It’s a question that is causing quite a buzz among investors in a pot stock which never quite took off — how can a listed company earn just $2,000 in interest over three months on nearly $10 million of cash?
That’s the issue shareholders in Cann Global are mulling after the group reported that it earned $2,000 in interest in its September quarter report which was released on the ASX on October 28.
The interest figure is far less than the $90,000 in interest declared from the same $10 million bank balance which the company reported in its June quarter report, which reported a total interest of $163,000 in the year to date.
“Where is the money? There couldn’t have been much of it in the bank to only make $2000 interest,” one shareholder told The Age and the Sydney Morning Herald.
So far, Cann Global managing director Sholom Feldman has not provided an explanation for the massive reduction in interest earned.
He declined to answer questions, saying his lawyers had advised him not to respond to The Age and the Herald.
Mr Feldman said a report by the newspapers on Monday which highlighted related party transactions between Cann Global and private companies owned by him and his mother, Pnina Feldman, was “highly defamatory”.
Capital raising through share placements is another area of concern among Cann Global shareholders. A decision in late October to issue 600 million new shares at 0.3 cents per share to clients of financial services company 180 Markets angered shareholders because it further diluted the value of their Cann Global stock.
Shareholders told The Age and the Herald the placement of the $600 million shares was unnecessary because Cann Global had $10 million cash in the bank and had assured investors it had secured sufficient funds to operate for several years.
The placement raised $1.8 million for Cann Global.
In a release to the ASX, Mr Feldman described it as an “unsolicited” approach from 180 markets to Cann Global. Following the initial placement announcement, a further 10 million Cann Global shares were granted to 180 Markets as a broker’s fee.
In a Youtube video to its clients, a 180 Markets representative said the financial services company had been approached by a “cornerstone investor” in Cann Global to pursue further shares in the cannabis company via a placement.
In response to questions from The Age and the Herald last week, Mr Feldman said he was unaware about the cornerstone investor’s approach to 180 Markets until he was contacted about the share placement.
The identity of the cornerstone investor has not yet been revealed.
Cann Global is set to hold an annual general meeting, but is yet to inform shareholders when that meeting will be held.
At the meeting, shareholders will be asked to approve the company’s decision to grant recently retired chairman, Mrs Feldman, 70 million Cann Global shares in recognition of her long service and to uphold contractual obligations under a terminated service provision arrangement with one of her private companies.
Mrs Feldman has been replaced by Sydney lawyer David Austin as an “independent” chairman of Cann Global. Mr Austin has been a long time legal advisor to the Feldman family.
Cann Global’s shares traded at 0.2 cents on Friday.
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Source: Thanks smh.com