ManifestSeven Archives - Green Market Report

Debra BorchardtNovember 1, 2021
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ManifestSeven Holdings Corporation (M7) (OTCMKTS: MNFSF) announced financial results for its fiscal third-quarter ending August 31, 2021, on October 29, 2021, as revenues rose 11% sequentially to $4.2 million from the second quarter’s revenues of $3.8 million. The net loss for the quarter was $1.6 million. Despite this M7 said it is still in default of certain debt obligations. M7 said it is looking at solutions and is working closely with its major creditors, vendors, and landlords as it continues to pursue a range of strategic and financing alternatives.

Revenue Decline

M7 reported revenue of $11,704,450 for the nine months ending August 31, 2021, which represents a decrease of $1,979,802 (15%) from $13,684,252 for the nine months ended August 31, 2020. The company attributed the decrease to a decline in revenue generated from ancillary product sales due to a disruption in one of the company’s third-party e-commerce distribution channels that caused extended delays in the delivery time of products to customers and were partially corrected following the conclusion of the first fiscal quarter.

Can’t Pay The Bills

As of August 31, 2021, M7 only had $170,704 in cash. The company had a net working capital deficit of $28,251,574, however, the financial statements at August 31, 2021, reflect certain notes payable and convertible debentures as current liabilities that are not expected to be repaid within the next twelve months. In addition, the derivative liability is a non-cash balance, the resolution of which is entirely tied to the resolution of the convertible debentures. When excluding these balances, the working capital deficit was approximately $15.9 million.

As a result of the debt woes, M7 said it continues to explore, review and evaluate a broad range of potential strategic alternatives focused on maximizing shareholder value. The company managed to cut some operating expenses as that number fell by 33% to $2.3 million during the fiscal third quarter versus $3.5 million during the second fiscal quarter.

Revenue Streams

During the third fiscal quarter, M7 said it continued to place a greater emphasis on generating revenue from its regulated operations, with regulated product sales increasing by 25% quarter-over-quarter and expected to yield more significant long-term revenue growth. the company also said in July that it entered into a Master Services Agreement with a licensed third-party cannabis distribution company, focused primarily on the rapidly growing beverage product category, to carry out finished goods distribution operations on behalf of Highlanders. “The contract consolidates a client portfolio that includes some of California’s highest-selling beverage products, a database of nearly 400 active licensed retailers throughout California, and a robust fleet of 16 distribution vehicles, allowing for efficient statewide long-haul transportation and last-mile fulfillment of regulated products. The agreement is expected to result in significant operational synergies and maximize the company’s ability to monetize its regulated distribution infrastructure by generating incremental and accretive revenue and optimizing operating margins.”

One of the company’s products, The Marijuana Index has been offline for some months saying it is being reengineered. Though it seems the company is more focused on supply chain businesses.


Debra BorchardtAugust 2, 2021
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Following the close of the market on Friday, ManifestSeven Holdings Corporation (OTC: MNFSF) reported its financial results for its fiscal second-quarter ending May 31, 2021, as revenue fell from last year and was flat sequentially. The total revenue for the quarter was $3.7 million, which dropped from last year’s $4.9 million for the same time period. It was flat from the first quarter’s revenue of $3.8 million. 

The net loss for the quarter increased from $1 million in 2020 to $1.7 million in 2021. M7 said it continued to optimize its cost structure, resulting in operating expenses of $2.7 million during the fiscal second quarter, representing a decrease of 23% from $3.5 million during the first fiscal quarter.

During the second fiscal quarter, M7 said it continued to place a greater emphasis on generating revenue from its regulated operations, with regulated product sales increasing by 4% quarter-over-quarter and expected to yield greater long-term revenue growth. The company’s gross profit margin increased from 30% during the first fiscal quarter to 33% during the second fiscal quarter, with gross profit margin for the company’s regulated segment increasing from 30% to 34% quarter-over-quarter.

Sturges Karban, M7’s Chief Executive Officer, said, “M7’s launch into 2021 demonstrated that our commitment to integrating our B2B and B2C operations into a singular, statewide cannabis superhighway has yielded a reliable, scalable, and frictionless commercial platform capable of supporting the legal cannabis industry’s increasing demand for distribution, retail, and delivery solutions. In this most recent quarter, M7 continued to build upon its focused strategy by further developing Highlanders’ distribution capabilities and strengthening the business processes and practices across the Company’s integrated regulated operations.”

Going Concern

The company also stated within its earnings release that it will need to raise additional capital during the next twelve months and beyond to support current operations and planned development. At the time of the filing, M7 only had $644,000 in cash on hand. “These factors indicate the existence of a material uncertainty that may cast significant doubt as to the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with cash on hand and proceeds from a financing done
prior to the Merger.” The company said in a statement that it has initiated a strategic review process to explore, review and evaluate a broad range of potential alternatives for M7 focused on maximizing shareholder value.

M7 also reviewed its inability to make its interest payments due on the New H3O Note on July 1, 2021. “The Company announced that it has modified the terms of the New H3O Note to (a) clarify the rights of the parties thereto, (b) provide for additional security in consideration of the lender’s deferral of its right to immediately foreclose upon the pledged collateral, and (c) to amend certain other provisions of the New H3O Note to add the lender as a regulatory owner on H3O’s applicable cannabis licenses and escrow all documents required to completely transfer ownership of H3O over to the lender in the event of a subsequent default under the New H3O Note.”

“As consideration for this modification, the New H3O Note will accrue interest at the pre-existing default rate of 25% per annum from June 1, 2021, until paid in full pursuant to the terms of the New H3O Note (as modified). No payment of principal or interest shall be due before the maturity date, which shall remain January 1, 2022. In accordance with New H3O Note, the Company shall be entitled to prepay the principal amount, all accrued and unpaid interest, and costs plus a prepayment fee equal to the lesser of two additional months of interest or the amount of interest that would accrue between the date of prepayment and the maturity date.”

Despite revenue and going concern issues, in April 2021, M7 approved the issuance of 14,360,789 restricted stock units, 2,187,826 of which vest in October 2021 with the remainder vesting in April 2022. Stock-based compensation was $152,333 in the quarter versus $14,606 for the same time period last year.

Problems

As M7 tries to make strategic moves, it seems each attempt is thwarted. The company is in litigation over its acquisition of the cannabis delivery firm DPH. The value of the deal was $645,000. In July 2020, DPH claimed M7 failed to pay the money due to DPH and get regulatory approvals. DPH wants to cancel the agreement. M7 filed a countersuit in August 2020 and claimed DPH didn’t cooperate with M7 to get the approvals. The claims have not been resolved.

The company conducts, or, in the case of the Sacramento facility, plans to conduct, operations out of these facilities through certain of its wholly-owned subsidiaries, or, in the case of the Long Beach and Oakland facilities, through certain affiliated entities owned by the company’s CEO and director and controlled by the company by way of a management agreement. The company initially funded security deposits on these facilities, including the Long Beach and Oakland facilities. One location has apparently not worked out. M7 had placed a deposit of $65,000 on a facility in Monterey, but due to a change of operations and the assessment that it was not recoverable, the company has determined this deposit to be uncollectible and recorded a full write-off on the amount during the year ending November 30, 2020.

 

 


StaffSeptember 10, 2020
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California-based ManifestSeven announced it closed on an aggregate of $10.2 million in gross proceeds raised via three private placements of equity and convertible debt in 2020. In addition to the fundraising, the company said it is close to completing its reverse takeover transaction of P&P Ventures Inc., which is to be renamed ManifestSeven Holdings Corporation. M7 said it expects to begin trading within the coming days on the Canadian Securities Exchange using the ticker symbol “MSVN”.

ManifestSeven is an omnichannel platform for legal cannabis, merging compliant distribution with a retail superhighway. M7, with offices in Commerce and Irvine, California. The company said it has a growing portfolio of owned and operated retail operations located in major metro markets, including brick-and-mortar dispensaries, local on-demand delivery services, e-commerce, and subscription offerings.

“Today’s announcement is a resounding affirmation of M7’s business model and corporate resilience in the face of economic headwinds, making us one of the few cannabis companies to raise capital in this environment successfully,” said Sturges Karban, Chief Executive Officer of ManifestSeven. “We are truly encouraged by this level of financial backing from the investment community, which solidifies M7’s position as one of the leading operators in the legal cannabis market. This injection of capital allows M7 to continue expanding our seamless, compliant omnichannel across California, and eventually evaluate other markets in North America as opportunities arise.”

Capital Raising

Earlier this year, the M7 completed a unitized private placement offering at a purchase price of $4.50 per unit, with each unit consisting of one M7 share and one half warrant exercisable to acquire M7 shares at an exercise price of $6.75 per Share. Pursuant to the 2020 Private Placement, M7 has issued units for aggregate gross proceeds of approximately $2.3 million.

M7 completed a private placement offering in August of an aggregate principal amount of approximately $2.5 million in subordinated secured convertible promissory notes, which carry non-compounding interest at a rate of 15% per annum over an 18-month term, with the outstanding balance of principal and accrued interest convertible into Shares. The holders of the 15% Convertible Notes were also issued non-transferable warrants exercisable to acquire the number of Shares that such holder is entitled to upon the conversion of the 15% Convertible Notes at an exercise price equal to the conversion price until the date that is three years from the date of the CSE listing. As a result of the completion of the RTO, the 15% Convertible Notes constitute an obligation of the Resulting Issuer.

M7 completed a private placement offering in September of an aggregate principal amount of approximately $5.4 million in subordinated secured convertible promissory notes, which carry non-compounding interest at a rate of 17.5% per annum over an 18-month term, with the outstanding balance of principal and accrued interest convertible at a conversion price (the “17.5% Note Conversion Price”) of $1.17 per share (subject to certain adjustments). The holders of the 17.5% Convertible Notes were also issued warrants exercisable to acquire the number of Shares that such holder is entitled to upon the conversion of the 17.5% Convertible Notes at an exercise price equal to the 17.5% Note Conversion Price until the date that is three years from the date of the CSE listing. As a result of the completion of the RTO, the 17.5% Convertible Notes constitute an obligation of the Resulting Issuer.

 


StaffAugust 21, 2019
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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 SumnerMarch 28, 2019
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It’s time for your Daily Hit of cannabis financial news for March 28, 2019.

On the Site

CannTrust Holdings Inc.

Sales are up, but profits are on the decline for CannTrust Holdings Inc. (NYSE: CTST) as the company releases their financial results for the fourth quarter and year ending on December 31, 2018.

SAFE Banking Act Advances As Committee Votes For Approval

The House Financial Services Committee voted 45 to 15 to advance the Secure and Fair Enforcement (SAFE) Banking Act. Currently, Federal law prohibits banks from providing banking services to cannabis companies since cannabis is illegal despite some states legalizing cannabis.

In Other News

MJIC Inc.

MJIC Inc. announced today that it would change its name to ManifestSeven. The company is rebranding itself as part of its preparation to go public in Canada in the first half of 2019. “Our new name – ManifestSeven – speaks to the evolution of our company and the destiny of legal, compliant cannabis in the United States,” said Sturges Karban, ManifestSeven’s Chief Executive Officer and Director. “As we prepare to enter the public markets, we are already seamlessly integrating fully compliant operations across California, creating the cannabis industry’s first omnichannel distribution and retail superhighway. Our name change speaks to our ambition to continue growing in California and other markets as they legalize across other states.”

Aurora Cannabis Inc.

Aurora Cannabis Inc. (NYSE: ACB) announced that the company has added product information numbers (PINs) to 78 medical cannabis products. The PINs are meant to help track insurance coverage for medical cannabis patients. Patients hoping to submit health insurance claims to third party providers will be able to specifically identify the products they use, which in turn will theoretically help speed up the coverage process.

Flower One Holdings Inc.

Flower One Holdings Inc.  (CSE: FONE) announced that it has closed its previously announced public offering of unsecured convertible debenture units of the company. Issuing 50,000 units as a priced of $1,000, the company raised $50 million. The net proceeds of the offering will go towards working capital, general corporate purposes, finishing the development and construction of a production facility in Nevada, and the payment of outstanding notes.

Newstrike Brands Ltd.

Newstrike Brands Ltd. (TSXV: HIP) announced that it will invest $5 million in Green Tank Technologies, a manufacturer of cannabis vaporizer hardware and technology. “. Our strategic investment in Green Tank puts us in a strong position to become a preferred supplier of end-to-end vape solutions to the adult use recreational market,” said Mark E. Burton, Chief Strategy Officer, Newstrike Brands.


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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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