RavenQuest BioMed: The Next Bridgemark Group Target?

It seems that the now infamous Bridgemark Group might be getting the gang back together after all. The group, notorious for using an exemption intended for consultants to effectively dump their shares on retail investors while enabling public issuers to be able to claim that they had fully subscribed private placements, seems to have infiltrated yet another public company. This time, however, it appears to be through a slightly modified arrangement.

Back in November 2019, RavenQuest BioMed (CSE: RQB) announced that they had appointed two new directors to their board, Usama Chaudhry and Jatinder Dhaliwal. Two days later, they also appointed Cassidy McCord to the board as well. At the time, this was inconspicuous enough – management teams change constantly in the cannabis sector, and this as a result was nothing too out of the ordinary.

However, on further inspection, all three new directors appear to be connected to each other. For instance, they all serve in some capacity for Global Health Clinics Ltd (CSE: MJRX), a known Bridgemark Group associated firm. Dhaliwal currently serves as the firms interim CEO and as a director, while McCord just resigned from the board, and Chaudhry is still currently a director. Anthony Jackson, the purported ring leader of Bridgemark Financial Corp, as of January 7, 2020, filing was still the firms Chairman, however the recent news release related to McCord’s resignation did not identify him as still being a director. Dhaliwal and Chaudhry also have experience working together with Jackson at Intact Gold (TSXV: ITG) where all three have served as directors as well.

If this isn’t enough of a connection, consider the recent acquisition that Ravenquest conducted for the purchase of DigiGro Software Inc. The all stock transaction, valued at $5.0 million, saw 41.6 million shares issued in exchange for the assets of DigiGro. The firm is purported to own software that has the technology to mimic real life cannabis cultivation and growing which is intended to help industrial and personal growers maximize efficiency and yield.

The acquisition saw the shares issued to three individuals, all of whom are located in BC as per the latest Form 9 filed with the CSE by Ravenquest. The three holders are listed as being A. Dhaliwal, Mercantile Holdings Inc (Owned by a W. Su), and Tutum Holdings Corp (Owned by a K. Su). A cached version of the Form 9 available via Google however identifies the three owners as being Avtar Dhaliwal, Kevin Su, and William Su. Notably, a Wilson Su was investigated by the British Columbia Securities Commission for his connection to the Bridgemark Group. While acting as a realtor for one of the purported members of the Group, it’s been identified that he has personally invested in a number of the associated companies. Meanwhile, a Vancouver, BC based Kevin Su lists on his LinkedIn profile that he previously worked as a junior accountant for Bridgemark Financial Corp in 2010. It’s unclear if this is the correct Kevin Su related to DigiGro Software.

On top of that, it appears that DigiGro Software was incorporated in BC on December 10, 2019, thus placing the $5.0 million valuation as being questionable at best. The software developed by the firm is said to still be in a beta phase based on screenshots provided by the company in a January 28, 2020 corporate update. A timeline for commercialization has not yet been provided by the firm.

The issuance of the securities related to the DigiGro acquisition has done damage to the firms share structure as well. Prior to the DigiGro shares being issued, there were 123.9 million shares of Ravenquest BioMed outstanding. Following the issuance of the 41.6 million owed to the shareholders of DigiGro, the firms outstanding share count has ballooned by 33.62% to that of 165.5 million, yet its unclear what value the acquisition truly provides at this point. It’s also unclear whether any mandatory hold period was applicable to the shares issued.

With the acquisition first being announced on January 10, the shares were issued at a price of $0.12. By the time the acquisition closed on January 15, the price per share had fallen to that of $0.10. Up until this time period, volume on the equity was relatively low – numerous days had seen less than 150,000 shares trade hands within the entire session. However, volume spiked significantly beginning on the 16th, following the close of the acquisition.

A total of 5.49 million shares traded hands January 16, with the share price falling to $0.065. The volume was beat the following day with 11.44 million shares trading hands, and a slight increase on the day to close at $0.08 after climbing as high as $0.155. Multiple days since have seen millions of shares trading hands during each session, with volume spiking again on January 29, hitting 7.21 million. Despite the volume, the share price has slid consistently, hitting a low of $0.025 per share on February 5, leaving long term investors asking the question of what exactly happened.

While it can’t be stated with absolute certainty that this was the work of the Bridgemark Group, it has all the hallmarks of it – direct connections to Anthony Jackson, management changes to bring in known associates, and the occurrence of a transaction that was followed by a sudden, atypical spike in volume on the equity.

Why Ravenquest might subject themselves to such a group is anyone’s guess – the firm needs significant funds though, with a series of convertible debentures coming due on March 2, 2020 to the tune of $14.25 million before interest is considered. Originally slated to convert at a price per share of $1.45, the conversion of such debt is simply out of the picture at this point. And if the company were to reduce the conversion price to current pricing levels, even at a price of $0.05 per share the conversion would result in 285 million shares at minimum being issued, which is more than all currently outstanding shares of the equity.

The company’s cash struggles are further exemplified by the recent reduction in staffing at their facilities due to having no cash – yet this was announced only days after the firm conducted the $5.0 million all-stock transaction for DigiGro, further raising questions on the transaction as a whole. In it’s defense, the company has since stated via a corporate update that it will be transforming into a “technology company that grows cannabis using our technologies,” what that looks like though is anyone’s guess.

Ravenquest Biomed last traded at $0.035 on the CSE.

Information for this briefing was found via Sedar and RavenQuest Biomed. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.