FSD Pharma (CNSX:HUGE) Largest Share Consolidation on the CSE
FSD Pharma (CNSX:HUGE) (OTCMKTS:FSDDF) (FRA: 0K9) the largest-ever IPO on the CSE, has undergone the largest rollback for a trading company. Executive Co-Chairman & CEO, Raza Bokhari, joins James to address the stock consolidation in further detail. He discusses the current revenue footprint of the company in terms of products and provides an outlook on revenue streams for investors to keep an eye out for. Since he’s become CEO, FSD Pharma has decided to distance from rapid growth and to focus on profitability and make measured growth investments. Raza also provides an update on the 4.5 million, private placement closing the second tranche on October 31st.
James West: I’m here with Raza Bokhari. He is the executive co-chairman and CEO of FSD Pharma. Raza, welcome.
Raza Bokhari: Thank you for having me on your program.
James West: Of course. Raza, FSD Pharma has been the subject of much speculation since it was the largest-ever IPO on the CSE when it happened; it was the largest trader ever in the history of the CSE, and now it’s done the biggest rollback in the history of the CSE for a trading company, and so the symbol HUGE remains so relevant to this company. But tell me about the recent rollback; what is the thinking behind that? It seems like it was done strategically with a specific objective in mind.
Raza Bokhari: Yeah, so thank you again for having me on your show, and FSD Pharma is a huge opportunity for us and our shareholders in this ecosystem, which is groundbreaking, and it is something that we are hoping that, over time, the strategic and tough decisions that we are taking are going to produce dividends.
James West: Dividends?
Raza Bokhari: And hopefully, will give dividends in a big way.
James West: Wow, sure. Forward-looking statement, here.
Raza Bokhari: And which I hope that a forward-looking statement that I make not only as a fiduciary, but also as a shareholder and an investor, and when I gather a compensation of $1 as the CEO, but I, w e just finished a round of investment, a private placement in the company at around 4.5 million, at $20.10 when the stock is trading rather low. And I let that, with a $1.5 million USD investment myself, because we believe that this is the best time to invest in the company.
We did this stock consolidation based on a strategic plan that was put into motion in the fall of last year, when we announced our strategic intent to uplist on a major US exchange. I was very fortunate that the FSD Pharma Board gave me an opportunity to lead the effort; I was named the executive co-chair with one of the founders, Anthony Durkacz, and we embarked on a process to list on a major exchange. And one of the – there are many steps that we had to take, including composing an independent Board. Today we are proud to report that we have eight Board members; five of them are independent, including a former United States member of Congress sits on our Board.
We have CEOs and two CEOs, one former CEO, one sitting CEO, and another Washington insider, David Urban, who helped elect President Trump, put him into the White House by winning Pennsylvania for him. I am from Pennsylvania, so I kind of have to give the plug for that.
James West: Sure.
Raza Bokhari: But another important step for that effort was that we go to shareholders, and we did a special shareholder meeting in January of 2019, and sought their permission that we have to consolidate the stock so it becomes investor-grade, number one; so that it more institutional investors, beyond our retail shareholders, which are the thrust of our investor base, and we are very appreciative of their support that they have provided us: 50,000 plus retail shareholders in Canada, primarily, and elsewhere that support us, and we thank them for that.
But for this FSD story to continue forward as a medicinal-grade grow facility, plus to also become a pharmaceutical research and development company that is advancing clinical trials of synthetic compounds, we have to have more visibility into major capital markets, and also attract institutional-grade investment. And for that, we need the up-listing, we need stock consolidation, and so here we are today, and we thought that October 11th was the time to announce, and October 16th we have begun to trade at a consolidated number.
James West: Sure, okay. So the idea behind the consolidation is to move up to the NASDAQ, I’m assuming?
Raza Bokhari: It is one of the two. So it either is NASDAQ or NYSE; I’m constrained by my lawyers not to disclose the exchange. But it’s one of the two.
James West: Okay, great. Now, tell me about the current revenue footprint of the company in terms of products. What’s it producing, what are the longer development sort of revenue streams on the horizon that investors can keep their eyes looking?
Raza Bokhari: So we were fortunate to get our sales license, which was much-awaited, at the end of second quarter of 2019. So in Q3 we are about to disclose our financial, but we will announce that we have top line revenue, which comes from core sale of cannabis. So, and I am hopeful that every quarter, we will post revenues which I hope are comparable to the previous quarters that we have reported, but it is important for us, as a company, that we generate revenues from our core product, which is the medicinal-grade cannabis that we are growing in our 25,000 square foot facility.
We, when I became the CEO in February of earlier this year, we made a decision to distance from rapid growth and to focus on profitability and make measured growth investments. So, use our capital that we had raised, 53 million that we had raised and went public on May 29th of last year, of 2018, that we should only deploy capital and forecasted that there is some level of A) a supply glut that is emerging in the marketplace.
So today, we are one of those fortunate companies that do not carry a long-term debt on our books. Our non-cash assets are 72 million, as we have reported on our Q2 financials, and I hope that, and I believe that, they will remain comparable even in our Q3 financials.
We have cash on hand, we have raised that we have announced, 4.5 million, through a private placement at $20.10. We are closing the second tranche on October 31st, which is Halloween Day; hopefully, we will still be able to get some more capital in. with that capital raise, our existing cash on hand, with, we have 20 million or so marketable securities that we have, and our assets, which is primarily our real estate at Coburg facility.
We have a runway of nearly four years to remain as a going concern. So I feel that we have quite a good and a strong outlook, and there are better days ahead of us.
James West: You bet. Okay, well, that’s a great introduction, Raza. Thanks for joining us today. We’ll come back to you soon.
Raza Bokhari: Thank you so much for having me on your program.
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.