The Green Organic Dutchman Holdings Ltd. (OTC: TGODF) has entered into an agreement with Canaccord Genuity Corp. to purchase, on a bought deal basis an aggregate of 46,316,000 units at a price of $0.24 per Unit for aggregate gross proceeds to the Company of approximately C$11 million. TGOD said it intends to use the proceeds of the Offering for general corporate purposes.
TGOD has also granted Canaccord an option to purchase up to an additional 6,947,400 Units at a price of C$0.24 per Unit which would result in additional proceeds of approximately $1.65 million. The Offering is expected to close on October 22, 2020, and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX and the applicable securities regulatory authorities. The stock was lately trading at C$0.29.
Corporate Update
In August, TGOD told investors that problems in the company’s greenhouse led to poor quality flower. “Start-up commissioning and calibrations challenges within the energy center at the company’s Ancaster facility led to inconsistent climate controls in the hybrid greenhouse during the very hot weather in late July and early August which led to several recent August harvests not meeting the Company’s strict premium flower specifications. As a result, most of the flower from these harvests will now be used for extraction.”
The company went on to say, “Some of the delays experienced by the Company resulted in lower than expected flower availability and a shifting of the national Highly Dutch expansion from Quebec to the balance of the country from August until the latter part of September.” Seemingly as a result of these issues, TGOD appointed Michel Gagné as Vice President, Operations. Gagné brings over 30 years of experience in the food and natural health products industries, having occupied leadership roles at Cargill and Maple Leaf Foods.
Product Pipeline
TGOD said it has introduced multiple 2.0 products during the second quarter, including RIPPLE dissolvables, teas, and vapes. Based on the popularity of certain SKUs, TGOD said it accelerated its innovation pipeline by signing an expanded licensing agreement with Colorado-based Stillwater Brands to bring their entire RIPPLE product suite to Canada, including RIPPLE Gummies and RIPPLE QuickSticks. The commercialization of RIPPLE Gummies is expected in the fourth quarter.
TGOD also leveraged consumer insights to develop new product formats, including balanced CBD/THC and CBD only versions. Some of these new products are already in market, with the balance expected to be commercialized during the fourth quarter.
TGOD launched its mainstream brand, Highly Dutch, in Quebec at the end of May. Given strong sales, the Company looks forward to expanding to the balance of Canada in late September once it can build sufficient finished goods inventory to provide consistent supply to the market. TGOD also started production of Highly Dutch’s 2.0 line-up with concentrates expected to be launched, beginning in Quebec, at the end of September.
Valleyfield
A couple of weeks ago, the company said it planned to turn its licensed facility located in Valleyfield, Quebec, into a processing hub to support its expanding product portfolio. The move would significantly reduce its reliance on third parties. The production of RIPPLE Dissolvable Powders and premium teas is expected to restart this month. TGOD has also begun production of concentrates and Ripple Gummies in Valleyfield. Hash should be available for sale at the end of this month under the company’s mainstream brand, Highly Dutch, while Ripple Gummies are planned to launch in the fourth quarter.
“As we conducted a complete review of our operations, we saw the opportunity to leverage Valleyfield and centralize our processing activities for 2.0 products. Not only does it streamline our supply chain and help absorb the fixed costs of maintaining the site, but it also makes us more agile and provides us with more control over the development and quality of our products,” commented Brian Athaide, CEO of TGOD. “By developing the in-house capabilities to manufacture multiple product lines, we are well-positioned to capitalize on the increasing popularity of cannabis derivatives such as beverages, chewables, chocolates, concentrates, and teas,” added Athaide.
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