Neptune Wellness Solutions, Inc. (NASDAQ: NEPT) (TSX: NEPT) said has entered into an agreement with institutional investors for the purchase of 27,500,000 common shares that will bring the company gross proceeds of approximately $55.0 million before deducting fees and other estimated offering expenses. Neptune said it expects to use the net proceeds for working capital and other general corporate purposes. The Offering is expected to close on or about February 19, 2021.
A.G.P./Alliance Global Partners is acting as the sole placement agent for the Offering. This follows a separate announcement that the company terminated its “at-the-market” equity offering program with Jefferies, LLC as a sales agent. “The termination of the ATM Offering is effective as of February 16, 2021 and Neptune will make no further sales under the ATM Offering. As of the date of this announcement, Neptune had sold 9,570,735 of its common shares under the ATM Offering, raising approximately US$18.6 million in gross proceeds.”
This comes on the heels of a weak fiscal third-quarter report. The company said it had total revenues for the three-month period ending December 31, 2020, of $3.3million, a decrease from $9.1 million for the three-month period ended December 31, 2019. The net loss was $73 million compared to net income of $5 million for the three-month period ended December 31, 2019. Included in the net loss for the quarter ended December 31, 2020 is a $35 million impairment of goodwill and a $2 million impairment of property, plant and equipment and right-of-use assets related to the acquisition of SugarLeaf in July 2019. In addition, the net loss also includes accelerated amortization of $13 million also related to the SugarLeaf acquisition.
“The third quarter represented a pivotal point in Neptune’s transformation to a B2C provider of plant-based health and wellness products. I am excited about the prospects and opportunities ahead for Neptune as we transition to a branded consumer-packaged-goods company and the endless possibilities that come with that: from M&A, to the development of new products that disrupt traditional consumption habits, and of course, the cannabis movement in the United States. We are very encouraged by the recent comments of Senate Majority Leader Chuck Schumer (D-NY). The success of our recent launch of Mood Ring™ in British Columbia with rapid sell-through at the retail level reinforces our confidence.”
The company said in a statement, “During the third fiscal quarter, Neptune substantially completed its strategic transition from extraction of hemp and cannabis to the production and sale of consumer-packaged goods and branded products. Neptune believes the shift to consumer-packaged goods and branded products will ultimately result in higher margins and lower risk and will enable the company to generate positive adjusted EBITDA sooner than in its prior B2B model. In addition, the transition has allowed Neptune to prepare logistics to build scale and situated the Company for accelerated growth.”