The Green Organic Dutchman Holdings Ltd. (OTCQX: TGODF) is a research & development company licensed under the Access to Cannabis for Medical Purposes Regulations to cultivate medical cannabis. The Company carries out its principal activities producing cannabis from its facilities in Ancaster, Ont., pursuant to the provisions of the ACMPR and the Controlled Drugs and Substances Act (Canada) and its regulations.
In a short span of time, Green Organic Dutchman Holdings has strengthened its market and operational profile significantly. The company is moving forward at a rapid pace on its aggressive, de-risked business plan and continues to expand all aspects of its business significantly.
The company continues to invest heavily in building the foundation to drive it at an unparalleled pace. The overall construction is on schedule across all jurisdictions including Ancaster, Ontario, and Valleyfield, with cultivation expected to commence in the first half of 2019. Furthermore, TGOD is also investing in consumer research, R&D and simultaneously building both the capability and systems needed to scale as it prepares for the adult-use market rapidly. From a liquidity angle, TGODF maintained a strong balance sheet with cash and cash equivalents of $261,816,000 (as on 30th June’18) and continued to execute on management’s vision of becoming the largest organic cannabis brand in the world.
Having already launched operations in Jamaica, the company’ business plan calls for operations in 12 countries on three continents by the end of 2018 with a focus on Europe and Latin America. The management continues to make strategic additions across all divisions of the Company to execute on its expansion plans.
Recent highlights:
- The launch of premium certified organic cannabis brand: Most recently, on Sep 21st, the company announced the launch of its premium, certified organic cannabis brand. This preeminent launch coincides with Canadian Organic Week, the largest annual celebration of organic food, farming and products across the country. This is a pivotal step for the Company in becoming the largest, organic cannabis brand in the world.
- Acquisition of HemPoland: Before this, on August 21st, the company announced to acquire 100% of the issued and outstanding shares of privately-held HemPoland for $7.75M cash and 1,968,323 restricted TGODF shares currently worth $7.75M, which will be escrowed for a term of three years from closing.
- HemPoland is a leading European manufacturer and marketer of premium organic CBD oils led by founder and CEO, Maciej Kowalski, one of Europe’s most widely recognized CBD experts. This strategic acquisition provides access to HemPoland’s vast distribution network, premium Cannabigold brand, state-of-the-art hemp oil extraction technologies, and provides a strategic pathway into the European market for TGOD’s medical & recreational products and licensing deals.
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Investment highlights:
The company share price has been on a constant climb in the recent past and has reported an increase in the volumes backed by these announcements laying the strong foundation for revenue visibility and business growth. Considering all this, the company is in an extremely favorable risk-reward position, and value investors should consider exposure in this sector as the backdrop remains exceptionally favorable.
About the Company: The Company grows high quality, organic cannabis with sustainable, all-natural principles. TGODF’s products are laboratory tested to ensure patients have access to a standardized, safe and consistent product. TGODF has a funded capacity of 170,000 kg and is building 1,382,000 sq. Ft. of cultivation facilities in Ontario, Quebec, and Jamaica.
The Company has developed a strategic partnership with Aurora Cannabis Inc. (TSX: ACB) whereby Aurora has invested approximately C$78.1 million for an approximate 17.5% stake in TGODF. In addition, the Company has raised approximately C$350 million and had over 20,000 shareholders.
Strategic relationships:
Other recent announcements:
- Continued to make steady progress on the construction of its facilities in Ancaster, Ontario and Valleyfield, Quebec, spending a total of $20,734,000 on those initiatives
- received organic certification from ECOCERT Canada
- successfully completed the record-breaking Initial Public Offering on the Toronto Stock Exchange, raising gross proceeds of $132,264,000
- expanded its shareholder base from 4,000 to over 20,000
- announced a strategic partnership agreement with Epican Medicinals Limited, a vertically integrated Jamaican cannabis company
- completed a letter of intent with Denmark’s Queen Genetics/Knud Jepsen A/S, which, if completed will increase TGOD’s total organic-funded capacity to 195,000 kgs
- Announced several strategic licensing agreements with top US brands including Stillwater Brands, Evolabs, and CBx Sciences
- Completed a $25,024,000 bought deal financing which closed on June 26th, 2018
Second Quarter 2018 Financial Results –
Liquidity –
- The Company maintained a strong balance sheet with cash and cash equivalents of $261,816,000 and continued to execute on management’s vision of becoming the largest organic cannabis brand in the world.
- Successfully completed the record-breaking Initial Public Offering on the Toronto Stock Exchange, raising gross proceeds of $132,264,000
Key risk factors and potential stock drivers:
- Continuing growth in the cannabis sector could act as a catalyst for the company shares.
- The company operation is still at a pre-commercialisation stage. Therefore, its ability to maintain liquidity and financial flexibility to fund its incremental capital requirements will remain an extremely critical challenge for the company.
- The company’ business is exposed to risk related to competitive pressure, and its revenues may suffer from better products sold by competitors.
- Notwithstanding the recent boom, this is still a very nascent stage space and only time would differentiate between real winners and laggards. As far as choosing an option with a relative advantage is concerned, TGODF is the preferred choice with upside potential.
- Marijuana remains illegal under federal law. It is a Schedule I controlled substance. Even in those jurisdictions in which the use of medical marijuana has been legalized at the state level, its prescription is a violation of federal law.
- The company’s business is exposed to regulatory risk and its adverse impact on the overall business risk profile.
Stock Performance
Comments:
- On Monday, October 15th, 2018, TGODF was at $4.15, on volume of 1.6 million shares exchanging hands. Market capitalization is $1.172 million. The current RSI is 39.21
- In the past 52 weeks, shares of TGODF have traded as low as $2.7840 and as high as $7.8940
- At $4.15, shares of TGODF are trading below its 50-day moving average (MA) at $4.91
- The present support and resistance levels for the stock are at $4.0560 & $4.7988 respectively.
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