Queensland Bauxite is gleeful that its soon-to-be-subsidiary has pocketed another cannabis licence — this time a manufacturing one.
MedCan, run by Gareth Ball and air conditioner salesman Craig Cochran, now has licences for manufacturing, cultivation, importing and exporting, and a Queensland permit to hold Schedule 9 substances.
The company will still need a federal permit in order to actually start growing medical cannabis, as this dictates the quantities that can be grown.
Queensland Bauxite (ASX:QBL) arranged to buy MedCan in June for 250 million shares, giving the two founders an 8 per cent stake in the listed company.
The agreement sees Mr Cochran and Mr Ball stay on to manage the company for at least two years, and receive 1.25 million and 1 million shares respectively over the next two years as part of their remuneration.
The transaction was approved by shareholders in September but Queensland Bauxite share are yet to start trading again as it switches from bauxite explorer to cannabis grower.
No accounts
Queensland Bauxite has not issued it annual report this year, but reiterated its accounts to the end of 2017 in a recompliance prospectus.
The company made $17,000 in the six months to December 30, 2017.
It made $3000 in FY17.
The company started hemp operations in November last year, but has not reported revenue from that venture yet.
Expenses came in at $1.9m, and the highest figures were for director fees and administration costs.
Australian Gemstone Mining (AGM), a company owned and controlled by Queensland Bauxite chair Pnina Feldman provides “executive and corporate services” to the company,
Queensland Bauxite pays AGM at least $386,000 a year in total for administration, rented office space and office services.
Queensland Bauxite also pays AGM $984,000 a year in total for executive services by Ms Feldman, her son and fellow Queensland Bauxite director Shalom, and another director Robert Coenraads, according to the prospectus.
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Under director fees, Queensland Bauxite paid a total of $588,000 for fees distributed amongst directors Ms Feldman, Mr Feldman, Meyer Gutnick and David Austin in the year to June 30, 2017, and proposed to lift that to $714,000 in FY18.
In a prior interview, Shalom Feldman told Stockhead that AGM had a service contract with Queensland Bauxite and saved the company a lot of money by providing “personnel and officers and all of that for less than market rate”.
“I just don’t understand where the issue is, it’s actually [suggested] by people who are misunderstanding corporate dealings. Everything that’s been done has been done at arms length and has been done to benefit Queensland Bauxite.”
The prospectus shows that another company called Australian Gemstone Resources (AGR), also controlled by Ms Feldman, was put into liquidation in May by a creditor before that was quashed by a court in late September.
“AGR was placed into liquidation in May 2018 without the knowledge of the directors due to a creditor demand being filed in Court but not brought to the attention of the directors until after a liquidator was appointed. The liquidation of AGR was accordingly stayed by the Court, and the Court agreed to dismiss the liquidation at a hearing on 27 September 2018 and is in the process of preparing final orders to return the company to the control of its directors,” the prospectus said.