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I wonder what caused the growth in March.
On January 4, 2024, the Company divested substantially all of the operating and intellectual property assets related to the Company’s production, manufacturing, and sale of certain fertilizers and associated products operating under the name Success Nutrients, as well as the distribution and sale of certain cultivation resource materials associated with Three A Light, to Organitek, Inc. a California Corporation. The divested assets included all tangible inventory, customer lists, website and domain names, social media accounts, intellectual property rights held by the Company associated with those brands, and all rights, including but not limited to the copyrights in the Three A Light book. The aggregate consideration was $170,100, which is to be paid in quarterly installments with a final balloon payment due 24 months following the closing date.
My red flags:
Reading --
As of December 31, 2023, cash and cash equivalents were $19.2 million compared to $38.9 million on December 31, 2022. Total debt as of December 31, 2023, was $156.8 million compared to $127.8 million on December 31, 2022.
Then hearing --
$2.5M FCF last year
Continued margin pressure
Looking to unlock liquidity and capital to take advantage of the shakeout.
When should we expect an offering?...or will they first need to hold a shareholder vote to increase the common before doing so?
I did, here is my unedited/unfiltered notes as I was listening and watching TV (so take them with a grain of salt):
CO
690+ outlets
Market decrease 15% YoY
Outpaced the market
$750/lb
Lowell Preroll #1 preroll in CO
Shakeout year for Colorado
Expect margin pressure in the market to continue to shakeout competition.
NM
675 total stores
Store closures are increasing
Flower price slightly up compared to CO
Rest of metrics on par with CO
Introducing Lowell to NM in April
License count challenged SHWZ business, but that is changing.
GENERAL
18% YoY wholesale growth both states
Wholesale generation up 27% YoY
Closed 301 grow in NM, consolidation
Implemented new ERP system in Q4
Rev up 8%
13.1M product consolidation of which
5.7M was fair value price converting Everest inventory
Op ex decreased Q4, due to lower impairment costs
Loss from Op, 16.2M, noncash inventory adjustments
3.5M positive cash flow for the Q...2.5M for the year
Q&A
Future M&A? Retail up 50% 2023-2024.
Looking to unlock liquidity and capital to take advantage of the shakeout.
280E approach-- conservative view. 2-3Q lag in payments. Have extended the lag to 5-6 quaters based on federal optimism. Other companies lagging 10-12 quarters. Possible know more about S3 news in the next few months.
Refinancing opportunities? Tactically skirted
Actively looking for additional opportunities similar to Lowell Farms
Bioscience Unit - viewed more of a product development unit to work with vendors and incorporate products into the business. More focused on Quality and less R&D.
2024 - CapEx spend - probably lower than 2023 spend. Investment mostly inside store base, storytelling, other improvements.
Pablo - question about how CO has controlled the illicit market. Tax dollars flowing into enforcement. State has been proactive in enforcing rules.
How quickly the CO market is consolidating.
7.8% above market in CO
Revenue per store of operation? 112K avg dispensary and SHWZ is above that.
Retail forward organization, focused on wholesale and asset lite. Investment is more sales force and promotions.
At this rate we have to hope some type of federal involvement happens soon, like mgmt...and the X-echo-chamber...is anticipating it will. The company might be proving ability in highly competitive markets, compared to others...or the average...in those markets, but an MSO in established/competitive markets isn't the shiny object to an investor. Until national normalization, investors will seek operators in medical flipping to adult use states where the average flower price is 3x-5x that of CO & NM...and operator inefficiency/inability is easily masked by profit margin.
Posted on their website. Q4 gross profit was a disaster...to the tune of the company posting an "adjusted gross profit" for the first time in company history (that I can remember).
Add pressure on the other 'injectable' pharmaceutical companies to keep up with the Joneses.
Now to speculate, because GLP-1 drug development is in its infancy. They are finding more uses for it than just weight loss. Can you imagine a day where a DehydraTECH, low dose of Ozempic pill is taken as part of a daily regimen to combat not only weight loss and diabetes but also aid in cardiovascular health and lessen ones chances at developing Altzheimer's?
Anyone else just buy this premarket dip? I am gonna hope that this isnt foreshadowing, but more so cleaning out the pipes before releasing news. We shall see...but it barely moved my average. Still very green.
Buying has returned. Exciting times.
Dont know the guy...but based on prior position/title...I dont like it. Other CFO's have taken CEO roles in cannabis companies...and if history has proven anything...they are just not cut out for the job. I guess we will find out if this bean counter has a green thumb.
Today announced that Forrest Hoffmaster, the Company's Chief Financial Officer, has been appointed to the additional role of interim Chief Executive Officer ("CEO"). This follows Nirup Krishnamurthy's resignation as CEO and as a member of the Board of Directors ("Board"), effective February 20, 2024, due to personal reasons.
https://www.prnewswire.co.uk/news-releases/schwazze-appoints-forrest-hoffmaster-as-interim-chief-executive-officer-302069402.html
Looks like MSOS and MJUS both bought 100K shares today.
Significant EOD buying more than likely means MSOS added to their position.
Based on podcast provided information, if SAFE banking was to pass, Pharmacann said that would save them (projected) 10% off the top because banking would normalize for the industry, which would allow them to consolidate banking services and lessen banking fees. On a second, recent, podcast the guest (can't remember who...sorry) stated the removal of 280E could, as a guesstimate, give back 20%. So it is interesting to at least think of a future where the industry is accepted by the govt...and then again, wayyy further down the line, when prices finally compress to a price point seen in competitive markets (where it is truly competitive with the illicit market...say $1K/lb) when the true players will be determined.
Correcting my previous post. MJUS holds 326K shares...that means that they only sold 4K shares. Not sure why their site was inaccurate when I retrieved the information last night. Maybe it was in the middle of updating.
Looks like MJUS sold 90K shares today. Website has their holdings at 240K.
If I was playing the "feels-like" game; I would say it "feels-like" today. I say that because of the stretched buying of 180K shares of SHWZ yesterday....and the new total of 330K shares is around the same count that it held in SHWZ this time last year.
That is my thought as well. And why I am also thankful that the EFT manager of MSOS didnt decide to sell his holdings knowing that MJUS was adding...knowing the lack of retail buying would cause the stock to drift lower, while looking at close to a 2x gain since he bought.
I have mixed feelings. The skeptic in me says....why now? Why not wait until after the news to see the best return, and less shares issued. The optimist in me thinks what you said. Expecting/Knowing favorable results...so get the money on the books now so that everything is line up and ready to go to hit the ground running.
With that being said, I did buy a little more this morning...and if it gets close to $2 will add again.
https://www.marketscreener.com/quote/stock/LEXARIA-BIOSCIENCE-CORP-25530934/news/Lexaria-Announces-3-6-Million-Registered-Direct-Offering-Priced-At-The-Market-Under-Nasdaq-Rules-45962079/
The gross proceeds to the Company from the offering are expected to be approximately $3.6 million before deducting placement agent fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for research and development studies and the patent and legal costs associated thereto, and for general working capital purposes.
Per the site, MJUS up to 330K shares. That's up 180K shares...and more than the previous two days combined. It is also essentially all of the shares (all but 7,129) that traded between the OTC and NEO, for the company, today.
Looks like MJUS added another 75K today. Total holdings 150K...or 0.14% of their holdings. Hoping it continues.
Looks like 75K shares were bought by the cannabis ETF MJUS yesterday.
Was waiting to see if the buying was MSOS. Per JungleJava on X, MSOS did not add SHWZ today...so great day! Now I really wonder where the buying came from.
While it is great to see the stock price climb back to where we all think it belongs, it is very obvious that this climb is because of MSOS adding. Just hope that the rest of the stars align and govt/Schedule III news happens. A lot of bullish people think that once Schedule III is finalized it will make things easier for Congress and banking to get behind the industry. My obvious warning/concern is that MSOS is leveraged ETF. Times are good when there are inflows...and resources are being deployed in SHWZ...but if the well dries up, look out below.
MSOS added to its position...now 1,701,000...and has been known to do its buying at the end of the day (which a lot on Twitter have learned to trade around the end of the day volatility on other stocks). Don't know if this is the answer here or not...but just an observation.
Going to stay optimistic...but I thought for sure that this would have held $1.50, at the lowest, knowing that FDA IND news is any day now. I found the CEO letter a little wishy-washy compared to the date deadline provided in the quarterly report. Just hoping the slow regression is not an indication that the "on or before January 31, 2024" is getting pushed back.
Thanks again!
Thank you both!
Shawking & Abundance88,
Do either of you remember, years ago, LEXX saying that they received confirmation from the FDA stating that DehydraTECH does not alter the carrier drug? I remember it being mentioned, but I can't find it anywhere. I am trying to confirm the information, and have written IR as well as Chris on LinkedIn (still awaiting a response). I remember it being conveyed to us as critical because it means that DehydraTECH can be added to any existing FDA approved drug without the drug company redoing all of FDA Drug Approval process. If my memory serves me correctly, this information is obviously BULLISH and needs to be broadcasted.
HHS moved quickly...but late on a Friday going into a long weekend? Foreshadowing or hoping people forget by market open?
https://www.dropbox.com/scl/fi/pw3rfs9gm6lg80ij9tja6/2023-01171-Supplemental-Release-1.pdf?rlkey=v5atj0tcnhxhnszyyzcwdcvvt&dl=0
Probably the only holding he has that he is truly in the green on.
I am sure that it is a combination of being overpriced (which is still successful in other, less competitive, or D8 restrictive markets) and the greatest competition, to edibles, is operating essentially direct to consumer via the hemp-to-THC market. With how convenient, and cheap, those hemp products are who really needs/wants to go to a dispensary for a marijuana chocolate bar?
Regarding the companies, the highest selected rating for all of the companies was the 1 star selection.
The saddest story of the cannabis industry, IMO, is the one Alan Brochstein has been pushing for a while...GNLN. If you look at its 5yr the stock is down 99.99% which is worse than <<<insert pick here>>>...but includes CGC, ACB and MMNTF.
Someone is buying. Up over 29% in the last 5 trading days and MSOS hasn't added since their initial position (unless it's the swap and MSOS hasnt acknowledged it yet).
Was curious, went to Indeed and saw that the score was 1.8...however this seems to be on par with all the other cannabis companies that I looked up.
That graph also shows that DehydraTECH delivered more of the drug compared to the 7mg control...meaning it would take less drug, than the 7mg control, for DehydraTECH technology to deliver the same return.