World Class Extractions ($PUMP) found a way to pick up some assets on the cheap, announcing this morning that:
There’s a question that pops out of this, as Scientus Pharma (who apparently is a part of a drug called ‘Medisinol’) owns HydRx Farms but apparently doesn’t want to buy the debenture and keep the company. HydRx’s main page refers to the Medisinol website, but the rest of their info is still around in some places.
Alas, the answer to the question is that more than likely….Scientus is broke. As fact, ‘leadership’ at Scientus is a collection of private equity investment bankers led by a guy who’s described as “entrepreneur, investor, senior executive and strategist”. Not a ton about pharmaceutical in there for a company that sports ‘Pharma” in their name.
Medisinol came around when HydRx (an extraction facility with a dealer licence) met CannScience (a small R&D firm with 3 patents but no way to operationalize). They entered into happy union in March of 2017, and by summer of that year, everything was set to pop (Spoiler: it didn’t)
While finishing up that sexy facility, one of these two companies issued $11.5MM of debentures, which, happened to be secured by that very facility. Fast forward to recent breaches in debt covenants on them, the original debenture holders took a 60% loss, and were presumeably happy to watch the ass end of the whole thing go away.
<NB – what I read into all of this is that Scientus never retained a secured position in their holdings, and the assignment of debentures underneath the ‘merger’ meant that the debt-holders had a straight line-into the assets. If that’s the case, we can drop ‘strategist’ from that description of accomplishments by the head of Scientus>
For what looks to be about $5MM, Rosy bought herself an R&D company with a standalone drug, two facilities, and IP in patent form. HydRx also touts fast-acting sublingual strips, but I don’t believe there’s a canna/pharma outfit in existence that doesn’t claim or aspire to have them. See also: fast acting, slow acting, time release, chewable, hard pill, soft gels, and Flintstone shapes (subject to licensing).
For Rosy, she’s gone from manufacturer of extraction equipment, and expanded into a delivery service with a side of pharmaceutical. Too bad that ‘sonic wave extraction’ thing didn’t apparently catch on.
In totality, it looks like a proactive stance of diversification. Whether Pineapple Express pans out, or whether this latest pickup can or will ever become profitable, it can be said that unlike some others in the sector watching their bank accounts decrease as sales stagnate and inventory builds, Rosy’s been busy trying to build an outfit.
The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds a position in $PUMP.