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If the stock runs up that high, fantastic, but if financing isn't dependent on Nasdaq anymore then I see no reason to worry about it. The stock has shown the capability to hit 500k volume and beyond, which is more than a lot of Nasdaq stocks do regularly so being patient as the business is being built may be the better option if Nasdaq is not essential. But it depends on Marc's capital needs and the terms he can get.
It was essentially spelled out for me by Flash, who obviously knows what's up so yeah, I think an RNG offtake deal with Tidal seems very likely.
Lotsa heavy hitters among the conference sponsors. Not sure how schmoozing with the big boys will help in this business but good to see Jon active and I agree with Bob that there has to be a reason capital keeps flowing in. But as the excerpt from the 10K shows, what we still don't know are the terms under which the capital is provided and what percentage of any money awarded would go to Quest
Could be noteholders with fresh conversions dumping as I believe the outstanding share count has increased by 1.36 million very recently.
So my question then is whether the Hamilton fertilizer and Belleville biogas financings will be separate, or at least if each facility will be used as collateral in different ways
Seems to me like the Hamilton build-out will financed against the appraised value of the combined property as implied in the press release and the Belleville biogas facility will be financed against an offtake agreement with Tidal.
The other question is obviously what amount can be raised like this also keeping in mind that the company owes $5.3 million in mortgage payments between now and March 1st next year along with the purchase price of the new 2 acres at Hamilton.
I wouldn't say that. He did predict something in the 10K, which was the waste transfer station and the company getting into biogas. It also seems he hinted to me that Marc may be borrowing against assets (which is not a stretch as Marc's done it before though), although not against property but against an offtake agreement provided by Enbridge's subsidiary Tidal Energy Marketing. We'll see if that last part comes to fruition.
Looks like those are management fees paid to Marc's company Travellers International in the form of shares. This happens fairly regularly but yeah, with these share-based payments Marc keeps adding to his massive position of now more than 22 million shares.
The press release explicitly says they need the land to run the fertilizer operation:
The acquisition of this additional property will provide the space needed to manufacture, distribute, and store SusGro™, as well as other top-quality products available through private label arrangements.
So I guess they realized that just the existing Hamilton property won't cut it. And my guess from the fact that the release very much features the $14.2M appraisal value of the land is that they plan to finance against the combined property but maybe I'm wrong and we'll see a large equity buy-in by a big company as well that provides a wealth of financing. Flash has alluded to that.
I understand why Marc bought Hamilton. It has an ECA that fits the bill as it was used for a process making fertilizer from sewage sludge in the 1990s. I don't like the fact that the press release still refers to him converting Hamilton into a showplace with 10,000 feet of office space (enough for 100 people) and a state-of-the art R&D lab. I worked as a chemistry lab tech for many years for a large power company with tons of money and our microbiology lab was a room maybe 300 square feet within the much larger lab area.. Microbio labs are actually about the cheapest to outfit and that's probably all they need.
The first question when it comes to dilution is what is happening with the $4.9 million in notes that are way overdue, which would be 16 million shares at the current price.
Then there's the question of how big of a loan they can get against the total property, if that is the plan. A problem I see is that they paid $3.5 million for the property with the building on it just 2 years ago and the property hasn't been significantly improved since then. And with that being the more valuable of the 2 properties, it may be tough to convince a bank to value the total property at $14.2 million, no matter the appraisal (and I'm sure any bank will do their own appraisal).
Plus they aren't going to get the full appraised amount, whatever that turns out to be, anyway. Lenders loan less than the appraised value to hedge against a drop in property values. .And then there's the possibility of a lender taking into account the debt the company is carrying.
So the amount of funds Marc will be able to secure is very much an open question if the plan is to borrow a giant chunk of cash against the properties.
Thanks. Seems obvious that they need it to accept and store large quantities of waste pre-processing
Seems to me that they'll be borrowing money against the value of the property, thus the Colliers appraisal. The $1.5 million mortgage for Hamilton was still due Aug 17th as of the last 10Q so they will be borrowing against that, and likely paying it off with the funds, because the appraisal was for both properties in total.
And this is just a signed agreement, the add-on property sale hasn't been closed yet because it sounds like it's dependent on also using it as collateral to get a loan to purchase it. If this is correct, Marc once again shows that he's the king of convoluted schemes.
What's interesting to me is that the property is just for fertilizer, not for a potential second biogas facility. Makes sense though because they'll need somewhere to store the waste before it's processed into fertilizer.
The shares outstanding hasn't increased in the last month so probably not.
The shares outstanding hasn't increased in the last month so probably not.
Who knows if we'll find out the terms of any settlements. We haven't for the STX/Fujifilm settlement in March as far as I can find other than it contributed to the Q1 revenue of $200k. And then there's the question of how much Quest receives in any settlement after financiers are paid and the particulars of those agreements are also unclear.
The share price should get a big bump when/if adequate financing is announced.
But it's a longer term play. Bruce's comment at the end of the webinar said it well: "We are on the right track but need to build out our business".
A biogas facility may take at least a year to build and start producing but revenue could ramp up quickly if there is an offtake agreement in place.
And as Marc has said in the past, fertilizer commitments will probably take a good bit of time to monetize so don't expect significant fertilizer revenue to start flowing overnight even when Hamilton is finished and digesters are creating product.
Once it all gets going high quality carbon offsets will be created which should really leverage revenue from production.
There is compost revenue and maybe the waste transfer station in the meantime but compost hasn't brought in much so far and the transfer station wasn't mentioned in the webinar, which made me think that it won't be a big money generator.
But as with every early-stage company, time is money is dilution.
Thank you. So is the answer:
A: Leveraging offtake agreement for financing..
B: Enbridge direct investment
C: Tidal direct investment.
D: None of the above.
I think A is most likely with B being second and C not likely.
Love the hints but now I'm a little confused. Tidal is Enbridge's marketing subsidiary. Their main activities are finding customers for gas, facilitating the transportation and storage of the product and providing things like futures contracts on the physical gas and options used as hedging instruments.
I could see them facilitating an off-take agreement, maybe that Susglobal could leverage for financing somehow, but is Tidal expected to invest?
It seems like money would have to come from Enbridge although I'm not an expert in this stuff (I have been learning though through other investments I'm in).
I would have never come up with Enbridge on my own. I just very easily connected the dots from the hints that Flash gave us. This is obviously something that can't be verified so we're just following Flash's breadcrumbs at this point.
That's still the unanswered question. Obviously they need a good bit of money to complete Hamilton, buy land and build the biogas facilities plus pay debt owed.
My impression from Marc's comment was that the capex raise would still be tied to Nasdaq but I didn't write down the exact quote because it passed so quickly. and was I trying to catch up jotting down what he was saying. There was no hinting at a partnership or equity sale to a larger company that I heard.
We'll see if a new S-1 is filed but Marc didn't mention one as he has in the past. I wondered if Bruce's 310k share private placement purchase was part of a larger financing but nothing has materialized since the Form 4 was filed so maybe it was a one-off thing.
I tried to record using the function that comes with Windows 10 but the end with the Q&A, which was the interesting part, unfortunately got cut off. My notes:
Hamilton still 27% complete. Expect it to be finished this year and waste processing to start there in 2024.
They plan a biogas facility in Belleville and on extra land expected to be assembled at Hamilton (I'm assuming that means they are buying more land at Hamilton).
Marc didn't directly address my question asking whether an uplist is still needed for financing but did mention an uplist to Nasdaq and capex funding, so it sounded to me like an uplist still may be needed but I'd love to listen to it again.
Said he is seeing incremental growth in revenue and still projects hitting a $100 million annual run rate in 2024.
No mention of the waste transfer station, only biogas, fertilizer and compost, so I doubt the transfer station will generate significant revenue.
Bruce closed with saying that "we are on the right track but need to build out our business".
Nothing earth shaking and most of the presentation was just the general circular economy stuff we all know.
If there is a deal potentially brewing with Enbridge, those types of things can obviously take time to hammer out and closing dates can't necessarily be projected accurately enough to time them with an upcoming webinar. Maybe Marc will allude to a pending deal tomorrow if no announcement before. I'm ready to attempt to read tea leaves but we'll see if he drops anything significant to analyze or not.
Another company I'm in mentioned an upcoming partnership without specifics in a webinar last week and press released the details today.
The question is whether this Vince Sbarra guy would cripple the company by demanding conversions, which would obviously need an increase in authorized shares. He seems to be what is generally referred to as an OTC toxic lender but he's held those notes converting at $0.00005 since 2015 and has bought more notes this year so that may mean he's bullish on the future with no plans to trigger overwhelming dilution. Either way, he does have the company by the balls.
For me deciding when to sell is almost always a tougher decision than when to buy. The webinar next Wednesday may provide some info or clues about what's happening or what the plan is going forward so maybe that will help you decide one way or another. I'll do my best to record it and upload so anybody who missed can watch it.
Marc is trying to do whatever he can to keep from converting the notes, which may or may not work, but more than a year of essentially doing nothing needs to be paid for. The good news is that things are looking up.
I think what that's saying is Marc recently defaulted on giving shares to the noteholders so the noteholders got their attorney involved. I asked ChatGPT and it agreed with me. It's a great tool for investors when trying to decipher language or check if your assumptions are correct. I use it all the time.
What happened or will happen after the attorney's letter was received, we'll see, but Marc definitely does not want to dish out 15+ million shares at current share prices because those can then be sold and I'm not sure he can fit that plus a potential offering under the authorized share cap anyway. Hopefully he can come to an agreement with the noteholders to extend the deadline again now that there may be significant catalysts in the pipeline. Or maybe he could pay them in cash, which would not be optimal because it would obviously take money out of a raise.
Are you looking at this because I can't find that language:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001652539/000106299323013567/form8k.htm
Marc always has the option to pay the notes off in cash if some of the funding potentially being raised now is non-dilutive or if it could save a few shares as the terms of some of the notes provide a discount to the current share price.
There could always be noteholders or former noteholders out there who got their conversions and are looking to sell.
A big factor in the share price going forward will be what happens with the $4.9 million in notes that are in default and for which the holders recently demanded to be converted to shares. If Marc can get those due dates retroactively extended then that will buy time for the share price to run up but if not and those notes are converted, that's a lot of shares which could put downward pressure on the share price.
I'm not trying to predict what will happen with the share price because there are a lot of factors obviously but a big overhang of converted notes could definitely keep the ask side healthy.
It's gonna take a wide-ranging effort by a company the size of Enbridge to achieve net zero in the next 25 years.
Enbridge is connecting with small biogas producers to offtake RNG. Here's a family farm in Ontario with a biogas facility that Enbridge is partnering with. Not sure if Enbridge ponied up any dough for the facility but it shows that the company is looking for a variety of RNG sources.
https://www.enbridge.com/stories/2022/october/stanton-farms-first-ontario-agriculture-based-rng-supplier-connecting-with-enbridge-gas-network
Thank you. I appreciate the hints.
If this comes to fruition, the rapid turnaround of the company's fortunes will be amazing. It looked like bankruptcy was a real possibility before Bruce came on the scene and now the company may have a diversified revenue stream from biogas and waste transfer as well as fertilizer. Kudos to Marc for bringing him onboard.
Not sure if you are prompting me to point out the obvious reason why an oil company would be interested or to dismiss the oil company idea.
But if it's the former, which I think it is, then:
1. Enbridge for a potential biogas facility. Would obviously be a fantastic opportunity for such a small company.
If it's the latter then:
2: Morgan Stanley
3. Goldman Sachs
In that case I'm guessing a big asset management company or an oil company. No waste management companies are that big. Blackrock is about that size.
Oh yeah, I totally agree but the company needs money, much more than just his hundred grand, so a larger and imminent offering would be good news as well.
A note on the Form 4 says that Bruce "subscribed to the shares in a private placement with the Issuer" so maybe his 310k share buy is part of a larger offering to be announced soon.
And of course if unhappy noteholders get big blocks of shares they can start dumping them onto the market, which could hamper any upcoming financing. It's definitely a juggling act from Marc's perspective.
8K filed.
For defaults on the defaults of convertible notes. The company had previously defaulted on 3 outstanding notes but was able to amend terms to get extensions on the due dates and those extension dates have now passed.
The noteholders want their converted shares but have not gotten them so Marc got a letter from their attorney. The bulk of the notes convert at 85% of 10 day VWAP upon default so the three notes need more than 15 million shares total. Besides simply dilution from converting the notes at that price, the obvious problem could be fitting the conversions plus a potential financing under the authorized share cap of 150 million (there are 120 million outstanding currently). Going ahead with the reverse split approved by shareholders last year could remedy that situation as the authorized amount stays the same while the share count is decreased in a reverse split but maybe it means something that Marc did not go ahead with the split when he knew the default was looming.
While I think the company can still have a promising future, this plus the PACE settlement shows what difficult financial circumstances Marc got the company in. Hopefully Bruce's connections are the way out. Things could turn around quickly and Flash is confident good things are brewing so we'll see.
We did get the news about using land at Belleville as a waste transfer station 3 weeks after Flash's post. It was in the 10Q.
I've been trying to figure out what kind of revenue the transfer station could generate but after looking at a Veolia pricing sheet for waste they can haul, there are so many variables with the type of waste the station will be accepting, which is what the 10Q also says.
Any offering that doesn't depend on an uplist would be better in my opinion because that's been such a difficult hurdle to overcome and I've never seen a company tie a raise to an uplist in the manner Susglobal did for a reason.
But the company does need a lot of money as things stand now. $5.3 million in mortgage payments are due in the next 6 months plus the committed amount to finishing Hamilton is probably around $5 million and Flash has hinted at maybe another $3.5 million to buy land and a biogas digester. Interest on current debt is also constantly accumulating and there's the cost of general business operations.
Maybe some of those cash needs can be reduced in the near-term, which would really help. The number one priority has to be securing Hamilton or deferring the Hamilton mortgage due date of August 17 because if that $1.5 million payment becomes delinquent the former owner of the property can take it back. Marc's not going to let that happen but it is an urgent need.
The other issue is the authorized share cap. Currently the number of shares accounted for is close to 130 million so even if the share price gains significant momentum it could be tough to fit a large raise under the authorized amount of 150 million with the amount of convertible notes in the balance. It's plausible that the company could ask shareholders to vote to increase the authorized amount or for a reverse split to give them room under that cap.
I think Bruce has been a huge positive for the company and don't doubt that he's helped Marc in creating a more realistic plan but there are still a lot of dominos that have to fall into place.
In this case I think it probably means that they are preparing an offering with different terms so the S-1 is obsolete and needs to be declared as such.
I agree with the packaging criticism.
I owned a little of this stock 3-4 years ago when Sean used to interact with people on the Telegram channel and I tried to persuade him to go with a new packaging design that emphasized nighttime and sleep, like a moon or sheep or something obvious like that but for some reason he was fixated on the crave monsters thing and the all dark blue design doesn't help.
But the bottom line is likely that there is no sleep-friendly snack market. It's not much of a selling point.
You may want to look at ORGN if you haven't already. Biofuels will be only a small portion of their business, their main focus is plastics and other materials from biomass and they are showing that they can execute both with the construction of an initial, smaller scale plant and with generating very significant partnerships, although they are still in the early stages of a long-term plan. They have the chance to become a force in the sustainable chemical industry over the next 7-10 years.