Seeking Alpha

Samuel Cary's  Instablog

Samuel Cary
Send Message
I have been investing in MMJ and 3D printing sectors for the past 3 years.
View Samuel Cary's Instablogs on:
  • CEN Biotech - Acquired Rights Doctrine

    To understand the current issue in Lakeshore with CEN Biotech, it is important first to understand some basic terminology in land use planning: primarily "permitted use" and "legal non-conforming use". It is the second term which I would like to focus on. This statutory protection within Ontario, and in the Supreme Court, is also described as, "the doctrine of acquired rights".

    The Mayer and town welcoming CEN Biotech to Lakeshore

    "Zoning" is the process which creates areas where land can only be used in certain ways based on the zoning classification. Each zone has a list of uses that are permitted and any uses outside of that are presumptively not permitted.

    The courts have determined that zoning changes cannot end a use that was already legal before the change in the zoning took place. And so the doctrine of legal non-conforming use was established. As long as the use of the land does not change, then the use can continue.

    This law is built to protect land and business owners from unfair changes or additional bylaw creation that might otherwise place restrictions on the use of the existing property.

    In Ontario, the doctrine of legal non-conforming use can be found in Section 34(9) of the Planning Act.


    Excepted lands and buildings

    (9) No by-law passed under this section applies,

    (a) to prevent the use of any land, building or structure for any purpose prohibited by the by-law if such land, building or structure was lawfully used for such purpose on the day of the passing of the by-law, so long as it continues to be used for that purpose; or

    (b) to prevent the erection or use for a purpose prohibited by the by-law of any building or structure for which a permit has been issued under subsection 8 (1) of the Building Code Act, 1992, prior to the day of the passing of the by-law, so long as the building or structure when erected is used and continues to be used for the purpose for which it was erected and provided the permit has not been revoked under subsection 8 (10) of that Act. R.S.O. 1990, c. P.13, s. 34 (9); 2009, c. 33, Sched. 21, s. 10 (1)."

    The Supreme Court of Canada also made it clear in Saint-Romuald (City) v. Olivier that the use can be intensified, so long as it does not change in "kind".

    But let's first examine what the law says, and then we will go through some point of facts regarding the situation surrounding CEN Biotech and the town.

    Simply put, this Ontario Planning Act, RSO 1990 law makes it crystal clear that CEN Biotech is protected from any by-law creation that would prohibit the use of its land or buildings from operating under its intended use as long as the use of the property does not change after a new bylaw is created that would restrict its use.

    While many are concerned, the idea that Lakeshore possesses a legitimate ability or concerning intent to create a by-law that would either restrict CEN Biotech from operating, or would require them to re zone or reapply for new permits under this new by-law is quite simply ridiculous, as this law was specifically created to protect land and building owners for this exact situation.

    In order for the town of Lakeshore to have any leg to stand on in regards to interfering with the use of the property, several factors would need to be in play at the same time:

    1) CEN Biotech would need to be attempting to change the use of the property to another use entirely. Such as changing from an impound lot to a cabbage patch.

    2) CEN Biotech would have to be attempting to change the use of the property after a by-law was created that would restrict the use of the land for the new purpose.

    3) CEN Biotech would need to be pre-permit stage. They would need to be still seeking a permit for the buildings structures at the time the new bylaw was passed.

    Obviously, CEN Biotech has not found itself under any one of those 3 conditions, let alone even 1. Thus the issue remains plain as day that CEN Biotech has complete rights in continuing to acquire its MMPR license from Health Canada, and to proceeding with operations under such MMPR in its current agricultural conforming condition, and further more; "No by-law passed under this section applies to prevent the use of…" because CEN Biotech has not changed the use of its property and no such by-law has existed.

    In fact, until any proposed by-laws are passed and enacted, CEN Biotech even has full legal rights to purchase and develop additional agricultural property for its medical marijuana operations as long as the building permits are acquired and use of the property is determined prior to the passing of the new restrictive by-law.

    I'm now also going to give you some excerpts from the Canadian justice review board archive entitled:

    "The Planning Act: What's New, What Remains, What You Should Know"

    "The purpose of this paper is to provide an overview, with examples where helpful, of

    how the Ontario Municipal Board (the "Board") and the Courts have interpreted and

    applied the wording of subsection 34(9)."

    I have given an excerpt to show the intent of the paper and I will now give some examples of existing uses when by-laws are passed:

    (ii) Use of Buildings or Structures on the Day the By-law was Passed

    A use will not lose its non-conforming character by virtue of expanding the use to the

    entire building or structure, as long as the owner maintains an intention to make such use

    of the building or structure. For example, in Re Hartley and City of Toronto,13 an

    association purchased a duplex residential building as a home for juvenile girls two days

    before a by-law was passed to prohibit such a use. The Association occupied the upper

    dwelling unit, while the lower dwelling unit was continued to be occupied by the

    previous owners. The question before the Court was whether the use of only part of the

    premises constituted "using for purposes prohibited by the by-law". The Court found that

    where possession has been taken so far as it can be and in good faith for the purpose for

    which the building was acquired, the ingredients for protection are met:

    "The test of the bona fides of the user must be whether the acts done disclose a

    real intention to use the building for its intended purposes and an actual user so

    far as that purpose could be carried out at the time."14

    The Supreme Court had the opportunity to consider almost the identical facts in a case

    called Central Jewish Institute v. Toronto.

    15 In that case, a private school purchased

    property with the intention to conduct schooling services on the premises. At the time

    that the land was purchased, schooling was permitted under the by-law. When it became

    clear that the by-law was about to be amended to prohibit its proposed activities, the

    school arranged for a number of teachers and students to be present on the premises prior

    to the passing of the by-law. The Supreme Court found that it was not necessary that the

    entire premises be used as a school at the time the by-law was passed to be afforded

    protection for the entire building. The Supreme Court also confirmed that, while an

    intention to use the building is not sufficient in and of itself to determine whether

    protection should be afforded to the owners, it is "an important element in considering

    evidence as to actual user."16

    OK. So clearly CEN Biotech has a bona fide intent to operate a large scale medical marijuana grow operation. That could not be clearer. However, what about in if CEN Biotech wishes to expend the buildings purpose or significantly increase capacity through expansion?

    As was noted in Re Hartley and Central Jewish Institute above, the Courts have found

    that the entire building or structure for which a legal non-conforming use is being made

    enjoys the exemption from the zoning by-law, as long as the intention of the owner to use

    the building or structure for that purpose was bona fide. However, the analysis is not so

    clear when the building or structure has been reconfigured to allow additional density of

    use. It may be that this increased density will disentitle the owner from relying on the

    protection of subsection 34(9). For example, in R. v. Grant17 the Ontario Court of Appeal

    found that a legal non-conforming two-unit apartment building could not be extended

    into a four-unit apartment dwelling, and similarly in Weisburg v. Kingston (City),18 the

    Court refused to permit the extension of a legal non-conforming four unit dwelling to a

    five unit dwelling. Instructive for this issue may be the impact of intensification, as

    discussed in Saint-Romuald v. Olivier, which case is discussed below.

    So it appears that the only real danger to CEN Biotech could perhaps be that they may experience some difficulty in expanding the build out of the facility to the entire 10.3 acres. However, this is not a cut and dry matter as we see in certain methods of evaluation in preexisting use was demonstrated by a test in determining expansion criteria under the scope of previous by-laws.

    4. To the extent activities are added, altered or modified within the scope of the

    original purpose (i.e., activities that are ancillary to, or [page921] closely related to, the

    pre-existing activities), the Court has to balance the landowner's interest against the

    community interest, taking into account the nature of the pre-existing use (e.g., the

    degree to which it clashes with surrounding land uses), the degree of remoteness (the

    closer to the original activity, the more unassailable the acquired right) and the new or

    aggravated neighbourhood effects (e.g., the addition of a rock crusher in a residential

    neighbourhood is likely to be more disruptive than the addition of a fax machine). The

    greater the disruption, the more tightly drawn will be the definition of the pre-existing

    use or acquired right. This approach does not rob the landowner of an entitlement. By

    definition, the limitation applies only to added, altered or modified activities.

    So here we see demonstrated that it is the Court's stance that it must balance the landowner's interest against the community interest, taking into account the nature of the pre-existing use. However, although the narrower pre-existing condition may be held to more tightly after a restrictive by-law is passed, the situation surrounding CEN Biotech is a little unusual in that a formal plan and intent has been supplied to and approved by the Canadian government for a full 1.3 million lb capacity which seems to have addressed the concern of density of use prior to this situation arising.

    Therefore it is my belief that CEN Biotech will maintain legal grounding under the protection of the doctrine of acquired rights in their expansion and build out of the entire property even if is if Lakeshore passes supplementary restrictive by-laws. Of course Lakeshore also has the right to amend their added by-laws to make it an easier process for CEN Bio expansion later down the road, through once a government facility is classified and operational under health Canada's jurisdiction, I believe this will be who holds the cards.

    I hope this helps you to form an opinion about the current state of your investment in FITX, and to highlight what may be the real questions in this situation, and what may be baseless fear. I believe we as investors can rest easy on the matter of both zoning for current build outs and licensing from health Canada.

    Nov 06 12:06 PM | Link | 42 Comments
  • Creative Edge Nutrition - Vertical Integration

    Creative Edge Nutrition - Vertical Integration

    In this article I initially intended to do some comparative analysis between 2 companies in the medicinal Cannabis sector that appear to have laid ground work for, or are directly involved in the field of THC and CBD based pharmaceuticals. However, after completing my last write up, there seems to be far more information that I find myself compelled to cover about Creative Edge Nutrition, and although my previous article attempted to delve "beneath" the surface, it seems I ultimately only just managed to scratch it.

    In order to gain an informed, actionable opinion as an investor, I believe it is first necessary to paint a picture of the overall competitive environment in terms of US based investment opportunities directly related to this sector, and secondly to evaluate potential market value of the sector as a whole vs. the positioning of each of these companies, and finally to what extent a company may benefit from its respective position and how those benefits may correlate to the investor… but perhaps in no particularly certain order or all within the confines of this one particular post.

    Competitive environment

    Since we are still at the very early stages of the rebirth of this ancient industry (previously stifled by political and corporate agendas), there is certainly no shortage of opportunities in creating innovative products or companies. However many companies may still be facing a shortage of either investment money or talent. It's for this reason that, when writing, I prefer to focus primarily on companies who appear to have those first 2 bases well covered, and as such would be expected to have the resources and means necessary to secure a strong footing in the early stages of the global market. It is after all a well-known fact that the early bird does tend to catch the biggest worms, and as investors, we all want our birds to be extremely well fed.

    While there are a handful of companies that do appear to have the pharmaceutical marketplace in their sights in at least some capacity, there are only 2 publicly traded companies that stand out as having a direct and actionable competitive edge in that regard. And while one of these companies is extremely well focused, specialized, and globally established (NASDAQ:GWPH), the other has evidently adopted a much broader corporate strategy (OTCPK:FITX) in order to capitalize on multiple revenue streams across various aspects of the Cannabis industry. Since these additional revenue streams also have the potential to accelerate the advancement of the company's pharmaceutical divisions, it is logical to seriously consider the company as a direct competitor and potential front runner in the pharma-cannabis space, as well as a potential front runner in any other area of cannabis production. Creative Edge Nutrition has also previously secured 20 million in funding and has gained some serious traction as a company as of late, and so I tend to feel that the company, being at a relatively low market cap in comparison, may be the better investment, or at least provide the most significant rate of return.

    Elements of vertical integration - Overview

    By stark contrast to GW Pharma, Creative Edge has positioned itself to capitalize on multiple aspects of the Marijuana and hemp industries in a vertically integrated business model. What does that mean? Well, in management and microeconomics, vertical integration is defined by the company owning its own supply chains, with each part of the supply chain producing a different market specific product or service, with all products combining to fulfil a common market need. So what the company specifically intends to do is meet every global market need that is directly relevant to all forms of the Cannabis plant, under one large controlling corporation. If successful, this may be the very first vertically integrated global corporation in history to invade this particular market.

    But the focus is all here… for now.

    Although there are wide variations in estimates, the total value of the world's marijuana market from several credible sources is estimated to be somewhere in the $100-$200 billion range, and according to the 2014 United Nations world drug report, between 125 million and 227 million people were estimated to have used cannabis in 2012, corresponding to between 2.7 and 4.9 per cent of the population aged 15-64 years old, although these numbers have been on the rise since. This same report by the UNODC states that;

    "Expert analysis predict that the legalization of cannabis will most likely reduce production costs substantially, which would in turn be expected to put downward pressure on prices over time, although whether prices materialize in the first few years or only in the longer term in unknown. Since cannabis consumption responds to prices, the lower price will probably lead to higher consumption. It is estimated that for each 10 per cent drop in price, there will be an approximately 3 per cent increase in the total number of users."

    While this may be a good indication of a price to consumption ratio based upon legalization, it may not be sensible to expect a consistently proportional trend as there are many factors to consider in various regions, such as controlled medical-only legalization regions and increase use for medical purposes after expanded research. However, the fact still remains that Cannabis legalization is spreading across the globe like a wildfire, which is in turn opening the door for significant profitability to be had by legitimate enterprises. This is important to consider, firstly because the company's that become front runners in a legitimate production capacity in legal or semi-legal environments will not only be positioning themselves directly in the path of a massive 100+ billion dollar shifting revenue stream, but will also capture the expanding market as the spread of legalization increases the number of patients organically. If a potential front runner such as Creative Edge Nutrition could capture just 1% of the global market share from the sale of marijuana alone, they would generate well over a billion dollars in revenue annually. However, a front runner could very well gain a much larger position in the market over time.

    To help understand this concept, we could perhaps compare the market share of the world's largest brewer, Anheuser-Busch InBev who has captured a 25% global market share and 47.2% market share in the USA. Considering that Cen Biotech Inc. (subsidiary of Creative Edge Nutrition), may soon be licensed to produce up to 1.32 million pounds of dried medicinal grade marihuana annually for the Canadian and global population, with potentially $5-7 billion in revenues at full production capacity, one cannot overlook this aspect of their corporate strategy when considering the additional pharmaceutical component, and how those revenues could drive that component forward also, with each element in the vertical integrated model in turn connected to and supporting another branch of the corporation.

    Science Defined

    Creative Edge Nutrition also recently announced the purchase and build-out of a second marijuana facility for the purpose of research and development with respect to strain genetics, new grow techniques and bio-medical research, as well as the creation of 5 key research and development divisions that would address the company's vision in growing long term profitability through innovation and research. These divisions are: Genetic Engineering & Cloning, Genomic DNA Mapping & Strain Analytics, Extracts & Delivery Instruments, Pharmacogenetic & Clinical Trials, and Stem Cell & Tissue Proliferation. The R&D facility has been set up as a cGMP/ USP 797 facility with a similar workflow model to the main site ¼ mile away, which by contrast will soon be licensed to produce a substantial amount of dried medical marijuana for distribution to Health Canada patients. This R&D site includes a 25 acre lot which will be used for hemp growing and trials. Evidently this site that has been prepared to begin the company's journey into pharmaceutical research and development, which could prove to be just as significant a venture as the build out of the first facility, albeit for a different purpose. The R&D facility will be used to aid the discovery and development of disease treatments, wound healing, and other ground breaking cannabis based medical solutions.

    Leading the companies R&D efforts, are a group of highly acclaimed Doctors and Scientists with Dr. David L. Felten (Chief Medical Director) who has received numerous honors and awards, including the John D. and Catherine T. MacArthur Foundation Prize Fellowship, and two separate 10-year MERIT Awards from institutes (Aging, Mental Health) at the National Institutes of Health and published over 200 peer-reviewed publications. Dr. Sam Alawieh (Chief Pharmacology & Acquisitions Officer) who happens to be an expert in the field of science based growing and various research and has developed important proprietary technologies. Dr. M. Kerry O'Banion (BOD), an internationally recognized scientist specializing in brain inflammation, epilepsy, brain radiation, and many neurological disorders who along with his colleagues were awarded patents in the development of Vioxx & Celebrex. And most recently, Dr. Jonathon Lakey (Chief Science Officer), who is perhaps the most prominent name in the field of diabetes research and was a key contributor in the development on the Edmonton protocol for patients with chronic type 1 diabetes and has several notable patents and a multitude of publications under his belt.

    It is very apparent that Creative is gearing up to become a front runner in the pharmaceutical space as part of its vertical integrated model, and that by getting in now; we are essentially getting in on the ground floor. Perhaps with such a drastic change in the global climate currently under way, and a new found focus on top level research now being actionable, we may begin to see things like new cancer or epilepsy treatments, advancements in regenerative medicine, and more natural pain medications that avoid the negative side effects of more traditional means.

    A world of hemp

    The world does not yet understand, nor can it be fully educated on the potential value of hemp cultivation which Creative Edge happens to be setting up to capitalize on, in part, by the recent acquisition of Hemp Technologies Global, who is involved in a multitude of hemp related projects. Hemp Technologies is able to boast being the first company permitted to construct hemp houses in the USA. That's right, hemp houses, made of "hempcrete". Hemp can also be effectively utilized in a wide range of products for an enormous range of applications including fabrics and textiles, construction and insulation materials, auto parts, composites, yarns and raw or processed spun fibers, paper, carpeting, home furnishings, nanotubes, and biofuel.

    (click to enlarge)

    The Hemp Industries Association (HIA) estimates that the total U.S. retail value of hemp products in 2012 was nearly $500 million. Although that is about to change significantly, in part, due to the recently enacted farm bill with an amendment to allow industrial hemp research in the US. And according to one CRS Report for Congress RL32725, there are currently over 25,000 uses for hemp… that we know about. Hemp production also appears to have been increasing even before the recent changes in legality, and Creative Edge is positioning itself to capitalize on the entire global market, not merely the USA.

    Hemp could quite literally cure world hunger, end deforestation, reduce our dependence of fossil fuel, and may even hold the keys to unlock a variety of disease treatments and cures.

    Back to the beginning

    At some point, when revenues begin to flow, and the CenBio project has had its beginnings, I believe it is safe to say that the supplement side of the business will then be able to flourish more freely, and in an impressive manor I might add. At that point I will be writing a very specific article covering that part of the business. But for now, I will leave you with a number, and a thought. If Creative Edge was able to capture just 5% of the global market share as an early mover in all proposed aspects of expansion, it is not completely unreasonable to propose that the company's annual revenues could reach the neighborhood of double digit billions, with a market cap in the neighborhood of say… $100 billion (543x current market cap), and a share price north of $30. However, even if we are able to achieve a small fraction of that, we may still be wildly successful in our investment. Here's to the future.

    Disclosure: The author is long FITX.

    Additional disclosure: The author has no affiliation with any company mentioned, and was not compensated in any way shape or form for this article or its content.

    Aug 14 12:58 AM | Link | 26 Comments
  • Creative Edge Nutrition – Beneath The Surface

    Creative Edge Nutrition - Beneath the surface

    It's no secret that for many, the definitive climax to the fervently debated OTCPK:FITX saga, would be characterized by the issuance of a license by the Canadian government to grow and sell up to 1.3 Million pounds of medicinal cannabis on an annual basis. We all know FITX is a publicly traded company, and as such, investors seek revenue first and foremost to secure and grow their investment…

    However, by focusing solely on this element of the company, one may "overlook" the full extent of the company's capabilities and aspirations, perhaps subsequently missing out on a very rare investment opportunity.

    Let me draw your attention for a moment if I may, away from the methods and tactics of the company's CEO, Bill Chaaban, away from the pending issuance of a grow license (or 2 to be exact), away from debates about company share structure, shareholder lawsuits, and internet slander.

    If we temporarily remove these elements and distractions from the equation, we can then begin to focus on the actual company that is being built, and we can begin to hypothesize what the end result may be, based upon the steps being taken, and in which direction those footprints appear to be moving.

    There are 2 main aspects of this company to which I would like to address in this article. The first is science and the other (albeit perhaps more briefly) is the company's financial profitability. Both appear to be being built simultaneously into the company's foundation by what appears to be strategically placed building blocks, acquisitions, and world class team and board members.

    The Science - Forging a creative edge in the market

    In the most recent press release from Creative, Dr. Sam Alawieh announces the creation of 5 key research and development divisions that would address the company's vision in growing long term profitability through innovation and research. These divisions are: Genetic Engineering & Cloning, Genomic DNA Mapping & Strain Analytics, Extracts & Delivery Instruments, Pharmacogenetic & Clinical Trials, and Stem Cell & Tissue Proliferation.

    It may be worth mentioning that there are 5 key research and development divisions, and there are also to-date 4 very notable key players driving the construction of the company's scientific foundations. These men are none other than Dr. David L. Felten (Chief Medical Director), Dr. Sam Alawieh (Chief Pharmacology & Acquisitions Officer), Dr. M. Kerry O'Banion (BOD), and most recently, Dr. Jonathon Lakey. Perhaps there is room for one more superstar.

    The company's newest addition, Dr. Jonathon Lakey, takes the position of Chief Science Officer for Creative Edge Nutrition. Dr. Lakey was Director of Research at one of the top 50 US medical schools for research; UV Irvine. Former director of comprehensive tissue bank and perhaps the most prominent name in the field of diabetes research, Dr. Lakey's research at Irvine has been in the preservation and isolation of tissues, especially the insulin producing cells from the pancreas. His work with Dr. James Shapiro led to the improvements in Islet isolation techniques and the development of the Edmonton protocol for patients with chronic type 1 diabetes. Dr. Lakey's resume boasts a long history of ground breaking research and over 250 scientific publications in diabetes, stem cells, and tissue transplantation, as well as several notable patents.

    In his appointment, Dr Lakey states; "It is my goal to take the expertise and infrastructure I have developed over the years and apply it to the field of this research, strong evidence based science will address common misconceptions and provide scientific basis for our efforts. By studying effects of stem cells and differentiation we may gain key insight into pathways of disease treatments and wound healing. Bill Chaaban has done a great job emphasizing that this is the route necessary to take and I couldn't agree more"

    One statement in particular is very telling as to the intent of Dr Lakey and perhaps the company as a whole; "By studying effects of stem cells and differentiation we may gain key insight into pathways of disease treatments and wound healing."

    What does that mean exactly? Well, it's hard to say to what extent, but we can attempt to at least draw some reasonable conclusions by understanding some basics.

    Firstly, cell differentiation is essentially a transition of a cell from one cell type to another, involving a change from one pattern of gene expression to another, while rarely ever involving a change in the DNA sequence itself. The main types of molecular processes that control cellular differentiation involve "cell signaling". There are cells in adult organisms that can "differentiate" into any cell type; these are known as being pluripotent. Levels of differentiation can also be used as a measure of cancer progression. I could go deeper here and attempt to draw more specific conclusions, but my intent is not to turn this article into a scientific research paper, it is merely to highlight the scientific focus of the company on the cellular level of both the patient and plant, coupled with Dr Lakey's intent to utilize stem cell research and differentiation to open doors for disease cures, and possibly even cellular regeneration (known as Dedifferentiation). Though it is difficult to say what could be discovered and unlocked. I am no scientist. However I believe it is important to note that there are important cellular and genetic relationships between human cells and compounds such as THC (Tetrahydrocannabinol) and CBD (Cannabidiol) that have yet to be explored whole heartedly due to restrictions in legality, and that these scientists could very well anticipate being on the forefront of history.

    It is also worth mentioning that the background and expertise of each of these men seem to go hand in hand in covering different scientific aspects of the human condition in very specific and relevant areas, such as Dr. Feltons background in neural biology and Dr. Kerry O'Banion's brain inflammation, epilepsy, and neurodegenerative disease studies. Or Dr Alawieh's studies on the effects of CBD and THC compounds within the Cannabis plant in relation to dopamine, and the relationship between dopamine and diabetes that is well known by Dr Lakey.

    If I was a betting man, I would say that Creative Edge Nutrition is (in part) building a foundation that seeks to develop a strong presence in the world of "big pharma" by concentrating on cures and treatments related to conditions such as neurological disorders and diabetes. One might also wonder that with the sheer level of world class intellect now working at Creative edge, firstly; what is it that attracted such talent in the first place? And secondly, how could each of these geniuses (difficult to find a better term) put their collective heads together and not end up with at least a few new forms of extremely valuable intellectual property? That is of course a rhetorical question.

    The "Business" side of the business

    Now I'd like to draw your attention briefly to the financial side of the business (or the "business" side). It's not the share price or market cap that I'm specifically concerned with, since opinions tend to vary greatly as to what constitutes value here. An emerging developing company such as Creative at the forefront of such a young sector is extremely hard to value as there are so many variables in the market and in the overall global climate in general. Taking merely the initial Pharmaceutical potential, medical marijuana grow & research facilities, hemp division for CBD's and building materials, patented grow technologies, pending incorporation of RXNB with its 50,000 patients, insurance division, world class board of directors, and nutritional aspects; one could probably make a very strong case for a billion dollar valuation even before any grow licenses are issued. However, I have also seen valuations on the very opposite end of the spectrum that take none of these positives into account, focusing primarily on the company's larger than average share structure. Perhaps one could draw a valuation somewhere in the middle of each extreme.

    However, what I would rather focus on is any strategic moves the company may be making, and the talent behind those moves driving each piece forward, and in turn lend an ear to logic in evaluating the potential of the company within the confines of the foundational elements that have been constructed.

    Perhaps I am being presumptuous, but it would very difficult to make a case against the people who are involved with Creative on the business side. This is a company that is being constructed by savvy lawyers, business men, corporate finance specialists, and investment managers. 2 particularly notable mentions I would like to expound upon briefly are Mr. John A. Germinario, and Michael K. Clark.

    On April 17th, 2014, Creative announced the appointment of John Germinario as chairman of the board of directors. Mr. Germinario is a veteran in the global capital market place having worked intimately with the SEC, IRS, and FBI on criminal investigations and has very specific experience in the understanding of global securities that he has brought with him to manage the company's regulatory compliance, manage and mitigate risk, and advise in corporate governance, as well as oversee potential mergers and acquisitions and assessing the market in general. The level of corporate ethics and business skills Mr Germinario brings to the table have seemed to be invaluable in helping to provide a safer level of operational comfort when conducting business in the wake of the SEC onslaught that ripped apart the publicly traded marijuana sector recently, leaving bodies in its wake (so to speak). One could perhaps liken the appointment of Mr Germinario to a strategically timed chess move.

    And of course there is Mr. Clark (Vice Chairman), who is also the CEO of a Wall Street Financial Institution which supports corporations in both the emerging and established capital markets. Mr. Clark was previously chief executive officer in charge of JPMorgan's $15 trillion Worldwide Securities Services business generating over $3 billion in revenue year over year, was on the JPMorgan Executive Committee reporting to CEO, Jamie Dimon (one of Time magazine's 100 most influential people), and later became President of Fidelity Institutional Investments.

    None of these men are even remotely insignificant by any stretch of the imagination; on the contrary, these men have become involved only in the very largest forms of business. In considering these roles, one must in all manner of sound reason, interpret their appointments as such that they are collectively loitering at the doorstep of "big business"… as big business is the only place men like this tend to congregate.

    With a foundation as seemingly remarkable as the one evidently being constructed before us, I needn't persuade anyone to buy stock in this company. As I believe the evidence speaks for itself.

    Disclosure: The author is long FITX.

    Additional disclosure: Note: The author has no affiliation with any company mentioned, and was not compensated in any way shape of form for this article or its content.

    Aug 05 1:27 AM | Link | 45 Comments
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.