Darren Bondar; Something to ponder. Since the facebook group doesnt allow for discussion other than pump talk, maybe these things should be discussed here;
How do you (shareholders) feel regarding all the arms length transactions rolled into the IPO, and the current compensation structure moving forward?
I bring this up as I've recently had some shocking revelations being invested in the cannabis industry, and as a such, am reviewing my current holdings more closely.
I thought Ben Ward was a pretty stand up guy, and also shares the same award Darren received in the 40 under 40. Turns out Ben entierly (to be confirmed in court if he ever finally attends) defrauded investors and siphoned a pile of money from Canada Cannabis Corp, and then went on to helm Maricann, which changed its name to Wayland after it was found that he among others was caught in inside trading, along with collapsing their $70 million dollar PP. Several auditors have reviewd and refused to sign off on the annual financials of Wayland, leading to its destruction and asset sale for pennies on the dollar @ $12 million.
I also believed in Hadly Ford, who after special commity review today was found to have taken very unfavourable terms to funding (with friends), then closing a 100k interest free, private loan with the same lender a day later. Then another 60k loan with another arms lengh party that provided funding to Ianthus.
All that being said, I thought I would look into the past track record of our CEO. And try to rationalize how I feel regarding my personal view of the ethics involved.
Jesse you're going to love this statement. I'm not saying any of the below information is illegal by any means, nor am I suggesting it. It is simply my view of the ethics involved, and my feelings towards them.
For those of you who dont spend too much time with DD, heres the backstory;
The Aquisition - https://www.sedar.com/GetFile.do?lang=EN&docClass=9&issuerNo=00042834&issuerType=03&projectNo=02756259&docId=4295288
The Acquisitions Comfortable Image Inc. and Watch It! Incorporated, two private Alberta corporations of which Mr. Darren Bondar was Chief Executive Officer and a director, together operated a retail consumer watch, sunglasses, watch repair and related accessories business across Canada. As a result of the economic downturn and shifting trends related to the watch business, the companies faced financial difficulties and on May 15, 2017, Comfortable Image Inc. and Watch It! Incorporated filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act (Canada). Mr. Bondar and certain former company employees, creditors and investors still believed that the underlying business of Comfortable Image Inc. and Watch It! Incorporated was viable and formed Watch It! in 2017 and structured an asset purchase agreement on June 6, 2017 whereby Watch It! would purchase substantially all of the assets of Comfortable Image Inc. and Watch It! Incorporated in exchange for assuming those companies’ material debt obligations; namely; (i) debt held by Proficio Capital Partners LLC (“Proficio”) in the amount of USD$1,248,869.08, which was settled and discharged through the issuance of 1,300,000 Watch It! Common Shares to certain principals of Proficio on July 15, 2017 pursuant to a debt settlement agreement between Watch It! and the principals of Proficio dated July 10, 2017; (ii) the Grenville Royalty Agreement; and (iii) the Bondar Loan. The agreement was approved by the Court of Queen’s Bench of Alberta on June 30, 2017, the Acquisitions were completed on July 14, 2017 and the closing certificate was filed on August 10, 2017. Upon completion of the Company’s March 27, 2018 private placement, the Bondar Loan was paid out in full. Neither the Company, nor Spirit Leaf, has provided any credit support (guarantees or other assurances) or security in relation to the creditor agreements of Watch It! The management of ISH PrivateCo believed that the business of Watch It!, which was managed by the same individuals and an affiliated entity of ISH PrivateCo, could provide valuable diversification from ISH PrivateCo’s cannabis retail and franchise business carried on through Spirit Leaf, and, on July 15, 2017, completed the WCL Share Purchase by acquiring all of the remaining 2,485,956 Watch It! Common Shares which it did not previously own in exchange for the issuance of 2,485,956 ISH PrivateCo Shares (representing 27,345,516 Common Shares on a post-Amalgamation basis). In addition to the diversification and immediate revenue provided by the Acquisitions, the Acquisitions provided ISH PrivateCo corporate infrastructure that included eight corporate owned Watch It! locations, seven franchise Watch It! locations and an e-commerce service & distribution centre. In the opinion of management, all of these services are essential to the growth and success of the Company and have been developed and refined by management’s 19 years of experience in the Canadian retail and franchise space. Management of the Company believe that the elements of this infrastructure will provide the base to diversify and expand into the cannabis business.
- Watch It!’s operations have been funded partially through its internally generated cash flow and partially through an inter-company loan from the Company, bearing interest at one percent per annum, compounded monthly and payable on demand, of which approximately $1,735,000 is outstanding as of the date hereof.
- As described elsewhere herein, Darren Bondar was a director, chief executive officer, shareholder and a lender to Comfortable Image Inc. and Watch It! Incorporated at the time that such companies entered into the agreement with Watch It! (of which Mr. Bondar is also a director and officer) to complete the Acquisitions. The indebtedness of each of Comfortable Image Inc. and Watch It! Incorporated to Mr. Bondar was assumed in part by Watch It! pursuant to a debt assumption agreement dated July 14, 2017, and repaid in full on March 28, 2018. Additionally, the Company leases its office space from Joclo Properties Inc., a company controlled by Mr. Bondar.
SO to summarize, Darren essentially loaned WATCH IT! $600,000 at 12.5% interest compounded monthly. At the risk of losing this loan, along with other investments, when most parties deemed that they should file a notice for bankrupsy in 2017, Darren and others saught to restructure (in his best interest of course) as the new amalgamated company would assume these liabilities and buy it more time. In that time, ISH private Co (to which Darren was also CEO) bought out WATCH IT! and through the second round of private placements, repaid the Bondar loan $500,000.00. Meanwhile they offered no other assurances to ANY other creditor. ISH private co also bought out the remaining shares of WATCH IT! Which we're echanged for ISH private co shares, so Darrens interest in WATCH IT! was converted into many of the ISH shares he currently holds.
So as a recap, on May 15th 2017 it was suggested that both WATCH IT! and Comfortable Image file for bankrupsy. In swept Inner Spirit (Darren being CEO of all three companies) to save the day with shareholder funding, on the premise that the assets and knowlege of WATCH IT! and Comfortable Image's assets and knowledge would be beneficial for the new companies growth and diversification. You know, as opposed to simply re-hiring these people without having to buy out these questionable liabilities. Less than 3 years into the mix, Inner Spirit folds WATCH IT! into the Bankrupsy and insolvency act, and frames it as a good thing because they're focusing on a pure play cannabis company.
Oh, and Spiritleafs Offices are leased from Joclo Properties Inc., a company controlled by Mr. Bondar.
I'm sure at a very modest rate.
Again, nothing illegal transpired, however, ethically it certainly is questionable to take new shareholders money in a 'green rush' sector that proved that most investors are new, and simply buying things on hype before propperly looking into them.
Do I think Spiritleaf has a bright future ahead of it? Certainly. Do I think these new 'dragons' would get in bed with the company if it had a tarnished image? Not at all. But I do think that we need to look into the securities we spend our hard earned money on? Certainly, as its rare that these companies have our interests in mind when it comes time to look out for the retail shareholders.