Australis Archives - Green Market Report

StaffAugust 30, 2021

Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) delivered its unaudited financial statements and management discussion and analysis for the first quarter of the fiscal year 2022 ending June 30, 2021. AUSA revenues rose 2,652% to $1.7 million over last year and was a sequential increase of 266%. The company said that the quarter included revenues from ALPS (acquired in March 2021) and management fees from GT.

Australis recorded a net loss of $(9.5) million or $(0.04) per share. The company said the loss was driven primarily by a decrease during the first quarter in the price of Body and Mind (“BaM”) shares held. To date in Q2 FY 2022, BaM has rebounded back to the per-share price as of March 31, 2021.

Australis said that without the revaluation of the BaM shares, Adjusted EBITDA was comparable to a year ago. Adjusted EBITDA remained at a slight loss of $(0.01) per share or $(1.6 million), a sequential 15% improvement from $(1.8 million) in Q4 FY 2021. There were very few other impairment costs, as AUSA’s new management has completed most of the restructuring of various deals or disputes as of FY 2021.

“Continuing the strong performance recorded in Q4 of fiscal 2021, AUSA has transformed itself into a rapidly growing MSO in the U.S. cannabis space,” said CEO Terry Booth. “With revenues soaring by over 2,600% over last year, improving gross margin and adjusted EBITDA, we are showing the power of our execution on a unique strategy. This is just the beginning. We are exceptionally well positioned with operations in new jurisdictions coming online, new brands launched, and a number of very interesting transactions and partnerships progressing well towards signing. Going forward, shareholders can expect AUDACIOUS to continue transforming the business and execute towards becoming a unique and uniquely successful MSO.”

Expenses

In the first quarter SG&A expenses increased to $1.7 million. The company said that the increase from the prior year was due to the addition of ALPS personnel as well as higher legal, professional, and board of director fees. The operating loss was $3.4 million for the three months ended June 30, 2021, compared to $2.5 million for the three months ended June 30, 2020. Higher SG&A costs more than offset the increase in gross profit. However, the operating loss in Q1 FY 2022 was $0.3 million less than Q4 FY 2021 and $1.6 million less than Q3 FY 2021.

In June, Australis announced that it was changing its name to Audacious Brands. The company’s ticker symbol will remain AUSA on the CSE and AUSAF on the OTC. The company said it will consolidate its brands under the new Audacious banner and intends to launch additional product lines under the new name.

StaffJuly 14, 2021

Australis Capital Inc., operating as Audacious (CSE: AUSA) (OTC: AUSAF) is buying a cannabinoid-infused shot beverage company called LOOS. The company which is also known as Gary Maverick Inc. is based in Santa Cruz, California. The amount of the transaction was not disclosed.

The products are based on a unique nano-emulsion technology platform for rapid onset, are all-natural, vegan, gluten-free and low sugar, and low calorie. The company said in a statement that after entering the market in the 2oz drink category, Loos plans to release a number of other products across several key categories, including CBD infused shots.

“With LOOS we are adding a fresh and exciting brand and consumer segment with compelling products that offer a unique user experience,” said Leah S. Bailey, Chief Business Development Officer of Audacious. “Furthermore, with Ben and Anthony, we are adding two aggressive, highly successful, and commercially savvy people to our team, which will help us to build new distribution networks for all Audacious brands and product lines. The deal is structured to ensure full alignment with AUSA shareholder interests, and we anticipate the LOOS transaction to become accretive rapidly.”

CEO Terry Booth added, “Launching a logistics-light SKU into the beverage market, I have always believed, will make all the difference in accelerating sales in this category. Furthermore, this transaction also signals our intended entry into the CBD infused drinks market, which industry insiders anticipate may become one of the most important product categories in our industry. Acquiring LOOS and the team behind the brand gives us a head start and adds another product and revenue generating line to our portfolio. as well as sees Audacious increasing our presence in California.”

Loos’ management team brings over a decade of collective experience in cannabis with brands such as Plus Products, 710 Labs, Loudpack, and Flow Kana. Their first product, a 2oz drink (shot) infused with 100mg of THC, is available in three flavors: Orange Crush Sativa, Green Dream Hybrid, and Lavender Indica. Each flavor features a unique terpene profile and is infused with added nutraceuticals for increased functionality. Following completion of the transaction, the LOOS founders will join the Audacious Sales team reporting to Dr. Duke Fu, Chief Operation Officer and the Business Development team, reporting to Chief Business Development Officer (“CBDO”) Leah S. Bailey.

LOOS Founders Anthony Bendana and Ben Koppel stated jointly, “As two people who worked their way up from the bottom in this industry, we saw an opportunity to create a brand with quality, effective, and affordable products that specifically caters to the cannabis community we love. The CPG space is filled with brands focusing on new consumers and the canna-curious and we’re excited to join them on the shelves and counters to help the entire cannabis community get Loos. We believe this industry should aspire to the highest ideals of the cannabis pioneers that powered it into existence and want Loos to be an ambassador for the type of radical empathy, compassion, and community we could all use to help us stay loose. We are excited to join forces with Audacious whose philosophy and values closely match ours and whose rapidly expanding footprint will enable us to accelerate our growth into new territories on a global basis.”

Debra BorchardtMarch 11, 2021

Australis Capital Inc. (OTC: AUSAF) has completed the acquisition of a 51% ownership interest in ALPS in a deal valued at $12 million, which consisted of $10 million in shares and $2 million in cash. Australis has the option to acquire the remaining 49%. Former Aurora Cannabis founder (NYSE: ACB) Mr. Terry Booth has been named CEO, effective immediately. Former MedMen alumni Dr. Duke Fu, who had been serving as the company’s Interim CEO since November 2020 will remain on the AUSA board of directors. Thomas Larssen, founder of ALPS, will remain as President of ALPS.

Green Market Report CEO Debra Borchardt hosted a Club House event on Wednesday evening featuring Booth with added commentary from Dr. Fu. At the event, Booth said the company was planning on changing its name from Australis. Despite his Canadian bona fides, Australis will be focused on the U.S. market. He also noted that even though Australis employed former Aurora Cannabis employees, that AUSA was not an “Aurora 2.0”.

ALPS

ALPS is best known as a leader in facility design, construction management, and (post) commissioning services to the horticultural sector across a wide variety of commercial crops. The original name was Aurora Larssen Project, shortened to ALPS and the Aurora connection no longer remains. Booth explained that in the early days of Aurora, he met Larssen and was so impressed he jumped to secure his expertise for the company. Now with Aurora out of the picture he can expand that knowledge to others in the cannabis industry by creating low-cost facilities.

ALPS is expected to bring material revenues to Australis and is also anticipated to be immediately accretive to AUSA results. The company said that in the past two months alone, ALPS has signed a number of agreements with a total contract value in excess of $5 million. The majority of the work related to these contracts is anticipated to be completed in fiscal 2021 and 2022, with additional revenues extending beyond this period from recurring-revenue service contracts. Working capital upon close is expected to be approximately $1.5 million.

“With the completion of the ALPS transaction, AUSA has now been transformed into a revenue-generating company with a difficult to imitate multi-state expansion strategy in the U.S. cannabis market,” said Booth. “This transaction puts AUSA in a position where it can pursue novel streaming deals to fuel the scaling up of its high-quality brands across the nation, while delivering a de-risked income stream from a diversified services portfolio. We made a number of promises to our shareholders, and we are delivering on these, rapidly. I look forward to continuing a high-frequency dialogue with our stakeholders as we continue to execute and grow the Company.”

The company said that approximately 64% of the acquisition price is tied to significant top-line revenue and EBITDA targets, reflecting the confidence of the ALPS management team to profitably expand the business. Revenue targets range from $26.1 to $46.6 million. Corresponding EBITDA targets are $11.7 to $21.0 million. The targets are date driven, ranging from 12 to 54 months, and will be paid out in equity or cash at the discretion of the company.

Thomas Larssen, President of ALPS, added, “We are very pleased to now be part of AUSA, providing ALPS with additional market access to drive our growth. We see numerous growth catalysts for ALPS and AUSA both within the cannabis industry and in more mature horticulture sectors. I look forward to continuing working with Terry, Duke, Jon, and the rest of the AUSA team as we continue to strengthen our brand across the globe.”

Mr. Natural

Along with the acquisition comes the iconic west coast brand Mr. Natural. Founded by Bob “Natural” Luciano, an Ordained Rastafarian Priest, Vietnam War Veteran, and a master of organic cannabis cultivation, Mr. Natural is a multiple award-winning (LA Gem Cannabis Cup and High Times Cannabis Cup) medical and recreational brand that originated in California in the 1970s to treat veterans of the Vietnam war suffering from post-traumatic stress (PTS). Mr. Luciano has worked closely with the U.S. Department of Veterans Affairs and has been one of the key drivers to help create a platform within this federal agency to help educate Veteran Health Administration (VHA) officials on the benefits of cannabis.

AUSA said it intends to scale up the Mr. Natural brand across its operations in multiple jurisdictions, leveraging its capital-light strategy, enabled through the acquisition of ALPS. Veterans deserve access to cannabis as many studies support its positive outcomes in treating PTSD. Combining select cultivars along with therapy helps our veterans sleep, eat and deal with PTSD in a manner that is safe and proven.

Booth said, “I have known Bob “Natural” Luciano since 2015 when I did what I call “my pilgrimage” into the legalized cannabis industry, which was strictly medical at the time. I myself got into the space because I regarded it a noble and global pursuit, and Bob is one of the key people I met on my journey that helped cement my conviction to help provide fair access to cannabis, initially for medical and subsequently for recreational use. Bob is one of the most genuinely authentic and most knowledgeable operators in the sector, which is reflected by how his brands resonate with connoisseurs and patients alike. Through ALPS and with the expected completion of the GT transaction, we have a strong foundation to help bring the Mr. Natural products to consumers and PTSD patients across the U.S. and beyond.”