World Class Extractions (PUMP.C) trades 18.9 million shares as it streamlines

05/19/2020

As a general rule – in business & life – when you say you’re gonna do something – it’s best to do it.

There are exceptions.

If your New Year’s resolution was to “French-kiss a Stranger” – that goal should be postponed.

If – like Mark Cuban in 2019 – you still think gold is “an expensive pet rock” – it’s not too late to make a U-turn.

If you’ve been planning a Carnival Cruise (CCL.NYSE) to Venice – you should probably whisk that off the table ASAP.

On May 19, 2020 World Class Extractions (PUMP.C) provided an operational which included the cancellation of the following ventures:

  • Deployment of an extraction centre with FV Pharma Inc.
  • Deployment of an extraction centre with Nutralife Holdings LLC in Imperial county, California, and the related consulting services agreement with Nutralife Farming LP
  • Revenue collaboration agreement with Parity Partners PBC
  • Supply of a full extraction and processing facility for Puriflor Enterprise

“While World Class continues to grow and expand, management has re-evaluated its business plan to align with changing market conditions,” stated World Class Extractions (WCE), “The downturn in the cannabis and hemp industries which began in 2019 has been further amplified by the arrival of the global COVID-19 pandemic.”

In short, WCE is bailing on pre-revenue ventures, to focus on the part of the business that is currently generating cash.

On April 1, 2020 World Class Extractions (PUMP.C) announced that it had signed a definitive investment agreement to acquire a chunk of Pineapple Express Delivery (PED) – a private Toronto-based company offering delivery services to the cannabis sector in Canada.

WCE/PED Deal Highlights:

  • WCE purchased a $500,000 secured convertible debenture from PED, convertible at the option of World-Class at $0.15 per common share of PED.
  • The Convertible Debentures have a two-year term and bear interest at 12% per annum.
  • WCE also purchased 8.33 million units of PED, at a price of $0.15 per Unit for aggregate gross proceeds of $1,250,000.
  • The common shares of PED held by WCE represent approximately 21.55% of PED, valuing PED at about $5.8 million dollars.
  • PED utilized a portion of the financing to buy 25 million shares of WCE at a price of $0.05 per share. These shares are subject to a holding period expires on August 1, 2020.

Pineapple Express Delivery intends to become the delivery company of choice for Business-to-Consumer (B2C) and Business-to-Business (B2B) companies associated with medical and recreational cannabis, including all provincial organizations which manage cannabis distribution.

“This investment will allow us to participate in and capture PED’s potential growth on our future financial statements” stated Mondin at the time, “PED’s strategic partnerships enable inter-provincial deliveries across Canada, which we believe will create additional opportunities for World-Class in the future.”

PED’s progress since the April 1, 2020:

  • Expanded its services into the Ontario cities of Barrie, Ottawa and London;
  • Entered into an agreement with CannaLogic Solutions to provide Canadian cannabis dispensaries a one-stop shop/a-la-carte e-commerce and logistics management software platform
  • Expanded its services to provide same-day and next-day delivery of wine, spirits and beer products from The Saskatoon Co-op, to its retail customers in Saskatoon, Warman and Martensville;
  • Began operations of the PED cannabis depot in Ottawa (as of May 14, 2020);

For the month of April, 2020, PED recorded unaudited revenue totalling $819,931, gross profit of $404,084 and pre-tax net income of $188,428.

World Class and Canntab Therapeutics are finalizing a definitive agreement to deploy extraction and processing systems for cannabis and hemp at Canntab’s licensed facility in Markham, Ont.

A leading developer of advanced, pharmaceutical-grade formulations of cannabinoids and terpenes, Canntab is a Health Canada licence holder (standard processing, sales (medical), research and industrial hemp).

The Feb. 25, 2019, hemp supply and loan agreement with Canntab Therapeutics and FSD Pharma Inc., as previously announced on Feb. 28, 2019, remains active.

“This is a challenging time around the world and here at home in Canada,” confirmed CEO Rosy Mondin, “The operational adjustments announced today are an important step in streamlining our direction and preserving resources to be utilized in more focused priorities. These pro-active steps [cancelling FV Pharma, Nutralife, Parity Partners and Puriflor ventures] will result in a healthier and stronger company.”

“Today, PUMP announced PE made $819k (unaudited) in April, which is up 49% in gross profit margin,” wrote Equity Guru’s Chris Parry on May 19, 2020.

“To reiterate (sales, gross margin):

  • January: $131K, -12%
  • February: $154k, 12%
  • March: $347k, 25%
  • April: $819k, 45%

“If they only hold that April sales level for the next 12 months, that’s $9.8 million in revenues. And now they’re delivering liquor too”.

“At $0.02, Imma go ahead and say PUMP is hiding in plain sight, ready for you to take her seriously, and it’s time to get over the damned ticker symbol already…or change it,” concluded Parry.

The collective wisdom of the market determined that WCE’s pivot was a wash.

On May 19, 2020 WCE traded almost 19 million shares – ending flat at .025.

Full Disclosure:  WCE is an Equity Guru marketing client.

 

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