Financial Archives - Green Market Report

Jack SmithJack SmithJune 5, 2018
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5min1100

Neptune Technologies and Bioresources Inc. (NEPT) announced fourth-quarter results and said revenue declined sharply year-over-year, impacted largely by the sale of its krill oil manufacturing business.

Fourth-quarter revenue came in at $7 million, aided by a rise of 14.9 percent in its Solutions Business. In the prior year, revenue was $11.8 million, though the company noted the year-ago quarter was four months, compared to three months this year.

“During the fourth quarter, we sustained an intense pace of activity in developing the cannabis business opportunity, meeting with potential suppliers and partners while continuing to move forward with the regulatory licensing process,” Neptune’s President and CEO Jim Hamilton said in a statement.

Hamilton added that more than 90 percent of the company’s $5 million capital plan has been committed, to work on areas like sight security, license compliance and carbon dioxide extraction, with the first phase of its commercialization strategy set for later this year.

“Simultaneously, we began work on Phase II and successfully completed solvent lab scale trials,” Hamilton continued. “As a consequence, we are very excited that the Board approved the $4.8 million investment for Phase 2 capacity expansion.”

Shares of Neptune, which trade on both the Toronto Stock Exchange and NASDAQ, finished lower in Tuesday trading. NASDAQ-listed shares fell 0.7 percent to $2.75, giving the company a market cap of just over $218 million.

During the period, the company had a net loss of $4.8 million, compared to a gain of $300,000 in the prior period, and suffered a non-FRS (International Financial Reporting Standards) loss of $4.8 million, compared to an Adjusted EBITDA gain of $900,000 in the prior period, as the company continued to invest in its cannabis business.

Though the results may seem bleak, there were some bright spots for the company, particularly its Solution Business, Hamilton said. It also signed an agreement with Tetra Biopharma for “purified cannabinoid oil-based products targeting pain and inflammation,” the company said in a statement.

“As we move into fiscal 2019, we are keenly focused on executing our strategy to establish Neptune as an innovative health and wellness products company focused on the extraction, purification, and formulation of cannabis oil ingredients and differentiated products to serve customers globally,” Hamilton said.

Quebec-based Neptune, which sells products such as MaxSimil, premium krill oil directly to consumers and is working on a variety of other cannabinoid-based products, received $23.7 million from the sale of its krill manufacturing business, leaving it with $26.7 million in cash at the year-end.

Krill noted that the company’s “healthy cash balance” and its removal from the capital-intensive manufacturing business put it in a good spot for the rest of 2018 into 2019.

“[W]e have the financial strength to fund our cannabis business opportunity through commercialization based on our current timeline of developments,” Hamilton concluded.


Video StaffVideo StaffJune 4, 2018

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Matthew Nordgren, Founder, and CEO of Arcadian Fund said his fund only invests in ancillary businesses in the cannabis industry. His background in private equity caused him to focus on businesses that didn’t touch the plant and as it turns out he’s been impressed with the companies on this side of the business. Nordgren spoke to Green Market Report at the Cannabis Learn conference in Philadelphia. Nordgren is also the CEO and Founder of Nordco Consulting.


William SumnerWilliam SumnerJune 1, 2018
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3min3330

On May 30, 2018, Maricann Group Inc. announced the filing of its financial results for the quarter ending on March 31, 2018. It was a tough quarter for the company as profits took a precipitous tumble from $1,143,167 in Q1 of 2017 to $600,591 for Q1 of 2018.

The steep decline in revenue was due in large part to a bulk transaction in Germany that the company had planned to take place during the quarter. However, that transaction was pushed back to the second quarter because of the time it took the company to obtain a European Medicines Agency Good Manufacturing Practice certification. Current unaudited revenue for the second quarter so far is purportedly $905,000.

The company realized a net loss of $11.4 million for a loss per share of $0.11, which is drastically lower that its loss in the same period in the previous year; which was $66.8 million with a loss per share of $1.53.

A huge portion of the company’s losses stem from its general and administrative costs Over the last year, G&A expenses have grown tremendously, from $1.7 million to $6.6 million. Even if Maricann is able to sell all of its biological assets and inventory, which totals to approximately $1.7 million, G&A expenses would still outpace revenue, leaving some investors to worry about the company’s long term balance sheet.

With legal adult cannabis sales poised to launch in Canada in the next few months, and with Maricann set to begin exporting into Europe, the company should experience a boost in revenue; which means the next few quarters will be critical to the company’s long term success.

In a statement, Maricann CEO Ben Ward expressed support for the company’s current direction and reiterated the idea that creating better margins for the company’s products is more important than short term revenues.

“We maintain our position that establishing sustainable baskets of margin for our products that will be preserved over the long term is more important than immediate gross revenue. We base all our business decisions in the interest of long term value creation for our shareholders,” commented Ward.


Jack SmithJack SmithMay 31, 2018
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5min1910

Golden Leaf Holdings said first-quarter revenue soared, thanks to its 2017 acquisition of Chalice Farms and highlighted the progress it’s making in expanding its cannabis operations in California.

Golden Leaf, which trades on the Canadian Stock Exchange under the “GLH” ticker and is traded over-the-counter in the U.S., said revenue jumped 42 percent year-over-year to $3.2 million for the period ending March 31, 2018. It also generated $353,000 in gross profit, up from $238,000 in the year-ago quarter. The company said gross margins included a one-time charge of $377,000 for a write-off of obsolete packaging inventory.

Net income was a gain of 2 cents per share, compared to a loss of 2 cents per share in the first-quarter of 2017. However, the company said that it benefited from a $12.4 million benefit due to favorable changes in the fair value of its warrant and debt liabilities.

Golden Leaf’s CEO William Simpson called out the Chalice Farms acquisition, which took place in July 2017 in prepared marks, noting it’s opened more locations since the deal closed.

“Subsequent to quarter-end, we opened our seventh overall retail dispensary, and sixth Chalice Farms location, located in Happy Valley, Oregon, which has exceeded our expectations and is already our second highest selling Chalice location after just a few weeks since opening,” Simpson said.

He continued: “Our retail operations are a key component of our growth strategy and we are pleased to see our increased brand recognition among customers further entrench our position as a leading retailer in Oregon. We will continue to strategically invest in our retail strategy, adding stores in optimal locations.”

Golden Leaf also called out its new Fruit Chews edible line, which was launched in March in Oregon. The chews come in four flavors (Tangerine, Tropical Fruit, Kiwi Strawberry and Acai Berry) and are designed to “bring more variety to the Golden brand of products and aim to deliver delicious tasting edibles that are vegan-friendly, gluten-free and soy-free for the health-conscious, non-smoking cannabis consumer.”

At the end of the quarter, Golden Leaf had $22.1 million in cash, aided by a CAD $17.5 million private placement in January.

During the quarter, Golden Leaf also added Craig Eastwood as its CFO. Eastwood’s hire, along with raising the $17.5 million CAD, were “instrumental in fortifying the financial management side of the business, which underpins our growth initiatives,” Simpson added.

For the rest of 2018, Simpson said that Golden Leaf’s growth initiatives include building out its retail presence in Nevada and California, both of which have legalized cannabis for recreational use. Golden Leaf also wants to establish a franchise model for its Chalice Farms acquisition in the western part of the U.S. and Canada.

Simpson concluded by saying that the company is “making great strides” building the company that will allow it to take advantage of opportunities that presented to it in the future.

“We are pleased with the progress we have made laying the foundation for our entry into new geographies, across both our retail and cultivation operations,and look forward to continuing to drive revenue growth throughout 2018,” Simpson said.


William SumnerWilliam SumnerMay 29, 2018
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3min2270

BMO Capital Markets, a North American financial services provider, has initiated coverage on both Aphria Inc. (APHQF) and Canopy Growth (CGC) with a rating of Outperform.

According to the report released on May 28, 2018, both companies stand to benefit from a first mover advantage in initial recreational markets as many cannabis companies in Canada do not have the inventory or production capacity to meaningfully participate in the market while both Aphria and Canopy do.

In the long term, BMO believes that cannabis cultivation will become a commoditized activity and that oversupply will become an issue. Although a majority of cannabis brands hope to counter this through the development of brands or through the expectation that they will become a low-cost producer.

The Aphria Opinion

BMO expects that most cannabis firms will not be able to generate sustainable margins at scale, but they do believe that Aphria will be one of the few that can. The report points to the extensive commercial greenhouse cultivation experience held by the company’s management team and to the inherent infrastructure and greenhouse culture in Leamington, Ontario, where the company is based.

Aphria’s target price is $17 and is based on a projected enterprise value that is 17x BMO’s Base Case Fiscal 2020 EBITDA estimate; which in turn was based on the assumption that Aphria’s facility expansions would only be at 65% of its full production capacity by 2020.

The Canopy Growth Opinion

Canopy, on the other hand, is well positioned to become a global brand leader. In addition to the company’s first-mover advantage, the company also has a head start in the international market; establishing cultivation centers in hub regions like Denmark for the future export of medical cannabis to Germany and possibly the rest of Europe.

Canopy’s target price is $45 and is based on a projected enterprise value that is 20x BMO’s Base Case Fiscal 2020 EBITDA estimate. Like Aphria, this figure is based on the assumption that the company would only be at 65% of its full production capacity by 2020, even though both companies expect to reach 100% by that date.

MedMen Goes Public

In related news, MedMen Enterprises announced today that its stock would begin trading today on the Canadian Securities Exchange at 11 a.m. eastern time under the ticker symbol “MMEN”. The company will raise roughly C$143 million or $110 million from the listing, giving MedMen an enterprise valuation of C$2.14 billion or $1.65 billion.


Debra BorchardtDebra BorchardtMay 16, 2018
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The U.S.-based medical marijuana company MariMed Inc. (MRMD) stock jumped 13% after it reported its first-quarter financial results for 2018 with revenues increasing 81% to $2.08 million compared to $1.15 million first quarter of 2017.  The company attributed the increase to the expanding operations of MariMed’s medical marijuana clients from real estate revenue, management fees and licensing fees.

Unfortunately, the company delivered a net loss of $1.83 million in the quarter versus net income of $0.11 million for the quarter last year.  MariMed said that the loss was blamed on non-cash equity compensation and debt settlements in 2018 that it said would have no impact on operations/cash flow. MariMed happily reported $251,166 of operating income in first quarter of 2018, an increase from $228,552 for the same time period in 2017.

“MariMed continues on a solid trajectory of year over year growth that it has achieved each quarter since 2015,” stated Robert Fireman, CEO of MariMed Inc.  “Our new Maryland cultivation and production facility, which came online in Q1, will bring increased rent, management, and licensing fees, adding to our existing revenue streams from facilities in Illinois, Delaware, and Nevada. We anticipate increases in our revenue from our assets as the cannabis business in Maryland and Massachusetts continues to expand.”

According to the company statement, it raised approximately $1.5 million in equity through the sale of its 144  common stock in a private placement in 2018 at prices averaging 15% below the market price. “We raised approximately $1.5 million in capital and reduced our debt by approximately $ 1.5 million in the quarter,” noted Jon Levine, MariMed CFO. “We are displaying to investors and shareholders our consistent performance on quarter over quarter growth.”

Management Comments
“As cannabis legalization takes effect on July 1 in Massachusetts, we expect to supply dispensaries with our branded marijuana products across the state,” said Mr. Fireman.  “We are scheduled to open our first dispensary in Massachusetts the third quarter of 2018, further bolstering our ongoing revenue streams from managed services and the leasing of our cannabis facilities.”

“With each new client, we generate significant revenue from fees for leases, licenses, and managed services,” Jon Levine, continued. “We expect incremental growth in licensing from new product lines and organic growth from product sales as our licensed Nature’s Heritage Cannabis, Kalm Fusion, Betty’s Eddies, Tikun Olam and Lucid Mood brands gain loyal followings in each current market and as we expand our national distribution network to additional states.”

“Building upon our diverse platform, we are continuing to raise capital for new business and product development, strategic acquisitions and expansion of infrastructure that will enable us to take advantage of this critical time in the industry,” concluded Mr. Fireman.

Stock Performance

MariMed stock gained 13% to lately trade at $1.62. The stock is nearing its 52-week high of $1.77.


Debra BorchardtDebra BorchardtMay 15, 2018
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Cannabis software provider WebJoint is partnering with digital payment platform company Alt Thirty Six (Alt 36) to provide digital currency options to cannabis consumers. Alt 36 Co-Founder and Chief Executive Officer Ken Ramirez said, “It is the first digital payment platform that uses blockchain to help the cannabis industry go cashless.”

Bitcoin was the first digital currency and is probably the best known, but the adoption of bitcoin as a currency has been slow due to some of the problems associated with using it. In particular, the amount of time that a bitcoin transaction can sometimes take. A bitcoin purchase can take several minutes or even days to process.

“When you buy cannabis coins, there’s nowhere else to spend them but in the cannabis industry,” said Ramirez. “They lose value outside of the cannabis world. Our method allows consumers the ability to use this currency outside the dispensary.”

Ramirez said that Alt 36 built a platform that makes the digital currency transactions simple and fast. It combines digital cash from DASH with blockchain technology. DASH is number 12 in the world by market capital for cryptocurrency at $3.8-$4 billion.

Alt 36 has partnered with WebJoint in order to provide a solution for cannabis consumers and the businesses that try to serve them. Dispensaries struggle to create payment options for their customers who are used to using a debit or credit card for almost all of their transactions. Visa (V) and MasterCard (MA) are refusing to work with cannabis operations, so dispensaries have gotten creative in the processing of purchases. Customers may not be aware of the headaches that card processing is causing these businesses.

The program will roll out in the next 30-60 days with the beta location in Arizona. Customers will see a box that they can use to purchase the digital currency and then use that money to make their cannabis purchases. It will eventually be made available in over 200 dispensaries that work with WebJoint. Following Arizona, Alt 36 will move on to California and then the rest of the legal states.

“These machines are beautiful,” said Ramirez. “I think people will want to use them just because of how cool they are.”

Alt 36 has funded its operation through a combination of seed money and digital currency funded projects by DASH. The company also said that it expects to make more announcement in the near future with regards to additional capital raises.

 


Debra BorchardtDebra BorchardtMay 15, 2018
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3min2430

Cronos Group Inc. (CRON) reported that its first-quarter total sales rocketed 473% to $2.9 million versus last year’s $0.5 million. Sequentially, sales jumped by 83% from the fourth quarter of 2017 to $1.3 million in the first quarter of 2018.

The stock was rising by 4% in early trading to approximately $6.85 after beating analysts’ expectations for revenue of C$3.6 million or $2.8 million by today’s currency exchange according to Yahoo Finance. Three analysts had given their estimates for the quarter. Five analysts cover the Canadian stock and have an average target price of C$7.95 or $6.19.

Still, the company reported a net loss of $1 million versus last year’s net loss of $844,000. The net loss per share was one cent, the same last year’s net loss of one cent per share for the same time period. Cronos did report a gross profit of $1.9 million for the quarter, an improvement over the prior year’s $1 million.

“We are pleased that the strategic initiatives launched in 2017 are coming to fruition,” said Mike Gorenstein, CEO of Cronos Group. “2017 was a building block year which set the groundwork and foundation for the results achieved in the first quarter. Cronos is focused on continuing to increase capacity in order to serve existing distribution and newly established markets, developing intellectual property and launching recreational brands.”

The first quarter was punctuated with the company becoming the first licensed producer to list on the NASDAQ (NDAQ) exchange in February. The company now has a market capitalization of $1 billion, which isn’t too shabby for a company with current sales of less than $3 million a quarter.

Looking Ahead

Investors though are buying into the company’s future. The 28,000 square foot greenhouse at Peace Naturals is expected to deliver its first harvest in the second quarter of 2018. Plus, Peace Naturals was completely rebranded and received a dealers license from Health Canada. So, the company is expecting big things from this brand.

In addition to that, Cronos entered into a strategic joint venture with the U.S.’s MedMen to create MedMen Canada to create a Canadian branded retail chain.

Since the quarter ended, Cronos raised $100 million in gross proceeds through a bought deal offering n April.


William SumnerWilliam SumnerMay 15, 2018
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Without a doubt, The Green Organic Dutchman Holdings (TGOD) has one of the hottest IPOs in the cannabis industry right now. Initially slated to raise around $102 million, TGOD has amended their IPO twice due to investor demand and have grown an already impressive offering to $132,263,225.

For all the Johnny Come Latelys kicking themselves for not getting in on this red-hot IPO sooner, have no fear. There is already a handful of new investment IPOs waiting just around the corner, and they all look just as promising as TGOD. Here are four upcoming IPOs that you need to keep an eye on:

Acreage Holdings

Founded by a team of Wall Street veterans and financial gurus, Acreage Holdings is a well-financed company with a diverse portfolio. With licenses in cannabis cultivation, processing, and retail dispensaries; the company is currently operating in 11 U.S. states and has plans for further expansion. Most notably, the company rocked the world of cannabis and politics when it announced the addition of former U.S. Speaker of the House John Boehner and former Massachusetts Gov. Bill Weld to its board of advisers. So far the company has already raised $50 million and plans to go public in Canada sometime this year. With two heavy hitters like Boehner and Weld on their board and one of the largest cannabis cultivation footprints in the industry, Acreage is bound to give the top dogs like Canopy a run for their money.

Acreage is focused on medical marijuana and with a portfolio that spans 11 states, it has the largest footprint of any U.S. cannabis company. Initially, the company began life as High Street Capital and had intended on just making investments in cannabis companies, but it has since pivoted to become an operator. The IPO is expected to occur later this year in the Canadian market.

MedMen

This next IPO is not really an IPO, but nevertheless, it’s something that you should take note of. MedMen is a California-based cannabis retailer with operations in multiple states. As one of ten licensed medical cannabis operators in the state of New York, the company holds a lease on Fifth Avenue in Manhattan and will soon open a retail dispensary directly on the Las Vegas strip. Instead of doing a simple IPO, the company has decided to go public through something called a Reverse Takeover (RTO) and had entered into a letter of intent to merge with the publicly traded company OutdoorPartner Media Corporation. Instead, MedMen is doing its RTO with Ladera Ventures Corp. (TSXV:LV.H).  Once the RTO is complete which is expected in the second quarter of this year, MedMen will essentially become a publicly traded company itself.

MedMen is also beginning life as a public company in Canada. Adam Bierman, the Chief Executive Officer, and Co-Founder says he believes the company can raise more money in Canada versus the U.S. stock market.

MJIC Inc.

Compared to the other IPOs discussed so far, this one has been flying under the radar a bit, which is why you definitely want to keep a close watch on MJIC Inc. MJIC is a self-described “omnichannel” for the cannabis industry attempting to connect the multiple segments of the industry through a variety of services that it offers; such as accounting, compliance, e-commerce, etc… The company hopes to launch its IPO sometime in the third quarter of this year and plans to use the funds for its expansion in California as well as future mergers and acquisitions down the road.

CEO Sturges Karban said the company plans on raising at least $20 million in the offering, which has been discussed for some time, but the planning began in earnest over the last couple of months. In addition to creating a distribution channel, MJIC also owns MJIC News and the Rolling Paper Depot.

Dixie Brands

The maker of the famous edibles brand, Dixie Elixirs, the Colorado-based cannabis company is currently considering its IPO options. This year the company expects to generate approximately $20 million in revenue and expects to more than double that figure ($50 million) by next year. Last month the company closed a $4 million funding round and hopes to use those funds to expand its operations from four states to 10. Details about its upcoming IPO are scarce, but what is known is that it would be offered either at the end of this year or sometime in early 2019. Speaking with Bloomberg, Dixie CEO and majority shareholder, Chuck Smith, said that the IPO would go towards funding future brand acquisitions. “We need access to capital, we need liquidity because this growth is very expensive,” said Smith. “We’re going to continue to acquire brands or innovate them.”


Jack SmithJack SmithMay 14, 2018
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5min1470

iAnthus Capital Holdings (ITHUF) said on Monday it received a $50 million investment from private equity firm Gotham Green Partners to help it pay down debt and expand in key areas such as Florida and New York.

iAnthus, which is traded on both the Canadian Stock Exchange and over-the-counter in the U.S., said it will receive $46 million in cash from the investment once fees are paid. $20 million of that will go towards the repayment of a one-year note with interest to VCP Bridge. The rest will be used for the “continued cultivation and dispensary build-outs in New York and Florida markets” and general corporate purchases. After the note is paid, iAnthus said it will have $32 million in cash left on hand.

“Gotham Green Partners is well recognized as a long-term investor and leader within the cannabis investment community, and we are excited to partner with GGP to create value for our shareholders,” said Hadley Ford, CEO of iAnthus in a statement. “As the U.S. cannabis industry continues to grow, we will be well-capitalized and well-positioned to continue the buildout of our existing assets and pursue opportunistic acquisitions to expand our footprint.”

Gotham said iAnthus’ “compelling structure” (it operates in several U.S. states), was part of the reason it invested in the company.

On iAnthus’ website, the company says it owns and operates licensed cultivators, processors, and dispensaries across the U.S., a model which it believes “provides a unique combination of capital and hands-on operating and management expertise to create unparalleled value for its shareholders.” The company has one of only two licenses for Brooklyn, NY.

The management team of iAnthus said the investment is believed to be the largest investment ever made by one investor in a U.S. publicly traded marijuana company.

Julius Kalcevich, CFO of iAnthus, said the Gotham Green team has helped its portfolio companies “accelerate geographic expansion and operational efficiencies,” something iAnthus is looking forward to.

“GGP’s investment enables iAnthus to recapitalize its balance sheet with long-term exchangeable debt and significantly fund its key operations, particularly in New York and Florida,” Kalcevich added in the statement. “We look forward to GGP’s involvement in these activities in the coming quarters.”

The investment is considerably expensive for iAnthus, as it has issued $40 million worth of high-yield three-year notes, which have a 13 percent coupon. The notes are convertible to iAnthus’ stock at $3.08 per share and also include a warrant to purchase 6.67 million shares of iAnthum at $3.60 per share.

In addition to the secured debt issued by iAnthus, it has also issued $10 million worth of units, with each unit comprised of one common share worth $2.57 and a warrant to purchase the stock at $3.86 per share.

U.S.-listed over-the-counter shares closed on Monday at $3.69, the highest level seen since mid-January.



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