Emerging Markets
Pervasip Corp (OTCMKTS: PVSP) Heating Up as Artizen Subsidiary Reports Record Sales Growth & Rapid Build Out of its New Tacoma Cultivation Facility
Published
3 years agoon
By
Boe RimesPervasip Corp (OTCMKTS: PVSP) has been on the move northbound in recent weeks on a surge of trading volume and renewed interest from investors. PVSP has runner in its blood and saw a big move this time last year. The stock also has an established and significant shareholder base that will be back into PVSP heavily now that a clear upward momentum has been established. Currently PVSP trades just over 52 week lows and has a very significant gap to fill from where it was trading in April 2021. A big announcement is on the horizon; on the Company’s twitter account they posted: “Hello $PVSP shareholders: We are pleased to announce we are in the final phase of closing a strategic partnership that management believes will add an enormous amount of revenue to our bottom line. We look forward to announcing the details soon. Stay tuned!”
There are a lot of exciting things happening at PVSP; the Company’s 5% stake in KRTL Biotech seems to be paying off but it’s the Artizen acquisition that is bringing significant revenues to PVSP, revenues that put Pervasip above 99% of stocks on the OTCQB. Artizen is one of Washington’s original cannabis brands and is recognized as one of the most reputable leading consumer brands in the state. Earnings. Recognized as the 9th bestselling independent cannabis flower brand by MJ Business Magazine, Artizen further strengthened its market position by winning this year’s Dockside Cannabis Cup with its Dutchberry strain. Artizen subsidiary ZAM (Zen Asset Management) currently manages four licensed cultivation facilities and one licensed processing facility in Washington state. ZAM is also building out a next generation 24,000 square ft of cultivation and 9,000 square ft of processing capacity. PVSP has graduated to the revenue big leagues on the OTCQB reporting $17.1 million in revenue and about $530,000 in net income in fiscal 2021. For 2022 management is predicting big things; Artizen revenues are expected to incrase substantially by as much as 50% according to some. The Company is also expecting around $6 million in annual revenues from the Tacoma facility once its completed and another $5 million in annual revenues from the partnership with Full Spectrum Advisors.
Pervasip Corp (OTCMKTS: PVSP) is a developer of companies and technologies in high value emerging markets, owns Artizen Corporation and its subsidiary, Zen Asset Management LLC, a diversified asset management company founded to acquire, develop, and support companies and technologies in the cannabis industry. ZAM’s existing clients operate four licensed cannabis cultivation and one processing facility in Washington. Most of the biomass produced by these independent cultivators has been sold historically under the Artizen™ brand, including all-time top selling products in flower in Washington state. Pervasip additionally owns 5% of KRTL Biotech, Inc., a developer of biotechnologies with a focus on pharmaceutical grade resources and technologies as well as disciplines in the CBD, Psilocybin and certain psychedelics arena. The company’s scientists are leaders in cancer and neurology research, with over 80 years of experience in the research industry. KRTL Biotech Inc. has obtained the coveted approval of Korea’s Ministry of Food and Drug Safety (MFDS), formerly known as the Korea Food & Drug Administration (KFDA). The company has partnered with a multitude of universities and biotech companies to facilitate this venture.
Last year PVSP acquired Artizen Asset Management LLC (“AAM”) the parent of Zen Asset Management LLC (“ZAM”), a diversified asset management company that was founded to acquire, develop, and support companies and technologies in the cannabis industry. ZAM manages four licensed cultivation facilities and one licensed processing facility in Washington state under a series of management, leasing, licensing and other long-term agreements.
$PVSP…incoming expansion for these lucky States https://t.co/tFqYg2J3ff
— Keith Kyak (@KeithKyak) April 27, 2022
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Hello $PVSP shareholders: We are pleased to announce we are in the final phase of closing a strategic partnership that management believes will add an enormous amount of revenue to our bottom line. We look forward to announcing the details soon. Stay tuned!
— Pervasip Corp (@PervasipC) April 19, 2022
As one of Washington’s original cannabis brands, Artizen-branded products are the all-time fourth best-selling in Washington across all product categories, and the all-time third in flower, with five of the all-time top ten selling products in flower. Eighths of Artizen’s flagship Dutchberry™ flower are the all-time top selling flower product in Washington. Artizen’s commitment to quality and consistency has built a substantial following, fueling more than $69 million in wholesale sales to a distribution network with more than 200 retailers, corresponding to more than $200 million in retail value since inception in 2015. Go here for a full list of Artizen’s flower.
The Artizen brand is recognized as one of the most reputable leading consumer brands in Washington state, with tremendous consumer and retailer recognition. Management believes ZAM’s results in Washington are scalable with the right investment and management. Sales of Artizen-branded products have grown by more than 25% during the three years ended December 31, 2020, to more than $17 million in 2020. While that growth was historically driven by the continuing strong demand for Artizen-branded products, that demand significantly exceeds supplies. Additional growth is constrained by the availability of financing to invest in ZAM’s infrastructure and help its customers to increase utilization, sales, and earnings. Just last week ArtizenTM was announced as the winner of the esteemed Washington State 2022 Dockside Cannabis Cup. Recognized as the 9th bestselling independent cannabis flower brand by MJ Business Magazine, Artizen further strengthened its market position by winning this year’s Dockside Cannabis Cup with its Dutchberry strain.
Currently ZAM (Zen Asset Management) is building out a next generation cultivation facility in Tacoma, Washington consisting of 24,000 square feet of cultivation and 9,000 square feet of processing capacity, which ZAM will manage for three new ZAM customers. The new cultivation facility is projected to produce 500 pounds per month of high-quality cannabis flower and is scheduled for completion and launch by end of 2022. Pervasip management estimates the additional output to be initially valued at about $6 million in annualized revenues, with pre-tax operating income margins exceeding 10%.
In March Pervasip reported $17.1 million in revenue and about $530,000 in net income attributable to Pervasip’s shareholders for the year ended November 30, 2021 coming from its Artizen subsidiary. Wholesale sales increased by 330% for the year ended November 30, 2021, as compared to the year ended November 30, 2020, putting the Company on track to increase total sales to more than $30 million per year after construction of the Tacoma cultivation facility is completed. Pervasip Finanancial results will be further boosted by the Company’s strategic partnership with Full Spectrum Advisors (“FSA”), a cannabis cultivation group that has designed and operated over 7 million square feet of indoor canopy along with pioneering cutting-edge crop steering techniques. This partnership is expected to boost PVSP revenues by an additional $5 million annually over the next 24 months.
After recently announcing record Q1 financial results, CEO German Burtscher stated: “Our team has executed the first half of our restructuring plans flawlessly over the past few months. Improved gross margins, achieving positive EBITDA and quarter over quarter revenue growth even in the traditionally slowest quarter in our industry and compared to a pandemic high Q1 2021 is a testament to our strength, the direction of the Company and the power of the Artizen brand, “Our infrastructure is on track to achieve per square foot target objectives for harvest yields by Q4 this year, which will yield a 50% increase in output from all gardens. Together with the buildout of our new state of the art cultivation facility, this will continue to improve the company’s revenue and profitability.”
$PVSP Expecting 50% revenue growth from nation wide expansion🏆 #CannabisNews #cannabisindustry #cannabisstock #cbdproducts #CBD @MarketOverwatch @StockWeTrust #StocksToBuy @PervasipC https://t.co/v0uWKBlARn pic.twitter.com/AoxWypGGnn
— HELMER (@GoldenGlobeGGA) April 28, 2022
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PVSP is an exciting story developing in small caps; the Company’s Artizen acquisition continues to pay off in spades achieving $17.1 million in revenue and about $530,000 in net income in fiscal 2021. For 2022 management is predicting big things; Artizen revenues are expected to incraese substantially by as much as 50% according to some sources; added to that will be an addition $10 million in new revenues coming from the new Tacome facility and the partnership with Full Spectrum Advisors. Management is excited about the Company’s pospects recently stating: “The Company started 2022 in a strong position according to management; We ended 2021 with numerous accomplishments, healthy financials, an amazing lineup of new opportunities, various strategic initiatives, and a companywide restructuring that we concluded over the past 3 months, after completing our acquisitions of Artizen Corporation and its subsidiary, Zen Asset Management LLC in September 2021. We have an amazing foundation to grow from in 2022, including close to $17 million in annual revenues, positive EBIDTA, one of the most established cannabis management companies in Washington state, and the intellectual property behind one of the top 10 national cannabis brands.” We will be updating on PVSP when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with PVSP.
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Disclosure: we hold no position in PVSP either long or short and we have not been compensated for this article.
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Emerging Markets
Bitfarms (NASDAQ: BITF) in Focus: Exploring the Meteoric 110% Surge and Macro Influences
Published
12 months agoon
December 7, 2023Bitfarms Ltd. (NASDAQ: BITF) rides the wave of explosive growth surging by over 110% from its lows of $1.03 per share in November. This BTC miner has witnessed a 41% increase since last Friday, December 1st, 2023. If you’ve been keeping up with our recent articles, you’ll notice that majority of coverage lacks substantial press releases or filings supporting a surge in valuation. Today’s coverage includes precisely that and more. Let’s delve deeper into BITF to assess if this crypto miner is worth considering amidst the ongoing rise in spot BTC.
Background:
Established in 2017, BITF has established itself as a global leader in Bitcoin (BTC) mining. Utilizing its computational power, the company contributes to various mining pools, earning payment in Bitcoin.
BITF sets itself apart by developing, owning, and operating vertically integrated mining farms. These facilities feature in-house management, company-owned electrical engineering services, installation support, and multiple on-site technical repair centers, ensuring a comprehensive operational setup. Bitfarms relies on its proprietary data analytics system, ensuring superior operational performance and uninterrupted service.
Currently managing 11 farms across four countries—Canada, the United States, Paraguay, and Argentina—Bitfarms predominantly uses environmentally friendly hydro-electric power and maintains long-term power contracts. The company remains dedicated to employing sustainable energy sources, often utilizing locally available and under-utilized energy infrastructure.
In its recent upgrade initiative, BITF has improved its fleet’s efficiency and capital practices ahead of the Halving. This strategic move aims to boost its capital-efficient fleet to 12.0 EH/s by Q2 2024. The focus lies in reducing miner and energy costs, enhancing fleet energy efficiency, and fostering greater pricing flexibility for sustained growth and success.
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Market Update:
At the core of BITF’s latest momentum and strength lies its connection to macro-scale factors. To provide deeper insights into BITF’s future prospects, we’ve conducted a comprehensive market analysis.
The latest market surge propelled spot BTC above the USD $44,000 mark at its peak, reaching its highest value in more than 19 months. This remarkable rally emphasizes the enduring positivity shared among retail and institutional traders alike.
Blackrock ETF:
The primary driving force behind Bitcoin’s ascent appears to be rooted in market expectations of an approved spot BTC exchange-traded fund (ETF) in January 2024. This anticipation has spurred substantial cash inflows from institutional investors, contributing significantly to Bitcoin’s current trajectory.
If the approval unfolds as anticipated, it has the potential to bring a substantial wave of fresh capital into Bitcoin. According to certain projections, this approval might introduce up to $50 billion in new liquidity to Bitcoin. The precise impact on Bitcoin’s price remains uncertain; however, a particular model suggests a 4% price surge for every $1 billion that enters Bitcoin. Consequently, if the projected $50 billion materializes, Bitcoin could potentially double or even triple in value.
Rumours from Qatar:
As per bitcoin enthusiast Max Keiser, Qatar’s sovereign wealth fund (QSWF) (mainly tasked with managing the nation’s extensive oil and gas-derived wealth), is contemplating a significant investment spree of up to $500 billion in the flagship cryptocurrency, Bitcoin.
To offer a comparison, this proposed investment dwarfs the disclosed Bitcoin holdings of MicroStrategy, founded by Michael Saylor, by an astonishing 671 times. Presently, MicroStrategy stands as the largest corporate holder of Bitcoin, possessing 174,530 BTC following its acquisition in November.
Keiser is notably optimistic that QSWF’s monumental investment could propel the price of bitcoin to reach soaring highs of $100,000.
Binance Update:
In the aftermath of former Binance CEO Changpeng Zhao’s guilty plea and the subsequent $4.3 billion settlement with the U.S. Department of Justice (DOJ) on Nov. 21, Bitcoin’s price initially showed mixed signals. Contrary to expectations, Binance did not experience a mass exodus of funds similar to what FTX faced during its public liquidity crisis. Notably, prominent figures in the crypto space, such as Galaxy Digital CEO Mike Novogratz, perceive the settlement as a positive development overall.
At first, Binance’s Bitcoin reserves dropped by 17% from their peak. Following the initial outflows, the balance has shown an increase of nearly 1%. As for FTX, their BTC reserves fell a staggering 99.9% from all-time highs in November 2022 ,with no recovery in sight.
This serves as a significant testament to Bitcoin’s resilience at present, even as the largest cryptocurrency exchange by volume faces a monumental lawsuit. Unlike the substantial impact experienced by FTX, this legal challenge did not severely affect BTC reserves.
So What?:
With multiple factors driving spot BTC, smaller-scale BTC miners are becoming increasingly attractive -especially considering the potential financial growth and rising profit margins. Let’s delve into the recent developments concerning BITF for a closer look.
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What Happened:
On December 1st, 2023, BITF released a comprehensive performance and financial update, revealing robust figures for their BTC mining operations. Based on this report alone, it’s evident that BITF boasts a substantial global operational capacity and possesses the financial support needed to remain competitive, particularly as BTC mining grows more challenging post-halving. To enhance clarity, we’ve restructured the release into bullet points for easier comprehension.
BTC Production: November production recorded 392 BTC, a 1.5% decline from October. The network difficulty surged by 19.0% in November, indicating strong miner demand leading into the 2024 Halving.
Network Metrics: For the eleven months ended November 30th, network difficulty increased by 92.2%, while BTC’s price rose approximately 128.4%. This resulted in a 33.9% improvement in production economics measured by USD/TH/day.
Operating Highlights:
- 6.4 EH/s was online by November 30, 2023, marking a 45% increase from November 30, 2022.
- 66.4 BTC/average EH/s was recorded, down 1.9% from October 2023.
- 13.1 BTC earned daily on average in November, equivalent to about $495,200 per day based on a BTC price of $37,800 on November 30, 2023.
Expansion Initiatives:
- Firm purchase order placed for 35,888 Bitmain T21 miners, with an option for an additional 28,000 T21 miners.
- Finalizing contracts to expand operating capacity from 30 MW to 50 MW at Paso Pe, adding 20 MW of hydro-miner containers.
Financial Update:
- Raised $44 million in gross proceeds through a private placement of common stock and warrants.
- Sold 350 BTC, generating $12.8 million in total proceeds.
- Added 42 BTC to treasury, holding a total of 802 BTC, valued at approximately $30.3 million based on a BTC price of $37,800 at November 30, 2023.
- Held Synthetic HODL™ of 35 long-dated BTC call options as of November 30, 2023.
- Reduced outstanding indebtedness by $1.9 million, leaving a remaining balance of $6.0 million at November 30, 2023.
Technical Analysis:
We’re noticing a trend among retail traders on social platforms like X, discussing technical trading patterns related to crypto miners, specifically highlighting positive momentum linked to an Inverse Head and Shoulders (IHS) pattern. A user, @FreeDoomCapital, suggests that among all miners, BITF seems to exhibit the clearest pattern. Here’s a brief explanation of the pattern to enhance your comprehension.
The Inverse Head and Shoulders (IHS) pattern is a technical analysis formation commonly observed in financial markets, particularly in stocks, currencies, and cryptocurrencies. It’s considered a bullish reversal pattern and typically appears after a downtrend.
Here’s a further breakdown on the pattern:
- Formation: The pattern consists of three successive troughs. The middle trough (the “head”) is the lowest point, while the two surrounding troughs (the “shoulders”) are higher than the head and relatively symmetrical in height.
- Shoulders: The left and right shoulders are formed at the end of a downtrend. They show a decline in price followed by a temporary stabilization or slight increase before declining again.
- Head: The head is formed after the left shoulder, indicating a further decrease in price, often reaching a new low. However, the head is typically higher than the previous trough, indicating a potential shift in the downward momentum.
- Neckline: The neckline is a trendline connecting the highs of the two shoulders. It acts as a critical level; a breakout above this line is a significant signal for a potential trend reversal.
- Volume: Volume analysis can complement the pattern. Generally, during the formation of the left shoulder, the volume decreases, increases during the head formation, and decreases again during the right shoulder formation. A breakout with higher volume after the formation is considered a stronger confirmation of the pattern.
- Confirmation: A confirmed Inverse Head and Shoulders pattern occurs when the price breaks above the neckline. Traders often look for a sustained move above the neckline to confirm the reversal.
The Inverse Head and Shoulders pattern is considered complete when the price breaks above the neckline, indicating a shift from a downtrend to a potential uptrend. Traders and analysts use this pattern as a signal to anticipate higher prices, and they often set price targets based on the distance between the neckline and the head.
Similar to all technical trading patterns, it’s important to recognize that it’s not foolproof and may not be accurate in every instance. However, it’s noteworthy that several sources are paying attention, particularly due to the apparent clarity of BITF’s formation of an IHS pattern in their lineup.
Conclusion:
An essential consideration with BTC miners is the increasing difficulty of mining the digital asset after halving, which is scheduled for around April 2024. BITF’s recent fleet upgrade aims to strengthen its capacity pre-halving, positioning itself as a frontrunner. With spot BTC around USD $44,000, the 392 BTC mined in November alone would translate to approximately USD $17 million in top line revenue. If potential BTC catalysts sky rocket the price to USD $150,000 as some suggest, November’s mining performance would represent nearly $60 million – and that’s just in one month. As one of the leading BTC miners globally, we highly recommend keeping BITF on your radar.
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Disclosure: We have not been compensated for this article/video. MicroCap Daily is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.
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Emerging Markets
Music Licensing Inc. (OTC: SONG): Unraveling the 1250% Surge and Current Valuation
Published
1 year agoon
November 10, 2023Music Licensing, Inc. (OTC: SONG) shares skyrocket a whopping 100% gain at the time of writing, marking an incredible 1250% surge since their October low of $0.0004. Many appear to be wondering the cause behind the sudden rise and after today’s spike we decided to do more research. Let’s dig into the company and its recent updates to figure out how they’ve pulled off such an impressive climb and what might be coming next.
Background:
Starting with their name – Music Licensing, Inc., it is more commonly recognized as Pro Music Rights. If you’re diving into your own research, you’ll likely want to search by, “Pro Music Rights” to find the investor information you’re looking for, you won’t find much under the stock name alone.
In a nutshell, SONG is a performance rights organization (PRO) and was the 5th to be established in the United States. If that mean’s absolutely nothing to you, skip to the next title for a better understanding.
Nethertheless, they’ve got some big players under their license umbrella, including TikTok, iHeart Media, Triller, Napster, 7Digital, and Vevo. In total, SONG holds an estimated market share of 7.4% in the United States, representing a whopping 2,500,000 works.
Look out for familiar artists like A$AP Rocky, Wiz Khalifa, and Young Jeezy in their impressive lineup. For more details on other notable artists, their press releases have a comprehensive list for you to explore.
Again if the whole idea of a Performance Rights Organization (PRO) feels confusing, you’re not alone. We did some digging to break it down for you.
What’s a Performance Rights Organization:
To keep it simple, think of a Performance Rights Organization (PRO) as the backstage manager for musicians. It’s like the middle person making sure that when your favorite songs are played in public—on the radio, at concerts, or even on your go-to streaming app—the artists get their fair share of the spotlight. These organizations, such as ASCAP, BMI, and SESAC, keep tabs on where and how music is being enjoyed and make sure the right people get paid for their tunes. It’s a behind-the-scenes gig that ensures artists get a nod and a paycheck every time their music takes center stage.
Latest Press Release:
This morning on November 10th, 2023, the company announced it will be cancelling 59.9% of their outstanding shares to enhancing Shareholder Value.
“Following the cancellation of an astounding 1,566,945,290 common stock shares, which reduced the total outstanding shares to 2,000,000,000, Mr. Noch is now embarking on yet another groundbreaking endeavor. He has pledged to cancel an additional 1,197,364,785 common stock shares, equating to a remarkable 59.9% of the current outstanding shares”.
Taking the cancellation of all these shares would also mean their market cap would be effected pretty drastically as well. If we do the math (at time of writing), 2B shares outstanding multiplied by the current stock price of $0.004 would mean ~8M market cap.
Okay Jake, so you’ve done the share reduction dance, claiming it’s a boost for shareholders. But really, what else does cutting down on shares mean for investors. Allow us to further break it down.
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Why Does it Matter?
Cutting down on the number of shares a company has floating around might seem like financial gymnastics, but it actually makes sense for a few reasons:
- More Bang for Your Buck (EPS): Picture this – you and your buddies own a pizza joint. If you slice up the pizza into more pieces, each one gets smaller. The same goes for shares. Less shares mean each piece of the company’s earnings pie goes to fewer shareholders, so everyone’s slice gets bigger. That’s what we call Earnings Per Share (EPS), and a bigger slice is usually good news.
- Share Price Perk: When a company trims down its shares, it can potentially give its stock price a boost because the float is now tighter. With a tighter float, it doesn’t take as much buying to move the stock price in either direction.
- Steady Ship: Fewer shares mean fewer folks holding the reins. It’s like steering a ship – with fewer hands on deck, it’s easier to keep things steady. Reducing the number of shares available for purchase also makes it harder and more costly for others to buy a big chunk of ownership, fortifying the company against hostile takeovers.
- Improved Financial Ratios: Reducing shares outstanding can even positively impact financial ratios, such as earnings per share, return on equity, and book value per share. These improvements of course make their financial profile more attractive to investors by and large.
Financial Highlights:
Despite having a market cap of around $15 million on YahooFinance, or $8 million if we consider the share consolidation, SONG has posted impressive numbers for its financials. They’ve managed to rake in a substantial $758 million in revenues, pushing a solid net income of $39 million. Their quarter ending in June, 2023 showed 93M in revenue, which was also net profitable too. Digging into their balance sheet, you’ll find $45 million in assets and a modest $61,000 in liabilities. Given those figures, this valuation’s definitely a head-scratcher and seems completely off.
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Behind SONG’s Low Valuation:
According to one user, @StockPicksNYC, on Twitter there’s a story behind why their valuation is so low given their fundamental financial backing.
Apparently the stock’s low valuation can be attributed to a previous incident where a storm-induced power outage at the CEO’s residence led the company to a downgrade on OTC markets, pushing SONG into ‘Expert Market‘ status with a ‘Shell Risk’ label.
Despite successfully addressing challenges to regain ‘Pink Current’ status and remove the ‘Shell Risk’ designation, SONG is still unable to update its information on the OTCM platform.
This is a well-documented problem with OTCM and there’s ongoing litigation with OTC Link, (an OTC Markets subsidiary), revolving around transparency and responsiveness issues during efforts to resolve downgrade-related issues.
This has now pushed SONG to take further measures to safeguard itself and its shareholders. They currently have a lawsuit filed against OTC Markets, where they’re pursuing $386.6 Million in Damages.
The good news is despite the lack of information on OTCM, SONG filed a Form 1-SA with the SEC to provide detailed information about their business.
OTC Expert Market:
If we look at the OTC Market tiers, there’s OTCQX, OTCQB, OTCPNK, OTC Expert Market, and OTC Grey. Back on September 28, 2021 the SEC put an amendment in place that stops brokers from quoting stocks without current information. That’s where OTC’s Expert Market steps in.
In a nut shell, any company that does not have current information publicly available trades on OTC Expert Market. Only broker-dealers, professionals or sophisticated investors are allowed to view quotations in Expert Market securities. It of course comes with massive risk given you’d be completely unaware of the company’s financial health.
Conclusion:
Among many factors, SONG’s impressive revenue and profits alone make the company appear considerably undervalued. Even without more developments, we can imagine a company of this caliber will inevitably draw increasing interest from investors. Considering the legal issues with OTC, a move to a bigger exchange like the NYSE or NASDAQ seems likely. They’d atleast be a great candidate considering the fundamentals. Keep in mind, this dynamic story could change at a moments notice, so be sure to keep them on your radar.
We will update you on SONG when more details emerge, subscribe to Microcapdaily to follow along!
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Disclosure: We have not been compensated for this article/video. MicroCap Daily is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.
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Emerging Markets
Lucy Scientific Discovery’s (NASDAQ: LSDI) Game-Changing Move: A Closer Look at the High Times Acquisition
Published
1 year agoon
September 8, 2023On August 8th, 2023, Lucy Scientific Discovery Inc. (NASDAQ: LSDI), a leading developer in the psychedelic drug industry, witnessed an impressive surge in its stock value, gaining approximately 25% in combined trading, including after-hours (AH) trading. The British Columbia-based company made headlines by announcing its strategic move to acquire intellectual property (IP) from the renowned cannabis publication, High Times Holding Corp. (HHC).
Additional Background:
Under this agreement, Lucy will exchange 20% of its shares and a series of payments for access to HHC’s valuable IP portfolio, which includes the rights to generate licensing and royalty income from renowned brands like High Times, 420.com, and Cannabis Cup, along with their associated domain names.
The partnership between #HighTimes and #LucyScientificDiscovery just makes sense. It's a harmonious alignment that should lead to success. This could be the start of something special as they journey towards ambitious goals.$LSDI $TSLA $SPY pic.twitter.com/qgXYkKQVoe
— Luca Grayson (@GraysonLucasa) September 7, 2023
Lucy’s commitment involves making semi-annual payments to HHC over a five-year period, structured around earnings before income, taxes, depreciation, and amortization (EBITDA) generated through the acquired IP. The flexibility exists for Lucy to fulfill these payments either in cash or through stock issuance and the announcement is generating considerable interest.
Furthermore, post-acquisition, Lucy will grant High Times the opportunity to operate retail outlets and distribute THC products bearing these prestigious brands within the United States. This privilege comes in exchange for an annual license fee of $1 million, set to double to $2 million annually once federal legalization of cannabis occurs in the country.
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Leveraging the brand rights secured from HHC, Lucy aims to bolster its revenue streams by expanding and enhancing its existing 18 licensing agreements, both domestically and internationally. These arrangements encompass a wide array of consumer products and merchandise, promising to further establish Lucy’s presence in the global market. The acquisition is expected to be finalized within the coming two weeks, marking a significant strategic move for Lucy Scientific Discovery Inc.
As a result of the acquisition, High Times is now a publicly-traded entity. Lucy anticipates that this agreement will contribute over $10 million in revenue to its financial results in the upcoming year, along with $5 million in EBITDA.
By purchasing #HighTimes assets, Lucy Scientific Discovery has struck gold. It has acquired a wealth of intellectual property, trademarks, and royalty prospects that will bring #LSDI $LSDI #lucyscientificdiscovery millions of dollars. pic.twitter.com/CEkqQnuFHm
— Rowan Dune (@rowandune) September 7, 2023
Adam Levin, the Executive Chairman of HHC, expressed optimism about the deal, noting, “This transaction will create exciting new growth opportunities for the High Times brand, under the leadership of Richard Nanula, a seasoned executive with extensive experience in major consumer brands and global corporations.”
Levin also emphasized High Times’ enthusiasm in becoming a significant shareholder of Lucy Scientific Discovery. Notably, Lucy completed its initial public offering and Nasdaq listing in February, offering 1,875,000 shares at $4.00 each.
Richard Nanula, CEO of the British Columbia-based company, shared his outlook on the acquisition, stating, “Lucy expects this acquisition to rapidly generate high-margin revenue within the global cannabis sector.”
In recent developments, Lucy introduced the sleep aid product “Twilight,” which includes amanita muscaria and reishi mushrooms. Additionally, the company joined forces with Wesana Health Holdings Inc. (OTCQB: WSNAF) in March to collaborate on the development of the CBD and psilocybin-based drug SANA-013, targeting conditions such as migraines, cluster headaches, and major depressive disorder.
$LSDI's Health Canada license allows approved psilocybin sales, backed by the Canadian government's significant funding $LSDI is on fire. #LucyScientificDiscovery $LSDI
— William James (@jaym_willy) September 8, 2023
High Times, founded in 1974, has a rich history, featuring works by renowned writers like Truman Capote and Hunter S. Thompson. Since 1988, its Cannabis Cup has stood as the most prestigious cannabis competition globally, with notable judges including Snoop Dogg, Joe Rogan, Tommy Chong, and other prominent figures in the cannabis industry.
While Lucy’s shares showed a nearly 16% increase to reach $0.68 on the Nasdaq exchange on Friday, it is worth noting that they have experienced a decline of over 77% over the past year.
Macro Trend:
In recent times, our articles have prominently featured cannabis-related topics, reflecting the growing popularity of stocks in this sector. LSDI’s acquisition aligns perfectly with the current climate, as the cannabis industry experiences a significant surge, coinciding with the Health and Human Services (HHS) exploring the possibility of reclassifying cannabis from Schedule I to Schedule III of the Controlled Substances Act.
Don't overreact to temporary $LSDI EPS decline. Psychedelics mega-trend makes risk/reward compelling.#Shrooms#LucyScientificDiscovery
— gianna snell (@skatette) September 8, 2023
While many countries around the world have already moved towards decriminalization and legalization, the United States has been relatively cautious in its approach. However, the consideration of such a reclassification represents a potential historic turning point. If such a change were to materialize, it would mark a substantial shift in the regulatory landscape, potentially revitalizing cannabis as an attractive investment opportunity. The industry is already showing signs of reestablishing its market presence and could once again become a noteworthy investment option.
I know this Mindful line is set to disrupt the market. Expecting a surge in stock price in the months ahead. #Lucyscientificdiscovery $LSDI pic.twitter.com/2ccR1CttA3
— Tom (@Tomi_l33) September 7, 2023
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Picture by herbalhemp from Pixabay
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