From last month’s article on how to conduct due diligence using CMED (pre-merger mayhem) as an example, we put a stop sign graphic where something seemed puzzling.
Does it not seem odd we have a case study on a company that appears new and with a “coming soon” website? Does BLGV’s lack of information on their site seem odd to you especially given who is on ther board? Let’s dig a little deer now …
Let’s look into IC Potash for the answer:
- IC Potash traded on the TSX until November 23rd when it delisted and moved to the CSE.
- The share price traded as high as $2.94 in 2011 and as low as $0.01 in early November 2018 before moving to the TSX.
- According to SEDAR, the company’s first year of operations was over 15 years ago on 2002.
- This March 2017 news release discussing the organics/fertlizer entry in the cannabis industry.
In other words, this is not a new start up company as some suggested on social media but rather a proven company with likely the right networks, relationships, and reputation. This is indeed the “old world meets the new world” strategy combined with low market cap, the right sectors, revenues, and the right team.
From its legacy, In January 2018, the company is expected to receive USD$1.4M plus a royalty until 2022 equal to 75% of qualifhing revenues to an aggregate of USD$12.4M – SOURCE BULLETIN.
The company has a current market cap of just over CAD$13M with USD$1.4M due to it on January 8th. The company also raised approximately CAD$900K in June in a financing. In addition, it will reveive a royalty of 75% of qualifying revenues up to an aggregage amount of USD$12.4M. One such contract could be worth USD$4M to USD$6M annually – SALES CONTRACT.
A website lacking in information and under construction can quickly give that “nothing to see here … move on” impression.
However, that low market cap when one considers the cash coming in January and the potential of the royalty contract shows revenues that could quickly exceed the current market cap within 18 months.
This may be our first truly speculative case study and for good reason because this company, at face value, may appear to be something out of the darkest corners of the dot-com era; however, once we dive just a little deeper we find a trustworthy management team, an apparent reliable and impressive revenue stream, a sound business model, in house experience and expertise, and they appear to be addressing a number of market gaps ranging from reliable high efficiency and effectiveness organic fertilizer to integrated data bases built on blockchain technology.
Is BLGV an ideal company warranting further investigation and due dilligence by the retail investor with the appropriate risk appetite?
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