TGOD Archives - Green Market Report

Debra BorchardtJanuary 26, 2023
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3min5760

The Green Organic Dutchman Holdings Ltd. (CSE: TGOD) (US-OTC: TGODF) is changing its name from “The Green Organic Dutchman Holdings Ltd.” to “BZAM Ltd.” In addition to changing the company name, the ticker symbol will also switch from TGOD and TGODF to “BZAM” on the CSE and “BZAMF” on the OTCQX. TGOD acquired the shares of BZAM in November 2022 resulting in one large shareholder owning 49.5% of the company.

“This Name Change marks a new era,” said Matt Milich, Chief Executive Officer of the company. “It reflects our larger portfolio of brands and facilities, and our ability to reach a broader consumer base to realize our vision of being one of Canada’s favorite sources for cannabis.”

The company’s new corporate website, www.BZAM.com, will launch following the completion of the name change. BZAM Cannabis is a multi-licensed Canadian cannabis producer focused on branded consumer goods, cultivation, processing, and people. The BZAM Cannabis family includes core recreational cannabis brands BZAM, -ness, and TABLE TOP, and partner brands Dunn Cannabis, FRESH, SuperFlower, and Snackbar.

Earlier this week, The Green Organic Dutchman released 1,142,857 common shares held in an indemnity escrow account upon the closing of the acquisition of Galaxie Shares, to two vendors of the Galaxie Shares. The remaining 7,428,571 common shares held in the indemnity escrow account will be returned to the treasury and canceled. In addition, an aggregate of 1,120,226 common shares of the “BZAM Shares” will be issued to the company’s largest shareholder, at a deemed issuance price of $0.596 per BZAM Shares.

The company also announced that Mr. Bassam Alghanim has been appointed Chairman of the Board, effective as of January 24, 2023. Alghanim was recently named to the board to fill the vacancy left by the resignation of Mr. Tony Moschella. Alghanim managed and expanded Alghanim Industries, a multi-national conglomerate. Later, Mr. Alghanim spearheaded the acquisition of a controlling stake in Gulf Bank, becoming Chairman in 1999. After leading Gulf Bank for over nearly 10 years, during which it experienced profound growth, Mr. Alghanim moved on to hold diplomatic posts.


StaffNovember 1, 2021
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4min2910

The Green Organic Dutchman Holdings Ltd. (CSE: TGOD) (OTC: TGODF) is buying Galaxie Brands Corporation in a deal valued at C$21 million. the deal is expected to close near November 15.  Galaxie is a licensed producer focused on product innovation, branding, and manufacturing 2.0 products. The company creates and produces a range of products including premium cannabis edibles, infused pre-rolls, flavored and full melt vapes, oils, and solventless products. It also provides manufacturing and product development services to partners across Canada.

TGOD said the acquisition will give the company improved regional distribution across Canada, providing product expansion capabilities into British Columbia for TGOD’s products and Highly Dutch brands. On the other side, Galaxie’s Cruuzy brand will get better access into Quebec, which is made for emerging cannabis enthusiasts.

The combined entity will leverage TGOD’s unique quality organic platform and cultivation capabilities and Galaxie’s differentiated infused pre-rolls and full melt vapes. The product portfolio will expand from 157 to 215 listings across Canada and key product innovations will be deployed across all brands.

“We are excited to continue to execute on our growth plans. The acquisition of Galaxie will allow TGOD to expand by increasing scale, innovation, and operating capabilities, with the addition of exciting brands in Canada. We believe our complementary brands and consumer bases will result in stronger revenues and overall financial performance for TGOD, while preparing for a future expansion to the U.S.” said Sean Bovingdon, CEO and interim CFO of TGOD. “We look forward to leveraging Galaxie’s multiple strategic partnerships and welcome Galaxie’s talent to the TGOD team,” added Bovingdon.

“We are thrilled to join the TGOD team. We believe this transaction will accelerate our growth plans and expand our product portfolios and operations. Beyond complementary brands and products, we share with the TGOD team a focus on environmental stewardship, social responsibility, and sound governance. Olivier Dufourmantelle and I are proud of the strong team we have assembled at Galaxie, and we look forward to help bring value for the combined entity,” commented Footman.

Transaction Details

TGOD said it will also assume $1.3 million of existing shareholder loans of Galaxie, which are non-interest bearing until at least January 31, 2022. The vendors of the Galaxie Shares are also entitled to earn up to C$15 million in additional shares of TGOD, subject to the achievement of certain financial milestones by December 31, 2022.


StaffJune 23, 2021
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3min2070

Circle K Owns 20% of Fire & Flower

Fire & Flower Holdings Corp.  (TSX: FAF) (OTCQX: FFLWF) announced that 2707031 Ontario Inc. the wholly-owned indirect subsidiary of Alimentation Couche-Tard Inc. (OTC: ANCUF),  the owners of Circle K, has delivered in escrow its exercise notice and gross proceeds of $9,770,374.47 to exercise warrants to acquire 10,505,779 common shares of Fire & Flower at an exercise price of $0.93 per common share pursuant to the terms of an Amended and Restated Warrant Certificate dated September 16, 2020.

ACT, together with 2707, currently owns 66,328,421 common shares of Fire & Flower representing approximately 19.9% of its issued and outstanding shares. Issuance of the Shares will increase ACT’s collective ownership of common shares of Fire & Flower by approximately 2.45%.

“Alimentation Couche-Tard has been a strategic partner of Fire & Flower for almost two years and has been key in supporting the expansion of our data-driven retail network and improving our financial position through their continued investment. The exercise of these warrants speaks to the continued growth of our partnership and 2707’s strong support of Fire and Flower’s technology-driven retail strategy to drive ongoing financial and operational growth. With our strengthened balance sheet, we are strategically positioned to expand across Canada and in the U.S. as we continue to build out our omni-channel retail portfolio,” said Trevor Fencott, Chief Executive Officer of Fire & Flower.

TGOD Pays Debts

The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US-OTC: TGODF) reported that its wholly-owned Quebec subsidiary Medican Organic Inc. has completed the sale of the majority of its assets in Valleyfield, Quebec, including all industrial and agricultural land, main hybrid greenhouse, rooftop greenhouse, all support buildings and certain related equipment, to Cannara Biotech (OPS) Inc. for the $27 million purchase price. In addition, Medican received a $5.7 million deposit refund from Hydro-Quebec. TGOD repaid approximately $31.8 million to its senior lender to settle all of its outstanding obligations and terminated the loan agreement with the lender.


Debra BorchardtMay 13, 2021
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4min2110

After the close on Wednesday, The Green Organic Dutchman Holdings Ltd.  (TSX: TGOD) (US: TGODF) reported its unaudited interim financial results for the first quarter ending March 31, 2021. TGOD said its revenue increased 194% year over year to $8.98 million. However revenues decreased 18% sequentially to $10.92 million. The stock was falling by almost 5% to lately sell at 27 cents. 

The company blamed the decline on store restrictions and stay-at-home orders related to COVID-19, combined with some provincial listing mandates being revised at the start of the year. TGOD said it expects growth to rebound for the remainder of 2021 with restrictions anticipated to be lifted as vaccination rates increase and retail stores reopen.

TGOD went on to say that the decrease appears to be within the range of what has been observed and reported by many peer companies to date in 2021. The company still delivered a net income of $12.46 million for the quarter versus a loss of $73.44 million for the same period during the prior year, comprised primarily of the reversal of impairment, and a loss from operations of $5.89 million. On a per-share basis, TGOD recorded a net income of $0.02 compared to a loss of $(0.23) for Q1-2020 and $(0.05) for Q4-2020.

“This quarter’s improving financials demonstrate how we are strengthening TGOD’s foundations by executing our turnaround plan. From monetizing under-utilized assets to streamlining our organizational structure and strengthening our balance sheet, our new leadership team is making great strides towards completing the transformation of TGOD into a profitable and agile organic cannabis producer that stands to benefit from accelerated growth in Canada and abroad with opportunities in GermanyMexicoAustralia, and the United States,” commented Sean Bovingdon, TGOD’s CEO and Interim CFO. “The achievement of net income reflects the positive outlook for our cashflows in relation to our right-sized operations. We look forward to the potential lifting of COVID restrictions as vaccinations increase, which will allow for better access for consumers to our organically grown quality products, that are now consistently achieving THC levels greater than 20%.”

While the company seems to be turning a corner as revenues have mostly risen over last year, the company is still restructuring as it sells assets. On April 29, TGOD provided an update on the potential sale of its Valleyfield Quebec Facility, stating that it had received multiple viable bids. Management said it is currently working through the details of the bids and anticipate  closing by the end of June 2021. The company also recorded a net non-cash reversal of previous impairment of $21.81 million triggered by its Quebec Facility being classified as assets held for sale.

TGOD has also said it may sell or spin-off for an Initial Public Offering of HemPoland, its wholly owned subsidiary, for which it has retained Canaccord Genuity as an advisor, and the potential for mergers and acquisitions in the Canadian cannabis LP sector.


Debra BorchardtMarch 10, 2021
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6min1920

The Green Organic Dutchman Holdings Ltd.  (OTC: TGODF) reports its results after the market close on Tuesday for the fourth quarter and fiscal year ended December 31, 2020. In the fourth-quarter, TGOD said its revenues increased 236% to $10.92 million versus $3.25 million in Q4-2019. This was also a 91% increase over the third-quarter revenue of $5.71 million. The Green Organic Dutchman fourth-quarter net loss improved to $23.68 million versus $144.75 million for the same period in 2019. The company attributed it to a loss from operations and a write-down of $8.65 million in goodwill related to HemPoland.

Annual revenue for fiscal 2020 was $24.51 million versus $11.16 million for 2019. The net loss for the year was $183 million. The company said that the loss was due to a non-cash impairment charge of $120 million on the Canadian cash-generating unit. “The non-cash impairment charges recognized during the period are primarily attributable to the changes in the timing of accessing market demand, as a result of various factors including regulatory changes, production and supply chain impediments, COVID-19 impacts on retail store openings, and, sales price compression across the industry, resulting in a slower revenue ramp-up and growth than originally forecasted by management.”

Lowered Sales Forecast Outlined

In February, TGOD also lowered its estimates for revenues in 2021. The revised Canadian cash flow forecast, from November 1, 2020 to October 31, 2021, assumed that it would achieve $40 million in net sales over the 12-month period versus the $61.5 million previously forecast in the Base Shelf Prospectus. The reasons for the decline were listed below:

  • The company’s forecast assumes between 5% and20% of price compression into 2021 across its various product lines.
  • Pandemic restrictions reduced order levels for the first quarter of 2021. The company believes these measures will hamper the rate of revenue growth in Canada that was expected in the first half of 2021 and impact the timing of market penetration for its new sativa strains and some cannabis 2.0 products.
  • the sales volume forecast consists primarily of product mix premium flower, mainstream Highly Dutch flower, and 2.0 products expected to be sold and includes hash sales, which mix has shifted towards proportionately more mainstream Highly Dutch products that have a lower margin.
  • The company’s latest forecast further reflects the shift in its medical business from sales to patients directly to medical wholesaling, such as the company’s distribution agreement with Medical Cannabis by Shoppers Drug Mart. Medical wholesale generates narrower gross margins compared to direct patient sales.

Permanent CEO Named

The company appointed Sean Bovingdon as Chief Executive Officer (CEO), and member of the board, effective immediately. Mr. Bovingdon had previously been appointed as Interim CEO in November 2020 while continuing to serve as CFO. He will continue as interim CFO while the company undertakes a search for a permanent Chief Financial Officer.

“Sean has been very effective in leading the company through these extremely challenging past few months. He stepped into the interim-CEO position and has demonstrated outstanding leadership,” stated Jeff Scott, Chairman of the board. “Sean has the strategic vision and experience to effectively guide TGOD through its next phase of growth. On behalf of the board of directors, I am very pleased to appoint Sean as CEO of the company.”
Quebec Facility Disaster
The company also said it was seeking to monetize the underutilized assets at its Quebec Facility and had retained the services of a commercial real estate advisor to identify potential buyers for the site, focused on the state-of-the-art hybrid main greenhouse. The transaction could result in a complete or partial sale of the site. The company said it remains committed to maintaining a significant portion of its operations, including all 2.0 product manufacturing, in Quebec, either at a portion of the Quebec Facility or at an alternative Quebec site. The company spent millions building the Valleyfield Quebec facility only to be faced with unloading it as it downsizes.

StaffFebruary 9, 2021
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3min2081

The Green Organic Dutchman Holdings Ltd.  (TGOD) (OTC: TGODF) announced preliminary unaudited revenue for the fourth quarter of 2020 and provided an update to the previously provided twelve-month Canadian revenue forecast for the period of November 1, 2020, to October 31, 2021.

TGOD said that the unaudited consolidated gross revenue for the fourth quarter of 2020 is expected to be approximately $10.9 million, reflecting growth of 235% over the prior year, and an increase of 91% over the third quarter of 2020. The company said it reflected the significant progress and growth achieved in Canadian operations and sales, which accounted for $8.6 million of the fourth quarter 2020 gross revenue total.

“Our increase in revenue reflects the collective efforts of the TGOD team, resulting in improvements in the quality of our flower which is being well received by the market,” said Sean Bovingdon, CFO and Interim CEO of TGOD. “We are also encouraged by the traction we are gaining with our Highly Dutch flower and hash, and look to continue expanding distribution of these along with new premium flower strains and 2.0 product offerings, though we are monitoring the effects that the COVID crisis is having on this progress.”

Lowers Guidance

Despite the encouraging news for the fourth quarter, TGOD wasn’t completely ready to celebrate. The company said that continuing pandemic challenges existed and that many provincial governments were imposing lockdowns and stay-at-home mandates. The company said it believes these measures will hamper the rate of revenue growth in Canada that was expected in the first half of 2021 and impact the timing of market entry for its new sativa strains and some 2.0 products.

In a statement, TGOD said, “Without these conditions, TGOD would expect to be able to meet the Prospectus Forecast, however, TGOD now notes an increased risk in achieving the Prospectus Forecast of $61.5 million net sales for the period November 1, 2020, to October 31, 2021. As such, it expects revenue to grow at a slower rate with the revised Canadian net revenue forecast for that period being in a range of $40 million to $45 million. The company expects that due to these changing conditions, it will not meet its previous expectation of achieving positive monthly Canadian operating cash flow by the end of Q1 2021.”

 


Debra BorchardtMay 27, 2020
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6min1690

Organic cannabis company The Green Organic Dutchman Holdings Ltd.  (OTC: TGODF) reported revenue of C$3.06 million for the first quarter of 2020 ended March 31, 2020. The company also delivered a net loss of $73.4 million – a staggering amount when the revenues are so small, but it was at least an improvement over the fourth quarter’s net loss of $144 million.

TGOD said that the revenue mostly consisted of hemp-derived product sales in Europe of $2.40 million and sales from cannabis products in Canada of $0.66 million. The meager Canadian sales were blamed on a limited product assortment while the company scaled up its Ancaster cultivation and processing capacity from the prior quarter.

The bulk of the net loss was attributed to a write-down on the book value of the company’s global assets by $55.8 million for impairment as of March 31, 2020. “This reflects the uncertainty created by the pandemic, including the evolution of market demand, the temporary cessation of operating activities in Valleyfield, Québec, and the reduction of activity in Jamaica. This non-cash impairment charge is in line with the announcement on May 14, 2020, and does not impact the Company’s operations or liquidity.”

“I am proud of the resilience demonstrated by everyone on the team in the face of the global pandemic. With safety as our top priority, we have quickly adapted our processes, allowing our operations to continue running smoothly and uninterrupted to ensure that we meet the needs of our patients and consumers,” commented Brian Athaide, CEO of TGOD. “I am also satisfied with the progress we have made on bringing innovative new products to market and expanding distribution. TGOD remains on track to becoming operational cash-flow positive later this year,” added Athaide.

Financing

The company’s total operating expenses for the quarter were $16.9 million, but with revenue of only $3 million the company will need to either cut expenses even further or find a way to bring in more revenue. Prior to the end of the first quarter, TGOD was in a very precarious situation. At the end of March, the company had negative working capital of $8,197 (December 31, 2019 – positive working capital of $14,939) and an accumulated deficit of $327,169.

The company says that through its various financing arrangements, that it has enough funds for operations at this time. These deals are as follows:

  • The Company entered into a definitive agreement for a second-lien revolving credit facility (“Revolver Loan”) with a commercial lender for gross proceeds of up to $30 million of which $10 million of the revolving credit facility was funded on April 22, 2020.
  • The Company executed an amendment with the lender under its senior secured credit facility. On April 27, 2020, the Company received an accordion advance of $5 million and issued 1,500,000 warrants exercisable at $0.39 per share exercisable for 36 months to the lender.
  • Also on April 27, 2020, the Company completed a bought deal equity financing of 20,536,700 units at $0.28 for gross proceeds of $5.75 million. Each unit consisted of one common share and one-half common share purchase warrant, with each whole warrant being exercisable at $0.38 for 36 months.

Valleyfield Closed

The company has postponed the startup of its Valleyfield Facility in order to centralize cultivation in Canada at its facility in Ancaster, Ontario. The company said it has temporarily laid off the majority of its employees in Valleyfield with the intention of beginning operations at the Valleyfield Facility later in 2020, should market conditions improve.

Looking Ahead

TGOD said that it expects that the net proceeds, together with cash on hand, amounts available under previously announced credit facilities, and positive cash flow generated from anticipated revenues, will be sufficient to fund operations going forward. TGOD expects revenue growth acceleration to be driven mainly by product innovation. Its first 2.0 product, the TGOD Infuser, launched during March 2020 and quickly became a top-selling SKU within the beverage category; new formats of the popular dissolvable powder will be launching in June 2020

 


Debra BorchardtNovember 25, 2019
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8min2320

The Facilities Are Fully Funded

On Oct. 9, 2019, The Green Organic Dutchman (OTC: TGOD) said in a press release that it was updating the market on credit financing. In the statement, it noted that “The Company may revise the construction schedule for its Ancaster and Valleyfield projects if it is unable to obtain sufficient financing on reasonable terms, within the required timeframe. There can be no assurance that this review will result in the completion of any financing transaction.” Basically, TGOD said it needed money to finish the projects as planned.

However, TGOD had previously issued an investor presentation in which it stated its Ontario projects were fully funded. This did not go unnoticed by shareholders who were surprised to learn that TGOD needed more money to complete its facilities. Then on October 18, just 10 days later,  the company said, “The Ancaster greenhouse is complete, and the Ancaster processing facility is approximately five weeks from material completion.”

On November 13, the company was able to secure financing and said, “A term sheet with an investment fund for a $40 million construction mortgage loan has also been signed, secured on the facilities at Ancaster and Valleyfield.” TGOD said that now it had this money secured, it could complete construction of the processing facility at Ancaster and complete construction of six zones in the Valleyfield hybrid greenhouse and enclose the balance of the facility with the ability to quickly expand production as the market develops.

Can’t Trust

CannTrust (NYSE: CTST) earned the social media moniker “can’t trust” after the company was caught growing plants in unlicensed rooms. This past summer in July, the company conceded that it had plants seized by regulators from five unlicensed rooms. The scandal resulted in a death spiral for the company as it lost its license, saw the CEO resign and at least a hundred workers have been laid off.

Backing up a bit, roughly around May 19 CEO Peter Aceto said the company was on track to meet its production goals. Within six weeks, the company announced that it received a report of non-compliance from Health Canada. Aceto said, “Our team has focused on building a culture of transparency, trust and excellence in every aspect of our business, including our interactions with the regulator. We have made many changes to make this right with Health Canada. We made errors in judgement, but the lessons we have learned here will serve us well moving forward.”

Last month, CannTrust said it planned to destroy about $12 million worth of plants and about $65 million worth of inventory. The company has seemed to clean house and may be able to move one from this “error in judgment,” but so far the market isn’t convinced and the stock is still near its year low of 77 cents.

It’s Worth More

It’s hard to convince investors to buy company stock when the company devalues the price of said stock. Zenabis Global Inc. (TSX:ZENA) (OTC: ZBISF) destroyed the value of its stock after announcing it was going to raise $20.8 million through a rights offering to holders of its common shares of record at the close of business on October 31, 2019. The stock was lately trading at 16 cents, down from its year high of $3.03. At one point in this debacle, the stock traded at one cent.

The company said that part of the strategy was to fend off a hostile takeover, but there didn’t seem to be anyone bidding on the company. Director of Corporate Communications Jonathan Anthony said that the decline in Zenabis stock is “outside our control,” yet the company absolutely trashed the value by pricing the rights at a 70% discount.
The Twitter universe though had another opinion regarding the stock. There are accusations of Zenabis insiders shorting the stock while covering themselves with the rights offering.

Stock jocks were specifically pointing to the Twitter account of @rubiconcapital for talking up Zenabis ahead of the offering that prices the rights at 15 cents. Then, the former CEO and current Chief Facilities Officer, Kevin Coft sold 2.6 million shares right before the rights offering. The company reported its earnings on November 14 but opted to not host a conference call to discuss the earnings with investors.

Our Bad. We Thought It Was Licensed

After acquiring Newstrike Brands, HEXO Corp. learned that there were plants growing in a room called Block B. The room passed inspection by Health Canada and Hexo said Health Canada said nothing in the report gave them cause for concern. However, within days of the closing of its acquisition the company said it became aware of the illegal plants and notified Health Canada. The mistake was blamed on a new software program run by the federal regulator. Still, the plants were destroyed as a result of the snafu.

While market watchers didn’t seem to criticize Hexo in the same manner that CannTrust was criticized, it certainly didn’t help the company. The facility is no longer being used for growing cannabis.

In addition to the bogus Block B plants, in June, Hexo had said it would do $400 million in revenue in 2020 and double net revenue in the fiscal fourth quarter. Just four months later the company instead reported that revenue was $15.4 million a drop from the third-quarter revenue of $15.9 million, so it wasn’t even an increase. The net revenue for 2019 was $59 million making it abundantly clear that $400 million in 2020 is never going to happen and so that number was retracted but not replaced with a new one.


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