The Green Organic Dutchman Archives - Green Market Report

Debra BorchardtMay 13, 2021
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4min7320

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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6min3710

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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3min7961

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 BorchardtSeptember 28, 2020
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5min20480

The Green Organic Dutchman Holdings Ltd.  (OTC: TGODF) has entered into an agreement with Canaccord Genuity Corp. to purchase, on a bought deal basis an aggregate of 46,316,000 units at a price of $0.24 per Unit for aggregate gross proceeds to the Company of approximately C$11 million. TGOD said it intends to use the proceeds of the Offering for general corporate purposes.

TGOD has also granted Canaccord an option to purchase up to an additional 6,947,400 Units at a price of C$0.24 per Unit which would result in additional proceeds of approximately $1.65 million. The Offering is expected to close on October 22, 2020, and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX and the applicable securities regulatory authorities. The stock was lately trading at C$0.29.

Corporate Update

In August, TGOD told investors that problems in the company’s greenhouse led to poor quality flower. “Start-up commissioning and calibrations challenges within the energy center at the company’s Ancaster facility led to inconsistent climate controls in the hybrid greenhouse during the very hot weather in late July and early August which led to several recent August harvests not meeting the Company’s strict premium flower specifications.  As a result, most of the flower from these harvests will now be used for extraction.”

The company went on to say, “Some of the delays experienced by the Company resulted in lower than expected flower availability and a shifting of the national Highly Dutch expansion from Quebec to the balance of the country from August until the latter part of September.” Seemingly as a result of these issues, TGOD appointed Michel Gagné as Vice President, Operations. Gagné brings over 30 years of experience in the food and natural health products industries, having occupied leadership roles at Cargill and Maple Leaf Foods.

Product Pipeline

TGOD said it has introduced multiple 2.0 products during the second quarter, including RIPPLE dissolvables, teas, and vapes.  Based on the popularity of certain SKUs, TGOD said it accelerated its innovation pipeline by signing an expanded licensing agreement with Colorado-based Stillwater Brands to bring their entire RIPPLE product suite to Canada, including RIPPLE Gummies and RIPPLE QuickSticks. The commercialization of RIPPLE Gummies is expected in the fourth quarter.

TGOD also leveraged consumer insights to develop new product formats, including balanced CBD/THC and CBD only versions.  Some of these new products are already in market, with the balance expected to be commercialized during the fourth quarter.

TGOD launched its mainstream brand, Highly Dutch, in Quebec at the end of May.  Given strong sales, the Company looks forward to expanding to the balance of Canada in late September once it can build sufficient finished goods inventory to provide consistent supply to the market. TGOD also started production of Highly Dutch’s 2.0 line-up with concentrates expected to be launched, beginning in Quebec, at the end of September.

Valleyfield

A couple of weeks ago, the company said it planned to turn its licensed facility located in Valleyfield, Quebec, into a processing hub to support its expanding product portfolio.  The move would significantly reduce its reliance on third parties. The production of RIPPLE Dissolvable Powders and premium teas is expected to restart this month.  TGOD has also begun production of concentrates and Ripple Gummies in Valleyfield.  Hash should be available for sale at the end of this month under the company’s mainstream brand, Highly Dutch, while Ripple Gummies are planned to launch in the fourth quarter.

“As we conducted a complete review of our operations, we saw the opportunity to leverage Valleyfield and centralize our processing activities for 2.0 products.  Not only does it streamline our supply chain and help absorb the fixed costs of maintaining the site, but it also makes us more agile and provides us with more control over the development and quality of our products,” commented Brian Athaide, CEO of TGOD.  “By developing the in-house capabilities to manufacture multiple product lines, we are well-positioned to capitalize on the increasing popularity of cannabis derivatives such as beverages, chewables, chocolates, concentrates, and teas,” added Athaide.

 

 

 


Debra BorchardtMay 27, 2020
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6min9430

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

 


StaffMarch 10, 2020
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4min18390

The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US: TGODF) reported its financial results for the fourth quarter and fiscal year ending December 31, 2019. TGOD’s quarterly revenue was $3.25 million and $11.16 million for the year. This revenue consisted of hemp-derived product sales in Europe of $2.56 million for the quarter and $9.88 million for the year. Sales from cannabis products in Canada were only $0.69 million for the quarter and $1.28 million for the year.

The company said that quarterly sales in Canada increased marginally due to limited production from the Ancaster facility. TGOD said it initiated production in its hybrid greenhouse in November 2019, with an eight-week flowering cycle.

Loss Remain Elevated

The company delivered a quarterly net loss of $144.75 million in the quarter and a net loss of $195.75 million for the year including non-cash impairment charges of $127.74 million for the quarter. The charges were related to certain cash-generating assets being built or used in Canada, and the company’s investment in Epican Medicinals. The company said in its statement, “These impairment charges are primarily due to market conditions, which have caused the company to revise its near-term and long-term growth forecasts in the reduced operating facility footprint, and the strategic decision to forgo the expansion of its proposed cultivation activities for export in Jamaica in order to focus on its Canadian operations.”

“While 2019 was a challenging year for the entire sector, we have made significant progress on the operational front and adjusted our construction and operating plan to preserve shareholder capital and in light of changing market conditions,” commented Brian Athaide, CEO of TGOD. “Despite taking impairment charges this quarter, as we continue to evaluate financing options, we note that the value of our assets still far exceeds our liabilities.  With our first 2.0 product, TGOD Infusers, now available, our teas and vapes launching next month, as well as additional launches planned later this year, we anticipate continued sales momentum for the rest of 2020,” continued Athaide.

C-Suite Consolidation

TGOD also said that it had streamlined its leadership structure. The company’s former President, Mr. Csaba Reider, and its former Vice-President of Sales, Mr. Mike Gibbons, departed the organization. Their responsibilities have been consolidated under existing roles.

Athaide continued saying, “As market conditions improve, and should the Company decide to bring additional cultivation zones online which would increase the expected recoverable amount of future cashflows, the non-cash impairment charges may be reconsidered and be reversed as permitted by its accounting framework.


Debra BorchardtNovember 15, 2019
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3min20890

The Green Organic Dutchman (OTCQX: TGODF)saw its shares plunge by over 9% to lately trade at 63 cents after the company reported its third-quarter earnings following the market close on Thursday. The company delivered revenue of C$2.53 million, which missed estimates by C$1.77M. TGOD also delivered a net loss of $20.1 million for the quarter, of which $4.3 million was related to non-cash stock-based compensation, depreciation and amortization.

The company said it has “reorganized to reduce general and administrative expenses by approximately $3 million per quarter starting in Q1-2020 on a path towards positive operating cash flow by the end of Q2 2020.”

“Q3 marked TGOD’s entry into the recreational cannabis market with a small pilot in Ontario. We were thrilled to witness such positive feedback on product quality and packaging from retailers and consumers across the province.  Based on the initial response, demand for high-quality flower is strong and TGOD is well-positioned to capture the premium organic segment which is significantly underserved,” commented Brian Athaide, CEO of TGOD. “Despite the challenging market conditions in Canada, TGOD has an opportunity to be one of the first cash flow positive cannabis companies as early as Q2 2020. We rightsized our production and our first hybrid greenhouse is being commissioned, allowing us to produce at optimal levels while avoiding excess inventory or incurring unnecessarily high operating expenses.  Our first harvest from the Ancaster hybrid greenhouse is expected in December, which will enhance our current product line and enable TGOD’s first material revenues in Canada in Q1 2020 which is very exciting,” continued Athaide.

HemPoland,  the company’s wholly-owned subsidiary, saw a decrease in revenues in the third quarter to $2 million from $2.9 million in the second quarter due to fewer low margin bulk CBD extract sales. However, TGOD did see an increase in the number of sales of its high margin branded CannabiGold and private label products, resulting in gross margin of 80%, up from 69%.

TGOD said that it signed arrangements for up to $103 million in funding to be used mainly as bridge financing until TGOD becomes cash flow positive which is expected by the end of Q2 2020. According to the filing, “As of September 30, 2019, the company had working capital of $24 million and an accumulated deficit of $109 million.” The company came under fire for saying it needed more money to complete its facility projects after having said in investment presentations that all projects were fully funded.

The company has a conference call scheduled for Friday morning.


William SumnerOctober 9, 2019
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4min9500

It’s time for your Daily Hit of cannabis financial news for October 9, 2019.

On the Site

The Green Organic Dutchman

The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US: TGODF) is looking for a new source of funding to complete construction at its Ancaster, Ontario facility. The company had planned on using a traditional commercial bank facility but said that as market conditions have changed, the terms were no longer acceptable.

Kosher Cannabis For The Holidays

Can cannabis be kosher? The short answer is yes, at least if you smoke it. According to Chabad.org, “The answer really depends on how you define the word “kosher. Most narrowly defined, kosher means that it contains no ingredients that were from non-kosher animals, milk and meat, or other substances proscribed by Jewish law.”

Charlotte’s Web Holdings

Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF) announced today that it is partnering with the data and measurement firm Nielsen (NYSE: NSLN) to provide analytical coverage of the U.S. hemp-CBD retail market. Recently, Nielsen has been dipping its toes into the hemp and cannabis space by entering into strategic partnerships with cannabis-focused data and analytics firms like Headset and by developing a suite of cannabis measurement capabilities

In Other News

Innovative Industrial Properties

Innovative Industrial Properties, Inc. (IIP) has closed on an acquisition of a 156,000 square foot property in Warren, Michigan for $19 million. Following the closing of the acquisition, the company has also entered a long-term, triple-net lease agreement with LivWell Michigan, LLC, a licensee of LivWell Holdings, Inc. LivWell will make approximately $42 million worth of improvements on the property and IIP has agreed to provide reimbursement of up to $23.0 million.

Zelda Therapeutics

Zelda Therapeutics Limited (ASX: ZLD) (OTCQB: ZLDAF) announced a proposed merger with Ilera Therapeutics LLC, which entered into a strategic partnership with Zelda in March of this year. Under the proposal, Zelda would acquire 100% of Ilera Therapeutics through an all-scrip transaction. If the proposed merger goes through, the companies will rebrand as  Zelira Therapeutics Limited. “The merger will create one of the world’s leading medicinal cannabis companies with a rich pipeline of clinically validated products under development and unique access to the world’s largest and fastest growing cannabis markets,” says Zelda Therapeutics Chairman Harry Karelis.

New Frontier Data

New Frontier Data has reached an agreement to acquire Zefyr Inc. , a cannabis-focused data discovery and profiling platform, for $10 million. Zefyr acquires data from various sources and ingests, normalizes, analyzes, and deploys data and associated informational solutions through artificial intelligence. “Today, as mature market entrants move beyond examining investment risks and opportunities to connecting with the cannabis consumer, Zefyr enables us to expand and deepen our data services to support these evolving cannabis data needs,” said New Frontier Data Founder and CEO Giadha Aguirre de Carcer.


Debra BorchardtOctober 9, 2019
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4min30171

The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (US: TGODF) is looking for a new source of funding to complete construction at its Ancaster, Ontario facility. The company had planned on using a traditional commercial bank facility but said that as market conditions have changed, the terms were no longer acceptable.

TGOD has no debt and $56.7 million in cash available in Canada, which includes $40.2 million in restricted cash allocated to capital expenditures. If the company doesn’t get sufficient financing on reasonable terms within the required timeframe, it said it may have to revise the construction schedule for Ancaster and its Valleyfield project. TGOD also warned that this financing review may not result in an acceptable solution.

The stock was lately trading at C$1.73, down from its 52-week high of $6.61. Capital 10X (TGOD is a consulting client) recently initiated coverage on organic cannabis and forecast a rise in value for the stock by 377%. The analyst wrote, “Ultimately, we think TGOD is the best positioned of the organic growers. When we looked at the organic landscape, TGOD has the lowest operational risk, along with big potential upside. TGOD has a longer track record of execution (construction, branding, and cultivation) than any of its publicly traded peers, decreasing the risk they fail to grow at scale. TGOD also is aiming for true scale, with ambitions to not only be the largest organic grower but one of the largest growers period.”  

Construction Update

“We are doing something no other producer has done before, growing premium certified organic cannabis at scale.  By leveraging our proprietary growing methods, purpose-built facilities and industry-leading horticultural team, we are creating a wide economic moat within the premium organic segment,” commented Brian Athaide, CEO of TGOD.  “We are extremely proud to showcase the hard work that went into designing and building these state-of-the-art facilities as well as our cannabis 2.0 portfolio.”

The company said that construction at Ancaster is largely complete with all grow rooms licensed by Health Canada and approximately 6 weeks left before substantial completion of the processing facility. In a statement, the company said, “The evidence package for this final component is expected to be submitted to Health Canada by the end of November for licensing. The company will prioritize any financing secured to accelerate commercial production in order to ramp-up revenues. TGOD already has supply agreements in place with AlbertaBritish Columbia and Ontario, and plans to distribute nationally as production increases in 2020. Portfolio development is underway for Cannabis 2.0 with first phase of product launches scheduled for December 2019, including organic teas and infusers.”

The company took analysts for a tour at the Hamilton and Valleyfield facilities a few weeks ago. Valleyfield’s first phase on track to be completed in Q4 with the first harvest in early 2020, taking annual production capacity for the site to 65,000 kg. The Hamilton hybrid greenhouse now completed; all rooms licensed by Health Canada, bringing total annual production capacity for the site to 17,500 kg.

 


Debra BorchardtSeptember 4, 2019
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4min21080

Aurora Cannabis Inc.  (NYSE | TSX: ACB) sold off its final 28,833,334 shares of The Green Organic Dutchman Holdings Ltd (CSE: TGOD) (OTC: TGODF) at a price of $3.00 per share for gross proceeds of roughly $86.5 million. The stock was lately trading at C$3.51 on the CSE and $2.63 on the OTC. The share represent 10.5% of the issued and outstanding shares of TGOD.

“Aurora has a broad portfolio of strategic investments that allow us to participate in opportunities throughout the cannabis sector, while providing the company with non-dilutive access to capital,” said Terry Booth, CEO of Aurora. “We evaluate our investment portfolio on a regular basis to make sure it continues to align with our investment strategy and corporate priorities. When we acquired Whistler Medical Marijuana Corporation – an iconic and premium organic cannabis producer – our interest in TGOD became less important to our core strategy. Our return on our TGOD investment is significant and will add non-dilutive capital and further enhance our strategy to remain a dominant force in the global cannabis industry.”

The investment turned out to be a winner for Aurora. The company said that the sale represented an approximate 50% internal rate of return for the company. Aurora said it no longer holds any shares of TGOD, but it does continue to hold warrants to purchase 16,666,667 shares of TGOD.

TGOD stock got a lift on Tuesday after announcing it got approval from Health Canada to expand operations into its new hybrid greenhouse located in Hamilton, Ontario. The new facility is the third phase of TGOD’s Hamilton site, measuring 166,000 square feet with an annual production capacity of 17,500 kgs of premium organic cannabis.

Mo Money

Selling the TGOD shares was a quick way to bring money to the company’s coffers. In June, Stifel initiated coverage of Aurora with a Hold rating. The analyst W. Andrew Carter wrote, “Aurora Cannabis’ near-term growth strategy hinges heavily on its ability to return to the capital markets. The company has filed a base shelf prospectus of $750 million (roughly C$1 billion) and in conjunction with its 3Q19 earnings release, announced a supplement that included a $400 million of “at-the-market” distributions over a period of up to 25 months.”

At that time the stock was trading at C$10.65 and the analyst had a target price of C$10.00. The stock was lately trading at C$7.57.

The analyst went on to add, ” We question if Aurora has fully embraced the level of investment necessary to sustain a leading position in the Canadian market, and we believe the company could be challenged without the expertise of a consumer partner with a vested interest in the success of Aurora.”


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