MJardin Group, Inc. (CSE: MJAR) (OTCQX: MJARF) decided to terminate its previously announced joint venture partnership with Rama First Nation that included prospective plans for a cultivation facility. The company said that the announcement was part of its ongoing review, evaluation and turnaround process and that it has actioned amendments to the Managed Services Agreements (“MSAs”) which were negotiated and put in place by previous management.
“I have nothing but great respect and admiration for our Rama First Nation partners, but I have to make these difficult business decisions in an effort to allocate capital where it makes the most sense while ensuring that we don’t take on more debt until we have successfully turned this business around,” said Pat Witcher, CEO of MJardin Group. “This decision, along with restructuring our pre-existing MSAs to remove the burdensome management costs we were incurring is in the best interest of the Company and all of its stakeholders.”
The decision to dissolve the joint venture partnership with Rama First Nation, and its prospective 94,000 sq. ft. indoor greenhouse cultivation facility was based on fiscal responsibility, preservation of capital and developments in the cannabis cultivation market in Canada.
In addition to that the company stated that it has agreed to amend, terminate and extend its MSAs with Potco, LLC & Potco South, LLC, Next1 Labs, LLC, Next1 Labs South, LLC, and Gravitas Henderson, LLC dba F&L Warm Springs, LLC to December 31, 2020. However, it wasn’t clear from the press release which companies were amended or terminated.
MJardin did say that in final stage discussions to extend the MSA with Lightshade Labs, LLC for a period of 14-months. The company said it is also finalizing its renegotiation of its MSA with AtlantiCann Medical Inc. and that MJardin will earn a royalty for the balance of the existing 10-year agreement, but will no longer provide labor support to the operation.
The company stated that the amended MSAs will provide a streamlined royalty fee structure which will allow for the monetization of the company’s intellectual property and proprietary cultivation methodologies. In addition, the amendments will reduce ongoing management obligations, thus reducing costs and placing less cash flow demands on the Company.