Green Organic Dutchman Holdings Ltd (OTCMKTS: TGODF) has been on the rise in recent weeks making a highly explosive move up and transforming into a volume leader with the stock regularly topping $40 million CAD in dollar volume per day.
TGOD operates in the red hot cannabis market responsible for many of the hottest stocks and biggest winners on the OTCBB. This is a booming sector as legal marijuana sales are expected to grow to more than $20 billion by 2022 according to Marijuana Business Daily. As October 17 looms closer Canadian MJ stocks have been heating up big time.
Green Organic Dutchman Holdings Ltd (TXS: TGOD / OTCMKTS: TGODF) is a research & development company licensed under the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) to cultivate medical cannabis. The Company carries out its principal activities producing cannabis from its facilities in Ancaster, Ont., pursuant to the provisions of the ACMPR and the Controlled Drugs and Substances Act (Canada) and its regulations.
The Company grows high quality, organic cannabis with sustainable, all-natural principles. TGOD’s products are laboratory tested to ensure patients have access to a standardized, safe and consistent product. TGOD has a funded capacity of 170,000 kg and is building 1,382,000 sq. ft. of cultivation facilities in Ontario, Quebec and Jamaica.
The Company has developed a strategic partnership with Aurora Cannabis Inc. (ACB.TO) whereby Aurora has invested approximately C$78.1 million for an approximate 17.5% stake in TGOD. In addition, the Company has raised approximately C$350 million dollars and has over 20,000 shareholders.
Earlier this year TGOD announced its intention to complete a spinoff transaction by way of plan of arrangement, pursuant to which the Company will distribute a dividend consisting of a warrant in a new corporation (“TGOD Acquisitions”) to shareholders. The new corporation will be engaged in the acquisition and development of worldwide opportunities. TGOD Acquisitions plans to execute a series of staged financings and acquisitions leading to a late 2018 target IPO date.
The Company will distribute to its shareholders a Warrant to acquire a TGOD Acquisitions Unit for $0.50. Each Unit will consist of one share plus an additional warrant for the investor. This additional warrant will be triggered by a subsequent financing to occur following the initial $0.50 offering. TGOD and TGOD management will have the right to backstop the Unit in addition to participating in a financing on the same terms. This exclusive offering provides investors the ability to join in the future financing alongside TGOD management through participation in the seed round of the company. The distribution will be paid on the basis of one Warrant for every 6.67 TGOD shares owned on the record date, to be fixed by the Board of Directors of TGOD following satisfaction of the conditions for the Arrangement.
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The intention is to raise additional capital and list TGOD Acquisitions on the Canadian Securities Exchange. TGOD and TGOD Acquisitions will enter into a repayable funding agreement, whereby TGOD will provide $25,000,000 of working capital to TGOD Acquisitions. Following the completion of the spin out, TGOD Acquisitions will operate at arm’s length to TGOD and will have an independent Board of Directors and management. Further details of the management team will be announced with the filing of the Arrangement materials at a special meeting of TGOD shareholders.
Last month TGOD announced it has signed a definitive agreement to acquire held HemPoland in an immediately accretive cash and share transaction. Founded in 2014, HemPoland was the first company in Poland to obtain a state license allowing the company to grow hemp and manufacture CBD oil products. HemPoland’s management is comprised of experts in cultivation, oil extraction, and marketing of high-quality organic CBD oil. The company is vertically integrated, with over 1,250 acres of cultivation leveraging third parties, multiple commercial scale extraction units, local distributors in Poland, Austria, Netherlands, Germany, United Kingdom, Italy, Switzerland, Portugal, Ireland, Czech Republic, Slovenia, Lithuania, and Estonia, and product sales in over 700 locations. With a robust ecommerce platform, diverse wholesale model, and over 60 employees, HemPoland has proven the ability to execute by rapidly scaling across the European Union in a short timeframe. In 2017, the company produced over 32,000 kgs of organic dried flower and 310 kgs of organic CBD oils.
TGOD paid US$7.75 million (CAD$10.2 million) cash and 1,968,323 restricted TGOD shares currently worth US$7.75 million (CAD$10.2 million), which will be escrowed for a term of three years from closing. In addition, there is contingent consideration of up to 3,047,722 shares of TGOD currently worth US$12 million (CAD$15.8 million) based on delivery of US$32 million (CAD$42.1 million) EBITDA in the 2021 fiscal year. TGOD will invest a further US$10.3 million (CAD$13.5 million) in HemPoland to fund product development, R&D, drug development and continue global expansion initiatives.
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Currently trading at a market valuation approaching $1 billion CAD TGOD has $63.7 million in the treasury and another $16 million in restricted cash. TGOD is quickly establishing itself as a leader in the Canadian cannabis market with a funded capacity of 170,000 kg and the Company is currently building a1,382,000 sq. ft. of cultivation facilities in Ontario, Quebec and Jamaica. There is currently huge demand for TGOD and the next few weeks should be very exciting as we get closer to legal recreational cannabis on October 17. We will be updating on TGOD when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with TGOD.
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Disclosure: we hold no position in TGOD either long or short and we have not been compensated for this article.