re: Spec Play - HGRAF

I think that one is a couple months old.

Why the selloff today?
Im thinking of buying more if this falls much more.
We must have good news coming soon.

Definitely need some good news on that front.

They gave us a q1 timeline for customers and so far nothing

I’m not sure what taxes they’re paying with plenty of expenses and near zero revenue.

Good question and I have no idea, but here is what Chat thinks:

1. Canada’s corporate emigration / departure tax

When a corporation ceases to be a Canadian tax resident, Canada generally treats the company as if it sold many of its assets at fair market value immediately before leaving.

That means the company may owe tax on unrealized gains — appreciation that exists even if nothing was actually sold.

The tax is generally imposed on:
appreciated intellectual property
patents
trademarks
goodwill
equipment
investments
shares/subsidiaries
crypto or securities holdings
other capital assets

The taxable amount is generally:

Fair market value - tax basis/book basis

So if:

the company owns IP worth $200 million
but its tax basis is only $10 million

Canada may treat the company as having a $190 million gain upon emigration.

Wow… Canada sucks
Again

Well, if true, we have a damn good reason as to why HGRAF is not making public announcements and why they aren't pushing for the NASDAQ listing.

They have a new headquarters, but that is not the same as redomiciling.

They fired their CFO, and people assume that maybe he f'd up the NASDAQ listing, but it may be that he screwed up the paperwork on the redomicile.

Everybody is blaming it on an incompetent CEO.

If this is true, there could be a slew of announcements that will be made at one time that could show us that they haven't been spinning their wheels all this time.

quote:

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the company owns IP worth $200 million
but its tax basis is only $10 million

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25% on the gain. Holy shite Canada sucks. I wonder if the IP was "held" by the Canada corporation or elsewhere. That is an insane expense for zero reason.

If Canadian exit taxes are substantial enough to be delaying offtake agreements and something like a government co-op deal, how will HGRAF pay the tax regardless of FMV-tax basis? Based on the speculation in this thread it seems we're talking about millions of dollars, which I don't think HGRAF has. Have they made public some sort of credit arrangement to pay the Canadian government?

Also, I'm no tax lawyer but if HGRAF is 90% of the way to something big, like a development agreement with the pentagon or big sales contract, then drags its feet to avoid signing/announcing until after redomiciling is complete, isn't that the makings of a tax dispute with Canada?

quote:

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I wonder if the IP was "held" by the Canada corporation or elsewhere

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The original patent was owned by the professor and university. It was leased, long term, by the company. The professor had said less than a year ago that he would move to Austin when the company did. Saying he is a brilliant SOB does not begin to praise him enough.