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When I presented the late stage applicant strategy in our May/June issue, some asked me why I omitted Liberty Leaf Holdings Inc. The plain answer is that at that time it did not mean my metrics for inclusion. The change in share price from May 25th to September 11th suggests the decision at that time was the correct one.
The LOI to acquire 27.5% of GR8 Track Inc located in California appeared problematic to me and I also
wanted to see the
June 30th quarterly
financial statements
and these were
released on August
29th. Note 9 states
“…the Company’s
management has decided to no longer pursue the acquisition. Management believes the Company will recover some of the US$50,000 deposit paid. If necessary, Management will record an impairment loss during the year ended December 31, 2017 upon reaching a termination agreement.” Another announced intended investment in an unrelated company was also terminated.
The company is now focusing more on its core: the Canadian ACMPR license and its intended presence in the animal care and pet sector.
Although paid advertising, and in the absence of a current corporate presentation or investor deck, the September publication by Equity Insight is current and insightful as it details the three markets that Liberty has a foothold in: wholesale and retail of marijuana; distribution of marijuana; and Nutraceutical marijuana products aimed specifically for pets. The flexibility of the wholesale, retail, and distribution allows LIB to supply retail outlets (whether private or crown owned) or directly to consumers and this is a flexibility that LPs simply do not have.
LIB could also manage their inventory based on demand and margins. From a pure investor perspective, the license may also
have interest and value for Joint Venture and M&A activity. The size of their facility (55,000ft2 building on 3.5 acres) suggests it could accommodate future expansion. One risk will be securing inventory in the event of market wide supply shortages.
As at June 30th, the company had approx-imately $700,000; however, LIB must make a $1million milestone payment within ninety days as part of the original trans-action to acquire 100% of the applicant (North Road Ventures [NRV]).
LIB has brought in the experts at Cannabis Compliance Inc as well as from David Hyde and Associates. Investors familiar with the Canadian landscape know that such outside expertise is typically not brought in until the final stages.
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