TILT Holdings Archives - Green Market Report

Debra BorchardtDebra BorchardtFebruary 11, 2020
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5min7320

2019 proved to be a challenging year for the companies tied to vape products. Now it looks as if there could be strength in numbers as TILT Holdings Inc. (CSE: TILT) (OTCQB: TLLTF) and its vape subsidiary Jupiter Research, LLC  has partnered with vape device company The Blinc Group, LLC.

“Jupiter has always taken pride in being at the forefront of innovation,” said Mark Scatterday, interim CEO at TILT and Founder/CEO of Jupiter.  “As the market continues to grow we are excited to announce our partnership with The Blinc Group, enabling bespoke solutions for our clients and leveraging their expertise when it comes to vaporization regulatory and legal compliance legislation.” Just a few weeks ago, TILT was given DTC clearance to trade on the OTCQB Venture Market using the symbol TLLTF.

The Blinc Group makes proprietary cannabis vaping solutions for MSOs and focuses on control of the entire value chain from R&D to product design, to compliance and manufacturing at ISO and cGMP certified facilities with oversight by Blinc’s China-based quality control team.  Blinc’s Co-Founder and CEO Arnaud Dumas de Rauly said, “We look forward to working closely with Jupiter and bringing additional value and expertise to their extensive network of clients,” said Mr. Dumas de Rauly. “I am excited to see what the future of cannabis vaping landscape holds when two companies like Jupiter and Blinc work closely together to help shape the new standards and set an example for regulatory compliance as a whole.”

TILT acquired Jupiter Research at the beginning of 2019 in a deal valued at $210 million. At that time Founder Bob Crompton said, “Jupiter Research’s monthly sales continue to increase 15 percent month over month, and we already have US$28M of booked orders going into Q1. The opportunity to combine the synergies of the TILT portfolio of companies is expected to add to our rapid growth.”

For the quarter ending in September 2019 which was reported in November 2019, Jupiter accounted for $32 million in revenue and for the nine months ending in September it was $92 million.  It is the largest segment of the TILT Holdings family.

Stock Plunge

Like other cannabis stocks, TILT has seen its shares in the market. It was lately trading at 24 cents on the OTC and 31 cents on the CSE. Canaccord Analyst Bobby Burleson has continued to believe in the company even though he lowered his price target to C$1.50, which seems overly optimistic in hindsight. He wrote, “We believe TILT’s Q3/19 earnings result reflects solid execution of management’s strategy to enhance profitability and grow the company’s core businesses. While we are trimming our near-term estimates on vape related headwinds, with a shored up balance sheet and overall profitability driven by the company’s Massachusetts wholesale business, we continue to expect strong growth and enhanced profitability next year.”

Looking ahead to 202o, the company is focusing on expanding its Jupiter brand and the software company Blackbird. Scatterday said in a recent letter to shareholders, “While 2019 was a challenging year for public companies in our industry, l am encouraged and reassured knowing that we have such a strong and supportive group of people working together with us and toward the same goals.”


Debra BorchardtDebra BorchardtNovember 21, 2019
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3min7751

TILT Holdings Inc.  (CSE: TILT) (OTCQB: TLLTF) has closed an additional private placement of $10.2 million of senior secured notes from a syndicate consisting of existing shareholders and new investors, bringing to the total amount of the facility to $35.8 million, up from the previously announced maximum of $35 million.

“On the heels of the announcement of our outstanding Third Quarter financial results and earnings call yesterday, the closing of this additional financing only further illustrates the positive momentum TILT is experiencing as an organization and the growing confidence the investment community has in our refocused business plan,” said interim CEO Mark Scatterday. “We plan to use this additional funding to propel our growth into the new year and continue to invest into the operations of our core assets. The fact that the financing was oversubscribed only further speaks to the positive sentiment major investors are feeling towards what we’re accomplishing at TILT.”

While Tilt has been quick to note that the company has reported net income for the quarter, unlike many other cannabis companies, it still isn’t completely out of the woods. Canaccord Genuity analyst Bobby Burleson pointed out that the company will continue to face vape headwinds. Jupiter is 70% of the company’s revenue and while sales have rebounded, Burleson said he expects the company crisis to continue to have an effect on fourth-quarter sales. Especially the ban that was recently lifted in Massachusetts.

“We believe TILT’s Q3/19 earnings result reflects solid execution of management’s strategy to enhance profitability and grow the company’s core businesses. While we are trimming our near-term estimates on vape related headwinds, with a shored up balance sheet and overall profitability driven by the company’s Massachusetts wholesale business, we continue to expect strong growth and enhanced profitability next year. We are lowering our price target to C$1.50 from C$2.00 on valuation while we maintain our SPECULATIVE BUY rating.”

Revenue estimates for the fourth quarter were slashed from C$83 million to C$47 million. Full-year 2019 revenue estimates were lowered from C$214 million to C$167 million and 2020 estimates were cut from C$442 million to C$392 million. 2019 fourth-quarter EBITDA was dropped from $10.8  million to $4.2 million.


StaffStaffNovember 4, 2019
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5min7260

Beleaguered cannabis rollup TILT Holdings Inc. (CSE: TILT) (OTCQB: TLLTF) closed a private placement of up to $35 million of senior secured notes from a syndicate consisting of existing shareholders and new investors. The company said that the first close was $25.6 million and any further closing of up to $9.4M would take place within 45 days.

Interest Rate Cut

The proceeds will be used specifically to retire in full TILT’s $20 million bridge loan dated April 29, 2019, that bears interest at 18.75% per annum, as well as other payables. This loan will have a maturity date of 36 months from the closing date and will bear interest from their date of issue at 8.0% per annum, payable quarterly.

Board Change

TILT says it has agreed to change the Board of Directors with new independent Board members in line with new management’s focus on transparency, compliance and corporate governance. The lenders have proposed two Board Members who will be appointed shortly after closing.

“We are pleased to share that given our strong results and financial performance we have lowered the amount raised from our previous announcement and improved the terms resulting in significantly less dilutive financing for the Company. In a market where raising capital is challenging, this financing and these terms are a testament to our recent performance as a business and the support we have from our core shareholder base,” commented Mark Scatterday, the company’s interim CEO.

Mr. Scatterday further describes that “This loan demonstrates growing confidence in TILT’s value proposition as we seek to set ourselves apart with respect to profitable growth, free cash flow and resiliency in a dynamic industry. In a ‘grow for growth’s sake market,’ we are pleased to pair steady growth with principled financial discipline. Our goal is for TILT to become one of the top revenue-generating and profitable cannabis companies in the industry. We are excited to share our Q3 results in a few weeks.”

TILT said intends to use the proceeds to continue a rapid yet disciplined focus on profitability as one of the largest US-focused cannabis companies by revenue. Continuing to concentrate on the services side of the cannabis industry, capital will be allocated to help Jupiter continue its growth as one of the largest providers of vape hardware across the US and internationally, as well as the Baker and Blackbird software and distribution platforms.  The statement said that it will also be strategically reviewing opportunities surrounding non-core assets.

Terms

In connection with the issuance of the Notes, the Company will issue 1,800 common share purchase warrants to the subscribers for each US$1,000 principal amount of Notes subscribed, for a total aggregate of approximately 46M Warrants (representing 45% warrant coverage on the aggregate gross proceeds of the Notes). Each Warrant is exercisable for one common share of the Company at a price of C$.33 per common share for a period of 36 months from the closing date.

In addition, the previous sellers of Jupiter Research LLC have agreed to restructure unsecured debt of $35 million (owed to them in connection with their sale of Jupiter) with a new maturity date of January 2023 and an 8% per annum interest rate that accrues and is payable at Maturity, along with a junior secured position to the Financing. Upon repayment of the Notes, should any Jupiter Debt be outstanding, the Jupiter Sellers will assume the same rights and security as the original Financing Syndicate until repaid. No warrants shall be issued as part of the Jupiter Debt Restructuring.


William SumnerWilliam SumnerAugust 28, 2019
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7min6710

It’s time for your Daily Hit of cannabis financial news for August 28, 2019.

On the Site

SLANG Worldwide

SLANG Worldwide Inc. (CNSX: SLNG) delivered its financial results in Canadian dollars for the second quarter ending June 30, 2019, with revenue increased sequentially by 44% to $7.2 million and a big jump over last year’s $440,000 for the same time period. More importantly, Slang reported a net income of $17.5 million in the quarter versus a net loss of $13 million for the same time period in 2018. An even bigger accomplishment sequentially with a net loss of $16.1 million in the first quarter.

Environmental Issues Decided For San Diego Cannabis Dispensaries

On August 19, 2019, the Supreme Court of California issued a unanimous opinion in Union of Medical Marijuana Patients, Inc. (“UMMP”) v. City of San Diego. Except for the parties and the limited number of individuals who follow litigation involving environmental law, this case has moved through the California court system with little notice.

Texas Cannabis Report Ceases Publishing

In June 2013 Texas Cannabis Report launched as a premier news agency dedicated to covering the issue of cannabis activism and policy. Texans did not have a reliable source of news in this area, prompting our formation. Six years later there has been much progress made in ensuring this under-served community has access to quality and reliable information.

Green Thumb Industries

Green Thumb Industries Inc.  (CSE: GTII) (OTCQX: GTBIF) reported that its second-quarter revenue increased 228% to $44.7 million for the period ending June 30, 2019, over last year’s $13.6 million.  Revenue grew 60% over the first quarter of 2019. The company said that the revenue growth was driven by organic growth across GTI’s consumer products and retail businesses, strategic acquisitions and increased store traffic.

In Other News

TILT Holdings

TILT Holdings Inc. (CSE: TILT) (OTCQB: SVVTF) has released its financial results for the quarter ending on June 30, 2019. Revenue was $39 million, up 13% from the previous quarter. EBITDA was a loss of $4 million, up from a loss of $7.9 million. The net loss was $48.9 million. “The second quarter was a highly productive period for TILT. We continue to optimize our organization, including the dismissal and re-alignment of senior leadership, accelerate integration efforts, dramatically reduce overhead and instill an enhanced focus on profitable growth. TILT is making progress on our key initiatives to drive operational stability and progress toward profitability…” commented TILT Holdings interim CEO Mark Scatterday.

Origin House

Origin House (CSE: OH) (OTCQX: ORHOF) released its financial results for the three and six month period ending on June 30, 2019. Revenue for the quarter was $21.4 million. The gross margin was $4.4 million and adjusted EBITDA was a loss of $21 million. The net loss was $34.9 million. “”I am very proud of the entire Origin House team for generating another quarter of record revenue growth, leveraging the California brand support and distribution platform we built over the past several years, to deliver results for shareholders,” said Origin House CEO Marc Lustic.

Curaleaf Holdings

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) announced the release of its financial results for the second quarter. Total revenue for the quarter rose from $35.25 million in the previous quarter to $48.48 million. Adjusted EBITDA was $3.35 million, up from a loss of $3.6 million. The net loss was $24.54 million. “With the industry’s largest operational footprint, we have the scale to rapidly accelerate growth across the country. I continue to believe Curaleaf is the best positioned operator in the cannabis space with the potential to create substantial shareholder value,” said Curaleaf CEO Joseph Lusardi.

TerrAscend

TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) announced that it has signed a definitive agreement to purchase ABI SF, LLC, which operates a Bay Area cannabis cultivation facility and owns the premium cannabis brand State Flower. Initially, TerrAscend agreed to purchase 49.9% of State Flower for $2.85 million, along with extending a line of credit up to $3.75 million for cultivation facility improvements. The company has since upped its stake to 50.1%.

Vibe Bioscience

Vibe Bioscience Ltd. (CSE: VIBE) released its financial results for the three and six months ending on June 30, 2019. Quarterly revenue rose from $1.31 million in the first quarter to $3.09 million. The gross margin was $1.2 million and adjusted EBITDA was $113,322.


William SumnerWilliam SumnerJuly 31, 2019
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4min5590

It’s time for your Daily Hit of cannabis financial news for July 31, 2019.

On the Site

Brightfield Group Names Top 5 CBD Companies

The CBD industry is becoming much more saturated than it was before the passing of the U.S. Farm Bill late last year, with new products entering the market, threatening to take a slice of the CBD pie that the early producers of CBD have enjoyed until this time…Brightfield Group listed the Top 5 CBD Companies that the research group says “continue to make a name for themselves” within the growing CBD market. Here’s what we know about these various companies…

TILT Holdings

Following the market close and at the end of the evening on Tuesday, TILT Holdings Inc.  (CSE: TILT) (OTCQB: SVVTF) said that it refiled amended and restated management’s discussion and analysis for the quarters and year ended December 31, 2018, and for the three month period ended March 31, 2019, and 2018  (the YE 2018 MD&A and the Q1 2019 MD&A together.  The documents were prepared following a continuous disclosure review by the British Columbia Securities Commission of the company’s disclosure records.

CannTrust

Following the disastrous revelation that the company began growing cannabis plants in grow rooms without licenses, CannTrust Holdings Inc. (TSX: TRST)(NYSE: CTST) said that its special committee has retained Greenhill & Co. Canada Ltd. as the Special Committee’s financial advisor, to assist in a review of strategic alternatives. Those options include a sale of the company, a merger or changes to the company’s strategy. The interim CEO has said the talks are happening at only a conversation level at this time.

In Other News

Harvest Health & Recreation

Harvest Health & Recreation, Inc. (CSE: HARV,) (OTCQX: HRVSF) announced that it has entered a term sheet for a secure term loan of up to $225 million. The loan comes from an investment fund managed by Torian Capital Partners, and will be made available to Harvest in three tranches of $75 million. Harvest will use the proceeds from the loan to fund expansion initiatives. “Harvest is in a strong financial position in the cannabis industry and this growth capital, which we believe is provided at an attractive financing cost will enable us to deliver on our commitment to enhance shareholder value,” said Steve White, CEO of Harvest. “With greater financial flexibility, we are better equipped to execute our strategy to aggressively expand our retail and wholesale footprint across the U.S. into key markets, while seeking to build and acquire brands for broad distribution,” White concluded.


Debra BorchardtDebra BorchardtJuly 31, 2019
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6min12240

Following the market close and at the end of the evening on Tuesday, TILT Holdings Inc.  (CSE: TILT) (OTCQB: SVVTF) said that it refiled amended and restated management’s discussion and analysis for the quarters and year ended December 31, 2018, and for the three month period ended March 31, 2019, and 2018  (the YE 2018 MD&A and the Q1 2019 MD&A together.  The documents were prepared following a continuous disclosure review by the British Columbia Securities Commission of the company’s disclosure records.

According to the company’s statements, the documents were refiled to address comments received from BCSC staff and in order to improve the company’s disclosure. TILT said the refiling was specifically meant to address the following issues:

  • address the guidance provided in Staff Notice 51-352 (Revised) Issuers with U.S. Marijuana-Related Activities published by the Canadian Securities Administrators on February 8, 2018;
  • identify those persons party to Related Party Transactions disclosed in the MD&A;
  • provide more comprehensive disclosure and discussion regarding Pro Forma Results from the quarter ended March 31, 2019;
  • remove content from the MD&A deemed “promotional” by the BCSC;
  • specifically identify the forward-looking statements in the MD&A;
  • include a detailed listing of TILT’s financial instruments; and
  • discuss the impact on TILT of the implementation of IFRS 16 – Leases.

Furthermore, the YE 2018 MD&A was refiled at the request of the BCSC to:

  • address the guidance provided in Staff Notice 51-352 (Revised) Issuers with U.S. Marijuana-Related Activities published by the Canadian Securities Administrators on February 8, 2018;
  • provide more prominent and comprehensive disclosure regarding the Company’s goodwill impairment for the year ended December 31, 2019;
  • provide more prominent and comprehensive disclosure as to the Company’s significant increase from fiscal 2017 in consulting fees, general and office expenses, professional expenses and wages and benefits;
  • identify those persons party to Related Party Transactions disclosed in the MD&A;
  • provide more comprehensive disclosure and discussion regarding Pro Forma Results from the year ended December 31, 2018;
  • remove content from the MD&A deemed “promotional” by the BCSC;
  • specifically identify the forward-looking statements in the MD&A;
  • include a detailed listing of TILT’s financial instruments; and
  • discuss the impact on TILT of the implementation of IFRS 16 – Leases.

PR Firm Change

In addition to the refiling announcement, TILT also noted that the company added another PR firm. It has been working with ICR Inc. and now has signed with CMW Media. “From an operational and functionality standpoint, TILT is positioned better and stronger than we’ve ever been, and we want the world to know it,” said Mark Scatterday, Interim CEO of TILT Holdings Inc. “Our goal through the partnership with CMW Media is to educate the public on TILT’s ongoing successes and bring light to our subsidiary businesses through executed media campaigns and storytelling that demonstrates what sets us apart from everyone else in the industry.”

TILT has come under fire ever since the company wrote down over $500 million in company assets shortly after going public. Investors were furious and felt they had been duped, while the company shifted the blame for the overvaluation on Cowen & Company (its bankers) and the complications of combining numerous different companies. The stock has lost over half its valuation during 2019 as investors walked away.

According to the company statement, CMW Media will execute a public relations strategy to tell the accurate TILT story. The statement said that CMW will increase public knowledge of TILT by gaining national and regional media attention for the Company.

“The opportunity to partner with TILT Holdings is a major accomplishment for our company and meets our everlasting goal to work with businesses that are providing real, impactful solutions for the cannabis industry,” said Andrew Hard, CEO of CMW Media. “We are excited to hit the ground running alongside TILT’s impressive, renewed executive team and to share with the cannabis industry and beyond what this impressive company has accomplished and their goals for the future.”

 


William SumnerWilliam SumnerJuly 16, 2019
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4min7000

It’s time for your Daily Hit of cannabis financial news for July 16, 2019.

On the Site

TILT

Multi-faceted cannabis company TILT Holdings Inc.  (CSE: TILT) (OTCQB: SVVTF) said that it has signed a binding term sheet for a private placement of $125 million from a syndicate of institutional investors led by UCP, a Toronto-based investment firm specializing in cannabis and alternative assets. The company said that the money will be in the form of convertible senior secured notes that will provide aggregate gross proceeds of $50 million and could go up to $125 million. The deal is expected to close in August.

Jane Technologies

With one of the largest cannabis technology fundraises completed to date,  Jane Technologies, Inc., a retail software company that created the first and largest online cannabis marketplace, has announced it has secured $21 million in Series B funding. The I “Heart” Jane team is the company behind the first cannabis e-commerce marketplace expands to keep up with global demand for retail cannabis products sold online. This latest round of funding, led by new and returning investors, will allow Jane to expand its online marketplace to international vendors, bolster its data analytics platform, and deliver data to other industries.

In Other News

The Arcview Group

The cannabis industry investor network, The Arcview Group, announced that it has closed a $7.7 million Series A financing round. Leading the fundraise was Trivergance Investments in partnership with Cresco Capital Partners. In connection with the financing,  Washburn Ampology co-CEOs, Jerry Stone and Jonathan, and Codie Sanchez, Cresco Capital Managing Director, will join Arcview’s board. “We have been a proud partner of Arcview from many years, as several of our portfolio companies have successfully raised capital through their platforms,” said Sanchez. “We see a real need for the new asset management offerings in development at Arcview to fuel great ideas and passionate entrepreneurs. We are thrilled to help continue to ensure cannabis startups receive the funding they need to flourish.”

Canopy Rivers

Today Canopy Rivers Inc. (TSXV: RIV) (OTC: CNPOF) reported the fourth quarter and year-end financial results for the 2019 fiscal year. Operating income was C$6.08 million, down from C$19.5 million in the same period of the previous year. However, year-over-year operating losses declined from C$17.15 million in Q4 2018 to C$1.43 million in Q4 2019. Operating income for the year fell from C$50.21 million in 2018 to C$38.47 million in 2019. The company experienced a total comprehensive loss of $30.35 million for the year. “This past fiscal year represented a period of significant capacity build-out and operational investment at our portfolio companies. We are excited to see our partners complete their build-out activities over the next few quarters, allowing their underlying businesses to scale and accelerate their individual paths towards the generation of meaningful EBITDA across the Company’s ecosystem,” commented Canopy Rivers CFO, Eddie Lucarelli.


Debra BorchardtDebra BorchardtJuly 16, 2019
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4min28720

Multi-faceted cannabis company TILT Holdings Inc.  (CSE: TILT) (OTCQB: SVVTF) said that it has signed a binding term sheet for a private placement of $125 million from a syndicate of institutional investors led by UCP, a Toronto-based investment firm specializing in cannabis and alternative assets. The company said that the money will be in the form of convertible senior secured notes that will provide aggregate gross proceeds of $50 million and could go up to $125 million. The deal is expected to close in August.

The financing deal comes not long after the company was heavily criticized for taking a $500 million write-down after reporting its 2018 fiscal year results in May and five months after going public. The CEO and the company’s Chairman both resigned as the company claimed the executives were mostly in their roles to bring the company public. New shareholders were understandably upset when the company blamed the overvaluation on its investment banker and felt they had been duped.

Investors were also unhappy that the company arranged a $20 million financing deal with the eye-popping 18.75% rate. That debt was to come due at the end of this year and while TILT characterized it as an investment, it was a bridge loan. This round of financing will be used to pay off that loan.

“This financing demonstrates TILT’s access to long-term capital partners committed to realizing the TILT vision and TILT’s drive towards potential profitability, free cash flow and scaling,” commented Mark Scatterday, Interim CEO. “This investment into our business, at significantly improved terms to our existing debt facility, is a reflection of the value of our assets, the support investors are providing to a new transparent management team, and the opportunity for TILT’s strategic positioning to unlock that value. With our new leadership in place, we have already implemented imperative cost-cutting measures throughout the organization so that this new capital will be utilized in the most fiscally responsible way. Using the minimum $50 million positions TILT to reach potential profitability and become cash flow positive. Having access to $125 million enables TILT to take advantage of both organic and acquisition-based growth opportunities that will enable TILT to solidify its position as a top revenue-generating company in the sector. We look forward to sharing more about our comprehensive plan that is underway, recent management upgrades, and Q2 results in August.”

TILT said it intends to use the proceeds to continue its rapid yet disciplined focus on profitability as one of the largest US-focused cannabis companies by revenue.

Terms

The notes will have a maturity date of 36 months from the closing date and will bear interest from their date of issue at 8.0% per annum, payable quarterly. During the term of the notes, TILT said it may choose to pay a portion of the interest in kind and prepay the notes without penalty any time after the first year with 60 days’ notice to the holders of the notes.

 



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