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Quinsam Capital earns $3.6-million in Q1 2021

2021-05-26 12:05 ET - News Release

Mr. Roger Dent reports

QUINSAM ANNOUNCES Q1/2021 RESULTS AND UPDATE

Quinsam Capital Corp. has released its Q1 2021 results, with net income of $3.6-million (three cents per share basic, three cents fully diluted) versus a net loss of $2.6-million (two cents per share basic, two cents fully diluted) in Q1 2020. Investors can access the company's full financial statements on SEDAR. In addition, Quinsam is pleased to announce an update on recent events.

"At March 31, 2021, we had net assets of 35 cents per share, an increase of 10.2 per cent from our Dec. 31, 2020, level," said Roger Dent, chief executive officer of Quinsam.

Q1 2021 results

Market conditions continued to be broadly favourable in Q1 2021 which helped the valuations of several of the company's publicly traded investments. This also improved the prospects for its private company and debt investments, although its carrying values were not necessarily impacted.

Quinsam took advantage of liquid markets and exited a number of share positions including Skylight Health, Nexe and Helix TCS. All were solidly profitable investments for the company.

Quinsam saw a significant increase in the valuation of its shares in private company New Hope Medical Group as the company raised finances at four times its cost base. Quinsam also saw a significant increase in the value of its City View Green shares, which increased from 6.5 cents to nine cents. The company saw a material increase in the value of its Nutritional High share position, which it largely exited in the quarter.

Quinsam purchased and subsequently sold a number of unit new issues in the quarter. Most notable were profitable investments in Halo Labs, Bigg Digital Assets, Excelsior Mining and Tetra Bio-Pharma.

"Over all we are quite happy with our Q1 2021 results," said Mr. Dent. "We reported a solid financial result. Ongoing favourable market conditions continue to provide a viable environment for liquidity events for our private company investments. So far in 2021 we have seen liquidity events by Cannus Partners (trading as Ikanik Farms) and Wildpack. We expect to see quite a few more in the coming months including Agriforce, PMML, Pluribus, Pathway Health, First Helium, Green Impact, INX, Xebra, Green Stripe and Budbank/Trees."

Update

After a very strong performance in Q1 2021, the overall tone in the small cap market has moderated in Q2.

Quinsam has highlighted that one of its investee companies, Agriforce Growing Systems Ltd., has filed an S-1 statement to facilitate an initial public offering in the United States. While there is no certainty that the IPO will be completed, the company currently expects the IPO to close in Q2 2021. If the IPO is completed in the target price range, Quinsam expects to see a strong gain on its share position.

Quinsam is looking forward to a listing in the near term by PMML, which operates the Rivalry e-sports betting platform. This is poised to be one of Quinsam's most successful investments. In 2016, it purchased $50,000 of units at five cents (including a full warrant at five cents) which it carried at an aggregate of approximately $800,000 as at March 31, 2021, based on PMML's then most recent 34 U.S. cents per share equity financing. The company understands that the company has sold and will shortly close a financing at 58 U.S. cents per share and expects to list in Q3 2021. The 58-U.S.-cent price implies an increase in value of approximately $480,000 (U.S.) on the company's aggregate holding versus its March 31, 2021, carrying value.

Quinsam acquired debentures and warrants of Cannus Partners some years ago. This company listed in April, 2021, as Ikanik Farms and has traded at a solid premium to the company's cost.

In Q1 2021, Quinsam acquired $250,000 of units of Wildpack, a co-packer of canned beverages. Wildpack commenced trading last week and the units have increased in value by a solid margin based on recent trading versus the company's unit cost of 90 cents.

In recent months, Quinsam has invested in a number of other new companies including Music Royalties, Pluribus, Budbank/Trees, First Helium, Peninsula Capital, Virotek, INX, Above Food, Pathway Health, Green Impact, Orchid Ventures and Current Water Technology.

The company has seen improving liquidity in some of its older cannabis positions. Cansortium, Stem Holdings, Helix TCS and Aion have all recently repaid Quinsam's convertible debentures. FlowerOne completed a debt restructuring and the company has seen a strong subsequent increase in the value of its holdings. Inner Spirit has received a takeover bid and the value of Quinsam's convertible debentures has also improved.

"Small cap market conditions have continued to be favourable," said Mr. Dent. "While we want to take advantage of this market, we are being cautious about making new illiquid investments based on current euphoria."

Issuer bid update

Quinsam's issuer bid was not active in Q1 2021 because the bid was in trading black-out awaiting release of the company's Q4 2020 results. The bid will be permitted to be active following this earnings release until June 30, 2021.

About Quinsam Capital Corp.

Quinsam is a merchant bank with a focus on small cap investments which it believes are undervalued. The company 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.

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