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Yeah, unfortunately, I was right. Using pre-RS numbers, we've dropped from 1.61 to 1.25 since the RS was announced. That's a drop of 22%. Not good. That's why I always shudder when a stock I own announces an RS. I should have immediately sold some shares after the announcement.....totally my fault that I didn't.
Well, you were right. My thoughts were the reason for the split would have caused a better reaction.
Today's action is the perfect example of why I really dislike reverse splits. Using post reverse split numbers, the stock closed at 4.83 last Monday on the 15th. Then, the reverse split date was announced. VLNCF immediately took a big hit. A week later now on the 23rd (the first day that TDA members can trade since the reverse split), it's now sitting at 3.80.
Long story short, it's already dropped a full dollar in value from 4.83 to 3.80 since the split was announced. I don't like reverse splits!!! This sort of stock decline after a reverse split is not unusual at all. Instead, it's rather typical. Ugh!!
Thanks GE --->>> POMMIES RECEIVES MICRO-PROCESSING LICENCE FROM HEALTH CANADA FOR GREATER TORONTO AREA FACILITY
KELOWNA, BC, Nov. 22, 2021 /CNW/ - The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the "Company," "The Valens Company" or "Valens"), a leading manufacturer of cannabis products, today announced that Pommies (otherwise known as Southern Cliff Brands) has been issued a micro-processing licence from Health Canada for its manufacturing facility located in the Greater Toronto Area (the "GTA Facility"). With this licence, Valens active manufacturing platform now extends from Western to Eastern Canada, increasing speed-to-market capabilities while optimizing distribution cost-savings and efficiencies.
The Valens Company Inc. Logo (CNW Group/The Valens Company Inc.)
The Valens Company Inc. Logo (CNW Group/The Valens Company Inc.)
The GTA Facility provides Valens with an additional 30,000 square feet of licensed production and manufacturing space to execute on its cannabis-infused beverage commercialization and distribution strategy. The facility can support 8 million units per year on a single shift and can produce cannabis-infused beverages in both cans and PET bottles across various sizes and formats including carbonated and non-carbonated juices and waters, drops and single shots. The facility is right sized for the Canadian cannabis industry today and was designed with ample space for expansion if and when required, with minimal additional capital expenditures. The facility is strategically positioned north of Toronto and near Pearson International Airport. This positioning provides for optimal shipping into Canada's largest markets while utilizing significant amounts of automation. This is anticipated to enhance margins on beverages as they are currently being manufactured out of Valens' Kelowna campus in Western Canada.
Products developed and manufactured in the GTA facility will utilize Valens' powered by SoRSE™ emulsion technology, resulting in consumer products that are free of cannabis taste and aroma with predictable onset and offset timing. Valens R&D team has been active in formulating new products soon to be available in the Canadian market and is excited to introduce its innovative pipeline into the beverage and other 2.0 and 3.0 categories.
In Q3 2021, Valens' estimated share of the cannabis-infused beverage category grew to approximately 9.0% from 5.5% in Q1 2021 in Alberta, British Columbia, and Ontario, based on Hifyre data, with only one customer in this category to date. Upon commencing commercial operations at the GTA Facility, Valens will seek to grow its market share in the beverage category by accelerating the penetration of its internal brand portfolio, increasing its partnership network and expanding its product portfolios with existing customers.
"Despite delays caused by the pandemic, we have achieved a major milestone in our domestic expansion strategy with the receipt of this micro-processing licence," said Tyler Robson, Chief Executive Officer, Co-Founder, and Chair of The Valens Company. "As one of the first companies to launch cannabis-infused beverages in Canada, we quickly learned what was required to succeed in the category – quality and innovation. We have been working tirelessly to strengthen our resources and capabilities to continue successfully serving the cannabis-infused beverage market in Canada. With the ability to utilize the GTA Facility, we are ready to put our best foot forward and lead the category with a variety of exciting new products which will be available to our customers and consumers over the coming quarters."
All production equipment at the GTA Facility is fully operational and is expected to be commissioned in the coming weeks. Valens expects to begin manufacturing, commercializing and shipping products from the GTA Facility in the first fiscal quarter of 2022 and anticipates an increase in utilization over 2022 as the demand for its products continues to grow. Additionally, Pommies expects to imminently submit a sales licence application for the GTA Facility.
The micro-processing licence was issued in accordance with the Cannabis Act and Cannabis Regulations and was based on the approval of the site evidence package that was submitted earlier this year in February.
Yeah me too. With reduced shares available, there could be a short squeeze if the right news came out.
A long time in coming, I see Vlncd hasn’t released any P/R on it yet. It will be interesting to see how that all plays out.
Yesterday they finally received their license for the Pommies Facility from Health Canada. Hopefully next week they will announce a big CPG partnership which will explain the rush to R/S and move to the NASDAQ.
TYLER ROBSON, CEO, CHAIR AND CO-FOUNDER OF THE VALENS COMPANY HONOURED AS RECIPIENT OF CANADA’S TOP 40 UNDER 40® FOR 2021
ROBSON RECOGNIZED FOR EXCEPTIONAL ACHIEVEMENTS IN INNOVATION, LEADERSHIP, IMPACT AND SOCIAL RESPONSIBILITY
https://thevalenscompany.com/press-releases/tyler-robson-ceo-chair-and-co-founder-of-the-valens-company-honoured-as-recipient-of-canadas-top-40-under-40-for-2021/
Kelowna, B.C., November 18, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a leading manufacturer of cannabis products, announced today that Tyler Robson, CEO, Chair and Co-Founder of The Valens Company has been selected as a recipient of Canada’s Top 40 Under 40® for 2021.
Canada’s Top 40 Under 40® is an annual leadership award that recognizes exceptional achievement by 40 outstanding Canadians who are under the age of 40. Founded in 1995 by Caldwell, Top 40 has recognized almost 1,000 outstanding Canadians and is the country’s most coveted award for young business and community leaders. Top 40 alumni now include hundreds of nationally and internationally prominent CEOs, executives, and entrepreneurs in the private, public and social economy sectors.
Robson and his peers were selected from hundreds of nominees by a respected and independent Advisory Board, comprising 30 diverse leaders from across Canada. Four key criteria were assessed to select the recipients: Vision & Innovation, Leadership, Impact & Influence, and Social Responsibility.
“Achieving Top 40 signals a level of dedication and commitment that shows up in Tyler’s leadership style, and is what helps drive and propel our leadership and success of The Valens Company,” said Jeff Fallows, President of The Valens Company. “He is a team player, always ready to lend a helping hand or be a listening ear to someone in need. This approach has not only unified employees, but also enabled Valens to reach all its operational milestones.”
In 2021, Robson led Valens through four major acquisitions, including LYF Technologies, Verse Cannabis, Citizen Stash and Florida-based Green Roads, marking Valens’ expansion into the US. Under his leadership, Robson has made sustainability a core element to Valens’ company culture, developing a sustainable cannabis destruction method specially designed to not only be compliant with Health Canada, but to also be as sustainable and environmentally friendly as possible.
Fallows continued, “Tyler is a one-of-a kind, natural-born leader. We are proud to have him as part of the Valens team and congratulate him on this major accomplishment.”
The 2021 Top 40 Recipients were announced today in the National Post. Recipients will be honored at a series of events to take place in the coming months.
At Valens, it’s personal.
ABOUT THE VALENS COMPANY
The Valens Company is a leading manufacturer of cannabis products with a mission to bring the benefits of cannabis to the world. The Company provides proprietary cannabis processing services, in addition to best-in-class product development, manufacturing, and commercialization of cannabis consumer packaged goods. The Valens Company’s high-quality products are formulated for the medical, health and wellness, and recreational consumer segments, and are offered across all cannabis product categories with a focus on quality and innovation. The Company also manufactures, distributes, and sells a wide range of CBD products in the United States through its subsidiary Green Roads, and distributes medicinal cannabis products to Australia through its subsidiary Valens Australia. In partnership with brand houses, consumer packaged goods companies and licensed cannabis producers around the globe, the Company continues to grow its diverse product portfolio in alignment with evolving cannabis consumer preferences in key markets. Through Valens Labs, the Company is setting the standard in cannabis testing and research and development with Canada’s only ISO17025 accredited analytical services lab, named The Centre of Excellence in Plant-Based Science by partner and scientific world leader Thermo Fisher Scientific. Discover more on The Valens Company and its subsidiaries at http://www.thevalenscompany.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Jeff Fallows
The Valens Company
Investor Relations
ir@thevalenscompany.com
1 647.956.8254
KCSA Strategic Communications
Phil Carlson / Elizabeth Barker
VLNS@kcsa.com
1 212.896.1233 / 1 212.896.1203
Media
KCSA Strategic Communications
Anne Donohoe
adonohoe@kcsa.com
1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS
All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “forecasts”, “future”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “should”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, future outcomes of transactions, economic conditions, and anticipated courses of action. Investors and other parties are advised that there is not necessarily any correlation between the number of SKUs manufactured and shipped and revenue and profit, and undue reliance should not be placed on such information.
The risks and uncertainties that may affect forward-looking statements include, among others, that the potential benefits of the Consolidation, including the effect on the Company’s application to list its Common Shares on the NASDAQ, will not be achieved, Canadian regulatory risk, Australian regulatory risk, U.S. regulatory risk, U.S. border crossing and travel bans, the uncertainties, effects of and responses to the COVID-19 pandemic, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, limited operating history, vulnerability to rising energy costs, unfavorable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
Well, considering the reason for it and what that represents, I’m still surprised. However, I also took advantage of the decline. I don’t think you can look at it any other way than a strong positive for the company.
They don't. The past 2 day decline is no surprise whatsoever. Actually, I'm a little upset with myself for not immediately selling some of my shares when I heard about the split and then re-buying afterwards.
Wasn't expecting a 8 percent drop today. Perhaps people just don't like splits.
VLNCF: effective Nov. 18,2021 a one for 3 reverse split:
https://otce.finra.org/otce/dailyList?viewType=Symbol%2FName%20Changes
We knew it was coming; ho hum--->>>THE VALENS COMPANY ANNOUNCES NEXT STEP TOWARDS NASDAQ LISTING
https://thevalenscompany.com/press-releases/the-valens-company-announces-next-step-towards-nasdaq-listing/
KELOWNA, B.C., Nov. 15, 2021 – The Valens Company (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a leading manufacturer of cannabis products, today announced that as the next step in its Nasdaq listing process, it will be completing a three for one consolidation (the “Consolidation”) of its common shares (“Common Shares”) on November 16, 2021, in order to meet Nasdaq listing requirements. The Common Shares are expected to commence trading on the Toronto Stock Exchange on a post-consolidation basis on November 18, 2021.
“This announcement represents a milestone towards the listing of Valens’ Common Shares on Nasdaq,” said Tyler Robson, CEO of The Valens Company. “With the recent progress in our application, paired with the share consolidation to meet minimum listing requirements, Valens expects to commence trading on Nasdaq before the end of 2021.”
The board of directors of Valens (the “Board”) believes the Consolidation will result in a number of potential benefits to Valens, particularly in connection with the Company’s application for a secondary listing of the Common Shares on Nasdaq. To be accepted for listing on Nasdaq, the Company must meet certain minimum trading price requirements, which are anticipated to be satisfied as a result of the Consolidation. As discussed in greater detail in the management information circular of the Company dated April 19, 2021, the Board believes there are potential benefits of a Nasdaq listing, including increased visibility of the Company amongst U.S. analysts and investors, increased access to capital and the potential for greater trading volume and liquidity for the Common Shares. The Consolidation has no impact on the dollar value of investor shares.
No fractional Common Shares will be issued upon the Consolidation. All fractions of post-Consolidation Common Shares will be rounded down. The Consolidation will not affect any Shareholder’s percentage ownership in the Company other than by the minimal effect of the aforementioned elimination of fractional Common Shares, even though such ownership will be represented by a smaller number of Common Shares. Instead, the Consolidation will reduce proportionately the number of Common Shares held by all Shareholders.
The Consolidation was previously approved by the Board, as well as by shareholders at the recent annual general and special meeting of shareholders of the Company.
ADDITIONAL INFORMATION FOR SHAREHOLDERS
The Company’s new CUSIP number for the post-consolidation Common Shares is 91914P603 and the new ISIN number is CA91914P6030.
The Company will shortly mail a letter of transmittal (“Letter of Transmittal”) to its registered holders of Common Shares which must be completed and returned to Computershare Investor Services Inc. (“Computershare”) at the address specified in the Letter of Transmittal, together with their share certificates for the pre-Consolidation Common Shares, in order to receive share certificates for the relevant number of post-Consolidation Common Shares to which they are entitled to receive. Questions on how to complete the Letter of Transmittal, or requests for additional copies of the Letter of Transmittal, may be directed to Computershare at 1-800-564-6253 or by e-mail to corporateactions@computershare.com. A copy of the Letter of Transmittal may also be obtained from the SEDAR website at www.sedar.com or from the Company’s website at www.thevalenscompany.com.
Shareholders that hold their Common Shares through a broker, trust company or other intermediary do not need to complete and submit a Letter of Transmittal, as their intermediary will make arrangements on their behalf for their accounts to be updated for the relevant number of post-Consolidation Common Shares that they beneficially hold, as applicable.
For any more information or frequently asked questions please refer to the following link: https://thevalenscompany.com/share-consolidation-faq/
ABOUT THE VALENS COMPANY
The Valens Company is a leading cannabis consumer products company, with significant expertise in manufacturing cannabinoid based products and a mission to bring the benefits of cannabis to the world. Valens provides proprietary cannabis processing services and best-in-class product development, manufacturing, and commercialization of cannabis consumer packaged goods. Valens’ high-quality products are formulated for the recreational, health and wellness, and medical consumer segments and are offered across all cannabis product categories, with a focus on quality and product innovation. Valens also manufactures, distributes, and sells a wide range of CBD products in the United States through its subsidiary Green Roads, and distributes medicinal cannabis products to international markets through its subsidiary Valens Australia. In partnership with brand houses, consumer packaged goods companies and licensed cannabis producers around the globe, Valens continues to grow its diverse product portfolio in alignment with evolving cannabis consumer preferences. Through Valens Labs, Valens is setting the standard in cannabis testing and research and development with Canada’s only ISO17025 accredited analytical services lab, named The Centre of Excellence in Plant-Based Science by partner and scientific world leader Thermo Fisher Scientific. Discover more on The Valens Company at http://www.thevalenscompany.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Jeff Fallows
The Valens Company
Investor Relations
ir@thevalenscompany.com
1 647.956.8254
KCSA Strategic Communications
Phil Carlson / Elizabeth Barker
VLNS@kcsa.com
1 212.896.1233 / 1 212.896.1203
Media
KCSA Strategic Communications
Anne Donohoe
adonohoe@kcsa.com
1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS
All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “forecasts”, “future”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “should”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, future outcomes of transactions, economic conditions, and anticipated courses of action. Investors and other parties are advised that there is not necessarily any correlation between the number of SKUs manufactured and shipped and revenue and profit, and undue reliance should not be placed on such information.
The risks and uncertainties that may affect forward-looking statements include, among others, that the potential benefits of the Consolidation, including the effect on the Company’s application to list its Common Shares on Nasdaq, will not be achieved, Canadian regulatory risk, Australian regulatory risk, U.S. regulatory risk, U.S. border crossing and travel bans, the uncertainties, effects of and responses to the COVID-19 pandemic, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, limited operating history, vulnerability to rising energy costs, unfavourable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
It’s official. A PR was released stating November 16 there will be 3 for 1 R/S
On the Yahoo Board they are saying that tomorrow there will be a 1-3 R/S and on thursday it will start trading at post split price. And sometime before the end of the year Valens will be uplisted to the NASDAQ.
The total worth of the transaction in Valens shares for Citizen Stash.
CS Q3 nine months revenue was $10.79M CAD so it seems like they will be making north of $14M CAD for the year instead of $12.6.
I made a mistake with the CS revenue gross margin. It is NOT 84%. It is far less than that.
Item 2 – Identity of the Acquiror
2.1 State the name and address of the acquiror.
The Valens Company Inc. (“Valens”). The address of the head office of Valens is 96 Spadina Avenue, Suite 400, Toronto, Ontario M5V 2J6.
2.2 State the date of the transaction or other occurrence that triggered the requirement to file this report and briefly describe the transaction or other occurrence.
Effective November 8, 2021, Valens and Citizen Stash completed a court-approved plan of arrangement under Section 192 of the Canada Business Corporations Act (the "Arrangement"), pursuant to the arrangement agreement dated August 30, 2021 (the “Arrangement Agreement”).
Pursuant to the Arrangement, among other things, Valens acquired all the issued and outstanding Common Shares (including Common Shares issued pursuant to outstanding Citizen Stash restricted share units and in connection with certain financial advisory services rendered) based on an exchange ratio of 0.1620 of a Valens common share (a “Valens Share”) in exchange for each Common Share held.
In addition, Valens “cashed out” all outstanding in-the-money Citizen Stash options for their “in-the- money amount” and paid for the same by the issuance of Valens Shares (based on the same indicative trading prices).
The Arrangement is more particularly described in the information circular of Citizen Stash dated September 28, 2021 (the “Circular”) in connection with a special meeting of the securityholders of Citizen Stash. The Circular, the Arrangement Agreement, and other related documents have been filed on SEDAR and are available under Citizen Stash’s profile at www.sedar.com
Item 3 – Interest in Securities of the Reporting Issuer
3.1 State the designation and number or principal amount of securities acquired or disposed of that triggered the requirement to file the report and the change in the acquiror’s securityholding percentage in the class of securities.
Pursuant to the Arrangement, Valens acquired 106,265,303 Common Shares, representing all of the issued and outstanding Common Shares.
3.4 State the designation and number or principal amount of securities and the acquiror’s securityholding percentage in the class of securities, immediately before and after the transaction or other occurrence that triggered the requirement to file this report.
Immediately before the completion of the Arrangement, Valens did not own or control any Common Shares. Immediately after the completion of the Arrangement, Valens owned 106,265,303 Common Shares, representing all of the issued and outstanding Common Shares.
3.5 State the designation and number or principal amount of securities and the acquiror’s securityholding percentage in the class of securities referred to in Item 3.4 over which
(a) the acquiror, either alone or together with any joint actors, has ownership and control,
Pursuant to the Arrangement, Valens acquired, and following the completion of the Arrangement, Valens now directly has ownership or control of 106,265,303 Common Shares, representing all of the issued and outstanding Common Shares.
Item 4 – Consideration Paid
4.1 State the value, in Canadian dollars, of any consideration paid or received per security and in total.
Pursuant to the Arrangement, former holders of Common Shares received 0.1620 of a Valens Share for each Common Share held. In addition, the outstanding in-the-money Citizen Stash options, were transferred to Citizen Stash for their in-the-money amount, paid in Valens Shares.
Based on the closing price of the Valens Shares on the TSX-V on November 5, 2021 of C$1.76, being the last trading day prior to the completion of the Arrangement, the value of the consideration per Common Share was C$0.285 and the total consideration for the acquisition was C$30,298,363, all payable in Valens Shares.
-----------------------------------------------------------------------------------
So it seems like 0.1620 X 106,265,303 = 17,214,979 Valens shares. So far.
With Valens shares outstanding about 185M.
That's about a 9.3% dilution for an additional 12.6M CAD in annual revenue to the already 93.1M CAD projected for this fiscal year or 13.55% added in annual revenue run rate.
And from the last fins report, CS operates with an 84% gross margin.
Valens should be able to double the output of CS within the first year IMHO.
It seems like a good deal with great contribution overall.
The Valens Company Shares Surge On $54.3M Citizen Stash Cannabis Acquisition
11/8/21 11:44 AM ET (Benzinga)Print
The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) revealed Monday it has completed its previously announced acquisition of Citizen Stash Cannabis Corp. (TSXV: CSC) (OTCQB: EXPFF) (FRANKFURT: MB31) for $54.3 million in stock.
Under the terms of the arrangement, Citizen Stash shareholders are entitled to 0.1620 of a Valens common share for each Citizen Stash Common Share held. The outstanding in-the-money Citizen Stash options were transferred to Citizen Stash in exchange for the applicable entitlement to the in-the-money amount for such options, payable in Valens Shares, net of applicable withholdings.
"With the completion of this strategic acquisition, Valens is poised to strengthen its position in the recreational market with the ownership of premium cannabis genetics, strains and products," Tyler Robson, CEO and chair of Valens' board of directors. "As we enter the premium flower category, Valens now boasts a manufacturing and brands portfolio that focuses on two high growth categories of premium flower and 2.0 products. This is just the first step into the premium cannabis product category and consumers can stay tuned to see how we further leverage Citizen Stash's asset-light genetics portfolio to launch new innovative products in the future."
The acquisition was approved at the special meeting of Citizen Stash security holders held on November 1, 2021, and by the Supreme Court of British Columbia on November 4, 2021. As a result of the closing, Citizen Stash common shares are expected to be delisted from the TSX Venture Exchange at the close of trading on or about November 12, 2021.
Do you know how many Valens shares were traded for this company ? The total amount.
Just trying to keep track of the shares outstanding.
Thanks.
They said something about CS's SEDAR filings.
The Valens Company scales up and begins to show what it was 'made to do'
Snapshot
The Valens Company closes C$54.3M acquisition of Citizen Stash Cannabis in all-stock deal
The Valens Company receives ‘positive’ buy rating from Stifel following two acquisitions
The Valens Company signs a key deal with Aurora Cannabis while also entering Quebec Market
https://www.proactiveinvestors.com//companies/news/913854/the-valens-company-scales-up-and-begins-to-show-what-it-was-made-to-do-913854.html?SNAPI
Another step taken on the path.
THE VALENS COMPANY COMPLETES ACQUISITION OF LEADING, PREMIUM CRAFT LICENSED PRODUCER, CITIZEN STASH CANNABIS CORP.
https://thevalenscompany.com/press-releases/the-valens-company-completes-acquisition-of-leading-premium-craft-licensed-producer-citizen-stash-cannabis-corp/
Kelowna, and Vancouver, B.C., November 8, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”) and Citizen Stash Cannabis Corp. (“Citizen Stash”) (formerly Experion Holdings Ltd.) (TSXV: CSC) (OTCQB: EXPFF) (FRANKFURT: MB31) are pleased to announce the successful completion of the previously announced plan of arrangement (the “Arrangement”), whereby Valens has acquired all of the issued and outstanding common shares and other securities of Citizen Stash (the “Citizen Stash Common Shares”) in an all share transaction, effective November 8, 2021.
Under the terms of the Arrangement, Citizen Stash shareholders are entitled to 0.1620 of a Valens common share (“Valens Share”) for each Citizen Stash Common Share held. The outstanding in-the-money Citizen Stash options were transferred to Citizen Stash in exchange for the applicable entitlement to the in-the-money amount for such options, payable in Valens Shares, net of applicable withholdings. Further, each Citizen Stash restricted share unit outstanding immediately prior to completion of the Arrangement (whether vested or unvested) was fully vested and transferred to Citizen Stash and cancelled in consideration for the issuance by Citizen Stash of a Citizen Stash Common Share that entitled the holder to 0.1620 of a Valens Share pursuant to the Arrangement, net of applicable withholdings. Lastly, Hillcrest Merchant Partners Inc. (“Hillcrest”) received 1,519,306 Citizen Stash Common Shares that entitled Hillcrest to 0.1620 of a Valens Share per Citizen Stash Common Share.
“With the completion of this strategic acquisition, Valens is poised to strengthen its position in the recreational market with the ownership of premium cannabis genetics, strains and products,” said Tyler Robson, Chief Executive Officer and Chair of the board of directors of The Valens Company. “As we enter the premium flower category, Valens now boasts a manufacturing and brands portfolio that focuses on two high growth categories of premium flower and 2.0 products. This is just the first step into the premium cannabis product category and consumers can stay tuned to see how we further leverage Citizen Stash’s asset light genetics portfolio to launch new innovative products in the future.”
The Arrangement was approved at the special meeting of Citizen Stash securityholders held on November 1, 2021, and by the Supreme Court of British Columbia on November 4, 2021. As a result of the closing of the Arrangement, the Citizen Stash Common Shares are expected to be delisted from the TSX Venture Exchange at the close of trading on or about November 12, 2021.
Valens intends to cause Citizen Stash to apply to the relevant regulatory authorities to cease to be a reporting issuer in the provinces of Canada in which it is a reporting issuer, such provinces being British Columbia, Alberta and Ontario.
“I would like to thank all the Citizen Stash shareholders for their support over the years. Going forward as a combined company, Citizen Stash and Valens are well-positioned to be the leading cannabis company in Canada and beyond. It has been an honour to serve our shareholders and I look forward to the next chapter,” commented Jarrett Malnarich, Chief Executive Officer of Citizen Stash.
Further information on the Arrangement is set out in the management information circular of Citizen Stash dated September 28, 2021, which is filed under Citizen Stash’s profile on the SEDAR website at www.sedar.com.
Valens continues to be in compliance with legal and regulatory requirements with respect to the cultivation, distribution, sale or possession of cannabis, to the extent applicable to the activities being undertaken by the Company in the jurisdictions in which it operates, being Canada, the United States, and Australia.
ADVISORS
Stikeman Elliott LLP acted as legal counsel to The Valens Company. Fasken Martineau DuMoulin LLP acted as legal counsel to Citizen Stash, and Hillcrest and Evans & Evans, Inc. acted as financial advisors to Citizen Stash.
ABOUT THE VALENS COMPANY
The Valens Company is a leading cannabis consumer products company, with significant expertise in manufacturing cannabinoid-based products and a mission to bring the benefits of cannabis to the world. Valens provides proprietary cannabis processing services and best-in-class product development, manufacturing, and commercialization of cannabis consumer packaged goods. Valens’ high-quality products are formulated for the recreational, health and wellness, and medical consumer segments and are offered across all cannabis product categories, with a focus on quality and product innovation. Valens also manufactures, distributes, and sells a wide range of CBD products in the United States through its subsidiary Green Roads, and distributes medicinal cannabis products to international markets through its subsidiary Valens Australia. In partnership with brand houses, consumer packaged goods companies and licensed cannabis producers around the globe, Valens continues to grow its diverse product portfolio in alignment with evolving cannabis consumer preferences. Through Valens Labs, Valens is setting the standard in cannabis testing and research and development with Canada’s only ISO17025 accredited analytical services lab, named The Centre of Excellence in Plant-Based Science by partner and scientific world leader Thermo Fisher Scientific. Discover more on The Valens Company at https://thevalenscompany.com.
ABOUT CITIZEN STASH CANNABIS CORP.
Citizen Stash is the parent company of Experion Biotechnologies Inc., a Health Canada licensed cultivator and processor of cannabis, based in Mission, BC.
Citizen Stash is best known as a rapidly growing adult-use premium cannabis brand offered nationally in nine provinces and territories. Citizen Stash has invested and developed a portfolio of premium cannabis genetics, strains and products with a unique growth strategy incorporating a highly scalable aggregation and distribution business model to drive revenues across its national sales network.
Citizen Stash trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol “CSC” on the OTCQB Venture under the symbol “EXPFF” and on the Frankfurt Stock Exchange under the symbol “MB31”.
For further information, please visit Citizen Stash’s website at https://www.citizenstash.com.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Jeff Fallows
The Valens Company
Investor Relations
ir@thevalenscompany.com
1 647.956.8254
KCSA Strategic Communications
Phil Carlson / Elizabeth Barker
VLNS@kcsa.com
1 212.896.1233 / 1 212.896.1203
Media
KCSA Strategic Communications
Anne Donohoe
adonohoe@kcsa.com
1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS
This news release includes certain statements that constitute “forward-looking statements”, and “forward-looking information” within the meaning of applicable securities laws collectively “forward-looking statements”. These include statements regarding Valens’ and Citizen Stash’s intent, or the beliefs or current expectations of the officers and directors of Valens’ and Citizen Stash’s (the “Companies”) for Valens post-closing. When used in this news release, words such as “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “forward”, “future”, “outlook”, “plan”, “intend” and similar expressions are intended to identify these forward-looking statements as well as phrases or statements that certain actions, events or results “could”, “may”, “should”, “will”, “would” or the negative connotation of such terms. As well, forward-looking statements may relate to future outlook and anticipated events, such as delisting the Citizen Stash Common Shares from the TSX Venture Exchange, submitting an application for Citizen Stash to cease to be a reporting issuer and the market position of Valens as a result of the Arrangement. These forward-looking statements involve numerous risks and uncertainties, including those relating to required regulatory approvals and such other risk factors detailed from time to time in the Companies’ public disclosure documents including, without limitation, those risks identified in Valens’ annual information form for the year ended November 30, 2020, which is available on SEDAR at www.sedar.com, and Citizen Stash’s management’s discussion and analysis for the year ended November 30, 2020, which is available on SEDAR at www.sedar.com. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Forward-looking statements speak only as of the date those statements are made. Except as required by applicable law, the Companies assume no obligation to update or to publicly announce the results of any change to any forward-looking statement contained or incorporated by reference herein to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements. If either of the Companies updates any one or more forward-looking statements, no inference should be drawn that the company will make additional updates with respect to those or other forward-looking statements. All forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Probably happens with regards to NASDAQ.
Yep, I remember. I guess I still feel they are hunting for their place in the sector. I do understand it’s a hard place to get traction.
That being said things are going far slower in general than I thought they would. The reasons are clear and not their fault.
We still have the R/S which was approved May 25th. They have yet to play that card.
From the filings:
“Approval of Share Consolidation
A resolution authorizing the board of directors of the Company (the “Board”), in its sole
discretion, to consolidate the common shares of the Company (“Common Shares”) on the
basis of a consolidation ratio to be selected by the Board, provided that such ratio is within the
range of 1 new Common Share for every 1.5 to 3 old Common Shares and to amend the
Company’s articles accordingly”
When that is done it should lead the way to the NAS cap market which at this stage is what they need.
But we’ll have to see how it all plays.
It's another stepping stone. The circle of events has coming all the way around. Remember when the extractors were going to be an essential service provider to the cannabis industry?
Valens has evolved that notion.
Perhaps it can be dubbed, Valens 3.0
It's a nice step forward and whose to say it won't lead to something bigger down the road.
THE VALENS COMPANY AND AURORA CANNABIS ANNOUNCE MANUFACTURING AGREEMENT
New Seasonal Offerings Slated for November Release
The Valens Company@TheValensCo - The Valens Team would like to congratulate
@greenroadsworld on hiring their new VP of Marketing and Business Development, Antoine Awwad!
For more about Antoine, read the press release here:
https://globenewswire.com/news-release/2021/10/19/2316579/0/en/Green-Roads-Hires-New-VP-of-Marketing-and-Business-Development.html
$VLNS $VLNCF
#CannabisNews
globenewswire.com
Green Roads Hires New VP of Marketing and Business Development
DEERFIELD BEACH, Fla., Oct. 19, 2021 (GLOBE NEWSWIRE) -- Green Roads, one of the leading brands producing wellness products utilizing hemp-derived CBD,...
11:32 AM · Oct 19, 2021·Twitter Web App
New 12 months fwd PT average: CAD $3.88 or $3.13USD
https://www.marketbeat.com/stocks/OTCMKTS/VLNCF/price-target/?RegistrationCode=SocialMedia-StockTwits&utm_source=GeneralSocialMedia&utm_medium=Social&utm_campaign=SocialMedia
Good find jefra, THE VALENS COMPANY ANNOUNCES ENTRY TO QUÉBEC MARKET
Québec marks Valens’ 8th provincial distribution supply agreement
The Valens Company products will soon be available to over 95% of the Canadian population1
https://thevalenscompany.com/press-releases/the-valens-company-announces-entry-to-quebec-market/
Kelowna, B.C., October 18, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a leading manufacturer of cannabis products, today announced that it has executed a letter of intent with Société québécoise du cannabis (“SQDC”) for the distribution of its cannabis products into Québec. This marks a significant milestone for Valens entering the third-largest cannabis market in Canada, representing approximately 15% of Canadian cannabis retail sales2 in the country and approximately 22% of the Canadian population.3
“We are pleased to announce the entrance into the Québec marketplace,” said Tyler Robson, Chief Executive Officer, Co-Founder, and Chair of The Valens Company. “This an important milestone for The Valens Company with a national distribution platform that now makes our products accessible to over 95% of the Canadian population. This letter of intent showcases our innovation and consumers should expect new product offerings coming to the Québec marketplace soon. We expect our products to be first available at the beginning of 2022.”
At Valens, it’s Personal.
1 Statistics Canada
2 Statistics Canada, July 2021 cannabis retail sales
3 Statistics Canada
ABOUT THE VALENS COMPANY
The Valens Company is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. The Valens Company is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. The Valens Company currently offers a wide range of product formats, including tinctures, two-piece caps, soft gels, oral sprays and vape pens as well as beverages, concentrates, topicals, edibles, injectables, natural health products and has a strong pipeline of next-generation products in development for future release. Finally, The Valens Company’s wholly-owned subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. For more information, please visit https://thevalenscompany.com. The Valens Company’s investor deck can be found specifically at https://thevalenscompany.com/investors/.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Jeff Fallows
The Valens Company
Investor Relations
ir@thevalenscompany.com
1 647.956.8254
KCSA Strategic Communications
Phil Carlson / Elizabeth Barker
VLNS@kcsa.com
1 212.896.1233 / 1 212.896.1203
Media
KCSA Strategic Communications
Anne Donohoe
adonohoe@kcsa.com
1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS
All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, economic conditions and anticipated courses of action.
The risks and uncertainties that may affect forward-looking statements include, among others, regulatory risk, United States border crossing and travel bans, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, reliance on a single facility, limited operating history, vulnerability to rising energy costs, unfavourable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
The Valens Company Announces Entry to Québec Market
Kelowna, B.C., October 18, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a leading manufacturer of cannabis products, today announced that it has executed a letter of intent with Société québécoise du cannabis (“SQDC”) for the distribution of its cannabis products into Québec. This marks a significant milestone for Valens entering the third-largest cannabis market in Canada, representing approximately 15% of Canadian cannabis retail sales2 in the country and approximately 22% of the Canadian population.3
“We are pleased to announce the entrance into the Québec marketplace,” said Tyler Robson, Chief Executive Officer, Co-Founder, and Chair of The Valens Company. “This an important milestone for The Valens Company with a national distribution platform that now makes our products accessible to over 95% of the Canadian population. This letter of intent showcases our innovation and consumers should expect new product offerings coming to the Québec marketplace soon. We expect our products to be first available at the beginning of 2022.”
At Valens, it’s Personal.
Yes I do. Just having a little fun with the "speak".
Some well-reasoned thoughts in there. The way you ended it reminds me of a line from Caddy Shack :
An amusing analysis, Jim. but a sad one. Glad you prefaced things by telling us you bought an additional 22,000 shares. Obviously, you still believe in the company despite all its "corporate speak".
I thought it was a disappointing Earnings Call. The fact that they are waiting for someone in Italy to fix some machine is a joke. I would have bought more yesterday also, but I have a maximum number of shares already. I was hoping to get to the NASDAQ without a R/S, but that’s looking unlikely now unless they have some major partner on board when the Pommies Facility gets their permits and opens up for business. I hate that my investment depends on a bunch of politicians in the US, especially in the current political climate. Also, before I was worried about Valens being bought out, but now I wouldn’t mind so much if we could get at least $4 per share. A couple months ago I thought we might reach $8-$10 in 12 months, but now I think we are looking at 24-36 months for that unless we get a big CPG partner. I still think Valens is my best chance of getting rich. I just hope it will happen while I am still young enough to enjoy it. Unfortunately I’m not that young.
I’m going to have a little fun with “corporate speak “from the CC. All below is IMO. Their statements followed by my opinion. And to be clear I’m not down on the company, it’s a process and I’m aware of that, in fact I bought 22k more shares yesterday {low 1.50’s, come on now, it’s worth all of that and currently were in the oversold area} just thought I would break down the CC in my view.
So, we start off with the CEO stating:
“First of all, I want to start by saying we acknowledge it was a challenging quarter”
It’s nice you are acknowledging the company failings.
“So, it's not that we're not doing exactly what we said we're going to, we are just taking a little bit longer than expected”
Ah, way to back out of the accountability by using the old we ran out of time to make it happen last qt. And it opens this qt to a whole new review.
“Our motto has always been fewer, bigger, better”
No, it hasn’t.
“We are still running under the model fewer, bigger, better, and we're also kind of adding a new one, create, build and optimize”
Ah a new carrot to follow, cover them bases.
“we're now looking at optimization”
Are you now, well better late than never.
“Again, I don't think anyone can touch us on the market innovation”
Pat on the back, I guess. Any money in that?
“One of the big things you'll see out of Valens are infused pre-roll SKUs. I don't think anyone else can touch our capabilities there”
And what’s that worth? What percent of the market do you own? But it does give them something to point out.
“We are very pleased with the progress we have made on our strategic initiatives”
And when will that progress turn into profits, that would make shareholders pleased.
“not to suggest we are satisfied with the top line revenue performance”
Well, stop the presses, it’s ok as nobody is suggesting you were, I know the shareholders are not.
“The growth phase in which we intend to target accelerated expansion of market share”
When you get past intend and get to did, then THAT will be worth mentioning
“other activities will be realized over much of the 2022 fiscal year before we turn our focus to the final step in our strategic plan, the optimization phase”
other activities? before we turn our focus? the optimization phase? When 2023?
“Going forward, we will remain focused on executing and leveraging both our relationships and manufacturing expertise”
As opposed to what?
“we anticipate receiving Health Canada's approval to begin manufacturing and distributing our cannabis 2.0 and 3.0 products in the near-term”
The wait is nearly over, right?
“We have consistently messaged since the beginning of the year that Valens will exit 2021 as a very different company than when we entered”
And when does the profit, growth start? See qt’s for failings.
“The future prospects for Valens have never been better”
Now here is a phase that can be used every year, when they don’t use it run for the hills
“Valens owns Green Roads, a top 10 U.S CBD brand which has shipped over 10,000 locations and has a robust e-commerce business”
And what are those top 10 CBD brand numbers in regards to sales, and profit?
“We believe that California is a great roadmap for the future growth”
You and every other company
“we are diligently pursuing the process of completing our listing on NASDAQ, and anticipate we will commence trading on the exchange before the end of the year”
Alright, lets lay this out correctly. If approved by the NAS they will have to, first get over 2.00 a share, then not let it go under 2.00 for a period of 60 days. This under rule 5505 which is the only one they can qualify under for the NAS cap market. That’s a short window, but a nice carrot to follow.
“moving on to our third quarter 2021 financial results, net revenue increased by 15.8% to $21 million for the 3 months ended August 31”
21 mil in revenue. Yep, that’s light. More or less flat year over year.
“Operating expenses were $19.5 million compared to $50 million in the second quarter of 2021 and $10.7 million in the same period last year”
So, year over year OE doubled, now I see where that optimization comes in
“Valens ended the third quarter 2021 with an adjusted EBITDA of negative $6.2 million, compared to negative $5 million for the quarter ended May 31”
So, only a 20 percent increase in losses, we will call that NOT well done
“We are looking forward to the fourth quarter 2021 and fiscal 2022 where we anticipate an increase to recurring lines of revenue”
??? gee I was kind of looking at that all along, so I guess were on the same page now.
“From an inventory standpoint, the company has $29.6 million on hand as of August 31, 2021”
So, we have enough there to cover more than a qt’s worth, does that mean you can shutter down for any need to increase inventory for the next qt? Question what is the shelve life on that product?
“The cycle of new product launches and changes in product mix can be expected to cause the near-term volatility in inventory balances and the quarters ahead, but should be expected to stabilize once customer demand and sales patterns achieve a more normalized and rhythmic sales”
So, when should we expect it to be normalized? . . .I thought you would be talking ramping up .
it is to laugh. Corporate speak. A lot of dog and pony, but to their credit not a lot of smoke and mirrors.
IMO this company will not be able to make a major move until they get into the US market with sales in force. They will and I’ll be here to collect on that. All IMO
You're very welcome.
Thanks for posting that.
CEO Tyler Robson on Q3 2021 Results - Earnings Call Transcript
Oct. 14, 2021 5:19 PM ETThe Valens Company Inc. (VLNCF)
The Valens Company Inc. (OTCQX:VLNCF) Q3 2021 Earnings Conference Call October 14, 2021 11:00 AM ET
Company Participants
Tyler Robson - Chairman and CEO
Sunil Gandhi - CFO
Jeff Fallows - President
Everett Knight - Executive VP, Corporate Development and Capital Markets
Conference Call Participants
Andrew Partheniou - Stifel
Frederico Gomez - ATB Capital Markets
Shaan Mir - Canaccord Genuity
John Chu - Desjardins Capital Markets
Neal Gilmer - Haywood Securities Inc.
Gerald Pascarelli - Cowen
Operator
Hello, and welcome to The Valens Company’s Third Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Everett Knight, Executive Vice President of Corporate Development and Capital Markets of The Valens Company. Everett, please go ahead.
Everett Knight
Thank you, operator. Good morning and welcome to The Valens Company’s third quarter 2021 financial results conference call for the period ended August 31, 2021. A replay of this call will be archived on the Investor Relations section of The Valens Web site at thevalenscompany.com/investors.
Before we begin, please let me remind you that during the course of this conference call, Valens' management may make statements including with respect to management’s expectations or estimates of future performance. All such statements other than statements of historical facts constitute forward-looking information or forward-looking statements within the meaning of the applicable securities laws and are based on expectations, estimates and projections as of the date hereof.
Specific forward-looking statements include without limitation all disclosures regarding future results of operations, economic conditions and anticipated courses of actions. These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. For more information on the company’s risks and uncertainties related to forward-looking statements, please refer to our latest Annual Information Form and our latest Management’s Discussion and Analysis otherwise known as the MD&A, each as filed with the Canadian Securities regulatory authorities at sedar.com or on The Valens Company’s Web site at thevalenscompany.com.
The risks described in the Annual Information Form, which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed by the forward-looking information or forward-looking statements are hereby incorporated by reference herein. Although these forward-looking statements reflect management’s current beliefs and reasonable assumptions based on the current available information to management as of the date hereof, we cannot be certain on the actual results that would be consistent with the forward-looking statements in the future. We caution you not to place undue reliance upon such forward-looking results. For any reconciliation of non-GAAP measures and discussed, please consult our latest MD&A as filed on SEDAR.
Now, joining me on the call today are Mr. Tyler Robson, Chief Executive Officer; Mr. Sunil Gandhi, Chief Financial Officer; and Mr. Jeff Fallows, President.
With that, I would now like to hand the call over to Tyler.
Tyler Robson
Thank you, Everett, and welcome to everyone that has joined our earnings call to discuss our results for the third quarter ended August 31, 2021. I'll start by giving a recap of our most recent highlights and review all we’ve accomplished over the last year before Jeff goes into more detail on our operational and strategic accomplishments from the quarter and Everett discusses our corporate development and capital markets activities. Sunil will also give an overview of our financials also for the quarter.
First of all, I want to start by saying we acknowledge it was a challenging quarter that we're not trying away from, but at the end of the day the business is stronger, and we did make strategic initiatives to move the business ahead.
I will probably start by talking about some of the challenges first, including the supply chain. I think we all know COVID has been a challenging time for us. But we're still making strides ahead. And as we continue to strategically move the business, there's been some delays in manufacturing capabilities or even automation.
So, it's not that we're not doing exactly what we said we're going to, we are just taking a little bit longer than expected, whether it's delays in physical equipment coming into K2 or even getting tapped in from Europe to commission some of the equipment. So, we see some delays, but we're still extremely confident on where the business is going.
Just to echo again how we are confident; we obviously saw strong growth in the quarter as evidence of bounce successfully transitioning into a B2C and positioning one of the fastest growing LPs in Canada. B2C revenue lines represented roughly 50% of net revenue in Q3 and we expect this to continually grow. Provincial sales growth of 20% quarter-over-quarter supported by 76.5% increase in consumption levels at retail, with outpacing our competitors.
Our motto has always been fewer, bigger, better, and I think we are seeing that. So again, I want to make sure people understand the difference between a SKU and a listing. We are still running under the model fewer, bigger, better, and we're also kind of adding a new one, create, build and optimize. As we are building new markets into B2C we're now looking at optimization not only through optimization of automation, but also looking at delisting a few non-moving velocity SKUs and really doubling down on a few of the big ones.
Also, when you look at a few of the accomplishments in the quarter, looking at the acquisitions of Verse and the pending acquisition of Citizen Stash with the [indiscernible] down in the bar category. We still wholeheartedly believe those were strategic moving. First, amplifies the Valens provincial listings. And for the example of BC God Bud is a top five seller in flower SKU during September in Alberta, Ontario, and BC according to Hifyre.
Another thing I'll touch on briefly is just the market innovation. Again, I don't think anyone can touch us on the market innovation for not only what's already launched, what's coming in the next few weeks and kind of some of the products we're working on. One of the big things you'll see out of Valens are infused pre-roll SKUs. I don't think anyone else can touch our capabilities there. We've seen a few infused pre-rolls that are [indiscernible] sub parts of the premium category and you're going to see multiple coming out of Valens.
So, you'll see one of the [indiscernible] you'll see one with live resin, and then you will see one with [indiscernible], but not only we will see a branded one, you'll see some B2B partnerships start to leak out in some of those verticals as well. Also, again from the last call, our B2B relationships are stronger than ever, and you'll see some of those. So obviously saw the six relationships go public, you're going to see a few more coming very, very soon.
For now, I'll turn the call over to Jeff Fallows, President of Valens Company to dive into the deeper operational achievements, the strategic initiatives.
Jeff Fallows
Thanks, Tyler. We are very pleased with the progress we have made on our strategic initiatives. And I've taken some tough, but needed first steps to transform Valens into a leading cannabis consumer packaged goods company. In the third quarter, we experienced strong growth in product sales on a sequential and year-over-year basis, resulting in a 20% increase in net provincial sales and a 76.5% increase in consumption level retail sales according to Hifyre.
I highlight this growth in provincial sales in the midst of a tough market backdrop, not to suggest we are satisfied with the top line revenue performance in the quarter, but as a clear indication of the mechanisms or the mechanics of our previously discussed strategic plan, including differentiated launch, growth and optimized phases is working and has only just started to produce the results we envisioned at the outset.
Our launch phase has generated deep and broad SKU penetration at the provincial level, with our provincial listings increasing by 37.1% to 181 in Q3 2021, compared to 132 in the second quarter. 27 additional provincial listings were achieved since the end of Q3 2021 and another 40 provincial listings will be added from the acquisition of the Citizen Stash amounting to pro forma 248 provincial listings.
We believe this industry leading growth has successfully set the stage for the next phase in our strategic plan. The growth phase in which we intend to target accelerated expansion of market share, strong revenue growth and margin improvement. As we enter this phase, we have already initiated both process and operational changes to ensure we are able to efficiently service the anticipated increase in demand.
In addition, we have repositioned our B2B business to focus on deeper relationships with larger partners and we'll be making targeted investments into automated equipment to handle both the growth and volumes and support a key growth phase objective and increase in margins. We anticipate the benefits from these and other activities will be realized over much of the 2022 fiscal year before we turn our focus to the final step in our strategic plan, the optimization phase.
Touching on our U.S strategy and green Roads, with slightly more than 2 months of revenue accounted for during the third quarter of 2021 and revenue contribution of $4.7 million, we believe the U.S CBD segment will be a long-term growth engine for Valens.
Going forward, we will remain focused on executing and leveraging both our relationships and manufacturing expertise to drive both channel and volume growth for new and existing Green Roads products in the U.S., Canada and internationally. We've witnessed the remarkable demand and popularity for products across the CBD and cannabinoid-based wellness space and are fortunate to have gained a piece of this significant market.
While our top priority remains building our Canadian and U.S domestic footprint, we continue to make capital and asset like strategic advances to expand our international opportunities. Indicative of this strategy, we recently entered into a long-term partnership with Australia's Epsilon Healthcare Limited. This exclusive manufacturing partnership will give Valence the access to Epsilon's Good Manufacturing Practices or GMP facility in Australia.
The key benefit of this partnership will be to accelerate our growth in Australia, while also giving us access to EU GMP grade products for export to key international markets, such as Latin America, Europe, the U.K and the Asia Pacific region. Entering this partnership with Epsilon is another milestone for Valens and delivers on a key and promised deliverable in 2021. The agreement also reaffirms Valens positioning as a leading global CPG cannabis manufacturer.
Additionally, we continue to advance the [indiscernible] facility in the GTA, as we anticipate receiving Health Canada's approval to begin manufacturing and distributing our cannabis 2.0 and 3.0 products in the near-term. We continuously strive to grow our distribution network in order to meet the market demand across Canada and Valens currently manufactures products to serve six provinces and one territory.
During the third quarter, we made significant progress in our efforts to bring our innovative product portfolio to Quebec, a key market that represents nearly 15% of Canadian cannabis retail sales. Specifically, volunteers received authorization from Amp to contract and subcontract with a public body in Quebec. Amp's authorization is set in motion Valens ability to become a registered vendor to supply goods and services in Quebec.
We have consistently messaged since the beginning of the year that Valens will exit 2021 as a very different company than when we entered. Implicit in that assertion was our belief that at the end of the year we would be best positioned to service both our customers and consumers grow market share, drive towards profitability and be a leader in the industry.
We believe Valens is poised to enter 2022 from a position of strength with a balance sheet that allows us to operate in a nimble manner in order to capitalize on future M&A opportunities and organic growth. The future prospects for Valens have never been better, and we are excited about the opportunities that lie ahead both for the company and our shareholders.
I'll now turn the call over to Everett to discuss industry trends and capital markets activities. Everett?
Everett Knight
Thank you, Jeff. As Tyler and Jeff have made clear, we are a very different company than we were at the beginning of 2021. To illustrate this, I wanted to start with five quick facts that we believe only scratches the surface on putting into context the transformation Valens has undergone. One, roughly 50% of our sales in Q3 2021 were made up of U.S CBD and Canadian provincial sales, where both segments were largely non-existent last year.
Two, Valens owns Green Roads, a top 10 U.S CBD brand which has shipped over 10,000 locations and has a robust e-commerce business, whereas at the start of this year, Valens did not have any U.S operations. Three, we have now shipped well over a million units to seven provinces and territories in 2021, showing the power of our team and our platform where last year we only manufactured hundreds of thousands of units and shipped to four provinces.
Four, edible provincial listings made up roughly 25% of our overall listings at the end of the quarter where we had zero at the beginning of the year. Five, Valens successfully launched the top five dried cannabis SKU with Verse, without cultivating cannabis, were a year ago this wasn't even a product category we offered it.
We believe our joint B2C and B2B platform that mirrors large CPG companies offers a unique opportunity for investors to gain access to higher margin branded products and increased utilization through manufacturing for third parties, while leveraging the sophisticated platform we have built today. The edibles category is going to continue to be a focus for us, as seen by the innovation products that we have launched across the category including Very Cherry chocolate, Covered Gummies, Vacay Ice Cream Sandwich Cookies & Cream Chocolate Bites, and the Chocolate Peanut Butter Cup just to name a few.
In Canada, the edibles category is one of the fastest growing, having increased retail sales 123% since Q3 2020 and now represents 5.1% of the market as of Q3 2021 in Alberta, Ontario and BC according to Hifyre. With our recently announced agreement to acquire Citizen Stash and acquisition of Verse, we have gained exposure to a much larger share of the markets operating in two of the best segments for profitable growth, Cannabis 2.0 products and premium dried flower.
In Canada today, extract based products make up approximately 30% of the sales compared to California more sophisticated cannabis market where they make up almost 50% of sales. This growth is also illustrated in premium cannabis with the Canadian premium cannabis making up 14% of the market, where in California this makes up 31% of the market today.
We believe that California is a great roadmap for the future growth and upon closing these two acquisitions, we believe we have two brands that are well-positioned with leading provincial listings and market share. Furthermore, the pending strategic acquisition of Citizen Stash is expected to provide accelerated entry into the premium flower vertical with an asset light approach.
Citizen Stash is a world class genetics company that will bring to Valens a network of contract growers that is a very similar model to other CPG industries interacting with agriculture. Citizen Stash is expected to bring 40 plus provincial listings to our platform, increasing our pro forma provincial listings to 248. Valens is now present in seven provinces and territories and this will grow to nine across Canada, assuming the successful close of the Citizen Stash acquisition.
Additionally, our acquisition of Verse which closed subsequent to the quarter with the natural progression of our active partnership, which has allowed Valens full access to its broad product portfolio offered across the Cannabis 1.0 and 2.0 categories. We view this acquisition of Verse and the pending acquisition of Citizen Stash once completed to strongly position Valens branded products across the value chain and showcases Valens low-cost manufacturing platform. We anticipate both acquisitions to be accretive to Valens.
We have remained focused on finding strategic M&A opportunities that would complement our longer term vision. With the U.S being at the top of our list, we are working to provide our shareholders [ph] with greater exposure to this massive market in a variety of strategic verticals. In addition, we are constantly monitoring the Canadian international markets for growth and synergies.
Alongside all of these initial achievements, and as we've recently announced, despite a longer-than-expected timeline due to the backlog as a result of the pandemic, we are diligently pursuing the process of completing our listing on NASDAQ, and anticipate we will commence trading on the exchange before the end of the year. The NASDAQ listing is expected to provide Valens with greater trading liquidity, while also allowing for a broader base of institutional investors.
With that, I'll now turn the call over to Sunil to run through the financial results for the third quarter of fiscal 2021.
Sunil Gandhi
Thanks, Everett. Now moving on to our third quarter 2021 financial results, net revenue increased by 15.8% to $21 million for the 3 months ended August 31, 2021 compared to $18.1 million in the same period of fiscal 2020. The increase in revenue was primarily driven by cannabis operations revenue, and more specifically by an increase of $4.5 million or 29.7% in product sales. Offsetting this increase was the continued decline in revenue associated with toll extraction, co-packing services and bulk oil sales as the company continues to execute on a strategy of transitioning away from a focus on toll processing to a product development and manufacturing company.
Gross profit margins for the third quarter were 26.8% compared to 22% in the second quarter of 2021. The improved gross margin at our most recent quarter compared to the previous quarter was mainly attributable to the higher margin profile in the Green Roads business. The margins in the Canadian business continue to perform below our long-term expectations due to the inherent inefficiencies of new production processes, especially those associated with new product launches.
In addition, throughout the last year, Valens has experienced supply chain challenges and chronic labor shortages in the market, which ultimately drive-up labor costs. It is expected though the gross profit will continue to improve over time, as we optimize the product mix, production volumes increase and processes are made more efficient through automation initiatives.
Operating expenses were $19.5 million compared to $50 million in the second quarter of 2021 and $10.7 million in the same period last year. The increase in operating expenses compared to the previous quarter is predominantly due to the inclusion of the Green Roads business, along with increased D&O insurance costs, covering our U.S operations serving as a secondary factor. And all other remaining expenses actually coming in slightly lower than the previous quarter.
Valens ended the third quarter 2021 with an adjusted EBITDA of negative $6.2 million, compared to negative $5 million for the quarter ended May 31 as the increased revenues and gross margins were offset by higher operating expenses. We do remain confident that our transition to a global product development and manufacturing platform and our acquisitions of Verse Cannabis and the completion of the pending Citizen Stash acquisition will result in positive performance in the coming quarters.
We are looking forward to the fourth quarter 2021 and fiscal 2022 where we anticipate an increase to recurring lines of revenue as a result of our focus on capturing additional market share and increasing our listing base. The company will continue to leverage our updated business model as well as the pipeline of new partnerships, accretive potential acquisitions and global expansion opportunities to create substantial value for all shareholders and stakeholders.
From a balance sheet perspective, Valens continues to manage its working capital balances to ensure a strong balance sheet position. As of August 31, 2021, overall receivables on the balance sheet were $41.1 million, which included $34.5 million of trade receivables from customers with the balances being made up of other non-trade receivables. The balance of trade receivables as of August 31, actually declined by 9% for the balance outstanding at the end of the previous quarter, with the inclusion of receivables from Green Roads serving as a partial offset.
In addition, Valens has subsequently collected and has trade accounts payable outstanding with the same partners representing 68% of the total accounts receivable balance, which is outstanding as of August 31, 2021. As the revenue mix continues to move towards increased sales with provincial and B2C customers with more regimented and favorable payment terms relative to B2B LP customers, we do anticipate continued improvements in the amount of outstanding AR.
From an inventory standpoint, the company has $29.6 million on hand as of August 31, 2021, compared to $15.2 million on hand as at May 31, 2021. The increase in inventory was largely driven by two main variables. One being the need to procure and build inventory in advance of a numerous new product launches that are being undertaken.
And secondly, there was an operational need to build more finished goods inventory to more effectively service our key provincial customers with growing volumes and demand for our various products. This can be demonstrated by the $5 million increase in the company's finished good position as at August 31st, compared to the previous quarter.
The cycle of new product launches and changes in product mix can be expected to cause the near-term volatility in inventory balances and the quarters ahead, but should be expected to stabilize once customer demand and sales patterns achieve a more normalized and rhythmic sales.
Valens ended the quarter with a strong cash position of $31 million as of August 31, 2021 compared to $23.9 million in the previous quarter. There was a significant amount of capital flows within the quarter starting with a $43 million capital raise at the beginning of the quarter. This was then offset -- partially offset I should say, by the proceeds of approximately $18 million prior to close the acquisition agreements.
In addition to the settlement of various transactional costs, capital spend, debt repayments and the full payment of our full year premium on the company's D&O insurance policy associated with entering the U.S market. The total of all these above items resulted in the use of $20 million in cash. And then the increase in inventory levels of $14.4 million to support operational requirement was partially offset by the decline in trade receivables and the recent improvements in the operational cash burn rate. With these items largely behind us, we feel good about the strength of the company's bouncing cash position as we enter the fourth quarter.
With that, I will turn the call over to the operator to open the line for the question-and-answer session.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from the line of Andrew Partheniou with Stifel. Please proceed with your question.
Andrew Partheniou
Good morning, and thank you for taking my questions. Maybe just to start off on Quebec, could you provide an update on the process? What -- and what do you think needs to be done in order to become an approved vendor? And once you do become an approved vendor, could you walk us through, if possible, on how protocols work in the province to ultimately have your brands and products on the shelf?
Tyler Robson
Yes, absolutely. Thanks, Andrew, for the question. Obviously, it's Tyler. A few different things here. One, Quebec is definitely a challenging market, especially with the change in management. With the new CEO coming in relatively soon, I think I'll call it October 22 as this new start date. There's just been a few challenges and changes and they slow down a few things as we continue. But we're still super excited and extremely confident that we will be in Quebec in a meaningful way in the near future.
Obviously, with some of the challenges of changing management, you change relationships, you change ideas, you change strategy. But all after again, we are confident that we will have a meaningful position in Quebec. We are working on an agreement; it is well underway. I probably won't comment further on when we're going to have it done, but it is in the near future and we are excited.
Andrew Partheniou
Definitely looking forward to seeing your products in my home province. Maybe switching gears talking about gross margin improvement. I think you mentioned the driver in this quarter was mostly CBD. Could you talk a little bit about your facility utilization rate where it stands now? You have a lot of SKU listings that you've won and lot of new brand partnerships that you've announced, and obviously pushing on your own brand as well going forward. So how can we see that utilization rate ramp up? What do you think that could do to gross margins? And maybe tying that in with you make a comment earlier on the difference between listings, SKU listings and SKUs manufactured. Can see here that your listings are almost double the rate of the SKUs that you're manufacturing which could potentially be a leading indicator for your gross margin. So, a lot of moving parts here if you could just touch on that and what we can expect going forward.
Tyler Robson
Yes, absolutely. So obviously a lot to unwind in that one. I'll start with kind of K2. As we continue to ramp up it's hard to pinpoint an exact number on where we are, especially with some automation skills coming online. And like I touched on earlier, we expected to have some of it online earlier, to be frank and again some of the challenges of not only getting it commissioned or validated. We are getting physical [indiscernible] from Italy to bring on some of that stuff. So, I don't think I can pinpoint an exact number, but what we will see is less manpower and more automation, and that's one of our key focuses to drive gross margin. And in time, you will obviously see continue to get better and better and improve over time. Yes, I think that's basically the best way to say it. Jeff, anything to add?
Jeff Fallows
And I think if you think about it, and I like the distinction between the number of SKUs and the listings. Obviously, we believe the listings are a leading indicator of future revenue potential. And what we've done in the last quarter is focus on getting all of those products available, or the processes available to handle the volume growth that we're anticipating. So, you think about when you scale up to sort of process, there's lots of inefficiencies, there's lots of learnings, there's lots of things like that, that go directly against our gross margin, those things largely being worked out. And as the volume start to increase, and those provincial orders start to increase, like, your first orders are always small, right, Andrew, and then the second order, and the third order and fourth order. So as those orders continue to increase, you get the real benefit of launching those products, with the natural progression that the gross margin increases.
Andrew Partheniou
Fantastic. And just last one, if I could, just on the cash burn in SG&A. Sunil, thank you for that good color there. Obviously, on the SG&A line, we saw it increase quarter-over-quarter, and this is above -- well above the Q1 levels here. Could you -- with the color that you provided on the insurance payments and closing of acquisitions, could you provide a little bit of color on, what we could expect maybe in Q4? Should this stabilize out? Should we even, perhaps expect a decrease in expenses here, just a little bit more color on that could be helpful.
Sunil Gandhi
So, I think I'll start by saying, I think, the most material change from the previous quarter was obviously now including Green Roads as a business into our numbers, right? Otherwise, if you actually look at Q3 versus Q2, our SG&A line was actually very, very stable. So, now it's taking into account Green Roads being part of our business going forward, and the D&O costs also being part of our business going forward. I can't tell you exactly where [indiscernible] was lined up next quarter, but I'm not expecting material changes from where we want it right now.
Andrew Partheniou
Thanks for that, and I'll get back in the queue.
Operator
Our next question comes from the line of Frederico Gomez with ATB Capital Markets. Please proceed with your question.
Frederico Gomez
Good morning, guys and thanks for taking my questions. So just to start off about your U.S CBD segment, could you comment on the competitive landscape there? What are you seeing in terms of pricing and just overall growth in the industry? It's a very fragmented market there. And how confident are you about reaching the EBITDA targets that you set for Green Roads for 2022? Thanks.
Jeff Fallows
Yes. Great. Hello, and thanks for the question. So, in the CBD space, obviously and when you watch what I just said, it's fragmented and we're starting to see some consolidation and some of the smaller players sort of fall away out of the space as the users and the consumers of CBD in the market began to get a little bit more discerning about the products that they're utilizing. We like that trend and we like the opportunity that provides to Green Roads. As we continue to move forward, there's a couple of tailwinds out, in our view, greatly propel the opportunity that we're seeing in the CBD space down there. Obviously, the first is getting a little bit more clarity from the FDA. You would know when you look in the store formats, et cetera, carrying various CBD products and the assortment of products that are available in some of the larger format stores, very limited right now given the FDA uncertainty, really limited to sort of topicals, et cetera in those distribution channels. So, getting some clarity there will be a nice tailwind for us. And as you're saying and from that the EBITDA targets or the opportunity, we saw in Green Roads would be go a long way to fulfilling that objective that we have, that sort of one catalyst alone. Otherwise, as we're bringing the two businesses together and we're consolidating relationships and making introductions for Green Roads to Valens relationships as we -- I told the market we were going to do and also compare product assortments and IP opportunities -- opportunities to share IP, et cetera, we're pretty excited about what we're seeing at Green Roads, we're excited about the team that's down there and what they're doing for us. So, while it's -- I think it's too early to comment any more on sort of that EBITDA a number that we announced as part of the acquisition. We are greatly encouraged by what we're seeing and we still very much like that opportunity.
Frederico Gomez
Thanks, Jeff. That's a -- that’s great color. And maybe just on your outlook here, and we know that Q4 is still going to be a transitional quarter for you guys, but just looking forward into 2022, how should we look at growth? Will it come more from your B2C side, 2.0 products or 1.0 products, or maybe from Green Roads or even international? How should we look at that in terms of a mix between B2C, B2B and Green Roads and international? Thank you.
Jeff Fallows
Yes, absolutely. So, I think we're going to see is all the above with a major focus on B2C not only in Canada and the U.S. As we move towards the B2C model and really get behind some of the brands and open up distribution, I think that's going to be one of the biggest growth factors that you'll see in 2022.
Sunil Gandhi
Yes, and obviously [indiscernible] said that strong emphasis or expectation there in the B2C side, but not to underplay what we're seeing from the B2B side, and the opportunity that we're seeing there. We continue to like the relationships that we have, and that we're building and think that there's very strong potential for our base business in those relationships. And as we look [indiscernible] we look to Green Roads. Again, the pipeline of opportunities that we see there, the conversations that are currently ongoing, and the general market backdrop of several catalysts as we just discussed for the CBD space, we're very encouraged to what the contribution that Green Roads can be making to Valens financial statements in 2022.
Everett Knight
And Frederico, it's Everett here. Maybe to further kind of give context to that, and you saw this quarter that we had 50% of our sales coming from provincial sales and Green Roads already. Now with the closing of Citizen Stash, I think you see that aspect greatly increased going into 2022. So, that's great context for you from a modeling standpoint were obviously we picked Citizen Stash and the 2.0 areas because they're not only the fastest growing, but we see long-term the best profitable growth in those two categories.
Frederico Gomez
Okay, that's great. Thanks. I will hop back in the queue. Thank you.
Operator
Our next question comes from the line of Shaan Mir with Canaccord Genuity. Please proceed with your question.
Shaan Mir
Good morning, and thank you for taking my question. So, my first question, I just wanted to touch on where the business is at with the SKU optimization. In the press release, it was noted that Valens reached critical mass on SKU portfolio this quarter. And I think earlier in the prepared remarks, I believe, Tyler mentioned that there was some additional opportunity to move away from underperforming SKUs, and what's being distributed today. So, I just wanted to calibrate what portion of the currently listed SKUs do you see opportunity to drop. And then also as it relates to the Citizen Stash portfolio, what proportion of that businesses current distribution do you see opportunity to take offline or optimize on that front? Thanks.
Tyler Robson
Yes, our New York service Citizen Stash as we move closer to closing that transaction, I think there is a good opportunity to again optimize their portfolio and really bring them into the fewer, bigger, better strategy and really bring velocity to so some of the SKU. The SKUs [indiscernible] automate the packaging. Right now they're doing everything by hand and the way they're sourcing biomass is not efficient, if you know what I mean. So, bringing a fewer bigger, better model to them, I think will greatly improve their gross margin as we incorporate it. Also, when you look at our SKUs, what you'll see over the next couple of quarters, and again, it takes longer than people think it does to even delist the SKU or list the SKU with the provincial board. So, you'll see us move on some of smaller partnerships, or our non-velocity SKUs and really double down. And one thing that greatly affected our velocity or even optimization is our provincial sales are selling so quick, we can keep up with the demand. So, it's negatively impacting our gross margin short-term as we continue to [indiscernible], where we lack automation. So, there's some processes right now where you look at, we have 10 manual people packing things out that are going to go to one machine. So, it's greatly going to affect our -- not only our output, but our gross margin. So, there are a few SKUs really getting behind. You look at BC God Bud, you look at the first pre-rolls, and then you look at our base category, you're going to see greater velocity and more automation coming out of those.
Shaan Mir
Thank you for the color there. And then my second question, it's more on the international front. Could you help outline some of the capital requirements with the Epsilon Healthcare agreement? My understanding is that Valens assumes the operational and capital expenditures at the facility. So just curious what's remaining from a CapEx perspective? And then what's the expectations are for CapEx spend over the next year?
Sunil Gandhi
Sure. So first of all, I will address sort of the opportunity in Australia. So out of the gate, we don't anticipate any significant capital investment into the facility at all. Right now it's an operating platform. It already has the capability of producing products, and in fact it's producing products for Valens already today. The potential for CapEx goes forward as the market continues to develop there. And as we've always said, once the economic opportunity proves itself, we'd be more than happy to put capital to work. So, as we continue to build out that business once it gets to capacity and once we start to see the opportunity continue to increase for us there, we won't be shy about making some additional investments and -- into that market. But to be clear, that's not a big swing capital investment that's -- some additional equipment that may be upgrading some additional equipment or some of the equipment they have down there. So, it's not a big swing. It's right sized capital investments, but it's only when we see the economic opportunity to earn a return.
Shaan Mir
Okay. Thank you for the color there. And I'll hop back in the queue.
Operator
Our next question comes from the line of John Chu with Desjardins Capital Markets. Please proceed with your question.
John Chu
Hi, good morning. So, you've put the strategic transition mostly behind. You're now -- you're in your growth or ramp up stage. So, is it safe to say that the third quarter and even the quarter prior that, the second quarter is really your trough or your bottom? And that going forward, we should start to see accelerated sales? And with that gross margin improving and then obviously the EBITDA starting to improve from these levels going forward? Is that a fair statement?
Jeff Fallows
Yes, I think it's a fair statement, John. The question becomes just a matter of timing on that. So, when you're launching a SKU, just to be clear, as Tyler said, it's a long process, which is when we announced into the market, all these SKUs that we're getting listed and noting the listings, we don't want to be judged necessarily on our listings. What we are trying to do is be clear with the progress that we're making with the strategic plan to actually get to the larger scale revenue that those huge listings represent, could be anywhere from 6 to 12 months, right. So as the province accepts the listing brings it on to meet the first delivery opportunity to the province, they do their initial orders, and then it gets into the system and to the system and you start to get that velocity, it could be anywhere from 6 to 12 months. So, yes, a 100% getting those listings in was a big first step. We're very excited about that. And we are going to be working with the provinces to drive that volume as quickly as possible. But just to set realistic expectations out there as to what that means from a growth and a margin profile perspective. Yes, it's coming. It'll just be product dependent and it'll be over the next 6 to 12 months.
John Chu
Okay. So then maybe adding on to that. So, your manufacturer SKUs, I guess a few quarters ago, you're in the low 60s, you dipped into the low to mid 50s, and now you've jumped back up to 67 as of the third quarter. So, it sounds like those 10 new additional manufacturer SKUs from the prior quarter, that sounds like it's going to be a drag on margins then for the near-term similar to the idea you had before that the revenue that you're going to have a higher cost structure and then it's going to take a bit for their revenue to catch up. So is that going to act as a bit of a margin headwind, even though you have your listings starting to ramp up revenue.
Tyler Robson
I'd say yes, yes or no. I'd say yes when we start something, there is additional cost profiles we've been -- tried to be clear about what the market, but additional SKU listings are variations of existing SKUs. So, they're not whole new SKUs, for example. So, variations on pre-roll format, or putting whether you do 5 in a pack or 10 in a pack or something like that, these represent additional SKUs, John, but they don't necessarily have the same kind of impact as when you're launching a new product line.
John Chu
So, the 67 manufacturer SKUs they're not …
Jeff Fallows
[Indiscernible].
John Chu
Okay.
Tyler Robson
Yes, exactly. So, they're not a whole -- they're not wholesale new product forms. They're based on existing processes and variations that we're adding to those. So, from an efficiency perspective, there's much more or there's much less hit on cost. Even though we believe that there's real opportunity for those SKUs in the market from a revenue perspective. So not as -- not nearly as pronounced as historically when we were launching all new product forms.
John Chu
Okay. So those 10 additional quarter-over-quarter in manufacturer SKUs, all of them are essentially the [indiscernible] of existing SKUs?
Tyler Robson
Correct. Correct.
John Chu
Okay. Perfect. And then, just the last question then. You talked about or Tayler talked about some supply chain issues [indiscernible] equipment and getting technicians over and whatnot. Did that have a meaningful impact on sales for the quarter or margins? And have those issues been resolved yet?
Tyler Robson
Yes, I would say overall sales. But if you look at what we could have done in the first pre-roll, for example, we can't need to demand it. And if you look at like even the labeling [indiscernible], we're doing it by hand as compared to automation. So, it affects margin and it affects velocity of SKUs. So, I think both of those coming in, and again, I think people are underestimating some of the global supply chain issue. There's absolutely nothing we can do. And some of the automation is on route. It's been delayed a couple of weeks, some cases a couple months. But again, we're not going to risk putting inferior product on the shelf or do damage to the reputation and or brand. So, if the -- [indiscernible] environment essentially, but, yes, we did leave some money on the table, and it did affect our gross margin. So, we will clean that up and we're extremely excited with the [indiscernible] products and processes online.
John Chu
So that can be still a modest drag in Q4 then?
Tyler Robson
Yes.
John Chu
Okay. All right. Thank you. That's it for me.
Operator
Our next question comes from the line of Neal Gilmer with Haywood Securities. Please proceed with your question.
Neal Gilmer
Yes. Good morning, all. Thanks for taking my questions. I'll probably just sort of continue along the line of the listings here to understand that, and then a second question after that. You obviously had a 37% increase in the listings that you put in, and then subsequent to that some more, what sort of driving the success to be able to get those provincial listings? And then sort of the sub part to that question would be, if you take, for example, the six manufacturing agreements you recently announced, are those already listings that you have with the provinces? Are those net new listings that we should expect as you start to manufacture those products and get them into the provinces?
Tyler Robson
Yes, absolutely. Thanks for the question, Neal. I'll touch on the provincial success first, why are we winning provincial listings. I think it's kind of a three-prong. One, innovation. I don't think some of the products going live anyone else can do. You look at a peanut butter cup, you look at a few of the other edible innovations we've got listed, you look at the hard sell-throughs that are going live in a can with a resealable lid. We have innovation that no one else can touch. Two, the product offering. The depth of product where it's basically -- I don't want to call it bartering and trading with some of the provinces like, look, we'll do that for you if you guys give us these two products. So, it's really built the relationships we have in place and really being seen as an ally to the provincial board. Other than that, I think we would see pricing as the lowest cost producer, or the largest purchaser of biomass and the lowest cost producer for both biomass, I think we can do a product offering that no one else can touch on the price. And as we continue to bring on automation and optimize a lot of the processes, you'll really see that gross margins start to improve.
The second question with those six agreements that we went live with, some of them [indiscernible], and some of them are strictly bulk box of the licensed producers with excess capacity we have. So, when you really look at utilization of infrastructure, that's where we really start to move the needle as well as in backfilling our excess capacity.
Neal Gilmer
Okay, thanks, Tyler. I appreciate that. My second question sort of comes back to, I guess the strategy. Obviously, this has been a transformative year and you've had a number of acquisitions. As we look forward now, is your strategy sort of focused on integration and demonstrating, how accretive those acquisitions are and making sure that everything goes well with respect to the acquisitions, or are we to be expecting still you're very aggressive taking a look at potential opportunities and could have some further acquisitions over the course of the next, say, 12 months or whatever.
Tyler Robson
I would say the biggest things getting our attention right now is going to be integration, but also supply chain. When you look at the ecosystems that we bought, Citizen Stash with a pending transaction coming, you look at the ability for us to move the needle, not only on supply chain standpoint, really get to automation, even like, again sourcing biomass at a significantly deep discount to what they're currently paying. I really think integration and supply chain are going to be the story of Valens going forward. Obviously, we're going to be opportunistic, if the right opportunity comes along. But the story for us is going to be integration and supply chain on all those acquisitions that we've made.
Neal Gilmer
Great. Thanks, Tyler.
Operator
Our next question comes from the line of Gerald Pascarelli with Cowen. Please proceed with your question.
Gerald Pascarelli
Hi, good morning. Thanks very much for taking the questions. So, my first one is on Green Roads. Obviously, a nice contributor to your top line this quarter, even though it was a partial quarter. I'm just curious if you could provide any color on how sales are maybe trending into your fiscal 4Q, and then the expected benefit that you expect Green Roads to get following the passage of AB45 in California? Seems like obviously a net positive for the industry just in terms of distribution whitespace. So, any color you could provide there would be helpful. Thank you.
Jeff Fallows
Yes. Thanks for the question. So, from a Green Roads perspective and a revenue perspective going into the fourth quarter, I would expect in the short-term the company to continue to operate as it has on a similar basis to what it did in the third quarter, as we're going through and making introductions and also driving through some the balance added value to the equation. It takes time to get that stuff properly implemented and get out into the market. So, I would expect the bigger changes or the more growth to happen going into 2022 that in Green Roads. But that being said, as I said earlier, there are some potential positive catalysts south of the border there that could change that equation dramatically. California is an interesting opportunity, and from Green Roads perspective where there wasn't significant sales in the California, obviously, given the previous regulatory state there. But on the back of that opening up, absolutely, that's an opportunity for Green Roads, and one that we're going to be helping them realize in the coming weeks and months.
Gerald Pascarelli
Got it. Thanks very much for the color. That's helpful. My next question is on your partnerships. I know that you had called out in the press release that you're transitioning away from your smaller nonprofitable B2B partners, which obviously impacted your revenues. But at the same time you signed a big custom manufacturing agreement with six larger customers. And so, I guess, like as we look at the business going forward, is that disruption from the transition behind us? Should this new manufacturing agreement at a minimum partially or if not fully offset some of the disruption that you're seeing currently in your revenue trends? Any commentary there would be helpful. Thank you.
Everett Knight
Sure. Thanks, Gerald. It's a great question. So, if you look at the transition to that business, those six agreements are projected to ramp up over the next few quarters. So, yes, I think it was the right decision to go away from underperforming partners, right. What you want is more profitable growth. And what we try to do with these larger partners is we want more consistency from them. And we want that relationship of higher utilization, higher volumes and that's what we've gotten of those six partnerships, three of them were the top seven LPs in Canada. And as Tyler mentioned, I think you continue to see that to grow over the next-term. So, I think you see that ramp up over the next two quarters because some of the agreements don't start till Q1, Gerald. But largely, you're seeing that transition over that. And obviously that transition of the B2B go into more consistent and larger players.
Tyler Robson
Yes, one thing I'll kind of add on to that is, is that little six agreements that did go live, all of those were Canadian based groups. What you'll see in the upcoming weeks, months, quarters is some U.S partnerships. Again, the same relationship we have in Canada we're going to be taking them and/or joining them in the U.S., which you will see go live in the foreseeable future. So fewer, bigger, better, both sides of the border.
Gerald Pascarelli
Got it. Super helpful. Thanks very much for the color. I will hop back into the queue.
Operator
There are no further questions in the queue. I'd like to hand the call back to Tyler Robson for closing remarks.
Tyler Robson
Thank you, operator, and thank you for everyone joining. Obviously, not the ideal quarter, and again we're not shying away from it. There are headwinds in the sector, and we're doing our best. And if you look at the achievements we've made not only internally, but in comparison to some of our peers, we are winning. We are confident and we know exactly what we're doing. Is it going as fast as it should? No, it never does. But at the end of the day, we are getting better every single day. Underlying fundamentals are clear, and it's coming to fruition in all products and all verticals. Momentum is fueling our growth and will continue at the end of the year as of 2022 unique and innovative products going global, increasing provincial listings and delivering sustainable value to our shareholders. I want to say thank you for all the support. And with that, I'll turn it back to the operator to close the call. Thank you.
Thanks for your input, Funman. But, I gotta ask you....do you own only 7 shares of VLNCF or was that a typo?
Like GE I an disappointed but I wasn't hoping for anything close to his expectations. My take is from a different perspective.
Still, they missed my number too.
With all of the announcements, I was hoping for more. Their client contracts turn out to be piddling little things. They are going to need a lot more customers, or at least a few of their customers need to "hit-it".
LYF Food Technologies Inc. has to produce so much more.
They are competing with INDIVA, another peanut of an edibles company I owe, but they are capturing about 50% of the Canadian edibles market.
That said, that means that LYF is producing very little, and leaves me wondering how the acquisition is accretive.
We're still waiting on a permit announcement for the Toronto beverage facility. That should help, but it's not as if revenues will double when they get it.
Everything is waiting on "ramp-up" and USA legalization.
Green Roads will turn into a monster upon USA legalization.
I am holding my7 shares.
If the PPS slips back into the low $1.50's or $1.40's I will consider adding.
If USA legalization shows any signs of life, I will consider adding.
I'm not happy, but it is what it is.
Funman, what is your overall take on the earnings report? Will you hold all your shares?
Before the earnings were released yesterday afternoon, VLNCF had already tumbled bigtime since our last report. You would have thought that some of those losses would have been baked into the cake for yesterday's report. But, here we go again.....down.
I guess it's all part of being invested in cannabis stocks in such an awful down period for nearly the entire year. Everything is going down.
I see that. I have much to think thru starting with the filings. I was expecting far better traction.
The Street weighs in --->>> Price $1.73...Day's Change -0.14 (-7.49%)
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