Auxly Archives - Green Market Report

Debra BorchardtDebra BorchardtFebruary 8, 2019
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4min1242

FSD Pharma Inc. (FSDDF) and Auxly Cannabis Group Inc. (AXLY) have terminated their agreement to work together. The divorce is anything but friendly so far.

The first shot was fired on Wednesday when  FSD Pharma said that Dr. Raza Bokhari, Executive Co-Chairman, had been appointed interim Chief Executive Officer of FSD Pharma following the termination of Rupert Haynes. The statement went on to say that it terminated its agreement with Auxly and that Auxly was obligated to develop all aspects of the company’s cannabis cultivation facility in mutually agreed upon staged phases. However, it didn’t go into any detail.

On Thursday, Auxly said that it was FSD that breached the agreement and when notified and asked to comply with the agreement, FSD didn’t and then tried to control the message by announcing it had terminated first.

Auxly gave much more detail saying, “The joint venture was formed with the intention of developing a portion of FSD Pharma’s cannabis cultivation facility located in Cobourg, Ontario in mutually agreed staged phases. Auxly was supposed to receive a 49.9% stream of all cannabis produced at the JV Facility; the first phase of the JV Facility Development was to be the construction of an approximately 220,000 square foot self-contained cultivation facility.” Auxly said it has invested $7.5 million in the development and construction of the facility.

Auxly said it identified contractual breaches relating to FSD Pharma’s management and staffing obligations of the facility, as well as significant concerns regarding certain aspects of the buildings’ infrastructure. Auxly said it told FSD Pharma of the breaches in the hopes that FSD Pharma would work with toward a resolution. Auxly said FSD Pharma failed to remedy its breaches and instead purported to terminate the agreement effective February 6, 2019. Auxly then terminated the agreement effective February 7, 2019.

On Friday, FSD said that it hadn’t breached any of its contractual obligations and instead blamed Auxly for the problems in the agreement. “FSD Pharma strongly denies that it caused any breaches of the Streaming Agreement relating to its management and staffing obligations or otherwise, and rejects the claim that there are material issues with the infrastructure of its cultivation facility in Cobourg, Ontario.”

The company said that “As disclosed on Wednesday, February 6, FSD terminated the Definitive Agreement with Auxly. FSD believes that Auxly was under clear obligation to develop all aspects of the Company’s cannabis cultivation facility in mutually agreed upon staged phases. Auxly issued a press release on July 3, 2018, in which they anticipated that the first phase of construction would be completed and ready for Health Canada approval by the end of December 2018. We simply couldn’t wait any longer for our vendor to perform its obligations and therefore we terminated the agreement,” said Dr Raza Bokhari, Executive Co-chairman & Interim CEO.

Dr. Bokhari continued, “under the terms and conditions of the Streaming Agreement, FSD Pharma and Auxly are subject to a number of non-disclosure obligations that survive the termination. FSD Pharma intends to continue to live up to its surviving obligations, we are hopeful that Auxly will do the same.”


Debra BorchardtDebra BorchardtNovember 12, 2018
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5min2930

It’s time for your Daily Hit of cannabis financial news for November 12, 2018.

On The Site

Aurora Cannabis (ACB) posted a 55% sequential gain in revenue for the fiscal first quarter of 2019 with $29.6 million over the fourth quarter’s $19.1 million. It was a 260% jump over the same time period for last year, which was $8.2 million. The quarter ended on September 30, so these numbers do not include sales from adult use cannabis that became legal on October 17.

However, the company did note for the first two weeks to October 31, 2018, it was ranking at the top or among top-selling products and brands in many of the provinces that it was committed to supplying.

Unfortunately, the Q1 2019 gross profit was $8.1 million, compared to a $20.6 million in Q4 2018. Aurora said that the change in gross profit during the period was partially attributable to higher sales of inventory and lower fair value gains on changes in biological assets. Having said that the first quarter net income jumped to $104.2 million versus last year’s $3.6 million in Q1 2018. The company attributed the increase to the unrealized non-cash gain on derivatives and marketable securities.

In Other News

Auxly Earnings

Auxly Cannabis Group Inc.  (OTCQX: CBWTF) reported its financial and operational results for the three and nine months ended September 30, 2018. The revenue for the quarter was $512,000 versus zero in the previous year for the same time period. The total loss was $28.3 million for the quarter. The company has  $236 million in cash and cash equivalents earmarked for funding Auxly’s streaming partners, wholly-owned subsidiaries, downstream distribution efforts and general and administration costs. The increase in the cash and working capital balances came from the company raising $215 million in debt and equity financings year to date in addition to raising $95,017,000 in warrant and broker warrant unit exercises.

MariMed

MariMed Inc. (OTCQB: MRMD) has invested $30 million into GenCanna Global Inc. and the companies have created a strategic partnership, including a long-term supply agreement. GenCanna will use the money to expand its production capacity, and extend its position in high-quality hemp CBD production, with fully legal sales throughout the U.S. and internationally. MariMed said it intends to create a product and branding business unit focused on the development and distribution of Hemp CBD-derived products.

“MariMed’s renowned product development expertise, combined with GenCanna’s leadership position in premium Hemp CBD, will enable us to expand the Hemp CBD product category by creating compelling new consumer brands, and by developing powerful distribution channels,” said Robert Fireman, President, and CEO of MariMed. Mr. Fireman continued, “GenCanna shares our values – including our ‘best practices values in producing premium-quality, consistent, and compliant Hemp CBD oils and extracts. We believe many of the nation’s leading retailers will soon provide Hemp CBD products to their customers, in response to popular demand.”


StaffStaffSeptember 17, 2018
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3min3670

Auxly Cannabis Group Inc. (CBWTF) completed a strategic investment and a commercial rights agreement with Kaneh Bosm BioTechnology Inc. (KNHBF).  The deal will give Auxly access to a significant and established portfolio of international cannabis licenses, assets and distribution networks.

Kaneh Bosm is changing its name to ICC International Cannabis Corp. but will continue to use its existing stock symbol. The shares should begin trading under the new name on September 20.

Kaneh Bosm specializes in the acquisition of marijuana projects and cannabis-related companies and has agreements in place for European-based pharmaceutical distribution, wholesale importation, research, and development. In addition to that, the company has working interests in industrial hemp licenses in Greece, plus licenses to cultivate, produce, distribute, store, and export cannabis and cannabis derivatives in Colombia, the Kingdom of Lesotho, Africa, and Denmark.

“Auxly’s investment in Kaneh Bosm represents another synergistic partnership that adds depth to the Auxly platform,” said Hugo Alves, President, and Director of Auxly. “This time, however, the partnership substantially expands our platform on an international scale. We commend Eugene and his team on the work they have done in acquiring the valuable platform of assets that make up Kaneh Bosm and we look forward to working together to build a meaningful international asset base.”

Eugene Beukman, Chief Executive Officer and Director of Kaneh Bosm, added, “We are very fortunate to have attracted a partner like Auxly. Their support is a further validator of our conviction that international opportunities in the right jurisdictions are likely to represent the next major growth and focus area for capital, as these significant markets mature and develop. Our licenses and target licenses in Europe and Latin America blanket a massive population of eligible and interested consumers.”

Terms

According to the company statement, Auxly has subscribed for $5,000,000 of senior unsecured convertible debentures of Kaneh Bosm by way of a non-brokered private placement. The debentures bear a coupon of 8.00% and have a maturity date of September 17, 2021. The debentures can be converted into units, at the option of the company, at a price of $0.53 per unit. Each unit consists of one common share of Kaneh Bosm and one common share purchase warrant exercisable into one common share of Kaneh Bosm at an exercise price of $1.06 for a period of three years.

 


StaffStaffAugust 13, 2018
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7min3540

It’s time for your Daily Hit of cannabis financial news for August 13, 2018.

On The Site

Cowen Initiates Coverage On Tilray

Cowen Research initiated coverage on Tilray Inc. with an Outperform rating and a $34 price target. Analyst Vivien Azer is forecasting total company revenues of $44 million in the fiscal year 2018, $163 million in the fiscal year 2019, $346 million in the fiscal year 2020 and $503 million in the fiscal year 2021. She believes the company will break even in early 2019 with EBITDA margins in the mid-to-high 20% by 2020, which would be similar to the alcohol companies that Azer covers.

The $34 price target is assuming a nine times equity value and compares to Canopy Growth’s (CGC) which is currently trading at 11 times Cowen’s CY3 revenue estimates. Tilray was lately trading at $26.90. It had expected to price its IPO in the range of $14-16 but ended up at $17. It closed at $22 on its first day of trading and has traded as high as $34 since going public in July.

Harborside

FLRish Inc., a California corporation d/b/a Harborside is entering into a binding letter agreement with  Lineage Grow Company Ltd.  (CSE:BUDD) for a reverse takeover in a deal valued at C$200 million. Lineage will acquire all of the outstanding shares of Harborside in exchange for newly issued shares of Lineage.

Harborside operates two flagship dispensaries in the San Francisco Bay Area as well as a cultivation facility in Salinas California, plus the Harborside brand. The move will help Harborside expand within the state and across the U.S. Combined, the two Harborside dispensaries have generated over CAD $400 million in sales since their opening, including over CAD $50 million sales in 2017. Harborside is currently structured as a private California corporation.

Gron Chocolates

C21 Investments Inc. (CSE: CXXI)  has entered into an agreement to acquire Oregon-based premium cannabis edible companies Grön Chocolate and Grön Confections. The deal is expected to close by November 1, 2018. C21 has agreed to pay Grön unitholders $6.8 million plus the bonus earn-out shares of $4.375 million

In Other News

AeroGrow International

AeroGrow International, Inc. (AERO) announced results for its first quarter ended June 30, 2018. The company recorded net revenue of $3.7 million, an increase of 52% over the same period in the prior year.  Loss from operations was $653K, improved from $729K in the prior year period.

“I am very pleased to report our results for the 1st Quarter of our Fiscal Year 2019,” said AeroGrow President & CEO J. Michael Wolfe.  “With sales up 52%, we continued – and in fact accelerated – the strong momentum we’ve had over the last year and realized particularly good results on our Amazon platforms as well with several other online retailers, notably Bed, Bath & Beyond, Home Depot and Kohl’s.  Loss from operations was improved year-over-year and I’m especially pleased with the nearly 500 basis point improvement in our gross margin vs. last year (from 33.4% to 38.3%).  Our cash position remained strong with $7 million in cash on hand as of June 30th and no debt.  We have also lined up a $6 million line of credit with our partners at Scotts Miracle-Gro to support our anticipated growth this fall.”

Auxly Cannabis Group Inc.

Auxly Cannabis Group Inc. (XLY) announced that it has entered into a strategic partnership with Cannabis OneFive, Inc., a provider of quality management and document control software systems for the cannabis industry. Auxly’s wholly-owned subsidiary, Dosecann Inc., will become a lead subscriber of C15’s software, and the Company expects the C15 software to be deployed at other Auxly facilities.

In connection with the strategic partnership, the company has entered into a share exchange agreement with C15. Pursuant to the Share Exchange Agreement, Auxly will issue 429,507 common shares and make a cash payment of $50,000 to C15, and Auxly will receive 9,000,000 common shares in the capital of C15 and a common share purchase warrant entitling Auxly to purchase 4,250,500 common shares of C15 at an exercise price of $0.075 per common share, representing a 30% ownership interest in C15 on a fully-diluted basis.

Namaste Technologies Inc.

Namaste Technologies Inc. (NXTTF) announced that the company’s wholly-owned subsidiary, Cannmart Inc., a licensed cannabis producer under the Access to Cannabis for Medical Purposes Regulations, has completed Health Canada’s Pre-Sales License Inspection at the Cannmart facility in Etobicoke, Ontario. On July 31 st, 2018, Health Canada inspectors were on-site to verify information submitted by Cannmart as part of its application and in assessing compliance with the applicable sections of the ACMPR prior to license approval. The Pre-Sales License Inspection is one of the last steps prior to the issuance of a Sales License under the ACMPR.



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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