently bought back.”

According to Van Den Bussche, it was indeed the grades that first attracted them to the project.

“It was a combination of the grades and the mineralogy – the type of minerals that were in the mix. There’s a built-in hedge having nickel, copper, platinum/palladium and cobalt in there,” the CEO says. “It’s one of the highest grade nickel deposits mined in Canada.” 

Globally, there is a handful of very high-grade nickel deposits, such as Norilsk in Russia. Closer to home, the Raglan mine in Quebec and Voisey’s Bay in Newfoundland both stand out. The Rottenstone grade was essentially as good – or even higher – than some of the biggest economic deposits currently in operation. Fathom’s team believes that Albert Lake’s geological setting  supports the thesis that the Rottenstone is one of several variable size, high-grade nickel deposits similar to the multiple deposits that make up the Raglan nickel camp.

Not all nickel deposits are created equally, of course. There are essentially three types of nickel sources: limonite ore, saprolite ore and nickel sulphide ore. Currently, nickel sulphide is the preferred source to develop high purity Class 1 nickel which goes into creating nickel sulphate required for battery production. The pathway to creating Class 1 nickel from limonite and saprolite ores is more costly and typically creates a much larger environmental footprint.

It should come as no surprise that Albert Lake is a sulphide deposit. From the outset, sulphide opportunities were the focus for Fathom’s team.

“From Day One, we were focused on sulphide deposits,” Van Den Bussche says. “Our mandate is to look for electric vehicle battery minerals that are high in grade, particularly nickel. Nickel sulphide deposits are basically the main pathway to Class 1 nickel, which is necessary in the production of stainless steel and the EV/battery components.”

The mineralization of the historic Rottenstone deposit is unique and contains several notable associated metals. Initial sample metallurgy indicates metal recoveries of greater than 90% nickel, copper and cobalt are possible – all essential ingredients for the green economy. Furthermore, initial studies indicate recovery in excess of 80% can be expected from palladium and platinum.

Things look encouraging at the historic Rottenstone deposit, but with 80,000 hectares left to explore, the challenge for Fathom is to find out whether those grades extend throughout the property. The original deposit itself was small, which doesn’t faze Van Den Bussche, but he knows that the team must prove there is more there than just Rottenstone.

“We need to focus on understanding the system,” Van Den Bussche says. “Those kinds of high grades have to come from a very large system. There’s just no way in the geological model concept that you can have those kinds of grades without a large melting pot. The Rottenstone mine has to be one deposit within a much larger system.”

To that end, Fathom is planning an airborne electro magnetic survey and follow-up ground geophysics to zero in on prospective drill targets this year. A key part of its exploration activity is utilizing a portable Vanta XRF Analyzer (pXRF) to provide real-time litho-geochemical, multi-element data on core from current drill holes, and on historical drill core left by previous operators.

The pXRF results confirm the presence of nickel and copper in present and historic drill cores, and assay results will also test for the presence of platinum group elements, a significant component of the historic Rottenstone deposit that is not detectable via the pXRF. 

Saskatchewan may not seem like the first place a company would visit to explore for nickel, but the province is quickly emerging as a leading global mineral jurisdiction. The Fraser Institute’s annual investment attractiveness survey ranked Saskatchewan in third place in 2020, with a particular spotlight on the province’s mineral potential. The prolific Trans-Hudson Corridor runs directly through the province then veers east to cover northern Manitoba, northern Quebec, northern Labrador and across to Greenland. 

What has held Saskatchewan back from developing its own world-class base metal deposits has historically been, in part, the political situation. But that has changed completely in the last 20-plus years, according to Van Den Bussche. 

“During much of the 1970s and 1980s, a Saskatchewan Crown Corporation (SMDC) had the rights to become up to a 50% partner in exploration projects in the province. While a lot of exploration and development was occurring next door in Manitoba, many exploration companies chose not to take on a government partner and explore in Saskatchewan during this period,” Van Den Bussche explains.

“But that has completely changed and now Saskatchewan is a great jurisdiction to work in. There is a lot of opportunity, and it’s getting a lot of interest from many companies, including the majors. Rio Tinto is a major explorer in the province, and BHP is starting to look as well – they already know Saskatchewan because they’re a big player in the potash industry. Saskatchewan is in the right place in the system, and it’s got the potential to have continuations of some of the Manitoba base metal opportunities, including nickel.”

Fathom is operating during a wild time in the nickel industry. The silvery-gray metal is an essential component in electric vehicle batteries, and manufacturers are scrambling to secure safe supplies. As the green energy economy ramps up, so too does nickel demand – so much so that in early 2022, trading was suspended on the London Metals Exchange after nickel prices breached the $100,000 per tonne mark.

For Van Den Bussche, the dynamics of the current nickel market point to the necessity of developing a safe, stable supply of the metal within North America.

“There is definite urgency to try to lock up some supply of nickel from mines that are currently producing, but also to feed the supply chain two, three, four or five years out. Good projects in good jurisdictions that have a pathway to growing a resource and getting into production are essential. I think there’s going to be a huge move to gain control of the raw materials needed for these strategic businesses.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Fathom Nickel at https://fathomnickel.com/.

CSE Issuer Stories, Magazine

Mindset Pharma: Pursuing breakthroughs in the psychedelics field with the help of “hard science”

Psychedelic drug researchers have moved mountains over the last 30 years, helping to show that these misunderstood substances have vast potential to benefit people, while being safe and non-addictive.

Today, psilocybin is in Phase 2b clinical trials, MDMA is in Phase 3, and the US Food & Drug Administration (FDA) has given both trials breakthrough therapy status. There is tremendous momentum behind getting psychedelic drugs approved against a backdrop of two frustrating trends in North America: the opioid crisis and the negative effect of COVID-19 on mental health.

Mindset Pharma (CSE:MSET) saw early on that there would be a wave of interest in using psychedelic drugs as medication, but that ultimately there would be even more interest in next-generation drugs delivering greater benefits as medication with full patent protection.

From the outset, the company’s goal was to apply drug design, behavioural pharmacology and medicinal chemistry, which are essentially the tools of modern pharmacy, to try to harness the power of psychedelic drugs. 

Chief Executive Officer James Lanthier joined Mindset in early 2020 and was sold not only on the calibre of the scientists involved, but the specific strategy the team had developed.

“We’re applying hard science to these substances to try to create the best possible medications for people – that’s it, full stop,” Lanthier explains. “There’s now tremendous evidence to suggest that psychedelics have a breakthrough role to play to treat psychiatric mood disorders, but in our view, the classic psychedelic drugs did have some shortcomings.”

Essentially, Mindset wants to create new drugs that deliver the same or superior benefit but will work more predictably for the widest possible patient set. The team selected a psilocybin-like compound known as MSP-1014 from its Family Number One of novel drugs. The group of compounds is structurally closer to psilocybin but has the potential to deliver a more pronounced psychedelic experience than psilocybin does at similar doses. Given its higher efficacy, the drug would boast an improved safety profile because, theoretically, a patient could take less of it in order to achieve the same effect.

When Mindset tested MSP-1014 in mice and compared it to psilocybin at a range of doses, the company found that psilocybin reduced body temperature by as much as nearly six degrees, which is hardly a nominal amount. MSP-1014, however, showed no effect on body temperature, an early indication of the compound’s safety profile.

Another interesting piece of data from the lab studies confirmed MSP-1014 was comparable to psilocybin after a drug discrimination assay. In the lab, rats were able to determine the distinction between MSP-1014 and saline, which gives even further credence to the drug’s efficacy. “When we take a drug into clinical trials, you want to have as much confidence as possible that the drug is going to be effective and safe,” Lanthier says. “It’s another strong data point that will help us move forward with more confidence.”

Psilocybin is showing promise in early trials, but its effects can last up to eight hours. Mindset is hoping to tackle that challenge with its Family Four group of DMT analogues, which could offer similar benefits in a therapeutic context but with a much shorter trip of between 15 to 30 minutes. Its lead candidate in that group is MSP-4018, which is being compared against a serotonin analogue known as 5-MEO-DMT found in plant species and toad venom.

Researchers think this could be useful for in-clinic psychedelic-assisted psychotherapy. Because 5-MEO-DMT results in a total duration of experience of between 10 minutes and two hours, it would mean less time to spend in a clinic and fewer resources needed to treat a patient. 

Mindset’s research uncovered meaningful safety improvements with MSP-4018. “We saw signs of serotonin syndrome at a whole range of doses with 5-MEO DMT, which is a really unpleasant basket of symptoms that can afflict people with high levels of serotonin in their bodies,” Lanthier says. “MSP-4018 showed no signs of serotonin syndrome, but we saw behaviour that suggested that it was just as psychedelic as 5-MEO DMT. It’s really encouraging because it looks like we’ve got a drug that is just as psychedelic but potentially quite a bit safer.”

All of this is a step toward proving the concept behind Mindset to make better drugs than the original psychedelic by applying science. The company is building its value on those tweaks and improvements.

“This is about creating new chemical designs that make changes to the structure of the original drug, and then testing them rigorously to see the effect of the changes,” Lanthier explains.

Essentially, Mindset is changing the underlying molecule, synthesizing the elements of the particular drug. It’s an important distinction from its peer group, as companies can patent protect this type of intellectual property to a much greater degree than a formulation of the original drug.

“If you’re not changing the active pharmaceutical ingredient, but just putting it in a different solution, the level of intellectual property rights is quite shallow,” Lanthier states. “Another group can come along with a slightly different formulation and compete against you.”

In Mindset’s case, they’re getting intellectual property rights on the composition of matter, which Lanthier calls the “gold standard.”

The group has also selected two indications for its lead therapy MSP-1014: treatment-resistant depression and end-of-life cancer anxiety. Both are tragic mood disorders with, sadly, large populations.

Nearly 30% of people who suffer from depression do not find relief from traditional antidepressants or therapy sessions. It’s a field where pharmaceutical companies haven’t brought many innovations in the past few decades, leaving it ripe for psychedelic drugs to fill the void. And potentially, very lucrative: by dollar value, antidepressants represent a $15 billion industry.

Now comes the hard part. Mindset is hoping to move out of the lab and into clinical trials in 2022, which does not come without risks. As all drug discovery companies know, success in the lab doesn’t always translate to success in clinical trials. It takes a while to do all the testing and work through regulatory requirements until the drug gets to a point where regulators are comfortable having them taken by humans. 

But psychedelic discovery is different than many other drug discovery efforts because there is so much data available on how existing psychedelics work.

“Based on all the data, we have a pretty high level of confidence that many of these drugs will have a role to play in treating neuropsychiatric and mood disorders,” Lanthier says. “We’re not reinventing the wheel – we’re simply trying to make changes to the chemical structures that will make them safer and more effective. So, it’s a bit different than a typical biotech venture that’s working on something that’s brand new.”

The goal for Mindset is to stick to what they’re good at: discovering and developing new psychedelic drugs. The firm is positioning itself to partner with other groups, be it pharmaceutical firms or psychedelic companies, that want to get into the space and have the expertise and infrastructure to run clinical trials. 

“We don’t think that we’re going to have to raise billions of dollars to become the next Pfizer and take these drugs through late-stage clinical trials,” Lanthier notes. “We think there will be lots of opportunities for Mindset because we were filing intellectual property early and developing data early.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Mindset Pharma at https://www.mindsetpharma.com/

CSE Issuer Stories, Magazine

Gage Growth: The steady hand wins the race in this company’s playbook

When it comes to cannabis in the state of Michigan, Gage Growth (CSE:GAGE) is the name an increasing number of consumers are turning to. Still a young company, having been in operation for just over 18 months, Gage has nonetheless amassed one of the largest asset portfolios in the state. Experience at the leadership level is key to this success.

Gage’s Chief Executive Officer, Fabian Monaco, is a former lawyer and investment banker who was actively involved in the evolution of the cannabis industry. He was a key member of the team that transacted the first cannabis acquisition, Tweed (now known as Canopy Growth)’s purchase of Bedrocan, and also the first-ever cannabis IPO. Also on the team is cannabis impresario Bruce Linton, who serves as Chairman. Another big name is TerrAscend’s Executive Chairman Jason Wild, who has a large stake in the company.

What is it about Gage that attracts some of the most successful executives in the cannabis industry? For one, Gage is on track to be Michigan’s number one operator by the end of 2021, with 14 facilities either in operation or planned. Its first set of financial statements as a public company showed a big quarter-over-quarter jump in revenue, and a corresponding increase in its profit margin.

Clearly, the decision to start things off in Michigan was a good one.

“One of our founders is from Michigan and the other founder has a strong connection to Michigan through family,” says Monaco. “The biggest reason we chose the state, though, is that it had the second-largest medical cardholder system behind California for many years. Their caregiver program was introduced in 2008, and thanks to that, individuals have been going to dispensaries for over a decade.”

Monaco goes on to explain that close to 75% of the population in Michigan is of age to consume, and that after December 1, 2019, which was the first day of adult-use sales in the state, cannabis commerce skyrocketed. Michigan was outside the top 10 states by revenue at the time, but quickly vaulted to sixth, just behind Illinois. Today, it surpasses Illinois consistently and ranks third.

“It’s been playing out pretty much as we thought it would,” says Monaco.

In a market that size, there is bound to be healthy competition. But Gage has established some important points of differentiation and leverages them to the fullest.

“We really focus on every part of the value chain of the business, from seed to smoke,” says Monaco. “We’re constantly hunting, looking for new cultivars to bring to the table for patients and for consumers. A lot of producers out there – especially some of the publicly traded ones – don’t really grow a lot of varieties, and we pride ourselves on having 40, 50, sometimes even 60 different flavours within our retail locations for people to choose from.”

Monaco says that post-production processes are just as important, and that Gage hang-dries its product, trims it, and packages it. “We have this fun, bright, engaging packaging as well for our flower that people enjoy, and we manage most sales through our own retail channels.“

In addition to having identified a prime jurisdiction in which to operate, Gage also knows who it’s targeting to buy its products.

“In general, we’re going after the former medical user – a refined consumer, someone who has been consuming the product for many, many years,” Monaco explains. “We have a really wide variety of customers.”

The Gage business strategy calls for vertical integration and establishing operations strongly in a single state before taking its proven model and applying it in other states.

“We’re going to focus on one market for the better part of 2021, although we do anticipate doing something outside of Michigan near the end of the year,” Monaco says. “We’re trying to follow that Trulieve (Trulieve Cannabis; CSE:TRUL) model where you execute really well in one state and use that as a springboard to enter other states. Once we feel comfortable with where we’re at, especially as we approach the end of the year, you’ll see us branch out into other states.”

With expansion seemingly just around the corner, the question of where Gage will decide to go next is an obvious one. Monaco believes there is “phenomenal” opportunity throughout the United States and his team has already assessed several states this year. He says there is a lot to like. Plans call for focusing on some of the larger markets with Gage’s first few acquisitions. Massachusetts, Illinois, Ohio, Maryland, California and Pennsylvania are all in the running.

“You’ll probably see us make a move into one of the larger states pretty soon,” says Monaco.

Looking out over the next two or three years, Monaco says Gage is strongly positioned to take advantage of a wide range of opportunities that present themselves as the industry evolves.

“We have a solid cash balance to execute our plans in Michigan and didn’t really take on any harsh payment obligations, in terms of sale leasebacks or debt, over the past couple of years,” Monaco explains. “Now we have the opportunity to tap into some of the lower cost of capital opportunities that cannabis companies are seeing these days. Because our cultivation assets are unencumbered, and we own our retail locations, it really affords us the opportunity to go after some debt to fuel growth without having to dilute shareholders.”

From an earnings perspective, Monaco believes Gage can both increase revenue and expand margins rapidly, because Gage products so frequently sell out.

As for the higher goals, Gage is probably not all that far from achieving some of them already, though the walk before you run mindset remains firmly in place.

“Personally, I’d love to be number one in Michigan, our home base, and then a top player in two or three other states. I think it’s important to remain focused in Michigan before we branch out. We’ll look to be one of the top three in each respective state we go to within the next 24 to 36 months.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Gage Growth at http://www.gageusa.com

CSE Issuer Stories, Magazine

Temas Resources: Financial and environmental benefits are some of the good things that come from thinking outside the box

At first glance, Temas Resources (CSE:TMAS) is an explorer with two key mineral assets: a titanium project in Quebec and the intent to acquire a boron property in Serbia. As these commodities are used to make products such as paint, fertilizers and pharmaceuticals, Temas is positioned as a potential supplier to the specialty chemicals sector.

A deal was announced by the company in late January of this year that adds an exciting new strategic dimension. With its acquisition of a large stake in ORF Technologies, Temas will have access to patented, cost-efficient and eco-friendly processes for extracting, separating and recovering nickel, iron, gold and titanium dioxide.

Expanding the number of angles to the Temas story suits Chief Executive Officer Michael Dehn just fine. The new CEO has been involved in the titanium industry for years but honed his early skills in the gold sector in Red Lake with Rob McEwen and Goldcorp.

“I see us becoming a mining technology or mineral processing company,” Dehn tells Public Entrepreneur.

The key here is how all of the assets work together. The company’s flagship La Blache project is a 2,653-hectare property approximately 100 kilometres north of the community of Baie-Comeau, Quebec. It is home to the Farrell-Taylor magnetite-ilmenite lens, where consistent iron, titanium and vanadium grades are found across the entire length of the complex.

Preliminary metallurgical testing of oxide mineralization indicated 90% recovery of iron and 95% recovery of vanadium into a final high-purity product. A titanium dioxide product suitable for further processing to pigment-grade titanium dioxide was fully recovered in testing.

La Blache’s value lies not only in the ground but also in its proximity to key end users in North America. Temas is looking at processing in Ohio, which is close to at least five major US paint producers. What’s more, production at La Blache could be powered by tapping into the area’s electrical grid, making it a greener option than alternatives reliant on diesel.

There are other ways in which the project is green as well, as Dehn describes. “Your mine is wherever the rocks are. In our case, about 65% of the recovered rock goes into a finished product. We’re using around 65% of the rock to recover iron, vanadium and titanium.”

Shortly after Dehn joined Temas in November 2020, the company formed a strategic partnership with Erin Ventures to develop the Piskanja borate project in Serbia. Piskanja has an indicated mineral resource of 7.8 million tonnes averaging 31% boron oxide and an inferred resource of 3.4 million tonnes averaging 29% boron oxide. The project will be the only production of borates on the European continent, according to Temas.

Boron is primarily used in chemical compounds, with around half of all boron used as an additive in fibreglass for insulation and structural materials. The next leading use is in polymers and ceramics in high-strength, lightweight structural and refractory materials.

For Temas, adding Piskanja to its portfolio didn’t trigger much debate. “It’s such an obvious project,” says Dehn. “We have reasonable capital expectations to get to production in a country with very strong mining roots. The European Union and European Bank for Reconstruction and Development are trying to encourage Serbia to phase out coal mining, which means there is going to be a locally skilled workforce that will be looking for another opportunity.”

Under the terms of the agreement with Erin Ventures, Temas will commit to spending a total of €10.5 million toward the development of Piskanja within a three-year period. Erin will remain operator on the project until Temas has exercised the option to earn a 50% interest in its subsidiary, Balkan Gold, at which point Temas will become operator of Piskanja. The two companies expect to finalize the agreement by April of this year.

Between Piskanja and La Blache, Temas already has a couple of company-making projects. The acquisition of ORF Technologies was the missing component that can take things to the next level.

ORF’s technology is estimated to be 59.2% better on a production cost basis, leading to a process that is around 144% more cost-efficient than that used by the world’s largest titanium dioxide producer, The Chemours Company. ORF’s process is less energy-intensive than the industry standard and can create high-quality titanium dioxide from low-grade materials, which contain contaminants that competitors must discard, according to Dehn.

With the ORF approach, rock is dissolved in hydrochloric acid to selectively extract metals such as titanium, nickel or vanadium. The purity of the extracted elements is extremely high.

“We can go right from an ilmenite ore to a titanium dioxide without having to go through several intermediate steps, which is what the rest of the industry has to do,” Dehn explains. The same goes for commodities such as nickel, which now is in higher demand thanks to the red-hot electric vehicle market.

Temas plans to acquire a 50% interest in ORF. The company will fund certain ongoing expenses through secured loans, including acquisition and development of new technology, to be repaid from income generated by ORF before declaration of dividends to ORF shareholders.

Temas is in good financial shape to advance its 2021 agenda. Since November, the company has raised $5 million via Crescita Capital and an additional $3.6 million in flow-through funding.

It’s an undeniably exciting time for Temas, and right where you would expect to find a team that Dehn says is constantly thinking outside the box.

“We don’t want to do things the traditional way,” says Dehn. “Instead of blindly going forward with how things are always done, look for the opportunity that’s going to give you a quicker return on your investment but also leave a smaller environmental footprint.”

This story was featured in the Public Entrepreneur magazine.

Learn more about Temas Resources at http://www.temasresources.com/

CSE Issuer Stories, Magazine

Red Light Holland: Proving the potential of recreational psilocybin begins with choosing the right market

One of the more interesting small-cap market developments of 2020 is increasing investor comfort with the psychedelics industry.

The year has seen multiple psychedelics companies IPO on exchanges in Canada and the US, and M&A activity is ramping up, too. Momentum in the sector is being driven by legislation in Canada opening the door for end-of-life patients to use psychedelics as a therapeutic option, while in the US, the Food and Drug Administration designated psilocybin as a “breakthrough treatment” for mental health disorders. The industry clearly has plenty of runway heading into next year.

Most of the publicly listed companies in the segment focus on therapeutic applications, working on research and development of psychedelic-based treatments for mood and anxiety disorders.

Canada’s Red Light Holland (CSE:TRIP), however, has found its niche in the recreational part of the market by selling small doses of psilocybin to adult consumers seeking to experience the psychedelic effect without a prescription. In the process, it has set itself on a clear path to revenue, which is an immediate point of differentiation compared to most peers.

The Toronto-based firm is the first publicly traded company that has a legal psilocybin product on store shelves and online (in the Netherlands). Its iMicrodose pack is a collection of “magic truffles” – a type of fungi that contains a lower concentration of psilocybin than their mushroom brethren but still enough to produce a psychedelic experience.

While making very clear that medical claims cannot be made at this point and highlighting that substantial research is still being done to prove certain beliefs, Chief Executive Officer Todd Shapiro tells Public Entrepreneur that he thinks psilocybin has the potential to “change the world” for people suffering from depression and mental health disorders. “For me, the opportunity was never about a trend,” Shapiro explains during a recent interview. “It’s about making a difference with a long-term plan. And it’s about empathy, compassion and providing access.”

Shapiro, a former Toronto media personality, began to explore the world of psilocybin through conversations with guests on his SiriusXM radio program. Sensing opportunity, he assembled a team of investors and advisors containing some truly boldface names: Bruce Linton, Terry Booth, Brad Lamb and even comedian Russell Peters, who serves as the brand’s chief creative officer.

The group decided to explore the opportunity to sell psilocybin as a recreational product in a legal market and settled on selling truffles in the Netherlands. It raised nearly $4 million before going public on the CSE in May 2020.

At this point, it’s fair to ask – aren’t magic mushrooms illegal? The answer lies in the composition of the fungi. In the Netherlands, where iMicrodose recently debuted in smartshops across the country, magic mushrooms themselves are illegal, but truffles – a network of interconnected filaments that branch out from the mushroom below ground – are legal to buy and consume.

The pursuit of the recreational market as opposed to medicinal psilocybin is a huge part of what differentiates Red Light Holland. “We would love to be a part of helping to prove how psilocybin can help human beings, be it supporting studies or trials,” Shapiro says. “I think that the medical side is extraordinarily important, but why are we limiting the potential of responsible adult use? When we do that, we are limiting a lot of adults who have access to information, education and early trial data as well as anecdotal research. I don’t think we should do that for people who want to try this responsibly.”

Echoes of the cannabis sector’s growth trajectory ring through Red Light Holland’s story. Early acceptance of medicinal marijuana paved the way for the recreational market and, eventually, legalization. Shapiro is hoping that Red Light Holland can blaze a path to tolerance of recreational psilocybin. “Magic mushrooms have been used for generations for a wide variety of purposes,” Shapiro notes. “Red Light Holland wants to offer it to people who want it in legal jurisdictions, much like we saw in the cannabis market.”

That’s not to say that the company isn’t exploring possible therapeutic applications as well. Its scientific division, Scarlette Lillie Science and Innovation, recently secured a relationship with US-based Jinfiniti Precision Medicine to explore potential roles that psilocybin and truffles can play for age-related and psychiatric disorders.

Red Light Holland may not take the lead on clinical trials, but it wants to carefully look into how it can support the science by perhaps teaming up with people who could potentially get involved in trials in some capacity. “If we can learn more about the truffle itself, that would be our goal,” Shapiro says. “Maybe there’s a CBD-like element to the truffle that we don’t know about yet.” 

The therapeutic psilocybin market is poised to reach a value of nearly US$6.7 billion by 2027, according to Data Bridge Market Research, making it an attractive proposition for investors. While the recreational market is obviously much smaller in value, Shapiro hopes to find a new consumer – a young professional, a firefighter or a modern couple who just put their kids to bed.

“I want iMicrodose packs powered by Red Light Holland to be consumed by the Ketel One drinker, someone who loves a glass of wine, essentially an adult who wouldn’t necessarily walk into a smartshop but would rather order legally from an easy-to-use e-commerce store. I want to help expand the market,” says Shapiro.

There are signs that other countries will soon follow the Dutch lead of legalizing truffles, or at least relax the relevant laws. In Brazil there are no laws against the sale, distribution or use of magic mushrooms. Jamaica has long been a destination of choice for psychedelic retreats, and Bulgaria is on the radar. For now, though, Shapiro appears to have Red Light Holland firmly focused on its namesake country.

“A lot of the issues at cannabis companies came about because they thought there was a bigger market than there actually was, and then they wound up expanding too quickly,” Shapiro says. “We like the idea of learning who our customers are and expanding from there with education, information and responsible use initiatives.”

iMicrodose debuted in Amsterdam in September, retailing for €25 per pack. Distribution quickly spread to Rotterdam, Eindhoven and Den Bosch, as well as online. Shapiro and his team hope to have iMicrodose in as many smartshops as possible over the next year while growing brand recognition.

Red Light Holland is blazing a trail in the psychedelics sector as the first psychedelics company with a legally available product to list on a major exchange, and it fills Shapiro with pride.

“It helps legitimize what so many pioneers and advocates have pushed for, because we’ve gone through the regulatory bodies,” he says. “It’s not something that we’re doing underground. If you’re in the Netherlands, you can order iMicrodose packs online right now. Let’s end the stigma together.”

This story was featured in the Public Entrepreneur magazine.

Learn more about Red Light Holland
at https://redlighttruffles.com/

CSE Issuer Stories, Magazine

Northstar Gold: The new face shining brightly in the Kirkland Lake gold camp

When you’re a new name in exploration on the market, it helps to have an established project with a proven team at the helm.

This statement certainly holds true for recently listed Northstar Gold (CSE:NSG), a company that is working on advancing the Miller Gold Project in Ontario’s famous Kirkland Lake Gold District. This region has historically delivered more than 25 million ounces of gold from seven mines.

Northstar is led by Chief Executive Officer Brian Fowler, a seasoned mining executive with over 38 years of experience in mineral exploration under his belt. Behind Fowler is a veteran team of mining and capital markets experts with decades of insight and success advancing resource companies and projects.

Miller is a 1,100 hectare property just south of the town of Kirkland Lake, central to a district that has been producing gold for more than a hundred years.

In the early 1900s, the historic Miller Independence Mine saw a number of shallow shafts and three levels of development on the high-grade gold No. 1 Vein, with limited success. Exploration by Northstar and others since then has defined additional shallow high-grade gold veins, with a historic estimate of 270,000 ounces of gold at 11.5 grams per ton, and a lower-grade bulk tonnage gold exploration target at Planet Syenite that may contain up to 500,000 ounces of near-surface gold ranging in grade from 1 to 3  grams per ton. None of these targets has been tested at depth.

It’s the geology, however, that excites Northstar’s CEO the most. “The Miller Gold Property has very compelling geological similarities to the Macassa SMC (South Mine Complex) and other Kirkland Lake gold deposits,” explains Fowler. “Miller has the same style of vertical and flat, high-grade gold-telluride veins that are a unique feature of the Kirkland Lake District. Furthermore, gold mineralization on the Miller Property is controlled by a ‘first order’ fault structure (the Catharine Fault) that joins the regional Kirkland Larder Break and similar first order structures within the Kirkland Gold District. These fault structures acted as channels and traps for gold deposition.”

Fowler goes on to explain that it has been determined that gold mineralization at Miller was emplaced at the same time as that at the Kirkland Camp gold deposits, some 2.6 billion years ago. These similarities and geological features suggest Miller could be tapping the same gold source as the Kirkland Gold District.  The Macassa mine has been in production since the 1930s and owner Kirkland Gold continues to find and produce high-grade gold more than 2 kilometres below surface. The Miller Property, on the other hand, is essentially unexplored below 300 metres.

“We’re really excited [to have] both Kirkland-style high grade gold-telluride veins and broad low-grade intrusion-related gold mineralization in significant quantities on the Miller Property,” Fowler says, “Our main job now is to do some drilling on these targets and bring them to 43-101 status. If you stand back and look at it, we could be knocking on the door of around 700,000 to 800,000 ounces here.”

Since Northstar picked up Miller in 2012, the company has spent around $2 million on exploration. Including the use of  ground magnetics, 3D IP surveying, and nearly 6,000 metres of diamond drilling in 27 holes. Those holes returned multiple high-grade and broad low-grade intersections with abundant visible gold. In 2016, the company mined and processed a 932 ton bulk sample from the historic No. 1 vein that averaged 5.1 grams per ton gold.

Most of the past drilling done at Miller has been vertical in nature.  Subsequent surface stripping and sampling by Northstar has defined numerous vertical high-grade gold veins and structures, which cannot be assessed, let alone discovered, by vertical drilling. This year’s drill program will see Northstar utilize angled holes to properly test these new targets.

“We’re very confident that we’re going to make new discoveries at Miller, possibly within the Catherine Fault zone itself, which amazingly has never been drilled,” Fowler says. “It’s comparable to Kirkland Lake Gold’s Amalgamated Break where they’ve found an incredible amount of high-grade gold mineralization that remains open at depth. These structures can be incredibly rich and with kilometre-scale strike and depth continuity. We believe we have all the makings of a Macassa SMC-like gold mineralizing system at Miller and we’re really anxious to get the drill spinning.”

At 3,000 metres, the Phase 1 drill program is scheduled to commence in late February. This will have a preliminary focus on confirming and expanding portions of the near-surface Miller Independence historic estimate and the Planet Syenite bulk tonnage gold exploration target. Drilling will also follow up other known near-surface, high-grade and intrusion-hosted gold targets, including Allied Syenite.

Having a few million dollars on hand to support exploration doesn’t hurt – Northstar closed its $3 million initial public offering on December 31st of last year at $0.30.

“Everyone thinks we either definitely have a gold market or we’re heading into a solid gold market,” Fowler says of the company’s healthy IPO. “We believe our timing was perfect.”

There’s even more to Northstar Gold than Miller, though. The explorer also has the Bryce Gold Property and the Milestone copper-nickel-cobalt claims. These could add value at the drill bit or through farm-out opportunities.

The task ahead for Northstar is to prove up the claims at Miller. “We’re going to do it through a concerted and robust exploration effort, which we are now permitted and funded to complete,” Fowler concludes. “I really believe there is excellent potential to make some significant gold discoveries at the Miller Gold Property this year.”

This story was featured in the Public Entrepreneur magazine.

Learn more about Northstar Gold at https://www.northstargoldmining.com/.

CSE Issuer Stories

Peekaboo Beans Inc. Has a Majority Female-led Board: Here’s Why It Makes Sense

It’s a sad reality that even in 2020, women are sorely underrepresented in capital markets. Studies have shown that, as career level rises, female representation declines.

The Workforce Today

According to a report by Mercer, although 46 percent of financial services employees are women, only 15 percent of the financial services workforce is comprised of females at the executive level.

The situation is echoed when it comes to women who serve on the boards of public companies in Canada. A 2019 report by law firm Osler found that women now hold over 18 percent of board seats among surveyed companies, but the pace is slowing, down from 2.5 percent in 2017 to 1.7 percent in 2018.

Traci Costa (left), Founder and CEO, and Sarah Bundy (right), Board of Directors Member at Peekaboo Beans

Despite the decline companies are slowly recognizing the need to adopt policies and practices to ensure female representation at the highest level.  In 2018, the Canada Pension Plan Investment Board announced plans to establish a policy to vote against the chair of the nominating committee of its investee public companies if the board has no women directors. And, earlier this year, Goldman Sachs announced it wouldn’t take companies public if they do not have at least one woman sitting on their board.

Peekaboo Beans

Even so, public markets have a long way to go before women are equally represented across all levels of management. As such, children’s clothing designer Peekaboo Beans Inc. (CSE:BEAN) is a trailblazer. The Vancouver-based company is spearheaded by CEO, Traci Costa, and a four-person board of directors that is 75 percent female. If its bottom line is any indicator, Costa and her team are demonstrating that having a diverse team makes good business sense.

Costa never set out to stack her board with women. “For me it was trying to find the best fit for our board, first and foremost,” she said.

Former Lululemon executive Darrell Kopke was the first to join, bringing his knowledge of growing an apparel business that aligned well with the Peekaboo Beans brand.

Sarah Bundy came into the picture after Peekaboo started to transition its model from a direct sales approach to an omni-channel marketing plan. The switch prompted Costa to look for an expert in affiliate marketing and Bundy, founder and CEO of All Inclusive Marketing Inc., was a perfect fit.

“When I came across Sarah, she had an immediate draw and a powerful force,” Costa said. “She is a mother and an expert in affiliate marketing. In this day and age, brand and culture are such big things and you really need to have that voice, so Sarah was a great fit.”

The most recent member to join is Tamara Mimran, a member of one of Canada’s first families of fashion. Mimran, an executive at premier label Alfred Sung, brings connections, industry experience and a strong focus on products and trends to the board.

Tamara Mimran, Board of Directors Member at Peekaboo Beans

Mimran admired Costa’s energy, calling her a “powerhouse” and something of a role model. At the time, the company was pivoting its business model to adopt a new sales approach, which any executive knows can be a challenge. “She really faced that head on,” Mimran said. “She’s morphing the company into something that will have a lot of longevity. She made those hard decisions that were right for the future of the company and had the courage to get in front of it. I was inspired by her and loved her story.”

A Diverse Team for Fresh Perspectives

Today, the board covers the growth, marketing, and product trifecta; Costa is currently looking for a finance-focused member of the team.

“The value of my digital e-commerce expertise mixed with the value of Traci and Tamara’s expertise, next to what Darrell provides, is fascinating to see come together,” Bundy said. “In the end, this is going to create an incredibly powerful brand and board, because we have a very unique mix of board members with different perspectives.”

The lone male voice on the Peekaboo Beans board, Kopke is a firm believer that diversity is a major contributor to business success.

“Homogeneity breeds complacency and self-congratulatory myopia,” he said. “Diversity forces contrarian perspectives that highlight great ideas and weeds out poor ideas. If a board is committed to active listening from different perspectives, as well as active participation from all of its diverse members, better results will follow.”

Newest member Tamara Mimran said the board’s makeup reflects the needs of the brand’s consumer base. “A lot of mothers purchase the product for their children, so it does make sense to have female voices at the board level,” Mimran said.

“Diversification is all over the place at the consumer level, so why shouldn’t that trickle up to the executive team and board members? The decision-making process will have a different perspective, just as the purchasing will have a different perspective. If we mirror that, I think the company will have a lot of success.”

A Successful Business Model

Over the last year, the company has transitioned to an e-commerce model that gives it the ability to scale nationally and internationally in a much more efficient manner. Since switching to an omni-channel sales model, the company is finally starting to see its revenues grow. In its most recent quarter, Peekaboo Beans posted a 229 percent revenue boost compared to the previous three months and an increase of 21 percent over the same period last year. January 2020 sales figures were strong as well.

“After trying various sales models in the past, we believe we have finally found the optimal model to drive sales and take our unique children’s clothing brand to the next level,” Costa recently told shareholders in a statement.

Sarah Bundy, whose All Inclusive Marketing Inc. was directly involved in helping shape the new strategy, concurred. “Seeing that shift already make a big difference is really exciting.”

The Future is Female

Costa and her team have built a company that directly reflects the needs of its consumers, and at its heart, Peekaboo Beans is a female-driven brand. A tour of Peekaboo Beans’ corporate offices reveals highchairs nestled next to work desks. The company takes every step to help foster a work-life balance for its employees – which Costa says can pay off in a business context.

Sarah Bundy (left), Board of Directors Member and Traci Costa (right), Founder and CEO of Peekaboo Beans

If you have happy employees, you have happy board members. You have happy individuals at every facet of your business; they’re going to perform at every level,” Costa said.

“Being a mother has informed me of what problems existed with dressing kids. All of the things that I’ve experienced as a mother led me to create Peekaboo Beans to make life easier for parents, because being a parent is hard enough.”

CSE Issuer Stories, Magazine

BevCanna Enterprises: Building a brand in a nascent category as Cannabis 2.0 takes hold in Canada

How do you build a brand – and a company – in a completely new consumer product category?

It’s a question that Vancouver-based BevCanna Enterprises (CSE:BEV) is addressing as it prepares to launch a premium line of CBD- and THC-infused beverages in Canada, just months after the federal government legalized the sale of cannabis edibles and drinks.

The team behind BevCanna includes beverage and bottling experts who played integral roles with iconic brand portfolios such as Mike’s Hard Lemonade and Vega, the plant-based drink. Led by Chief Executive Officer Marcello Leone, Chief Brand and Innovation Manager Don Chisholm, and Chief Commercialization Officer Emma Andrews, BevCanna’s management is full of entrepreneurial minds with deep expertise coming together to create a vision for a nascent category.

“There isn’t really a rulebook ahead of us, but we have a lot of intel and insights and inspirations from our past industries that we can apply to this space,” Andrews explains.

A nutritionist by training, Andrews built an impressive career in the health and wellness space, most notably with Vega. She was drawn to the cannabis space after working in the natural products industry helping to build emerging companies in disruptive categories, and felt an organic transition to the cannabis business.

As Andrews herself will tell you, she’s a longtime cannabis consumer with knowledge of the entire value chain and various form factors. But it was the emerging beverages category that attracted her interest – and her extensive expertise.

“I’m all about making sure cannabis experiences are accessible,” she says. “Beverages offer the best of both worlds – it’s a very approachable product category for new consumers and something that is easily adopted into our day-to-day routine because we’re used to consuming them.”

Part of Andrews’ job is keeping her finger on the pulse of consumer trends. Understanding consumer needs, desires, and drivers helps the company shape its products and manage the go-to-market strategy. It can be a challenging task for any consumer packaged goods company launching new products, but when the category is almost entirely new to users, statistics and hard facts are difficult to come by.

With that in mind, BevCanna commissioned an independent research group to survey over 2,000 adults of legal drinking age in the US and Canada on their interests and preferences in current and potential cannabis products.

The study found that more Canadians are aware of THC-based cannabis products, with smokable or otherwise combustible forms of cannabis currently the most common methods of consumption.

But it was CBD-based beverages that had the highest future purchase intent – 70% among consumers. The study also found that consumers across all regions see CBD-infused beverages as contributing to a healthy lifestyle.

Among 25 product concepts, the top performing ones included ready-to-drink spring water-based beverages, which consumers see as complementary to their quality of life and contributing to their well-being.

The survey also noted that while Canadian consumers would consider THC beverages as a means to relax and unwind, they tend to associate THC with consumption occasions such as hanging out with friends or social gatherings.

“New consumers and lower tolerance consumers are both big markets for us,” Andrews says. “Part of that is because of the potency limitations in Canada being 10mg THC, so for someone with a really high tolerance it’s probably cost prohibitive for a regular user to exclusively consume cannabis beverages to get the outcome they are seeking. But it will be beneficial for a new consumer or a lower tolerance consumer, or the social drinker who might have a few beverages just to relax and unwind, and that’s exactly what THC-infused beverages can offer.”

BevCanna’s first brand, Anarchist Mountain Beverages, was inspired by the site of its bottling operations on Anarchist Mountain. Products will include a range of THC-dominant, ready-to-drink beverages, shots, and powdered drink mixes, with a flavour nod to the plants found throughout the Pacific Northwest.

BevCanna’s second cannabis-infused beverage brand to hit the market in Canada is called Grüv Beverages, featuring iced tea with a 1:1 ratio of CBD and THC. BevCanna also intends to launch a third brand mid-2020 called LEV, a CBD-dominant mixture of fruit flavours with an alkaline spring water base.

But the products are only one component of building a brand. To be successful, the company has to create repeat consumers.

Andrews contemplates the challenge ahead as the novelty of seeing infused beverages on shelves wears off. “Formulation is important,” she says. “I think it impacts how someone builds a lifestyle habit around consuming these beverages. We want to put out products that have a wide appeal and don’t seem too gimmicky.”

Grüv’s iced teas are familiar taste profiles in easy-to-drink bottles. Potency, too, is important. Grüv has 5mg THC and 5mg CBD. “You can sip these while gardening or hanging out with friends so it’s very easy to fit into your lifestyle and not have it be this one-off indulgence,” notes Andrews.

BevCanna is looking at 2020 to roll out multiple products and brands. Each province must approve the beverages for sale, and the company is already talking to regulators in BC and Ontario. “For us it’s all about planning throughout 2020 to make sure we get the right consumer awareness and retail adoption,” Andrews explains. “There’s a number of different stage gates we have to pass through in order to become a national brand. The larger provinces are our initial focus and then national rollout as time goes on.”

The rollout is also taking place amidst what some investors would term a challenging time for the cannabis industry. Just over one year after the legalization of flower and cultivation, sales figures and returns have been dismal for most companies. Will it be the same for edibles and beverages?

Andrews looks at the two segments very differently. “The first wave was set around flower, which is still easy to procure illicitly. There’s a lot of competitiveness for that product category.”

There are some key differences between the first and second waves, according to Andrews. “Derivative products are processed, bottled and manufactured – it’s a much more complex production, so I don’t anticipate that there will be as much competition,” she says. “Buyers will look to the legal market because there’s a much wider selection of products than they’ve ever been able to experience before. The product selection is going to be unlike anyone’s ever seen.”

On the profit side, BevCanna has multiple revenue streams, including house brands and white label bottling, a joint venture to bring multistate cannabis vape brand Bloom to Canada, a 130 acre outdoor cultivation site, plus an active push for additional joint ventures, licensing, and acquisitions of technology and brands.

Andrews envisions both the house brands and white label business being a global play down the road. BevCanna is in the process of obtaining EU GMP certification which is on their radar for mid to late 2020. Additionally, BevCanna is entering the California market with their house brands as well as white label services come early 2020.

However the industry takes shape, BevCanna appears set to become a key player in Cannabis 2.0. The task at hand for the company is to retain its own identity while growing into a major brand in the infused beverages market.

“I think the word that really captures the essence of what we’re doing is ‘innovation’,” Andrews says. “A lot of what the cannabis business is doing is pushing at the periphery and forging a new path, but it can be subtle instead of aggressive. Innovation can come down to things like sustainability in the form factors or packaging. For us, it’s about finding opportunities that lead to a better consumer experience or a better legacy for our planet.”

This story was featured in the Public Entrepreneur magazine.

Learn more about BevCanna Enterprises at https://www.bevcanna.com/.

CSE Issuer Stories, Magazine

GlobeX Data: There is no such thing as privacy in the online world anymore. Or is there?

GlobeX Data (CSE:SWIS) is on a mission to keep your data and communications safe, and in a world where each week seems to bring news of yet another large-scale data breach, it’s a mission of vital importance.

The Vancouver-based company offers a powerful product suite for cloud-based storage, document management, encrypted e-mail and secure communication with a few twists that differentiate it from the competition.  For one, data is stored in Switzerland (by Swiss partner GlobeX Data S.A.) in centres used by Swiss banks and organizations such as the United Nations. Switzerland is home to some of the strongest privacy protection laws in the world thanks to regulations such as the Swiss Federal Data Protection Act and the Swiss Federal Data Protection Ordinance.

GlobeX Data is readying a marketing push at a time when the cybersecurity market, by some counts, is set to exceed US$300 billion within five years, making the company’s recent debut on the Canadian Securities Exchange particularly timely.

In this interview with Public Entrepreneur, Chief Executive Officer Alain Ghiai explains why data is such a valuable commodity and why that means companies and individuals alike need to take more caution to protect themselves.

Can you give us a quick introduction to GlobeX Data and the company’s origins?

GlobeX Data has its origins in Switzerland and in payment processing. In 2008, during the credit crunch, most of the banks stopped lending to merchants. We used our technology to transform ourselves into a data backup company. In 2010, we started to develop a couple of products, the first of which became DigitalSafe, our secure backup file-share password manager. In 2012, I started GlobeX Data Inc. out of New York to expand in North America.

I was approached to license our technology to a CSE-listed company, which eventually became a shell company. When the licensing was supposed to be exchanged for funds the company didn’t have the money, so I called my board members and suggested listing on the CSE ourselves and formed GlobeX Data Ltd.  We raised money locally and set up an office in Vancouver. We started to receive a lot of interest from overseas and wanted to have an entity that handled everything outside of our Swiss-based private company. Vancouver was a perfect choice geographically to handle Asia and Latin America, our prime targets to start off our international business, and was also selected for the purpose of going public in an IPO on the CSE.

Our first major contract was with America Movil and its mobile division in Mexico called Telcel that has 75 million subscribers. Because they’re in 26 countries, we would eventually be able to sell services from the US all the way down through South America.  Over the last couple of years, we’ve signed deals with half a dozen partners. America Movil has close to 400 million subscribers, almost 300 million of them mobile users.

Why did it make sense to go public now?

Our goal in going public was to have a platform to raise more money and get wider recognition because when you are public it brings a level of transparency to the company that our partners like. Right now, data security and privacy is becoming a predominant subject in our society. People are the product now – the big companies are making money off our data. There is no real player that can offer the variety of services that we do when it comes to privacy and security. Our prime directive is to respect your privacy. We use the best security possible and have proprietary technology that other businesses don’t use because they think it’s too costly. Storage has become commoditized, but there’s no price for privacy.

I find that Canadians are quite conservative, almost too conservative to adopt new technologies. Also, they underestimate the value of security or privacy and the value that they hold. I think US investors value technology stocks a lot more than we do in Canada. This is why companies go to the US to get funding – investors there will pay for innovation. It’s a shame because Canada is a fantastic country with some great tech stories.  In order to attract more investors in the US, we plan to co-list in the US market by Q1 of 2020.

There’s a lot of talk out there that data is more valuable a commodity than oil. What’s your take?

I think data is even bigger than oil right now. The thing that makes it valuable is that a company or group can use it to create a profile and sell it to a third party to try and sell something to the consumer. Contrary to oil, which is a consumable, data can be repackaged and resold. Thanks to social media, the public is used to advertising their status every few minutes.

Why is it that people seem to be incredibly willing to give away their data for free?

When it comes to information, anything that is “easy” in the digital world is counterbalanced by the individual giving away more and more privacy. We live in a society where everything needs to be instant. If you want to have this instantaneous response, you are essentially giving away your data for free. Most people don’t realize the danger that this can cause because the average person doesn’t think they have anything to hide. It’s not about hiding from the government, it’s about keeping your data private so commercial companies don’t exploit you like a commodity.

How do the services work? Are they an alternative to popular instant messaging applications?

GlobeX’s services don’t use open source coding; instead, we use our own technology to add privacy and security by design. We try to offer what businesses and people need, which is a backup for their data and a file share and secure e-mail. DigitalSafe is like a Dropbox, e-mail and a password manager all in one. Our e-mail engine, Custodia, lets you send a message to an unsecured e-mail address and that service will not be able to read the content. PrivaTalk is a secure communications suite with chat, voice, video and e-mail. Our chat has a self-destruct timer that will disappear on the device. We never require your phone number because the minute you do that, hackers have an even higher ability to access your data.

We are also launching a product called Sekur, a service for high net worth individuals and corporations, in the fourth quarter of 2019. We were inspired to create the product from the Sony hack that happened a few years ago. This service is for any business for management to communicate without the in-house IT department knowing what’s going on.

What else is coming down the pipeline in the next few months?

We’ve already released DigitalSafe and PrivaTalk and plan to launch Sekur before the end of the year. In Mexico, we’ve launched and integrated DigitalSafe with America Movil and are planning to release PrivaTalk by the end of the year. Another product we’re excited about is PrivaTalk Messenger, which is similar to BlackBerry Messenger in that it’s a server-based closed-loop system. We’re going to launch PrivaTalk Messenger by the end of the year as well.

We’ve talked at length about the dangers of leaving data unsecured. What are some simple steps that we as individuals can take to protect our information?

The question that we need to be asking ourselves is how much is our data worth to us? The first thing I would advise is to reduce your social media footprint. Essentially, you are announcing to the world where you are and what you’re doing, and eventually artificial intelligence will put together a profile on you that can lead to hacking.

The second thing is to use secure services. There’s no free privacy or security. Use a paid service that will secure your information because at least then you have some sort of comfort or recourse that your data is safe.

This story was featured in the Public Entrepreneur magazine.

Learn more about GlobeX Data Ltd. at https://globexdatagroup.com/.

CSE Issuer Stories, Magazine

Acreage Holdings: The most transformative deal in cannabis history is worth taking the time to understand

A lot has been written about the game-changing deal between Canopy Growth and Acreage Holdings (CSE:ACRG.U) announced on April 17 of this year. Much of it is complex.

Most observers assume that final consummation of the megadeal is predicated on a single, very specific occurrence: federal legalization of cannabis in the United States. But Acreage Chief Financial Officer Glen Leibowitz and Vice President of Communications Howard Schacter say this actually is not quite the case.

One thing for sure, though, is that once the acquisition of Acreage Holdings by industry giant Canopy Growth Corporation is finalized, it has the potential to cause a sea change in the way companies structure business deals in the cannabis space.

Deal structure

Here are the facts as they stand today.  Canopy and Acreage have entered into an agreement that will grant Canopy the right to acquire 100% of Acreage’s shares at such time that cannabis production and sale becomes federally permissible (remember that term) in the United States.

As part of the transaction, Acreage shareholders will receive an aggregate payment of US$300 million, which works out to approximately US$2.51 – $2.63 per share.  The payment is to be made immediately following the receipt of approval from shareholders of both Acreage and Canopy, plus the Supreme Court of British Columbia.

Later, once the “federally permissible” condition is met, Acreage shareholders would receive 0.5818 of a common share in Canopy for each Acreage share held. Canopy has stated that it intends to waive the requirement when a change in rules policing the New York Stock Exchange and Toronto Stock Exchange would enable the acquisition to occur.

US footprint

To understand how the deal came about, a bit of background is necessary. Acreage’s roots started in 2011 when Chairman and Chief Executive Officer Kevin Murphy, a Wall Street veteran, began making moves in cannabis with a minority investment in Maine. By 2017, the company, at the time called High Street Capital, was rebranded as Acreage Holdings, welcoming former US Speaker of the House John Boehner to its board. There were several rounds of private raises, including a US$119 million financing that represented the largest in the industry at the time, culminating in a reverse takeover on the Canadian Securities Exchange last year.

Today, the multistate operator has a footprint in 20 states, making it one of the largest cannabis companies in the US. Its April 2019 acquisition of Form Factory, a manufacturer and distributor of virtually any type of ingestible cannabis product, propelled Acreage into the big leagues of the mainstream consumer packaged goods industry for cannabis products. With the acquisition under its belt, Acreage hopes to become the first port of call for traditional CPG companies like Kraft and Mars if they decide to enter the cannabis space.

In that context, it’s easy to see why Canopy saw Acreage as an ideal partner in its US expansion plans. Canopy’s $5 billion deal with Constellation Brands, which manufactures spirits such as Corona Extra, Modelo Especial, Robert Mondavi, Kim Crawford and SVEDKA Vodka, is a clear sign that global CPG companies are already making moves into cannabis.

The Canopy-Acreage deal is about creating a multinational cannabis brand, gaining consumer recognition and customer loyalty in the same way as a company like Constellation has with its product portfolio. According to Leibowitz, Acreage’s main focus prior to combining the entities is to be the number one player in every state and every market that Acreage operates in. Canopy’s intellectual property and flush treasury would certainly make it easier to reach those goals.

“We’re seeing the birth of a global cannabis brand, which doesn’t exist,” says Leibowitz. “Long term, that consumer loyalty and brand recognition is the value of the deal.”

Trigger events

There are clear synergies between Canopy and Acreage, but investors are still trying to wrap their heads around how a multibillion-dollar deal can hinge on US federal permissibility of cannabis.

The truth is there are multiple pathways, or “trigger events,” that could see the final combination of the companies take place.

“The trigger event would spur Canopy’s obligation to complete the acquisition, but they have said they would do it at their discretion if the exchanges indicate that they will approve the deal,” explains Schacter.

In terms of permissibility, the STATES Act in its current form would not necessarily constitute a trigger event, according to Acreage. The trigger event is about change to federal law, which could include new law that would make it permissible to cultivate and/or distribute cannabis in the US. That’s not necessarily federal legalization but rather a change in law that speaks to permissibility.

That’s not to say that the decision is entirely in Canopy’s hands. If Acreage believes that the trigger event has occurred, it can put the shares to Canopy. “It’s not just an exclusive option for Canopy to pull the trigger,” Leibowitz says.

Valuation

Many investors have also voiced confusion as to the value of the transaction. At the time the deal was signed, it was valued at nearly US$3.4 billion, a 41.7% premium over the 30-day volume weighted average price of Acreage shares.

The figure only illustrated the value of the deal if it were to close on the day the announcement was made, says Schacter. “Admittedly, our news release could have been more explicit in that regard,” he acknowledges. “The true value of the deal won’t be known until it closes.”

A host of factors that affect the share price of either company could change that valuation by the time the deal is finalized, one of the clarifications that Leibowitz wants investors to understand.

“There’s a lot of confusion around the value that the transaction was agreed to,” he says. “I want to be clear that the shares of Canopy and Acreage do not move in tandem. There could be opportunities where Acreage shares will move up in value and don’t necessarily correlate to Canopy’s share price.”

To calculate the implied value, take the Canopy stock price on the closing date and multiply by 0.5818 to reach the ascribed value of the Canopy shares. Add the approximate $2.51 – $2.63 upfront per-share payment to Acreage shareholders, then multiply that by Acreage’s current outstanding fully diluted shares (currently 117 million fully diluted outstanding shares). The resulting amount will be the implied value of the acquisition.

The value has fluctuated since the April announcement in a possible sign that not all investors are keen on the transaction. According to Leibowitz, that is likely a result of the groundbreaking structure of the deal.

“A lot of the conversations that we have on the institutional side are people asking about the models we used,” says Leibowitz. “They can model a lot of these transactions pretty easily. The problem is this doesn’t have any certainty to it, so they can’t calculate the premium and arbitrage. The result is that institutions will say the risk is too great.”

On the retail side, investors have never seen a transaction structured this way before. “It’s a game changing, innovative deal that has taken time to digest in order to effectively understand the value to both companies,” Schacter explains.

Once the deal is agreed to by Acreage and Canopy shareholders, Acreage becomes Canopy’s exclusive pipeline in the US, ascribing value to the shareholders of both companies.

Global cannabis brand

Whether the trigger is federal legalization, or relaxed restrictions on the New York Stock Exchange, or the passage of a new law, it’s clear that Acreage and Canopy are committed to acting together to create a global cannabis brand.

In the meantime, Acreage maintains the flexibility to conduct further acquisitions through the ability to issue 63 million new shares that will be convertible to the more liquid Canopy stock.  That amounts to approximately “$1.4 billion of dry powder for M&A activity,” says Leibowitz.

Leibowitz says the phones are ringing with calls from companies wanting to be a part of the promise of an Acreage-Canopy merger.

“The combination of the number one player globally with the number one player in the US creates a superpower in this industry.”

This story was originally published at www.proactiveinvestors.com on June 14, 2019 and featured in the Public Entrepreneur magazine.

Learn more about Acreage Holdings at https://www.acreageholdings.com/.