Canadian CANNAINVESTOR Magazine November 2017 - Page 288


LGC Capital Ltd makes an ideal case study for a few different reasons. LGC first appeared on the CannaInvestor Magazine Stocks to Watch list in July when the share price was approximately $0.06. For those that frequent social media and bulletin boards and follow those known to promote (or bash) penny stock companies – it has been all but impossible to have not been exposed to the perceived excessive interest in LGC.

If you are not familiar with LGC, it changed its name from Knowlton Capital and traded, until recently, under the ticker QBA. An excellent backgrounder on LGC and its entering into

the legal cannabis industry can be found here. That interview is current (October 2017) and includes their recently announced expansion

into the Australian legal cannabis industry.

At one time, LGC had a diversified portfolio of investments ranging from beehive projects to coffee to Cuban sports content related TV rights. However, in September, it was stated that LGC “exits all investment activity associated with Cuba to focus on its global Medical Cannabis initiatives and other investment opportunities”. The beehive project was in Australia providing a level of comfort that LGC has a familiarity with navigating the investment, political, and regulatory landscape down under.

In September, LGC announced that it had completed a $3M financing. That financing was for 30 million units consisting of 30 million shares and 30 million warrants that each can be exercised at a $0.15 strike price and expire after one year. The holding period for securities purchased in the private placement expires on January 13, 2017. In other words, assuming no other financing occurs, that will add between 30 and 60 million shares and could push the total number of shares outstanding north of 300 million. We’ll come back to this share count shortly.

As for the financing’s purpose: “the net proceeds may also be used for new medical cannabis investment opportunities elsewhere

in southern Africa and in the Asia Pacific

Region”. This sug-gests that are not done yet with in-ternational invest-ment and expansion.

On October 10th, LGC announced it was entering the merchant banking industry through a transaction with Etea Sicurezza Group Ltd. This merchant banking venture is separate from LG’s cannabis interests however in theory the merchant banking division could offering financings to companies in the cannabis industry.

In Summary then:

Diversification based on industry and geography.

Primary industry of focus (legal hemp and marijuana) is anticipated to be one the largest and fastest growing and as our



As At October 20, 2017

Shares Outstanding: 269,861,810

Share Price: $0.15 Market Cap: $41,828,581