Indus Holdings Archives - Green Market Report

StaffFebruary 25, 2021
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3min12420

California-based Indus Holdings, Inc. (OTCQX: INDXF) is buying Lowell Herb Co. and Lowell Smokes in a deal valued at $39 million. The acquisition includes trademark brands, product portfolio, and production assets of Lowell from The Hacienda Group effective immediately. The company will change its name to Lowell Farms Inc.

“The combination of Indus and Lowell will create a leading producer of California cannabis and the next step for the first great American cannabis brand,” said Gregory Heyman, founder of Beehouse, Lowell’s largest investor. “The Indus team’s commitment to growing excellent cannabis and the communities they serve also realizes Lowell’s mission to normalize cannabis in America.”

The deal consists of a cash payment of $4.1 million and the issuance of 22,643,678 Subordinate Voting Shares of the Company (of which 5,000,000 will be held in escrow to secure certain indemnification obligations undertaken by the sellers in the transaction). The share consideration was issued in a private placement transaction and the company has agreed to register such shares for resale in the United States. Hacienda said it has agreed to continue to produce Lowell products for an interim period pending the completion of the transfer of certain regulatory assets.

It is expected that Lowell Farms Subordinate Voting Shares and Warrants will begin trading on the Canadian Securities Exchange (CSE) on March 5, 2021, under the ticker symbols LOWL and LOWL.WT, and that the Subordinate Voting Shares will begin trading on the OTCQX effective on March 5, 2021, under the ticker symbol LOWLF.

“The cannabis industry is awash in brands competing for our attention, but Lowell has risen to the top of the fray as a brand that simultaneously empowers a movement, welcomes the curious, and greets the reacquainted all with a grace and elegance that other brands can only aspire to,” said George Allen, Chairman of the Board for Indus Holdings, Inc. “Every resource under our control will be employed in unlocking Lowell’s full potential.”


Debra BorchardtDecember 14, 2020
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5min11840

California-based cannabis company Indus Holdings, Inc. (CSE: INDS)(OTCQX: INDXF) has filed a C$100 million offering in Canada. Indus is based in Salinas, California, and is home to the following brands: Cypress Cannabis, House Weed, The Original Pot Co., MOON, Humble Flower, and Kaizen Medicinals. The offering extends over 25 months and can accommodate a variety of financial instruments. The net proceeds from the  offering will be used for discretionary capital programs, potential future acquisitions, general corporate purposes, and repayment of indebtedness outstanding from time to time

As of October 31, 2020, Indus held a cash balance of approximately $4.8 million and a working capital balance of approximately $20.3 million, compared to approximately $6.5 million and approximately $20 million, respectively, as of September 30, 2020.

Wildfires Affect Harvest

Indus said in its filing that it had realized positive operating cash flows of approximately $4.5 million during the three months ending September 30, 2020. The company attributed it to increased harvest volumes generated as a result of the renovations completed during 2020 to its cultivation facility in Monterey County.

However, for the quarter ending December 31, 2020, Indus said it is “expecting lower harvest yields than the previous quarter due to plant stress experienced from sealing greenhouses to prevent poor air quality from entering due to wildfires in California that occurred in late summer, early fall 2020, at a time when outdoor temperatures were also elevated. In connection with this expectation, on December 3, 2020, the company announced that based on preliminary financial information and subject to year-end closing adjustments, it expects net revenue for the fourth quarter of 2020 to be approximately $9.5 million to $11.5 million, a decline from the previously expected approximately $14 million.”  Prior to this announcement, Indus had said it expected some decline in yields, however, “the deterioration in yields has been more pronounced than anticipated.” Indus did say that new plantings in the current quarter that will harvest in the first quarter of 2021 are expected to return to normal yields.

“The decision to update our previously expected financial results for the fourth quarter 2020 was not taken lightly but we feel that it is the prudent one to make,” added George Allen, Chairman of the Board for Indus Holdings, Inc. “We remain focused on our commitment to building cannabis cultivations at an unprecedented scale in California and on driving long-term value for our shareholders. With the right team in place, we have taken a meticulous approach this year to reevaluate our efficiencies and strategic planning – with flexibility to adapt – and we saw great improvements so far; and we will continue to do so to respond accordingly.”

The wildfires that occurred in late summer, early fall 2020 also negatively impacted the company’s business, financial position, results of operations, and cash flows during the third quarter of 2020 and are expected to continue to have a negative impact for the fourth quarter of 2020 and potentially beyond as it completes its production from cannabis crops that were impacted by such wildfires. In the fourth quarter of 2020, the company said it installed automated environmental control systems within individual grow rooms at its cultivation facility

Personnel Changes

On November 9, 2020, Brian Shure was appointed Chief Financial Officer of the Corporation, adding strategic and financial experience to the company’s management team and replacing Steve Neil.

Co-Founder  Robert Weakley was replaced from his positions as Chairman and former Acreage Holdings’ George Allen was installed as Chairman and a member of the Board. While Mr. Weakley retained his position on the Board and did not resign from the Board at the time but he was later not nominated for re-election to the Board at its annual shareholder meeting held on October 22, 2020, and in his place, Bruce Gates was nominated by the Corporation and elected to the Board at such annual shareholder meeting Mr. Weakley’s involvement with the Corporation is now limited to any remaining ownership that he has of securities of the Corporation and Indus Holding Company.


Debra BorchardtNovember 10, 2020
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5min6110

Following the market close on Monday, Indus Holdings, Inc.  (OTCQX: INDXF)reported its financial results for the third quarter ended September 30, 2020, with revenue at $14.1 million. This was a 40% year-over-year growth from the third quarter last year and an increase of 43% from the prior quarter. As a percentage of revenues, owned brands grew from 73% in the prior quarter to 84% in the third quarter. Net income for the quarter was $2.4 million, compared to a net loss of ($4.8 million) in the second quarter. It was a huge improvement over last year’s net loss of $19 million for the same time period.

“Despite the headwinds caused by the wildfires, our Q3 results are the direct result of a strategy that prioritizes increased cultivation output and the Indus family of owned products,” says Mark Ainsworth, Chief Executive Officer for Indus Holdings, Inc. “While exceeding our expectations for the quarter, our performance was well short of where we could have been but for the impact of the wildfires and we are taking steps to be better prepared in the future.”

Wildfire Impacts

Indus updated investors on the effects of the fires that devastated the West coast. During the third quarter, the company said it experienced harvest weights that were on average 20% below the second-quarter levels. The company attributed the declines to remediation measures the company adopted to avoid crop-loss during the wildfires. Indus said it did increase in total flower harvest volumes during the quarter due to the increased number of harvests resulting from the expansion efforts in the first half of the year. Indus also said it expects that harvest yields will remain suppressed into the fourth quarter as the company works through the plants in the greenhouse that were impacted by the remediation measures. Indus said it is implementing automated environmental controls to mitigate similar losses in the future.

Indus Brand Updates

Indus owned brands continued to gain market share by strategically expanding in a variety of categories in the third quarter of 2020:

    • Flavor grew 71% from Q2 to Q3.
    • Original Pot Co. successfully launched two additional new baked good SKUs in Q3 and grew 42% from Q2. Allowing the team to penetrate in over 70 net-new dispensaries and garnered the highest month of revenue for the brand to date.
    • Moon, a chocolate edible brand, continues its position in the top three highest selling brands in cannabis-infused chocolates according to BDS Analytics.
      • Moon launched four different SKU’s from its highly anticipated gummy line, the first expansion into gummies for the brand.
    • Cypress brand sales grew by 42% from Q2 to Q3.
      • Due to our cultivation producing higher-quality flower, Indus’ flower continues to fill the void in the market for a higher demand in potency at a competitive price.

New CFO

The company also announced that Brian Shure was appointed as Chief Financial Officer. He is currently a Board member and Chairman of its Audit Committee. Steve Neil will remain with the company in a senior capacity and will focus his efforts on preparing the company for a potential US registration and other important initiatives in addition to supporting the incoming CFO in his transition.

“The turnaround at Indus has been the result of huge efforts by a highly talented team,” said George Allen, Chairman of the Board of Indus Holdings, Inc. “Not only has Indus solidified its market position as a dominant force in the cannabis industry, but the organization has positioned itself for greater success in the coming fiscal year.


Debra BorchardtMarch 16, 2020
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5min25190

Indus Holdings Inc. (OTC:INDXF) stock was moving higher by 24% to lately trade at 21 cents following news that former Acreage Holdings (CSE:ACRG.U)President George Allen has invested in the company.

Indus said it received a $2.3 million loan with lenders that included Geronimo Capital, LLC and Merida Capital Partners. In connection with the loan, Indus has entered into a non-binding term sheet with Geronimo Capital and Merida Capital Partners for the financing of up to $14.5 million (inclusive of the $2.3 million loan). The loan matures on March 13, 2021, and has an interest rate of 10% per annum until April 11, 2020, and 20% per annum thereafter

“We are excited to be working with Indus Holdings, Inc. as they have demonstrated early leadership in both cultivation and manufacturing capabilities in California. We see this as an exceptional opportunity to deploy capital behind a team that is focused and determined to lead California Cannabis,” said George Allen of Geronimo Capital. “While we foresee that the broader capital markets will interrupt many operators across the cannabis landscape, we intend to bring enough capital to Indus such that they are poised to fully capitalize on this tremendous opportunity for the benefit of all investors.”

The proceeds will be used to complete greenhouse 1 while the overall follow-on financing will fund the completion of all remaining greenhouse renovations and working capital needs for the company to become profitable and self-sustaining. The company said in a statement that greenhouse 1 and 2 renovations would continue on schedule. Within the past two weeks, the company has finalized and planted four of the additional 12 grow rooms and expects to bring Greenhouse 1 and 2 online by the summer, with one additional grow room every week for the next eight weeks. Indus said it would add one additional grow room every week for the next 11 weeks.

New Team

With the infusion of cash, the new lenders are also bringing in their own new team. Robert Weakley, Indus Holding’s, Inc. co-founder, and CEO said, “We are also looking forward to welcoming Geronimo Capital and Merida Capital Partners. This investment opens up Indus to opportunities that will get us to our goal of profitability.”

Mitch Baruchowitz of Merida Capital said, “Our objective is to finalize our investment into the Company and return the company’s focus to running a lean organization singularly committed to delivering high-quality products to customers.”

Allen formed Geronimo Capital after he parted ways from Acreage Holdings in April 2019. This occurred when Canopy Growth (NYSE: CGC) announced its unusual decision to agree to acquire Acreage once the U.S. federally legalized cannabis. Since that April announcement, Canopy Growth also showed its CEO Bruce Linton the door in July 2019. Linton has gone on to other investment opportunities and two weeks ago announced a $150 million SPAC to acquire cannabis companies.

Refocused On California

It seems one of the plans for the new team is to bring the focus back to California. Indus, like other cannabis companies, saw expansion as the goal for fast growth. However, expansion into numerous states has proven to be more expensive than planned. The company was establishing operations in Nevada and Oregon. The new team also suggested that it was dialing down the number of skus (stock keeping units). This has also been a big issue for many cannabis companies who sought to line up as many skus as possible.

In its last presentation, Indus listed as many as 12 different owned brands. It sells and distributes and mostly manufactures products for well-known brands like Beboe, Dixie Illixirs, Orchid Essentials, and Pantry. In January the company terminated its investment in CBD brand Shredibles as part of its plan to redirect its focus and resources on the company’s core brands.

 

 


StaffAugust 21, 2019
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4min9510

It’s time for your Daily Hit of cannabis financial news for August 21, 2019.

On The Site

Cresco Labs

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) reported that its second-quarter revenue rose 253% to $29.9 million over last year in its unaudited financial results for the second quarter ending June 30, 2019. The revenue rose 42% sequentially. The company attributed the increase in revenue to new market expansion and continued growth in existing markets with a higher revenue generated in Pennsylvania, Illinois, and California.

Cresco Labs also delivered a net loss of $3.9 million versus last year’s net income of $1.6 million for the same period. The net loss was blamed on an income tax expense of $5.6 million, primarily driven by discrete tax items related to the legal close of the acquisitions of MedMar Inc. and PDI Medical.

IRS

IRS Updates CTR Exams – The IRS has recently provided interim guidance to clarify actions IRS Examiners must take to analyze and document Currency Transaction Report (CTR) data during an audit.  The Guidance, which is effective immediately, will be incorporated into IRM 4.10.4, Examination of Returns, Examinations of Income.

Prior to incorporation, IRM 4.10.4 provided very little guidance on when and how to use the Financial Crimes Enforcement Network’s (FinCEN) Currency Transaction Reports [See Structuring Rules ]. However, this new guidance assists examiners during an audit of a taxpayer’s returns and income.

In Other News

Indus Holdings

Indus Holdings, Inc. (CSE:INDS) announced its financial results for the fiscal second quarter ending June 30, 2019.  The company generated second quarter record revenue of $9.7 million, 183% year-over-year and 51% sequential growth. It added 87 new dispensaries during the quarter. Announced acquisitions of CBD brands Shredibles and Humble Flower Co. Entered Nevada and Oregon markets through its pending acquisition of W Vapes, a licensed multi-state manufacturer and distributor of cannabis products

Cansortium

Cansortium Inc. (CSE: TIUM) (OTCQB: CNTMF), a vertically-integrated, global provider of premium-quality medical cannabis operating under the Fluent brand, announced today that it will begin trading today on the OTCQB Venture Market under the ticker “CNTMF”.  This is an upgrade from the Company’s previous classification on the Pink Open Market.

Cansortium Chief Executive Officer Jose Hidalgo emphasized, “We are very pleased to begin trading on the OTCQB Venture Market less than five months after our initial public offering on the Canadian Securities Exchange, adding valuable visibility and additional liquidity for the benefit of our shareholders. We are intently focused on executing our growth strategy by expanding our cultivation capacity and dispensary platform in our home state of Florida and establishing our Fluent™ brand of cannabis products as a leader in each market where we choose to compete.”

ManifestSeven

ManifestSeven California’s first integrated omnichannel platform for legal cannabis, today announced it has acquired the Haven (formerly operating as ShowGrow) dispensary in Santa Ana, California.

“This acquisition represents the first dispensary in our B2C strategy, as unveiled last week under the Weden retail dispensary and delivery brand” The dispensary will be rebranded Weden Santa Ana to serve as the flagship location for Weden, M7’s new business-to-consumer brand that encompasses brick-and-mortar retail and delivery operations throughout the state, as supported by the 1-800-CANNABIS customer service center.


William SumnerMay 30, 2019
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5min10190

It’s time for your Daily Hit of cannabis financial news for May 30, 2019.

On the Site

The Economics of Cannabis and Women Led Businesses

Women lead almost 30% of the businesses in cannabis and the opportunities are there. This group of distinguished women reviews the best sectors to build a business and how to obtain the capital for your company to thrive and grow. Click here to watch.

MJardin

MJardin Group, Inc.  (CSE: MJAR) (OTCQX: MJARF) reported its financial results for the quarter ending March 31, 2019, in Canadian dollars. The company delivered revenues of $10.9 million versus last year’s $6.7 million for the same time period. MJardin said it continued to see improvements in the sales of Cannabis from its WILL facility, recording $1.1 million in sales in the first quarter with a $0.8 million fair value adjustment to inventory.

In Other News

Illinois

The Illinois State Senate has voted to approve the Cannabis Regulation and Tax Act. Under the approved measure, cannabis would be taxed and regulated like any other substance and would help communities disproportionately affected by the “War on Drugs.” This is just one step of many in ending cannabis prohibition. Even after this bill passes there will still be work to do to give adults in Illinois access to cannabis without having to purchase it from a limited amount of stores and cultivators,” said Dan Linn, Executive Director of Illinois NORML.

Green Thumb Industries

Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) today reported its first quarter financial results for the period ending on March 31, 2019. Quarter-over-quarter revenue grew by 34% to $27.9 million. Adjusted EBITDA was $4.9 million. For the quarter, the company incurred a net loss of $9.7 million, which the company attributes to the decrease in value from a variable note receivable in other income. The company currently has $151.1 million in assets and $6.7 million in outstanding debt.

Cansortium

Cansortium Inc. (CSE: TIUM.U) today reported its financial results for the period ending on March 31, 2019. Revenue for the quarter was $5.5 million and the experienced a consolidated net loss of $16.6 million. “We expect 2019 to be a year of expansive growth and we are reaffirming our previous full year outlook,” said Cansortium CEO Jose Hidalgo. “Our team is focused on positioning the Company and the Fluent brand to capitalize on rapidly expanding opportunities in the U.S., while laying important groundwork for future expansion in international markets.”

Indus Holdings

After the market close yesterday, Indus Holdings announced the release of their first quarter financial results. Year-over-year, revenue grew by 180% to $6.4 million. The gross margin increased from 10% in the previous quarter to 21%.  “As consumer awareness and demand grows, for a company to be successful, it has to be strategic and adaptable with the capacity to scale up. We will selectively grow in a disciplined manner with smart and very accretive deals with an eye to high return – adding strategic and like-minded partners as we position ourselves as a multi-state operator,” stated Indus co-founder and CEO, Robert Weakley.


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