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Monday, Mar 4, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

The weed wire

TGOD posts $128M write-down in quarterly report

The write-downs were related to Canadian cash generating assets under construction or in-use, and an investment in Epican Medicinals

TGOD posts $128M write-down in quarterly report

Publicly traded cannabis companies have been posting massive write-downs as the industry hurdles toward an elusive bottom, and The Green Organic Dutchman Holdings Ltd. (TSX: TGOD and US: TGODF) is no exception.

After market close on Tuesday, TGOD reported non-cash impairment charges of $127.74 million in its fourth quarter 2019 results. The certified organic Canadian producer said its quarterly losses totaled $144.75 million, for a yearly loss of $195.75 million.

The write-downs were related to Canadian cash generating assets under construction or in-use, TGOD said in a statement, and the company’s investment in Jamaican producer Epican Medicinals.

“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,” TGOD said. “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.”

However, if market conditions improve and more cultivation sites come online, these charges could be reconsidered.

Quarterly revenue increased to $3.25 million from $2.61 million in the previous quarter, $11.16 million on the year. TGOD said revenues consisted of hemp-derived sales in Europe of $2.56 million, $9.88 million for the year, and sales from cannabis products in Canada of $0.69 million, $1.28 million for the year).

Sales only increased marginally, the company reported, due to limited production from its Ancaster facility. TGOD just started production at its hybrid greenhouse in November, 2019, with an eight-week flowering cycle.

Other quarterly highlights included bought deal financing of 36,800,000 units and 20,608,000 warrants at a price per unit of $0.75 for aggregate gross proceeds of $27.6 million.

TGOD also raised cash by closing a senior secured first lien credit facility, with the first tranche producing gross proceeds of $27.7 million. A second tranche of $15 million may be released following “certain operational milestones.” In connection with the loan, the company issued the lender 7,000,000 common share purchase warrants.

Read more: TGOD expands Canaccord financing deal

The company said it’s continuing to evaluate additional financing to deliver its operational plan.

TGOD’s former president, Csaba Reider, and former VP of sales, Mike Gibbons, were let go and their responsibilities consolidated among other staff.

Among positive quarterly items, TGOD got a research licence from Health Canada, which reduces its need for third-party approval when testing its products. It also received an award from an organic farming association.

Top image via Deposit Photos


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