The Green Organic Dutchman Holdings Ltd. (TSX:TGOD), one of the Canadian marijuana stocks, recently reported its financial results for 2018
SmallCapPower | March 25, 2019: The Green Organic Dutchman Holdings Ltd. (TSX:TGOD), one of the Canadian cannabis stocks, late Tuesday reported its financial and operational results for the year ended December 31, 2018. Revenue came in at $1.9 million, mainly comprising of sales from hemp-based products through its wholly-owned subsidiary HemPoland. TGOD did not earn revenues from Canada as it was preparing for its exclusive “Growers Circle” launch to ~200 medical cannabis and founding investors in early 2019.
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Green Organic Dutchman Holdings reported a gross profit of $212 thousand, reflecting a gross margin of 11%, mainly on the back of unrealized gains on changes in the fair value of the Company’s biological assets.
Total operating expenses surged 191% YoY to $44.7 million from $15.4 million in 2017, attributed to rising sales & marketing expenses (+423% YoY), R&D costs (+101% YoY) and general & administrative expenses (+500% YoY). The increases in the expenses were due primarily to the operational expansion initiatives and brand promotion activities.
TGOD reported a 2018 net loss that widened to $45.2 million from $13.5 million in the prior year due to an increase in expenses mentioned above. The net loss was somewhat offset by $2.7 million of interest income earned on cash balances. As of December 31, 2018, Company’s cash & equivalents and total assets stood at $213.5 million and $287.6 million, respectively.
Green Organic Dutchman CEO and Director Brian Athaide said, “2018 has been a pivotal year for the Company. The accomplishments our team has made have been nothing shy of incredible. The Company has raised substantial capital and grown the team with the addition of deep expertise and exceptionally skilled professionals to both management and our Board. We are very excited for 2019 and we remain focused on delivering on the Company’s operational plans of producing and bringing to market high quality, premium certified organic cannabis.”
On the financing front, Green Organic Dutchman completed the largest Canadian cannabis IPO (closed in May 2018), raising gross proceeds of $132.3 million (including overallotment), completed two bought deals worth $101.2 million and private placements worth $77.6 million. Further, the Company received reiterated support from the investor community with $63.4 million in warrants exercised.
On the operational front, TGOD opened the first dispensary, with its partner Epican Medicinals, in Jamaica, and formed a joint venture with Knud Jepsen in Denmark to focus on production of cannabis & oils and develop/patent innovative cannabis genetics. The Company entered into a joint venture with LLACA Groupo Empresarial for distribution of medical cannabis into ~7,600 pharmacies and stores in Mexico. Additionally, TGOD secured exclusive licensing rights to Stillwater Foods’ RIPPLE SC patent pending soluble cannabinoid ingredient technology and Evolab and CBx Sciences brands and proprietary cannabinoid vaporization technologies for the Canadian market. Further, TGOD incorporated multiple subsidiaries around the world, including in the Netherlands, Greece, Colombia and Germany.
Green Organic Dutchman also completed the acquisition of HemPoland in October 2018 for total cash and deferred consideration of ~$18.6 million. The Company accelerated construction spending at its Hamilton and Valleyfield sites to $96.8 million and increased total planned global production capacity to 219,000 kg.
Post the announcement, shares of Green Organic Dutchman slumped 7.5% to close at C$5.07. The Company currently trades at a market capitalization of C$1.4 billion with a price-to-book multiple of 3.8x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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