On Wednesday, 12 August 2020, Pharmagreen Biotech Inc. (OTC:PHBI) filed bankruptcy protection in the US Bankruptcy for the District of Nevada due to lender notes, condemning the COVID-19 pandemic for its massive disruption, which has affected its operations.
The recent outbreak of the novel coronavirus COVID-19, which was declared a pandemic by the World Health Organization, has led to adverse impacts not only on the cannabis industry but also on the global economy. The disruption of financial markets has created uncertainty regarding companies’ operations.
The Pharmagreen Biotech CEO, Peter Wojcik, believes that the company’s hurdles were linked to “toxic terms” in lender notes. While Pharmagreen was getting ready to deliver the highest quality starter plantlets to cannabis industries, lender notes were pulling them down.
According to Wojcik, the two months of closure in Europe delayed the company’s ETN process. As a result, the notes became overdue, and lenders demanded very high conversions that could eventually exhaust the company’s valuation.
Pharmagreen’s plan after filing a bankruptcy protection
“After taking much time to carefully analyze our strategic options, we have decided that a voluntary chapter 11 filing provides the best possible outcome for Pharmagreen,” Wojcik said.
But, Wojcik already had a plan to settle all the debts by engaging lenders so that the whole process is fair for both parties. This means the Pharmagreen would continue its operations in the ordinary course of business, and lenders receive their notes.
Additionally, Pharmagreen Biotech, Inc. plans to utilize the chapter 11 process to build and restructure a plan that will maintain the company’s operational momentum and emerge from chapter 11 with a practicable balance sheet.
About Pharmagreen Biotech Inc. (PHBI)
Pharmagreen Biotech Inc, a Nevada company, publicly traded (OTC PINKS: PHBI), is an affiliate of WFS Pharmagreen Inc. The renowned cannabis industry sprout supplier focuses on manufacturing and marketing cannabis products for both medical and recreational markets. The industry’s primary focus is providing Good Manufacturing Practices (GMP) for its Tissue Culture facilities, nurseries, and cold storage of plantlets.
The pandemic has caused massive disruption to the economy, and it nearly shuttered the hopes of Pharmagreen. However, the US Securities and Exchange Commission (SEC) filings unveil the company’s late quarterly filing due to unanticipated delays that could not be resolved and other fallouts.
As of 31 March 2020, Pharmagreen reported in its preceding 10-Q that it had not raked in any profits from operations for the past six months. The company had a working capital deficit of $1.4 million and an accumulated $4.9 million deficit. For the quarterly period ended 31 March, Pharmagreen incurred a net loss of $209,684 and spent $474,205 cash flows in operations.
The business operated as Air Transport Group Holdings Inc. before it announced in May 2018 that it had completed a share exchange consent with WFS Pharmagreen Inc., a private company in British Columbia. Air Transport Group Holdings Inc. was then changed to Pharmagreen Biotech Inc. to reflect the new direction and business of the company.