Debra BorchardtApril 5, 2023
IPO comes with multiple red flags for investors.
IPO Archives - Green Market Report
Debra BorchardtApril 5, 2023
Adam JacksonFebruary 17, 2023
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Debra BorchardtOctober 12, 2022
Sundial ended up buying Zenabis the company that triggered the IPO case.
Debra BorchardtJune 18, 2021
Psychedelic industry leader Atai Life Sciences B.V. (Nasdaq: ATAI) announced the pricing of its upsized initial public offering in the United States of 15,000,000 common shares at a price to the public of $15.00 per share. atai’s common shares are expected to begin trading on the Nasdaq Global Market on June 18, 2021 under the ticker symbol “ATAI.” In April, the company had initially planned on a $100 million offering, but that has ballooned to $225 million.
Atai is a clinical-stage biopharmaceutical company aiming to transform the treatment of mental health disorders. atai was founded in 2018 as a response to the significant unmet need and lack of innovation in the mental health treatment landscape, as well as the emergence of therapies that previously may have been overlooked or underused, including psychedelic compounds and digital therapeutics. The company has created a pipeline of 10 therapeutics and six enabling technologies. So far none of the Atai-supported drugs have received regulatory approval. One of its companies, Recognify Life Sciences, has initiated a Phase 2a trial in the US. ATAI expects to initiate a Phase 2 trial for another program in 2021 and an additional three Phase 2 trials for other programs in 2022.
Atai has raised more than $362 million in private funding from a group of VCs and other investors. Its most famous investor is Peter Thiel. Besides Thiel and his firm, Thiel Capital, the company’s other notable backers include Steve Jurvetson‘s Future Ventures. Atai is headquartered in Berlin, with offices in New York and London.
In addition, atai has granted the underwriters a 30-day option to purchase up to an additional 2,250,000 common shares at the initial public offering price, less underwriting discounts, and commissions. The offering is expected to close on June 22, 2021, subject to customary closing conditions.
Compass Pathways, a biopharmaceutical company that patented the psychedelic compound psilocybin for use in treatment-resistant depression, went public on the Nasdaq last September and currently has a market capitalization of $1.2 billion. Thiel and Atai, through its founder Christian Angermayer, were major private investors in Compass Pathways before its IPO.
StaffJune 14, 2021
Greenway Greenhouse Cannabis Corporation has filed a prospectus for a listing on the Canadian Securities Exchange. The company is majority-owned by Sunrite Greenhouses Ltd., an established cultivator of greenhouse-grown produce within the Del Fresco Group of companies. Greenway currently operates in a hybrid greenhouse, located in Leamington, Ontario, and in an indoor nursery, located in Kingsville, Ontario.
According to the filing, Greenhouse has no revenue to date but is licensed to grow and sell dried cannabis. The first crop was fully harvested in May 2021. It intends to sell the strains called Sun County Kush and Lemon Pound Cake. Greenway says it has over 200 strains within its genetic portfolio and plans to be a wholesaler. The company plans to complete five crop cycles per fiscal year. Greenway has $4.1 million in working capital according to the prospectus.
“Greenway represents the next step in a lifetime of agricultural experience and innovation. The Del Fresco Group of companies have been bringing fresh produce to consumers across North America for years and we’re excited to leverage our greenhouse expertise with this legal crop of cannabis,” says Jamie D’Alimonte, CEO and Co-Chair of Greenway. “Combined with some of the most skilled cannabis specialists in the field, Greenway is prepared to bring quality greenhouse cannabis to the Canadian market.”
The company’s leadership is not diverse and is only white males. The gentlemen also hold the same positions in the produce company Del Fresco Group, which could create a conflict of interest according to the company filing.
The filing stated, “As of the fiscal year ended March 31, 2021, there is no revenue from dry bud cannabis or clones. The first batches of dry bud cannabis were approximately 50% through their production cycles at such time. In the past three fiscal years, the only source of revenue has been rental income from the Acquired Property, and reserves for potential additional production capacity. Rental income will be an insignificant source of revenue in the future. At present, the Corporation does not anticipate engaging in any business activities outside of Canada. The corporation uses approximately 4% of the Leamington facility for product development of new cannabis strains, retrieved from their significant seed bank. The footprint for product development varies by season and the judgment of Management. Research and development of new strains and growing practices is completed in-house drawing on the significant knowledge of the Corporation’s founders.”
StaffMay 11, 2021
Flora IPO
Flora Growth Corp. (NASDAQ: FLGC) priced its initial public offering of 3,333,333 shares of its common stock, at the high end of the proposed price range of $5.00 per share to the public for a total of US$16,666,665 of gross proceeds to the company. Flora Growth is a cannabis company that says it will leverage natural, cost-effective cultivation practices to supply cannabis derivatives to its diverse business divisions of cosmetics, hemp textiles, and food and beverage. Flora said it strives to market a higher-quality premium product at below-market prices. By prioritizing natural ingredients and value-chain sustainability across its portfolio. The common stock is expected to begin trading on the Nasdaq Capital Market today under the symbol “FLGC.” The offering is expected to close on May 13, 2021, subject to customary closing conditions.
True Leaf
True Leaf Brands Inc. (OTC Pink: TRLFF) (FSE: TLAA) has launched both a traditional private placement and an equity crowdfunding offering. The company plans to use the proceeds from both offerings to execute its strategic plan to become the industry’s leading provider of seed-to-shelf solutions for micro-cultivators. The company said it planned the dual offering so that institutional investors, plus the craft cannabis community, and the general public would have the opportunity to invest.
The company said in a statement that it will offer for sale up to a maximum of 25 million units at $0.40 CAD per Unit. Each Unit will consist of one common share and one-half of one common share purchase warrant. Each Warrant shall be exercisable for one Common Share at an exercise price of $0.60 CAD for a period of 24 months following the Closing Date (as defined below). The Warrants are subject to accelerated expiry in the event the closing price of the common shares of the Company on the Canadian Securities Exchange is $0.90 CAD or more for a period of ten consecutive trading days on or after the date which is four months and one day from the date of issuance.
“We’re celebrating B.C.’s rich history of growing quality cannabis – the world-renowned ‘BC Bud.’ By supporting micro-cultivators and giving the public a chance to become owners in our company, the entire craft cannabis community benefits,” said True Leaf CEO Darcy Bomford. “True Leaf’s model is focused on helping micro-cultivators navigate the journey to the regulated retail market so they can showcase their brand and provide consumers with the product they want.” True Leaf is supporting the craft cannabis community by partnering with micro-cultivators to provide the small-batch, premium product consumers are looking for.
Holistic Industries
Privately-owned Holistic Industries raised $55 million in the form of a convertible note. The company said that the proceeds from the oversubscribed offering, would be used to drive expansion into newly licensed markets, including Missouri and West Virginia, expansion into additional markets, M&A activity the company is currently pursuing, as well as launches of new brands and product innovations.
“We are the largest remaining private MSO operating in the market today, and we see tremendous opportunity ahead for us and our investors,” said Josh Genderson, CEO of Holistic Industries. “With this latest round of funding, we will continue our strategic expansion and continue to develop the operational scale and managerial excellence that makes us the best place to work, shop and invest.”
Holistic Industries has over 600 employees and over 500,000 square feet of growing/processing facilities in eight regionally concentrated states. Between 2018 – 2020, Holistic Industries said it had a revenue CAGR of 146% and is projected to more than double its revenue again in 2021. The company also has a growing and profitable Greenhouse of Brands for every type of cannabis consumer including recent launches of Do Drops, Garcia Hand Picked and Strane in strategic markets. In the first quarter, Holistic Industries opened three new Liberty dispensaries in California and Pennsylvania and has plans to open several additional retail locations and grow/processing facilities later this year.
StaffMarch 1, 2021
Optimi Health Corp. (CSE: OPTI) announced the closing of its oversubscribed initial public offering on February 24, 2021. Pursuant to the Offering, the Company issued 27,600,000 units of the Company at a price of $0.75 per Unit for aggregate gross proceeds to the Company of $20,700,000, which includes the full exercise of the over-allotment option.
The common shares of the Company and the common share purchase warrants issued began trading on February 25, 2021 on the Canadian Securities Exchange. The Offering was led by Mackie Research Capital Corporation, as the lead agent and sole bookrunner, on behalf of a syndicate of agents, including Canaccord Genuity Corp. and Stifel Nicolaus Canada Inc.
The Units offered under the Offering each consist of one Common Share and one‐half of one common share purchase warrant of Optimi. Each Warrant is exercisable to acquire one common share of the Company at an exercise price of $1.25 per Warrant Share at any time until February 24, 2023.
The net proceeds of the Offering will be used for capital expenditures related to the Company’s facilities in Princeton, BC, the development of the company’s functional mushroom business, the execution of the Company’s Psilocybin and Psilocin research and development initiatives, and for working capital requirements and other general corporate purposes.
No securities regulatory authority has either approved or disapproved of the contents of this news release. The Units, the Unit Shares and the Warrants comprising the Units, and the Warrant Shares issuable upon exercise of the Warrants, have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“), or any state securities laws. Accordingly, the Units may not be offered or sold within the United States or to U.S. persons (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws, or pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities of Optimi in any jurisdiction in which such offer, solicitation or sale would be unlawful.
With a vertically integrated approach, Optimi intends to cultivate, extract, process and distribute high quality functional mushroom products at its two facilities comprising a total of 20,000 square feet nearing completion in Princeton, British Columbia. To fully investigate the science of mushrooms, the Company has received a research exemption under Health Canada Food and Drug Regulations (FDR) for the use of Psilocybin and Psilocin for scientific purposes at its wholly owned Optimi Labs Inc subsidiary.
Debra BorchardtJanuary 29, 2021
Indoor agriculture company Agrify Corporation (Nasdaq: AGFY) has listed its shares on the NASDAQ after pricing its upsized initial public offering of 5,400,000 shares of common stock at a price of $10.00 per share for total gross proceeds of $54 million. The shares began trading on the Nasdaq Capital Market under the symbol “AGFY” on Thursday.
Raymond Nobu Chang, President & CEO of Agrify said, “We’re beyond thrilled to officially announce our IPO. This is an incredible step forward to solidifying Agrify’s foothold in the indoor agriculture and tech space. We look forward to empowering a generation of modern growers to achieve better consistency and quality through the understanding that cultivation techniques must evolve to meet the market’s future needs.” The company said that it does not cultivate, come in contact with, distribute or dispense cannabis or any cannabis derivatives that are currently prohibited under U.S. federal law, but notes that its cultivation solutions can be used within indoor grow facilities by cannabis cultivators if they choose to do so.
In addition to the shares that began trading, Agrify has granted the underwriters a 45-day option to purchase up to an additional 810,000 shares of common stock to cover over-allotments, if any. The offering is expected to close on February 1, 2021, subject to customary closing conditions. Maxim Group LLC and Roth Capital Partners are acting as joint book-running managers for the offering. The company reported net revenue of $4 million in 2019, which grew to $7.7 million for nine months ending September 30, 2020. The net losses were $8.5 million for those nine months in 2020.
Backlog
As of December 31, 2020, Agrify said its backlog, which consists of purchase orders or purchase commitments, was $59.3 million. In the company’s filing, it said, “We expect to recognize revenue of approximately $40 million in 2021 and the rest gradually thereafter. As of December 31, 2020, we have $105 million of carefully vetted potential sales opportunities (which we refer to as our qualified pipeline). Of this, $78 million of the qualified pipeline was generated through our company directly and $27 million through our Agrify-Valiant Joint-Venture. We are presently working to convert this pipeline into confirmed bookings over the next 12 months.”
Horizontal Modular Growing
“We believe that our AVFU is the only product on the market that offers a modular, compartmentalized micro-climate growing system for indoor vertical farming. These 8.5 ft. long x 4 ft. wide x 9.3 ft. tall units each have two tiers of growing space. They are designed to line up horizontally in rows, and they can be stacked vertically up to 3 units tall allowing a total of 6 layers of canopy, effectively taking advantage of previously unused indoor vertical space. The AVFU is a premium indoor grow solution with an MSRP starting at $20,000, and our most recent AVFU deals have been for between 60 and 535 units as our new customers become satisfied that our grow solutions will be an instrumental part of their operations moving forward. We are targeting large scale projects that range in size from $1 million to over $10 million in AVFU hardware sales before any additional revenue from our Agrify Insights™ software and ancillary products and services are realized.”
“A key component of our cultivation solution is our proprietary software, Agrify Insights, which has been developed in-house. This cloud-based software interfaces with a microservices middleware and relational database that integrates with our hardware and provides our managers, facility owners, facility managers, and growers real-time control and monitoring of facilities, growing conditions, and insights into both production and profit optimization. The combination of precise environmental control and automation with data collection and actionable insights empowers our customers to be more efficient, more productive, and more intelligent about how they run their businesses. We believe that the robust data analytics capabilities from our Agrify Insights platform coupled with our AVFU system is enabling our customers to transform their businesses and quality of the product they are cultivating.”
Debra BorchardtJanuary 6, 2021
HempFusion Wellness Inc. completed its initial public offering (IPO) of 7,000,000 common shares at a price of $1.00 per share for gross proceeds of $7 million and 10,000,000 units of the company for gross proceeds of $10 million. The company will begin trading on the Toronto Stock Exchange today under the following symbols:
- CBD.U – the Common Shares (including the Offered Shares, the Unit Shares (as described below) and the Warrant Shares (as described below));
- CBD.WT.V – the Warrants; and
- CBD.WT.U – the 2019 Warrants.
“We are incredibly excited to have completed our initial public offering and begin trading on the Toronto Stock Exchange,” commented Jason Mitchell N.D., HempFusion’s CEO. “The additional $17 million in capital adds to our healthy treasury, providing us with a solid foundation to build from and execute on our strategic plans for 2021 and beyond. Our goals include increased investment into research and development, expanding our sales and distribution networks, and firmly establishing HempFusion as a leader in the dynamic global CBD industry.”
HempFusion is a health and wellness CBD company utilizing the power of whole-food hemp nutrition. HempFusion distributes its family of brands, including HempFusion, Probulin Probiotics, Biome Research, and HF Labs, to approximately 4,000 retailers across all 50 states of the United States and select international locations. HempFusion’s product portfolio comprises 46 SKUs including, tinctures, proprietary FDA Drug Listed Over-The-Counter (OTC) Topicals, Doctor/Practitioner Lines and more. HempFusion says it has an additional 30 products under development. HempFusion is a board member of the US Hemp Roundtable, and HempFusion’s wholly-owned subsidiary, Probulin Probiotics, is one of the fastest-growing probiotics companies in the United States, according to SPINs reported data.
The company said it had revenues of $3 million in 2019 with a net loss of $12 million and total liabilities of $7.7 million.
Mitchell is a naturopathic doctor and brings 25 years of business development, scientific, nutritional, and product development experience to the company’s leadership. Mitchell has in-depth knowledge of the natural supplements industry, Hemp, CBD and probiotics, as well as ingredient sourcing. Mitchell also has extensive understanding and a background in regulatory matters specifically relating to FDA and other U.S. and foreign governmental agencies. Mr. Mitchell previously held the position of Chief Science Officer for Country Life Vitamins, where he developed over 300 products and assisted that company through its acquisition by Kikkoman Foods in 2006.
Debra BorchardtDecember 2, 2020
The independent branded hydroponics company with a comprehensive distribution platform, Hydrofarm Holdings Group, Inc. said it was launching an initial public offering of 8,666,667 shares of its common stock. The initial public offering price is expected to be priced between $14.00 and $16.00 per share. Hydrofarm said it expects to grant the underwriters a 30-day option to purchase up to an additional 1,300,000 shares of its common stock. Hydrofarm has applied to list its shares of common stock on the Nasdaq Global Market under the symbol “HYFM.” The company is hoping to raise $118 million, but the over-allotment option could bring that to $136 million.
Hydrofarm is not a newcomer to indoor growing, but it has targeted the cannabis industry as an area for expansion. The company had net sales for nine months in 2020 of $254 million. The net income was $2.1 million for that same time period. The proceeds are to be used for repaying existing indebtedness, for acquisitions, for working capital, and other general corporate purposes. The company has $113 million in total long-term debt.
Cannabis Restrictions
Despite the company’s desire to work with cannabis it also faces restrictions due to the company’s loans. According to the company’s prospectus, it states, “The Term Loan Agreement prohibits the Subsidiary Obligors from selling our products directly to cannabis growers or cultivators, or to sellers or retailers that sell only to the cannabis industry. The Encina Credit Facility prohibits the Subsidiary Obligors from selling our products to the cannabis industry. As a result, the Subsidiary Obligors do not sell our products directly to the cannabis industry, cannabis growers or cultivators, or to sellers or retailers that sell only to the cannabis industry. We are in compliance with the terms set forth by the Term Loan Agreement and the Encina Credit Facility and maintain policies and procedures that are designed to promote and achieve continued compliance with these requirements.” The company said it sells its products through third-party retailers and resellers which do not exclusively sell to the cannabis industry.
Reputation Risk?
Hydrofarm seems like it is preparing the company for cannabis to become legal and then be able to freely work with the industry, but in the meantime, it is clearly trying to distance itself from its customer base. The filing noted, “Damage to our reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not. Cannabis has often been associated with various other narcotics, violence, and criminal activities, the risk of which is that our retailers and resellers that transact with cannabis businesses might attract negative publicity. There is also a risk that the action(s) of other participants, companies, and service providers in the cannabis industry may negatively affect the reputation of the industry as a whole and thereby negatively impact our reputation.”
“Today, we believe that a majority of the CEA equipment and supplies we sell to our customers is ultimately purchased by participants in the cannabis industry, though we do not sell to participants in the cannabis industry directly.”
Former Hostess Brands CEO
Mr. Toler has served as our Chief Executive Officer and Chairman of our board of directors since January 1, 2019. Prior to joining Hydrofarm in 2019, Mr. Toler was the Chief Executive Officer of Hostess Brands, Inc. (Nasdaq: TWNK), a food and beverage company, from May 2014 to March 2018. Under his leadership, Hostess successfully re-established the iconic Hostess brand as a leader within the sweet baked goods category, returned the company to profitability, and transitioned Hostess from a private to a public company. Mr. Toler has over 35 years of executive leadership experience in supply chain management and consumer packaged goods, including previously having served as Chief Executive Officer of AdvancePierre Foods, from September 2008 to August 2013, and President of Pinnacle Foods. He has also held executive roles at Campbell Soup Company, Nabisco, and Procter & Gamble. Mr. Toler served on the board of directors of Collier Creek Holdings from September 2018 to September 2020, Hostess Brands from May 2014 to March 2018, AdvancePierre Foods from 2008 to 2013 and Pinnacle Foods from 2007 to 2008. In addition, Mr. Toler has also served as a senior advisor at Oaktree Capital Management, an investment management firm, from September 2013 to April 2014. Mr. Toler holds a B.A. in Business Management and Economics from North Carolina State University. Mr. Toler was selected to serve as Chairman of our board of directors because of his 35 years of executive leadership experience in supply chain management and consumer packaged goods.
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