Nabis Holdings Archives - Green Market Report

Debra BorchardtOctober 29, 2020
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5min9300

Troubled Canadian cannabis company Nabis Holdings Inc. (CSE: NAB) (OTC: NABIF) announced that its Arizona subsidiary Nabis AZ, LLC failed to fund its deferred payment obligation in respect of an asset purchase agreement for Perpetual Healthcare Inc. which is the operator of the Emerald medical marijuana retail dispensary located in Arizona.   Nabis AZ was required to make payment to the vendors of approximately $8.1 million, including accrued interest, which was due on October 25, 2020. That payment wasn’t made because Nabis failed to secure alternative financing to fulfill the Deferred Obligation.

Following the lapse of a 10 business day cure period ending November 10, 2020, in addition to the acceleration of the approximately $8.1 million owing, the terms of the Deferred Obligation contemplate that (i) a specified representative of the vendor will be appointed to the board of directors of Perpetual, and (ii) an amended and restated operating agreement in respect of Nabis AZ will become effective, providing certain specified representatives of the vendor with an aggregate 75% membership interest in Nabis AZ with certain limited governance rights, whereby such persons will be entitled to a monthly pro rata preferred distribution in respect of their 75% aggregate membership interest until the Deferred Obligation is satisfied.

Nasty COO Divorce

A couple of weeks ago, Nabis said that it had begun civil proceedings in the Arizona Superior Court and the Ontario Superior Court of Justice against Mark Krytiuk, the company’s former Director, President, and Chief Operating Officer. Krytiuk resigned from his position as President and Chief Operations earlier in October. Nabis said that Krytiuk failed to transition control of the material assets of Nabis back to the company following his recent resignation. Nabis accused Krytiuk of not transferring the directorship of Perpetual and has not returned other property belonging to Nabis. “Until such time as a new director of Perpetual acceptable to Nabis is appointed, the company has no ability to influence the business and affairs of Perpetual.”

Also in October, Shay Shnet, who co-founded Nabis in 2018, resigned from his role as Chief Executive Officer. Shnet agreed to provide transition services to Nabis and remained on the board of directors. The Special Committee, comprised of Emmanuel Paul and James Tworek, has taken on a more active role in the management of the company. As Chair of the Board of Nabis, Paul will oversee the leadership of the company and continues to assess the company’s strategic alternatives.

Nabis had warned in September that things were going badly for the company. It said it would not make the August 31, 2020, principal payment and are in discussions with the mortgage holder to either extend the payment due date, failing which, default proceedings are expected to commence. On June 30, 2020, the company did not make the quarterly interest payment accrued on the convertible debentures as a result of a Force Majeure event as set out in the convertible debenture trust indenture. 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, through the private placement of common shares, issuance of loans, and convertible loans.


StaffSeptember 1, 2020
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Nabis Holdings Inc. (CSE: NAB) (OTC: NABIF) reported retail revenue for the quarter ending June 30, 2020, was $3,987,777. The cost of goods sold for the same periods was $2,144,880 and gross profit was $1,842,897 or 46.2% for the three month period.

Nabis reported that its basic and diluted loss per share for the quarter ending June 30, 2020, was a loss of $0.02 compared to a loss of $0.04.

“We are very pleased with the progress our team has made at our Emerald dispensary, in Phoenix, Arizona,” commented Mark Krytiuk, COO. “Our results speak for themselves. Since October we have been able to double top line monthly revenue and our profit margins have seen double-digit increases. We expect to see further improvements as our Infusion Edibles line is fully relaunched. It is definitely an exciting time to be in Cannabis in the State of Arizona.”

Going Concern

The company did disclose that it has incurred losses and has had negative cash flows from operations from inception that have primarily been funded through financing activities. Nabis said it will need to raise additional capital during the next twelve months and beyond to support current operations and planned development. As of June 30, 2020, the company said it had a working capital deficiency of $14,811,051 and an accumulated deficit of $38,859,180. Of the total mortgages outstanding on June 30, 2020, $4,609,011 was due on August 31, 2020.

Nabis said it will not make the August 31, 2020 principal payment and are in discussions with the mortgage holder to either extend the payment due date, failing which, default proceedings are expected to commence. On June 30, 2020, the company did not make the quarterly interest payment accrued on the convertible debentures as a result of a Force Majeure event as set out in the convertible debenture trust indenture. 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, through the private placement of common shares, issuance of loans, and convertible loans.


Debra BorchardtAugust 12, 2019
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8min14550

It’s time for your Daily Hit of cannabis financial news for August 12, 2019.

On The Site

CannTrust

After the market closed on Friday, CannTrust Holdings Inc. (NYSE: CTST)said it received a report from Health Canada telling the company that “Its manufacturing facility in Vaughan, Ontario has been rated non-compliant with certain regulations.”CannTrust stock is dropping over 25% to lately trade at roughly $2.26 in pre-market trading as shareholders learn about the continuing problems with the facilities causing more uncertainty.

The news that the company’s facility has failed a recent inspection is troubling because it was supposed to have addressed problems from previous inspections in which the company was found to be growing cannabis in rooms that hadn’t received licenses.  Health Canada has said that it is currently unable to provide any guidance about the timing or content of its decisions regarding CannTrust.

Saving Money

On August 6th we published an article that illustrated the savings for consumers and additional profits for cultivators that could be produced through the use of a properly organized Cannabis Cooperative Association (“CCA”). This article describes the savings for consumers and the additional profits for cultivators in the movement of cannabis in the form of extracted oil.

As we have said on multiple occasions, a CCA is the most financially efficient structure for engaging in business in California’s cannabis industry. The utilization of a CCA for the movement of cannabis as extracted oil produces even greater price reductions for consumers and increased profits for cultivators than with flower. This occurs because more costs are incurred between the cultivator and the consumer in the movement of extracted oil than in the movement of flower.

Novel?

It was announced on January 2019 that the European Food Safety Association, EFSA is about to make a decision in order to classify CBD oil and other CBD products as a novel food. This decision was announced at the Novel Food Commission meeting which was held in Brussels in 2016. This led to a final imminent decision very soon and EFSA considered CBD products as Novel Food.

In recent times, there has been tremendous growth in food products available in the market which eventually included Cannabidiol. And, according to reports, it is clear that the European CBD Market is going to encounter a boom in the near future. Eventually, the regulators started taking a closer look at the CBD products and oil available in the European market.

In Other News

MediPharm Labs

MediPharm Labs (MEDIF) reported that its second-quarter revenue was $31.5 million, a 43% increase over Q1 2019, reflecting Canadian cannabis extraction-only industry and the ramp-up of new committed contracts. Gross Profit was $11.3 million, a 65% increase over Q1 2019, while Gross Margin was 36% compared to 31% in Q1 2019, reflecting increased production and production efficiency that continues to improve as the Company realizes economies of scale. Adjusted EBITDA was $7.7 million, 79% higher than Q1 2019, while Adjusted EBITDA margin was 24% compared to 20% in Q1 2019. Net income before tax was $4.1 million compared to a net loss of $0.3 million in Q1 2019

MariMed

MariMed (MRMD) report that its revenues for the second quarter of 2019 were $25.7 million, up 774% compared to $2.9 million in the same year-ago quarter. The increase in revenue was primarily the result of hemp seeds sales totaling $25.2 million dollars, of which $22.0 million was recognized in the quarter. The remaining revenue is expected to be recognized in the third and fourth quarters of 2019 upon payment from the buyer. Revenues excluding the hemp seed sales increased 24% to $3.7 million versus the year-ago quarter.

Gross profit for the second quarter of 2019 was $8.9 million or 34.8% of revenues, up 341.1% from $2.0 million or 68.9% of revenues in the same quarter from a year ago. Gross profit in MariMed’s core businesses as a percentage of revenues increased to 72.4% in the second quarter of 2019 from 68.9% in the year-ago quarter. Net income for the second quarter of 2019 was $4.7 million or $0.02 per fully diluted share, improving from a net loss of $393,000 or $(0.00) per basic share in the year-ago quarter.

Medicine Man Tech

Medicine Man Technologies, Inc. (OTCQX: MDCL) announced that it has entered into a binding term sheet to acquire Colorado-based Dabble Extracts, an award-winning cannabis concentrate company that specializes in processing medical and recreational marijuana into premium-grade extracts.

Under the terms of the term sheet, the company will pay $3,750,000 for Dabble Extracts. The purchase price will consist of $750,000 in cash and 996,678 shares of common stock priced at $3.01/share, which is the average closing price of the Company’s stock for the five trading days prior to August 6, 2019. The terms can also be referenced in the 8-K, which outlines the closing conditions. The obligations of the Company and Dabble Extracts under the term sheet are conditioned upon the satisfaction of mutual waiver of certain conditions, including regulatory approval.

Nabis

Nabis Holdings Inc. (CSE: NAB) (OTC: NABIF has entered into a Definitive Agreement for the acquisition of 100% of the membership units of a licensed medical marijuana business in the state of Arizona.

The Asset, licensed under the provisions of the Arizona Medical Marijuana Act, operates a dispensary in Phoenix, Arizona. The dispensary in Phoenix has been operating since 2015 with proprietary branded products and wholesale operations, including an established distribution network serving more than 50% of the dispensaries in Arizona.

The audited sales for 2017 and 2018 were USD $7.4 million and $8.7 million respectively.  2019 unaudited revenue is on pace for sales of USD $9 million. The dispensary specializes in top-tier flower, vape pens, concentrates, edibles, tinctures, and CBD products.

 


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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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