Mr. Roger Dent reports

QUINSAM REPORTS Q4/2022 RESULTS AND ANNOUNCES VALUE CREATION STRATEGY

Quinsam Capital Corp. has released its fourth quarter 2022 results, with a net loss of $6.9-million (seven cents per share, basic, or seven cents, fully diluted) versus a loss of $4.6-million (five cents per share, basic, or five cents, fully diluted) in Q4 2021. Investors can view the company's full financial statements on SEDAR.

"At Dec. 31, 2022, we had net assets of approximately 14 cents per share outstanding," said Roger Dent, chief executive officer. "Our shares continue to trade at a very steep discount from [net asset value].

"The market for both [small-capitalization] companies and for companies engaged in the cannabis business has been very difficult during recent quarters. Investors' appetite for new investment in these sectors has been very limited. This environment has impacted the values of many of our listed investments and has created a negative context for the valuation of our unlisted investments.

"A key factor in our results was carrying value adjustments made to a number of our private company investments pursuant to [international financial reporting standard] accounting standards. IFRS standards require all assets to be carried at fair value, and the determination of the fair value of private company investments during periods of public market volatility can be challenging. This is particularly the case with our legacy cannabis investments. Accordingly, Quinsam has decided to fully write off a number of these investments even though we are hopeful that we will see recoveries from these companies in the fullness of time. Companies where we have elected to take full write-offs include Asterion, Ikanik, Evio, King & Pegahmagabow, Budd Hutt, Plantext, Phytopharma, Green Stripe and New Hope.

"We made adjustments to carrying values totalling $6.4-million (including accrued interest in some cases) in Q4 2022. "We are hopeful that some of these provisions may prove in the fullness of time to have been unnecessary. However, given current small-cap market conditions, we believe that these provisions were appropriate.

"While Q4 results were dominated by these adjustments, we did see one legacy investment make excellent progress. A-Synaptic (formerly named Gefion), in which we invested $360,000 at 60 cents per share in 2018, has recently completed a financing at $3 (U.S.) per share and is planning a listing later this year. A-Synaptic is focused on the prescriptive medicine market with its first product about to enter physician-led NDA trials for a transdermal replacement for Jaxx Pharma's orally delivered [cannabidiol] product called Epidiolex. Epidiolex is a highly successful epilepsy treatment that has serious side effects, which A-Synaptic believes will be avoided with its transdermal treatment.

"In Q4 2022, the company also recorded a tax recovery of $600,000 based on the estimated cash tax to be recovered from tax loss carry backs."

Value creation strategy

Quinsam shares have traded at a discount to NAV in recent years. In an effort to secure a valuation for the company's shares that is at NAV or perhaps at a premium to NAV, Quinsam is embarking on a strategy to realize its underlying economic value.

In current capital markets, capital is very scarce for small-cap companies. If Quinsam is able to convert its portfolio to liquid assets, Quinsam believes that it may be able to secure a valuation in excess of NAV as part of a merger or reverse takeover with a private company.

Accordingly, Quinsam intends to commence an effort to exit its illiquid investments and look for transactions that have the potential to create significant shareholder value. Quinsam believes that it is prudent to exit its illiquid investments in a patient and careful way. Accordingly, this process will likely take in excess of one year. It is a goal to continue to try to increase NAV while this process is under way through investment in liquid vehicles.

The search for a value-creating transaction has begun. The company anticipates that it may take some time to find a suitable, value-creating transaction. Further announcements will be made on the status of such steps, which are subject to all applicable shareholder and regulatory approvals.

Issuer bid

In Q4 2022, Quinsam acquired no shares pursuant to its issuer bid to acquire up to 4,916,605 shares that commenced on Sept. 6, 2022, and will terminate on Sept. 5, 2023. To date, the company has acquired 516,000 shares pursuant to this issuer bid.

Dividend

Given Quinsam's value creation strategy, the company believes that it is in the best interests of shareholders to return capital to its shareholders through an issuer bid at this time. Share repurchases at less than NAV are accretive to NAV per share and should result in improved per-share returns if the value creation strategy can be executed. Accordingly, dividends are suspended at this time and will be re-evaluated as the value creation strategy progresses.

Investor call

An investor call will be held at 9 a.m. Eastern Time on Monday, May 1, 2023, by Zoom.

Meeting ID:  816 9724 8129

Passcode:  546933

About Quinsam Capital Corp.

Quinsam is a merchant bank with a focus on small-cap investments, which it believes are undervalued. It does not invest on behalf of third parties or offer investment advice.

Generally, Quinsam does not believe that individual investments are material events. Quinsam may choose to announce certain investments once the company has finished buying its position because it feels that this information helps investors understand its decision-making process. Generally, Quinsam does not announce the sale of investments.

We seek Safe Harbor.