MPX Archives - Green Market Report

Debra BorchardtMarch 25, 2019

iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCQX: ITHUF) is redeeming its outstanding convertible debentures of MPX Luxembourg SARL, a wholly-owned subsidiary of iAnthus, in the aggregate principal amount of $32,257,804.07. The redemption date of the Debentures will be April 24, 2019. The Debentures are redeemable for an amount equal to $860.43 per $1,000 principal amount of Debentures.

“The MPX Luxembourg convertible debentures were a legacy obligation inherited by iAnthus as part of the acquisition of MPX Bioceutical Corp. The redemption or resulting conversion of these debentures will enable us to significantly reduce our interest expense and potential further future dilution for our shareholders,” said Hadley Ford, Chief Executive Officer of iAnthus. “The removal of this expensive debenture is a key part of our commitment to optimizing our cost of capital. Given that the holders of the debentures are significantly in the money, it is our expectation that the vast majority of holders will convert, as opposed to redeem their notes.”

iAnthus acquired MPX in an all-stock transaction valued at C$835 million that was announced in October. The combined company, excluding MPX International, will include operations and cannabis licenses in 10 states that will permit iAnthus to operate 56 retail locations and 14 cultivation/processing facilities.

MPX Capital Raise

In a separate transaction, MPX International Corporation (CSE: MPXI) closed its previously announced non-brokered private placement offering of units of the Company. Due to increased demand, the previously announced offering was increased from C$20 million (approximately $15 million) to C$26,905,162 (approximately $20.2 million). The offering consists of the issuance of 56,052,421 Units issued at a price of C$0.48 per Unit.

MPX said it intends to use the net proceeds from the offering to fund capital expenditures in Owen Sound, Ontario as well as potential future acquisitions and for working capital and general corporate purposes. The securities issued pursuant to the offering are subject to a four month hold period in accordance with applicable securities laws expiring on July 21, 2019.

iAnthus Redemption Terms

Prior to the redemption of the Debentures, each holder thereof will have the right to convert the Accrued Principal Amount of their Debentures into units of iAnthus, each such unit consisting of 0.1673 of one common share in the capital of iAnthus and 0.08365 of one common share purchase warrant at a conversion price equal to $0.74 per Unit at any time prior to close of business on April 23, 2019. A holder electing to convert their Debentures will receive 1,729.80 Units for each US$1,000of Accrued Principal Amount. No fractional iAnthus Shares or iAnthus Warrants will be issued on conversion.

William SumnerNovember 30, 2018

MPX Bioceutical Corporation

MPX Bioceutical Corporation (CSE: MPX) reported its financial results for the second quarter ended on September 30, 2018. MPX recorded revenue of CAD$14.7 million, up from CAD$4.4 million in the same quarter during the previous year. The increase in revenue was attributed to wholesale operations and the company’s management of four cannabis dispensaries in Arizona. Gross profits for the quarter rose by 30.1% to $4.4 million.

The company’s net loss for the quarter rose precipitously to CAD$19.2 million, up CAD$3.9 million in the same period during the previous year. The company attributes its losses to general operations, accretion expense of CAD$1.4 million and costs related to the change in fair value for the Hi-Med Facility and convertible loan for CAD$9.2 million.

“For the second quarter, we again experienced strong growth, with revenue increasing $10.3 million year over year, topping $14.7 million, driven by the strong performance of our Arizona operations and much-improved production from our facility in Nevada,” said W. Scott Boyes, Chairman, President, and CEO of MPX. “We continue to execute upon our aggressive expansion strategy, as demonstrated by the successful openings of the Health for Life dispensaries in Maryland managed by one of MPX’s subsidiaries.”

Plus Products Inc.

The California-based edibles manufacturer, Plus Products Inc. (CSE: PLUS) announced its financial results for the quarter ended on September 30, 2018. Revenue rose to $2.56 million, up 60% over the previous quarter. The company’s loss and comprehensive loss rose to $1.79 million, up from $1.21 million during the same period during the last year.

PLUS ended the quarter with a gross margin of $0.38 million (15%) and $11.1 million in cash on hand. Shortly after the end of the quarter, the company went public and closed a CAD$20 million IPO

“We are pleased that as measured by retail sales in Q3, the PLUS brand is now the leading edibles brand in the largest and most competitive cannabis market in the world, and we look forward to extending the brand beyond California in 2019,” said Jake Heimark, CEO of PLUS.

Emerald Health Therapeutics Inc.

Emerald Health Therapeutics Inc. (TSXV: EMH) reported its financial results for the third quarter ending on September 30, 2018. Revenue for the company rose to $321,070, representing an increase of 51% when compared to the same period in the previous year. Likewise, Emerald Health’s net loss also increased; increasing from $1.9 million in Q3 of 2017 to $6.26 million.

Shortly before the end of the quarter, Emerald Health was chosen as an authorized cannabis supplier by the Newfoundland Labrador Liquor Corporation (NLC), and by the last week of November had completed its first adult-use cannabis shipments to Newfoundland; as well as British Columbia and Labrador.

“As we move forward at this pivotal point of commercial production, we expect our Pure Sunfarms joint venture, Quebec facility, and hemp sourcing agreements to result in significant scaling of production and sales from the fourth quarter onward,” commented Avtar Dhillon, MD, President of Emerald Health.

William SumnerAugust 15, 2018

Constellation Brands (STZ), best known as the distributor for Corona beer, is doubling down on its investment in Canopy Growth Corporation (WEED) in what some are calling one the largest investments in cannabis history. On August 15, 2018, Constellation announced that it would acquire 104.5 million shares of Canopy, increasing its stake in the company to 38 percent. At a price of C$48.60 per share, the value of the investment totals to approximately C$5 billion.

Additionally, Constellation will receive 139.7 million new purchase share warrants, which are exercisable over the next three years. Should Constellation exercise all existing and new warrants, it would increase its ownership of Canopy to 50 percent. As part of the agreement, Constellation will nominate four out of seven directors to Canopy’s Board of Directors, effectively seizing control of the board. Canopy founder, Bruce Linton, will remain as board Chairman and Canopy will continue to be led by its existing management team.

Canopy will use Constellation’s investment to strategically acquire and build critical assets in the United States, so long as it does not violate federal law, and the nearly 30 countries with federally legal medical cannabis programs. Canopy will also begin to lay the groundwork in those countries for future recreational cannabis markets as well. So far, the reaction within the cannabis industry to the investment has been mostly positive.

Beth Stavola, president and founder of MPX Bioceutical Corp. (MPX), said that the investment is a telltale sign of there direction in which the cannabis industry is headed.

“These alcohol and tobacco companies are starting to better understand the cannabis industry and the opportunity for large-scale growth,” said Stavola. “Mood modifying beverages for socialization is a natural segway for their businesses. As people continue to move toward a more healthy lifestyle and recognize some of the negative effects that alcohol may have on the body, I think we are only going to see this trend continue and get stronger.”

Mike Parmar, manager of investor relations for Isodiol International (ISOL), congratulated Canopy on its investment from Constellation, stating that the infused cannabis beverage markets “is poised to take another significant leap forward.” Canopy Growth is Isodiol’s Canadian licensing partner.

Despite the fear that Constellation’s investment would lead to greater market consolidation, Caliva founder Dennis O’Malley thinks that there is still plenty of opportunity of those in the cannabis industry.

“We believe there is a major consumer shift from alcohol to cannabis and that the Budweiser of cannabis has not yet been created,” said O’Malley. “There is a massive opportunity to innovate on form factor, dosage, and formulations in cannabis beverages to meet the fast-changing consumer demands.”

Linda Montag, a Senior Vice President at the financial services company Moody’s, was more circumspect, characterizing the investment as an expensive gamble for Constellation.

“Constellation’s investment in Canopy is a large bet at a very rich price, which can only be justified if the company proves that it can benefit from the changing environment for cannabis in Canada and beyond,” said Montag.”Constellation’s acquisition appetite has long been a rating consideration, but the deviation from its core beverage alcohol business into an entirely new space introduces potential new risks along with opportunities.”

StaffMarch 5, 2018

Ontario-based MPX Bioceutical Corporation (MPXEF) announced that it has entered into an agreement valued at $15 million to acquire 100% of the membership units of ABACA, LLC, Ambary, LLC, Tarmac Manufacturing, LLC and Tower Management Holdings, LLC. ABACA is a fully-integrated medical marijuana business licensed under the provisions of the Arizona Medical Marijuana Act, A.R.S. Title 36, Section 28.1 operating a dispensary under the trade name “The Holistic Center” in Phoenix, Arizona plus certain real estate properties in Phoenix.

“This acquisition represents a solid addition to our industry and presence in Arizona, a State that offers MPX one of the best-regulated, yet industry-supportive markets in the country,” said W. Scott Boyes, MPX’s Chairman, President, and CEO. “The entities being acquired have recorded trailing 12-month revenues of US$15 million and EBITDA of approximately US$3.5 million and its results will be immediately accretive to MPX earnings. Furthermore, the acquired companies are well-managed and will allow both parties to share best practices and benefit from the ability to share purchase economies.”

With the acquisition of The Holistic Center, MPX adds its third operating medical cannabis enterprise to its footprint in Arizona. MPX continues to expand its U.S. footprint and has recently acquired management companies that provide operational and other services to three dispensaries and one production license in Maryland. MPX also owns assets in Massachusetts supporting cultivation, production and up to three dispensaries.

“With the pending opening of our Apache Junction dispensary, the addition of the Holistic Center will bring the number of dispensaries managed by MPX in the greater Phoenix market to four, will more than double our cultivation capacity and will materially complement our management team in the State,” said Boyes. “Adding to our critical mass of operations, this acquisition will add to MPX’s ability to benefit from purchasing economies, spread the administrative overhead costs over a larger revenue base and provide cash flows to support additional growth.”

The Company will hold an investor call at 10:00 AM Eastern Standard Time on Thursday, March 8^th to discuss this acquisition and MPX’s third-quarter results.

Debra BorchardtMarch 1, 2018

MPX Bioceutical Corp. (MPXEF) reported its third-quarter earnings with the caveat that comparing results to the previous year (2016) didn’t make sense since most of the assets were acquired in 2017. Instead, the earnings are being compared to the fiscal second quarter of 2018.

Dispensary cannabis sales for the quarter ending December 31, 2017, were C$266,182 up 2% sequentially over the previous quarter ending September 31, C$271,405. Total revenues increased 2% for the same time period with sales in the recent quarter of C$4.5 million over the previous quarter revenues of C$4.4 million.

The company delivered a net loss of C$13 million, which was a huge jump over last quarter’s loss of C$1.5 million. In the company statement, MPX said the loss was explained by saying, “In Q3 2018, $10 million of non-cash items were recorded including a loss of $9.2 million in Q3 2018 relating to the October 24, 2017 drawdown of US$10 million from revolving credit facility as the option component increase from date of drawdown to December 31, 2017 as the share price increased in value and share based compensation of $0.9 million versus $0.2 million in Q2 2018 driven by the change in of our Board of Directors approved at the Annual Meeting .” The funds were drawn down in order to make acquisitions, expansion and to develop new facilities in Massachusetts and Maryland.

Gross profits fell slightly from C$2.9 million to C$2.6 million for the December quarter. This was due to the gross margins falling from 65.3% in the previous quarter to 57% in the latest quarter.

MPX stock was lately trading at 57 cents, down from its 52-week high of 94 cents.

Management Comments

“We recorded another strong quarter with sales up to $4.5 million and are forecasting revenues of over $6 million for Q4 2018 with the addition of our newly acquired Nevada operations. We have had a busy third and fourth quarter executing our expansion strategy, with the acquisition of the Nevada cultivation facility, management an, options to acquire three dispensaries and one production facility in Maryland as well as continued expansion of our assets in Arizona and Massachusetts. Once all of our current expansion initiatives have been fully developed, we anticipate having a total of 10 dispensaries throughout four states, 9 million grams per annum in cultivation and 1.2 million grams per annum in concentrates production capacity. This gives us an excellent platform for further growth, especially considering our proven access to capital,” said W. Scott Boyes, Chairman, President and CEO of MPX. “As well, plans for our cultivation and production facility in Owen Sound, Ontario are rapidly evolving with full-construction now expected to commence during the second calendar quarter of 2018.”

Beth Stavola, COO and President of MPX’s U.S. operations, added, “It has been a uniquely busy quarter for us operationally with most initiatives coming online in the spring of 2018, including the building-out and opening of a third Health for Life dispensary in the Apache Junction suburb of Phoenix, the completion of three dispensaries that we manage in Maryland. As well, Phase 1 of the new processing facility in Maryland is now complete and has received state approval with production commencing in the near term. MPX’s construction of a 40,000 square foot cultivation/processing facility in Fall River, Massachusetts is targeted to be complete in the summer 2018 with cultivation commencing in the third quarter 2018. We have also commenced construction on the first of three dispensaries in Massachusetts. Finally, the relocation and expansion of our Arizona processing division are moving into its final stage and we anticipate it to be fully operational this coming spring. This addition is expected to more than double our production capability of MPX concentrates for sale in the Arizona market.”

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MPX Archives - Green Market Report

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