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.
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.
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, 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.