GrahamB wrote:
I have been taking a break from this for a while, and will continue to and be steering clear of this for a while, but I read the same posts over and over again. Now we are back to talking about all the potential, and the value of the land, and the license that will finally come, and the revenues that will come.
I still hold shares but I’m not buying anymore and I’m waiting.
This optimistic thinking, is what led me to purchase the shares of the initially. Still, it is important to rely on facts, and the recent disclosure from the company.
In short, the company‘s financial situation is not consistent with projections of developments ,and valuations, that are being suggested here again and again, and will require additional financing‘s, with share dilution, and likely a consolidation which has already been voted on.
This will almost certainly result in a share price reduction
Any “smart money” that will invest sizeable amounts, will be getting a discount to the share price, and likely special terms with warrants, and this almost always result in a reduction and share price
Don’t believe me, nor anyone else on this board. Do your own due diligence. In this regard, I recommend you start by reading factual and published information.
To the newbies out there-
Verify what you read, and I will include the links so you can read it yourself.
Read the companies CEOs recent words, and published financial statements:
In an interview with Cannabis Professional on Monday, Raza Bokhari, who was appointed FSD’s interim CEO last week, acknowledged his company’s history of making overly optimistic announcements. These include predictions that the company would create 1,500 jobs and produce 400,000 kilos of cannabis annually.”
"We have been cowboys before,” said Mr. Bokhari, a physician and entrepreneur from Philadelphia who has sat on FSD’s board since shortly after the company went public on the Canadian Securities exchange last summer. "We have to restate, to whatever we have said in the past, because those aren't facts... Today, we are going to predict and project things that we actually live up too."
“People that were in the leadership at the time, the CEO and the CFO, both are no longer there. So we have held people accountable,” Mr. Bokhari added.
Source:https://www.theglobeandmail.com/robcannabispro/article-blame-flies-following-auxlys-divorce-from-fsd/?fbclid=IwAR2mZxn8ejbhu5snxIIowGRHCA8DVRp_YvqTJh3POJobY3F8UcQwqfQ7KBo
You’re starting to see some honesty, including more realistic projections about the time to cultivation and the license
“However, completion of the project is months away, even by Mr. Bokhari’s generous estimates. And it typically takes well over a year for facilities to receive the most basic cultivation licenses, let alone sales licenses. FSD’s 25,000 square-foot facility in the Kraft building, run by subsidiary FV Pharma Inc., was licensed to cultivate in the fall of 2017, and still has not received a sales license, due to “one or two crop failures,” according to Mr. Bokhari.
https://www.theglobeandmail.com/robcannabispro/article-blame-flies-following-auxlys-divorce-from-fsd/?fbclid=IwAR2mZxn8ejbhu5snxIIowGRHCA8DVRp_YvqTJh3POJobY3F8UcQwqfQ7KBo
A number of us also raised questions about how this build was possibly going to take place, given that the $55 million that we relied on, has now been swept away. The 30 million, is now more like 20 million
From the article:
“And tapping the Kraft factory’s value for much-needed capital, likely means selling the property, Mr. Bokhari acknowledged: “I will propose that it’s a sale and leaseback, rather than borrowing against it... We are not in the real estate business, we are in the cannabis grow business.”
https://www.theglobeandmail.com/robcannabispro/article-blame-flies-following-auxlys-divorce-from-fsd/?fbclid=IwAR2mZxn8ejbhu5snxIIowGRHCA8DVRp_YvqTJh3POJobY3F8UcQwqfQ7KBo
So this huge valuation we heard about in the building, will now likely be needed to cultivate
Let’s see what it’s really worth.
One thing that we need to be concerned about, is the viability of this large warehouse. Notice what they say in this article about another project that was also abandoned:
“In November, Auxly cancelled joint-venture plans with IDP Group Inc. to convert an old Nestle factory in Chesterville, Ont., into a 200,000 square foot growing space. The project “was no longer commercially viable,” according to the company’s most recent MD&A. Mr. Rifici would not elaborate, saying only that the IDP partnership “failed for due diligence reasons.”
https://www.theglobeandmail.com/robcannabispro/article-blame-flies-following-auxlys-divorce-from-fsd/?fbclid=IwAR2mZxn8ejbhu5snxIIowGRHCA8DVRp_YvqTJh3POJobY3F8UcQwqfQ7KBo
If You are looking for further understanding about where and how they will be able to finance this, it was also previously stated, but few are listening.
Also review the unaudited financial statements:
https://backend.otcmarkets.com/otcapi/company/financial-report/210488/content
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30 2018, the Company used cash of $14,321,228 in operating activities as compared to $346,777 in the nine months ended September 30 2017. The Company was less active in 2017 as compared to current year, due to cash flow constraints.
During the nine month period ended September 30 2018, the Company generated net cash of $52,611,687 (nine months ended September 30 2017 - $673,219) in financing activities, mainly from non-brokered private placement financings.
During the nine month period ended September 30 2018, net cash used in investing activities was $9,240,525 as compared to $141, 222 during the nine month period ended September 30 2017.
For the nine month period ended September 30 2018, the Company had a net increase in cash of $29,049,934 as compared to an increase of $185,220 for the nine month period ended September 30 2017.
At September 30 2018, the Company had working capital of $34,479,6704 compared to a working capital balance of $4,121,660 as at the fiscal year ended December 31 2017. The increase in working capital was mainly due to non-brokered private placement financings and exercises of warrants attached to those financings.
At this point in the Company's development, it does not as yet derive revenues from sale of cannabis products; the only revenue it generates is from subleasing an unused portion of its Cobourg facility to unrelated third parties. The Company continues to expend considerable amounts of capital on the development of its business, the continued renovation and build out of its Cobourg facility, salaries and wages for employees and ongoing operating expenses relating to the management of a public reporting issuer.
The Company anticipates that sales revenues will soon be adequate to cover these costs, however, the Company continues to seek additional working capital to pursue its present and future objectives. The Company’s ability to raise funds for future development is largely tied to capital markets and investor interest in cannabis related companies.
The Company’s financial performance is dependent on many external factors (see "Risks and uncertainties" below). These circumstances and events could materially affect the financial performance of the Company
And....
“Factors Related to the Facility Which May Prevent Realization of Business Objectives
Any adverse changes affecting the development or construction of the Facility and commencement of production could have a material and adverse effect on the Company's business, financial condition and prospects.”
And...
“It is also possible that the costs of commencing production may be significantly greater than anticipated by the Company's management, and may be greater than funds available to the Company, in which circumstance the Company may curtail, or extend the timeframes for completing its business plans. This could have an adverse effect on the financial results of the Company.”
How will they finance this?
“Dilution
The Corporation may issue equity securities to finance its activities, including future acquisitions. If the Company was to issue Class B Subordinate Voting Shares, existing holders of such shares may experience dilution in their holdings. Moreover, when the Company's intention to issue additional equity securities becomes publicly known, the Company's share price may be adversely affected.”
Caveat Emptor
G