Remember that whole Abattis Bioceuticals/Affinor Growers legal war I said was brewing around mid-2014? The one that Affinor stock holders yelled at me about? The one Affinor (CSE:C.AFI, Stock Forum) boss Nick Brusatore said would never happen? The one they said was all over at the first hurdle in Washington State?
Oh, it ain’t done. Not by a long shot.
For the uninitiated, Brusatore licensed his Vertical Designs Ltd vertical farming technology to Abattis Bioceuticals (CSE:C.ATT, Stock Forum) way back when the green rush was just beginning. VDL had emerged as a Brusatore vehicle after he departed from TerraSphere, where he invented that company’s first forays into vertical growing.
Abattis gave Brusatore a shedload of stock to come on over and be part of their vertical integration play, and he happily accepted, but after an aborted attempt to take over the ship, Brusatore dumped his stock, made a lot of cash, and put it into Affinor where he was given the keys to the executive washroom happily.
When I talked to Brusatore back in the day about what that meant for the tech VDL had licensed to Abattis, he first told me, “We’ll just talk to them and do a deal if we need to use it.” A few weeks later, he said there was no need for such a deal because, “We changed the tech.”
Abattis wasn’t having that, but had no reason to complain since Affinor had switched gears from weed to strawberries. But then Affinor started talked to people at PhytaLab, Abattis’ Washington State-based weed lab, and when those people bailed to start their own company, presumably with Affinor backing (and, Abattis says, with PhytaLab trade secrets), Abattis pulled the legal trigger.
The last week has seen a flurry in this respect.
December 29, from Abattis: “[Abattis] wishes to advise its shareholders that on Monday December 15th the Company obtained a preliminary injunction from the Washington state court in King County against Herbal Analytics, LLC, James Baxter, Kaleb Lund, Lauren Hilty, and Erin Leary, Affinor Growers, LLC, and Nicholas Brusatore.
December 30, from Affinor: “Although the Court technically included Affinor Growers, LLC, and Nick Brusatore, in the preliminary injunction, the Court made no finding that either were involved, assisted, or encouraged anyone to breach a fiduciary duty.”
Later that day, again from Affinor: [Affinor-owned] Vertical Designs Ltd. announced today that they have issued notice of termination of the License Agreement dated December 12, 2012 with Abattis Bioceuticals Corp., on the grounds of material breach of the Licence Agreement by Abbatis. The termination of the License Agreement is effective immediately. Abbatis has been instructed that all confidential materials […] must be returned to VDL offices.”
December 31, from Abattis: “[Abattis] wishes to advise its shareholders that contrary to public assertions made by Vertical Designs Ltd., Abattis does not consider the parties' worldwide exclusive license agreement terminated. The company maintains that it is still the exclusive worldwide holder of VDL technology for growing plants, plant material and extracts grown and produced for use as ingredients in the pharmaceutical, neutraceutical, cosmetic and wellness markets. Abattis will challenge any and all efforts by VDL to terminate the License. […] We see VDL's statements as nothing more than a blatant and unfounded effort to retaliate against Abattis and its shareholders for our legal successes. As I have previously said, Abattis welcomes spirited competition but we will not allow the Company's shareholders to be gamed by schemers. VDL's recent statements are solely meant to detract from Abattis' legal success. I am saddened that we continue to see such schemes and games being played."”
Abattis stock is up today, while Affinor is getting its ass handed to it.
So who is in the right?
Abattis is bolstering itself in respect to a situation I outlined some six months ago, that as Brusatore is a former employee of Terrasphere, and the named inventor of many of its patents, Abattis’ recent move to license Terrasphere technology alongside its existing deal for Brusatore’s VDL tech, mean they’re pretty well ironclad in any lawsuit claiming rights to his vertical grow technology.
Brusatore says any changes to that tech make it new tech, and thus outside the Abattis licensing deal (and any Terrasphere claim).
Abattis says that’s not the case.
If Abattis’ take on this proves true, and it may well go to court to clarify it has secured rights to VDL tech for the previously outlined ‘pharmaceutical, neutraceutical, cosmetic and wellness’ areas. The only area that VDL/Affinor would appear able to use the disputed tech, if Abattis is proved right, is for growing food – and even that is open to debate, depending on your definition of ‘wellness’.
Indeed, insiders suggest the aborted LOI last year where Affinor had negotiated the right to take over Vancouver’s rooftop parking garden facility, only to quietly walk away from it later, is said to have been more about Affinor getting its hands on that facility’s grow tech than it was about ever growing food.
Bottom line? When Pappy Parry tells you a legal fight is brewing, don’t argue with him, just grab your popcorn.
GeoNovus (CSE:C.GNM, Stock Forum) has officially terminated its Uruguay weed deal and will be leaving the dot.bong world to pursue a music/film/mining thing that, even as a one-time consultant with the company, I don’t understand. Stock jumped a few cents in the last few hours of 2015 on 800k volume. Now heavily involved: one Nicholas Brusatore, of Affinor.
Speaking of legal fights, no word from Satori Resources (TSX:V.BUD, Stock Forum) about their soon-to-be CEO’s threats to sue me for libel and slander for pointing to his Facebook post about ‘trying to light a fart but having too much non-combustible material’ to deal with. Also, I’ve been hearing word that current CEO Walter Henry has been hard to locate during the transition. Rumour, innuendo, farts.. it’s halted, so none of the above really matters too much, just as long as the RTO goes through.
I still hold BUD stock, by the way. As much as the RTO they’re working on with the Cannabis Oil Corporation is weird from six different angles, it’ll be better than the current share price suggests if/when it happens.
Also, since w'ere opening 2015 in 'I told ya so' mode, worth noting I told BUD investors months back that a deal was coming, only for naysayers to cover may articles in 'where's the BUD deal' complaints. Ta-da.
Inexco Mining (CSE:C.IMC, Stock Forum) has received conditional approval from the CSE for its acquisition of Worldwide Marijuana Inc. CEO Craig Engelsman is without question the Energizer Bunny of CEOs and has been relentlessly raising money for this vehicle. If you haven’t received a text message at 10pm on a Sunday from the Harvey Specter of weed yet, you’re just not a player in the game. The market has been waiting for more news on the facility itself before it takes the stock too seriously, but Inexco and Worldwide have collected some strong board names thus far. Wait and see..
Creative Edge Nutrition (OTO:FITX, Stock Forum) is – and I use this term advisedly – an absolute shit show. Longtime readers will have spent many long late winter hours with their feet up by the fire, a cigar and glass of red in hand, reading about how CEO Bill Chaaban has been pumping while dumping, about how the company said it was going to be the biggest weed grower ever, how it was sure to gets its license in a few weeks (about eleven months ago now), how Health Canada was calling them up begging them to get started to they could ‘partner up’, about how the town of Lakeshore had approved them to build their mega-grow (when actually it changed bylaws to stop it), about how random pictures of weed facilities from elsewhere posted to Facebook were somehow evidence that they had built more than a pole barn, and how they were going to sue anyone who had anything negative to say about them.
Of course, none of those promises have actually happened. None of them. And, as if to put a nice big exclamation point on the end of the whole ‘none of them’, Canada’s newspaper of record, the Globe and Mail, eviscerated the company with a Grade A takedown that did everything but label it as an outright fraud.
So I labeled it thus and demanded the company sue me to show it wasn’t. So far, no paper.
But in the wake of that Globe story, the company put out a news release interview by an investor (who goes by the name Big Addison on various messageboards) and a non-existent person referred to as Isak Weber of ‘internal public relations’ at the company, wherein the pair said the Globe piece was erroneous.
In the wake of that hilariously awful attempt at misdirection, FITX’s investor relations firm, 5WPR, and their investor relations rep William Swalm, insisted FITX remove their names from the news release and dumped the company as a client.
And as if that wasn’t enough, Marketwired, the newswire the piece was sent out through, also removed Creative Edge as a client.
Now, Creative Edge is saying it was unaware of the news release and that it went out without their approval, according to Grant Robertson of the Globe and Mail.
Lastly, the email address listed on the revised news releases for contact information… doesn’t receive email.
FITX stock is now under $0.015, yet still has a market cap higher than Organigram (TSX:V.OGI, Stock Forum), which is, you know, an actual license-holding medical marijuana producer with real patients and everything. So either OGI is way undervalued or FITX has a lot further to plummet before it is done.
Oh – one last thing – I’ve long been saying CEO Chaaban is in hiding. Someone on InvestorsHub looked at the signatures on some official documents of the company over the last month and found.. ooops.. someone is signing Chaaban’s name for him. Oh dear.
Worth noting: FITX’s last news release announced a new CEO for the company, saying Chaaban would remain as CEO of a spinoff, CEN Biotech, while one James Robinson would be taking the reins of FITX going forward.
What does this mean? Two things.
1. FITX shareholders will finally understand that the weed play is majority owned by CEN Biotech, a company they only have a small stake in, and a situation Chaaban engineered back when FITX ran out of paper to flog but still needed cash to operate.
2. It means Chaaban can dump the rest of his FITX stock without having to file anything beforehand.
And there you have it: the final days of a pump and dump.
Can someone at the SEC please, for the love of all that is mighty, continue to not their job and let this nickel and dime outfit keep roofying the dumbest retail investors out there? Because, frankly, we’re all better off if anyone who still thinks FITX is a good bet has their money taken away from them so they can stop doing damage to the market.
And the fact that there are STILL people buying this stock and telling the world they think it’s going to put their kids through college one day is, frankly, the single greatest act of surrealist comedy since Americans elected George W. Bush as President.
Either way, I'll say it again... told ya so.
In Tweed (TSX:V.TWD, Stock Forum) news, the company has announced an update that revealed some interesting things, specifically on the revenue side.
From today's news release: "The Tweed Inc. online shop has an industry-leading nine strains available for sale to customers, the waiting list for registration has been eliminated to ensure timely access to medicine, and even with the shortened month, due to the holiday season, Tweed's December revenue exceeded the $316,117 of revenue reported in the last quarter. With nine flowering rooms in operation and a further three awaiting Health Canada inspection, continuous harvesting and product release have now been achieved, supporting streamlined operations and customer supply."
This is the best new to come out of Tweed in some time. In fact, it's good news for the industry as Tweed is still, rightly or wrongly, seen as a bellwether of the sector at large.
That revenue figure will be a big deal for the company if it can crank out a million in revs in the coming quarter, and it will signal to casual investors that there is actually some money being made in the grow business... just as long as expenses don't blow the rev out of the water.
Rounding out the I told you so's for the year: Green and Hill Industries (OTO:GHIL, Stock Forum), the Ross Rebagliati thin air play, is down from a $400m market cap in March 2014 to one tenth of a cent per share now - good for a $100,000 market cap. Verde Science (OTO:VRCI, Stock Forum), after many big promises, couldn't shake its pump ancestry, now valued at 1/3 of a cent.
Called both shots, though doing so was kind of like suggesting the Edmonton Oilers might miss out on the Stanley Cup in 2015. You've just got to take a look at the roster..
So let's open 2015 with some predictions: Bedrocan to lead the show with big gains. Organigram to struggle through their next raise but come good at year's end. Wildflower with big news within the month. Thunderbird will - eventually - get the gears shifting and be a solid pick up... eventually.Matica to have a big quarter.
--Chris Parry
https://www.twitter.com/chrisparry
FULL DISCLOSURE: Inexco and GeoNovus are Stockhouse Publishing marketing clients.