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
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.