MJardin Archives - Green Market Report

MJardin Group, Inc.  (CSE: MJAR) (OTCQX: MJARF) reported revenue of $4.8 for its third-quarter ending September 30, 2020. This was lower than the $7.6 million in revenue that the company delivered in the 2019 third quarter. The net income for the quarter was $7.2 million All amounts are expressed in Canadian dollars unless otherwise indicated.

The company noted that its operating expenses were $6.7 million the quarter leading to a loss on operations of $4.2 million. This was higher than the $3.6 million in operational losses for the 2019 third quarter.  The general and administrative expenses of $3.7 million were higher than last year’s $3.0 million for the same period and mostly due to increased professional services expenses in Q3 2020. MJardin said it has been able to grow a new fifth strain testing at 24% THC on behalf of Robes at its WILL facility and that all harvests out of the WILL and GRO facilities have passed HC microbial testing without the use of irradiation treatment.

Fourth Quarter

MJardin said it plans on delivering the following in the fourth-quarter:

• complete run-rate production at the WILL facility;
• retail sales of cannabis produced at Canadian facilities; and
• full licensing of the AMI facility’s Phase II expansion.

The company said it plans to continue to increase the production from its Canadian assets and intends to continue doing so for the balance of the year. At the same time, the company said it plans to continue focusing on securing offtake for production via either firm commitments with retailers or supply agreements with leading license holders.

Last month, MJardin entered into a master service agreement with the OCS. This agreement immediately enables MJardin to make its product available to retail consumers in Ontario. It is an important step in MJardin’s evolution from a pure-play cultivator to a consumer-centric company, servicing the needs of retail consumers, in-line with the Company’s 2020 strategic plan. As a result, the company said it expects increased revenues from the same flower production, given the higher realized price per gram at the retail sales level, and expects to gain market recognition and consumer brand awareness from products sold under the Flint and Embers banner. The company said it anticipates its first sale to the OCS will occur in the fourth quarter of 2020.

MJardin Group, Inc. (CSE: MJAR) (OTCQX: MJARF) reported second-quarter revenue declined to $2.1 million from last year’s restated revenue of $6.8 million for the same time period. Net losses also increased to $12.4 million from last year’s net losses of $6.1 million. The company’s gross margin fell to $850,000 from last year’s $3.6 million, which MJardin attributed to the reduction in revenues from both the managed services and cultivation segments.

“While we still have a lot of work to get done to achieve our growth objectives, I am very pleased with the results of our team’s efforts, which have now resulted in a second consecutive quarter of stabilized operations, improved visibility into the future and ultimately better financial performance,” commented Pat Witcher, CEO of MJardin. “We are pursuing growth opportunities through sensible partnerships whereby our expertise and track record can contribute to growth and profitability without the need for additional capital. We continue to run a lean and extremely efficient business to manage margins and overall costs, while focusing our corporate development team’s efforts on creative growth strategies.”

AtlantiCann Medical

The company’s AtlantiCann Medical Inc. or AMI joint venture contributed $1.3 million to earnings, which was an increase of ~330% from the prior quarter, Unfortunately, that good news is short-lived because MJardin noted that on August 5, 2020, AMI bought out the previously signed master service agreement, which had been a ten-year term that was executed in 2019. MJardin said it will receive $2 million from AMI within the next 45 days in lieu of ongoing license fee payments. The company said its cultivation management support for the AMI operation has been substantially reduced in connection with the buyout and is expected to be completed by the end of 2020.

Second Half Plans

MJardin said it continues to advance the production from its Canadian assets and plans to continue doing so for the balance of the year. At the same time, the company plans to continue focusing on securing offtake for production via either firm commitments with retailers or supply agreements with leading license holders. In a statement, MJardin laid out the following plans:

• Complete run-rate production at WILL and GRO facilities by the end of Q3;
• Retail sales of products produced at Canadian facilities in H2 2020;
• Full licensing of AMI Phase II expansion by/during the Q4;
• Significant progress on completion of construction at the Warman facility;
• Continued pursuit of expansion opportunities in select US States.

MJardin Group, Inc.  (OTCQX: MJARF) reported first-quarter revenue dropped to $2.2 million versus last year’s revenue of $10.7 million for the same time period in 2019. The company also delivered a net loss of $8.1 million, which was lower than last year’s first-quarter loss of $14.8 million (all figures in Canadian dollars).

”During the first quarter we remained focused on the completion of our cultivation assets as we continue to push aggressively towards being prepared to penetrate the Canadian recreational market with our products, and ramping up revenues starting in the second half of 2020,” commented Pat Witcher, CEO of MJardin. “I am very encouraged with the progress our team is making with bringing our assets online as well as exploring strategic growth opportunities which could start contributing to our profitability in the foreseeable future.”

MJardin said that its Managed Services business generated $2.2 million in revenue during the quarter. The Canadian cultivation facilities were currently mid-way through the growing cycle and so no revenue was recognized at these facilities during the first quarter. The company did say that it was in advanced negotiations for a supply agreement with a major Canadian License Holder to sell approximately an incremental 2,000 kilograms of product.

While the gross margins fell to $0.4 million versus $4.1 million for the prior year comparable period, expenses dropped by 43%.  MJardin said it would continue to look for more ways to cut costs. 

Looking Ahead

The company said it has the following plans for 2020 and that they are on track:

• Complete run-rate production at WILL and GRO facilities by the end of the third quarter
• Retail sales of Canadian production by the end of the third quarter
• Full licensing of AMI Phase II expansion by during the fourth quarter
• Significant progress on completion of construction at the Warman facility
• Continued pursuit of expansion opportunities in selected US States

MJardin Group, Inc.  (OTCQX: MJARF) reported results for its fourth quarter and fiscal year ending December 31, 2019, with revenue falling to $26.7 million versus $27.5 million in 2018. In addition to the drop in revenue, MJardin delivered a 2019 net loss of $267.5 million versus $81.4 million in 2018. This loss included a $207 million impairment related to  goodwill, intangibles, PP&E and a principal promissory note in 2019 and $21 million in 2018

“When I stepped into the role of CEO, MJardin was in a state of transition. Since I have endeavored to place this business on a strong footing to succeed going forward, by narrowing the focus of operations and doubling-down on our core competencies, namely, the cultivation of high-quality and high THC cannabis,” said Pat Witcher, CEO of MJardin Group, Inc. “With construction completed at the majority of the Canadian facilities and right-sized operations, we are well-positioned to focus on a strong entry to the Canadian recreational market in the second half of 2020 and turn the corner as a business.”

The company scaled back most of its U.S. commitments as it terminated the Cannabella acquisition and sold GreenMart of Nevada.  The company said that it still sees the United States as a desirable growth market and will continue to pursue strategic joint ventures, acquisitions, or consulting arrangements in select States on a case-by-case basis. The company has $146 million in total debt and the sale of the GreenMart business, also called Cheyenne, will contribute $30 million towards that debt. Harvest Health & Recreation purchased the business from MJardin.

“For the past six months, I have been focused on addressing and ultimately improving the Company’s internal processes and financial reporting. Now that the Company has unwound historically unprofitable commitments, I will continue to focus on increasing transparency to our investors while working with Pat to continue stabilizing our operations and positioning MJardin for growth as we push forward towards delivering on the promise and value of our current asset base,” said Edward Jonasson, CFO of MJardin Group Inc.

Looking Ahead

MJardin said it will focus on its high THC high yielding flower to position the company well for entry into the recreational market in Canada during the second half of 2020.  Construction has been completed on the Brampton Ontario (WILL) facility and 10 of the 12 flower rooms have now been licensed by Health Canada. The company said it expects to receive licenses for the remaining two flower rooms imminently. This expansion is expected to result in run-rate production of 3,000 KG per year at the WILL facility during the third quarter of 2020.

Phase 1 of the Cultivation Facility in Lower Sackville, Nova Scotia facility (AMI) operated through a three-way joint-venture between the Nova Scotia Mi’kmaq First Nations (51%), MJardin (39%) and the Halef Group (10%) is fully operational with a run rate production of 3,500 KG per year. During 2019, construction was completed on the Phase 2 expansion, bringing on an additional 2,800 KG per year of capacity with licensing and run-rate production expected by the fourth quarter of 2020.

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. The Colorado operations generated $8.9 million in sales.

The net loss was $7.7 million versus last year’s $1.3 million. Total expenses increased to $3.4 million from $1.8 million. General and administrative expense increases were attributed to the GrowForce Holdings acquisition. The company underwent corporate cost-cutting measures late in the first quarter of 2019 and the company said the resulting expected annual SG&A and Payroll expense run rate is approximately $12.1 million.

“Our Q1 results reflect the successful implementation of our operating plans.  We refocused our priorities back to what we do best: grow high yield premium products,” said Adrian Montgomery, Chairman, and Interim CEO. “We made considerable progress towards the completion of our build outs and expansion of our U.S. and Canadian facilities, committed to smart and strategic growth decisions, and utilized the impressive industry talent we have on our team to improve our earnings and bolster our capital position. In Q2 we will start recognizing the benefits of the SG&A cost-cutting initiatives we started at the end of Q1. We will continue to develop and build demand for our premium product lines and evaluate more tuck-in opportunities where we can confidently and responsibly deploy smart capital.”

Post Quarter End

Following the end of the quarter, MJardin acquired Nevada edible producer Carson City Agency Solutions dba Cannabella. This past week, the company completed construction of its 76% owned “GRO” cultivation facility in Dunnville, Ontario. Plus, the company said it submitted the Evidence of Readiness package to Health Canada for the purposes of receiving a Cultivation and Processing Licence. On May 29, 2019, MJardin said it amended the terms of its existing loan with the senior lender to remove the callable feature and convert into a term loan, this enables MJardin to simplify the Company’s capital structure and fully focus on executing the operational plan.