A more indepth report
Laurie Sadler's halted capital pool shell, Valiant Minerals Ltd. (VTM), has finally submitted an information circular detailing its plan to acquire Convalo Health International Corp., the owner of a rehab clinic in Hollywood, as its qualifying transaction. Convalo owns the BLVD Center in Hollywood, where it offers the usual 12-step recovery approach. It has also designed programs that are "gender specific, creatively oriented, medication/mindfulness and LGBT affirmative." There must be plenty of money to be made in the rehab business. BLVD currently charges $1,000 (U.S.) a day for the basic outpatient program services, $1,595 (U.S.) a day for intensive outpatient program services and $2,400 (U.S.) a day for the real basket cases, partial hospitalization program services. Most of these fees are covered by insurance companies that now must treat alcoholism and drug addiction as diseases. BLVD says that in its fourth quarter of 2014 it averaged 10 clients a month, generating a monthly gross profit of $165,000. Those numbers are unaudited. The most recent audited financials available are for the nine-month period ended Aug. 31, 2014, when Convalo lost $1.21-million on revenue $436,123, but the loss includes start-up costs for the rehab clinic, which opened in the spring of 2014. The company plans to open two new BLVD Centers this year, so the founders evidently have high hopes. Valiant will ask shareholders at a Feb. 10 meeting to approve conditions of the QT, including a 1:2 rollback of its shares. Following the rollback, which will leave the shell with 5.9 million postconsolidated shares, Valiant will issue 71,089,550 postconsolidated shares to the shareholders of Convalo, after which the shell will change its name to that of its target and resume trading under the ticker symbol CXV. As well, last November Valiant closed a $2,907,000 private placement of 58.14 million subscription receipts at five cents a receipt. Those receipts, like Valiant's shares, will roll back 1:2 and convert into 29.07 million shares of Convalo when the QT closes. When Convalo lists, it will have a hefty 106,059,550 shares outstanding. The largest shareholders following the QT will be Convalo's two founders, Michael Dalsin, who will own 11,768,000 shares, and Roger Greene, who will own 8,612,000 shares. They will also join the board of Valiant and Mr. Dalsin will become chief executive officer. These two promoters, both of whom live in California, are also the founders of Patient Home Monitoring Corp. (PHM), which was today's most active stock on the TSX-V. It closed at its all-time high of $1.05 after gaining six cents on 5.41 million shares. Patient Home acquires small health care companies in the U.S. that provide in-home monitoring equipment, supplies and services to patients. It is profitable and has done well for investors. Another large shareholder of Convalo is Nimble Capital Inc., which will own 3.04 million shares when the QT closes. It is an Edmonton company owned by Fabrice Taylor, a stock picker who publishes a newsletter called the President's Club. Other noteworthy shareholders of Convalo include Tarik Elsaghir's investment company, Cedar Point Capital Inc., which will own two million shares, and Sean Tabibian, a high-profile criminal defense lawyer in Los Angeles, who will also own two million shares. Mr. Tabibian specializes in helping people charged with driving under the influence and people charged with growing drugs, many of the same folks who end up at rehab centres. Following the QT, all Valiant directors will resign but they will keep their escrow shares. Mr. Sadler, the shell's president, will own 450,000 shares of Convalo when it begins trading. He is a retired chartered accountant who was a founding director of Valiant when it listed in February, 2008, with a 10-cent IPO. He resigned from the board two years later as it reached its 24-month QT deadline, then reappeared in November, 2013, at the same time that Valiant reported the Convalo deal. Mr. Sadler is also the former president of an NEX shell, CCT Capital Ltd., which Keir Reynolds used to launch his Mezzi Holdings Inc. (MZI: $0.145).