The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), a pot stock that was once valued north of $1 billion, continues to shed investors after reporting another quarter of low sales.
Late Tuesday, the Toronto-based producer released its financials for the three months ending March 31, booking net revenues of $2.9 million — with only $664,000 coming from Canadian cannabis sales and the rest from European hemp operations.
TGOD reported a first-quarter net loss of $73.4 million, with impairment charges of $55.8 million. The company said the massive writedown in the quarter was mainly due to the economic damage created by the COVID-19 pandemic, in particular how it slowed down its Quebec and Jamaica operations.
But the massive loss was still an improvement over the company’s fourth-quarter net loss of $144.8 million.
Investors, however, didn’t seem impressed as shares of TGOD fell 10 per cent Wednesday, closing at $0.48 on the Toronto Stock Exchange.
The company said its operating loss was $15.3 million in Q1, an improvement from $17.7 million in the previous quarter. Reported selling, general and administrative expenses came in at $9.7 million in the quarter, which was 27 per cent lower than Q4 2019.
Remaining cash was reduced to $4.8 million, from $27.6 million at the start of the quarter. In its financial report, the company issued two “going concern” warnings. A “going concern” is an accounting term that informs investors of a potential red flag on a company’s viability.
The company noted that after the end of Q1 it has gone on a cash raising spree to stay solvent and cover its accounts payable, which were a reported $39.3 million at the end of Q1.
Green Organic said it raised a combined $20.75 million from two separate public share offerings, a $10 million loan from a credit facility that could increase to $30 million in total, and a $5 million loan from an accordion debt facility.
Despite the company’s fiscal restraints, CEO Brian Athaide said they have taken actions to be more agile since last October and are charting a path to profitability while cutting costs.
“TGOD remains on track to becoming operational cash flow positive later this year,” Athaide said in the statement.
TGOD’s follows value brand trend in Canada’s legal market
Apart of the company’s strategy moving forward is to bring innovative new products to market and expand its distribution.
The Green Organic Dutchman introduced a 28-gram value brand on May 26. Press photo
On Tuesday, TGOD introduced its new bulk value product called Highly Dutch Organic, which targets daily cannabis users.
The 28-gram product will be first introduced in Quebec at the end of this week and then shipped to additional provinces during the weeks ahead.
“Our research also shows that value-conscious consumers prefer buying cannabis in larger volumes, which is why we are launching with Highly Dutch’s one-ounce format [28 grams],” Athaide said in a separate statement.
While the product’s website says the terpene-rich and high-THC Rotterdam OG strain will be “affordable,” the company has yet to release a price.
TGOD’s bulk product strategy falls in line with a growing trend of other Canadian LPs who have introduced their low-cost options.
Industry heavyweight Aurora Cannabis (TSX: ACB) said its value product, Daily Special, has recently taken up 13 per cent of the market share in Ontario.
Read more: Aurora’s stock rallies on rising revenue
Top image via The Green Organic Dutchman
jared@mugglehead.com
@JaredGnam
