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The Green Organic Dutchman: Hitting The Reset Button

Mar. 02, 2021 2:27 PM ETBZAM Ltd. (BZAMF)ACB, CGC, WEED:CA, ACB:CA25 Comments
Cornerstone Investments profile picture
Cornerstone Investments


  • TGOD shares lost more than 90% of value since the 2018 IPO mainly due to its wrong bet on a massive greenhouse that is now being sold.
  • The company spent $500M on operations and capital expenditures since 2018, the majority of which was spent on the Quebec facility.
  • Now that TGOD is turning a page on its past, the company will likely survive as a niche Canadian player, but investors have many better options in the cannabis sector.

The Green Organic Dutchman (OTCQX:TGODF) completed its IPO at $3.65 per share in May 2018 and subsequently garnered much fanfare due to its purported focus on organic cannabis. However, it has struggled since then mainly due to its wrong bet on a massive greenhouse in Quebec that almost took down the whole company. The massive greenhouse in Quebec turned out to be a huge drag on its cash flow and balance sheet, leading to large dilution and borrowings that culminated in a ~90% decline in its share price.

(All amounts in C$)

One Giant Mistake

TGOD has spent an enormous amount of capital on its greenhouse building and funding its operations since its IPO. In total, we estimate that TGOD spends ~$500M on capex and operating cash burns. What TGOD has accomplished in this time frame are essentially two production facilities: the smaller facility is in Ancaster, Ontario and the massive 1.3 million sq ft greenhouse is in Valleyfield, Quebec. In order to finance the $500M of cash needs, TGOD raised $115M in IPO and subsequently increased its share count by 65% from 234M to 385M between Q2 2018 and Q3 2020. At the end of September, TGOD had $41M of debt outstanding and only $4M cash. Luckily, TGOD was able to raise significant new capital since Q3, benefiting from a broad rally in the cannabis sector:

  • Oct 2020: raised ~$13M at $0.24 per share
  • Dec 2020: raised ~$13M at $0.28 per share
  • Dec 2020: announced $15M at-the-market ("ATM") equity program

Therefore, the company should have anywhere between $40-$50M of cash on its hand right now, excluding Q4 cash burn and capex. As we will discuss below, the bulk of the capex was spent building its massive Quebec greenhouse that is currently being sold, likely for pennies on the dollar. The impact on TGOD is massive

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Cornerstone Investments profile picture
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Comments (25)

OneStrawRevolutionFarming2023 profile picture
This might be a pattern: force the share price down on intended acquisitions, disappoint the faithful shareholders in the process :-(
OneStrawRevolutionFarming2023 profile picture
@Balaland Fair enough and thank you :-)

You're a good teacher, man :-) Thanks a lot :-)
mmiralpha profile picture
I hope canopy comes in quick!
Lookout! Canopy (CGC) may take this one…
OneStrawRevolutionFarming2023 profile picture
@Perseverence Fair enough and thank you :-)

If CGC bought TGODF that would be a nightmare: a booze company destroying "live soil" production = No, thank you :-(
mmiralpha profile picture
Make me a meme stock please!
Frankly it’s surprising they didn’t go under. Maybe there is enough resilience here to create a future. The dilution is painful and if they ever fully recover I expect a reverse swap.
mookdoc profile picture
They DIDN'T go under and your correct a reverse split
will happen probably down the road.
mmiralpha profile picture
I made money after averaging down from 6 bucks finally when we went above .40. Hard to believe I escaped but had to go to 175,000 shares to do it. Bought back 50,000 shares only as a trade here before earnings. Not true belief in the company. Like all, I am disgusted about the $500 million blown on the greenhouse. I don’t understand how that is even possible. I remember listening to earnings calls where ex-ceo described company as a construction company. Now it makes sense. I don’t get the pennies on the dollar thing. Maybe someone can tell me why it’s not worth more? I think I heard you don’t need greenhouses to grow anymore but how can it be dumped so cheaply?
Great Read Cornerstone , Thanks ..
OneStrawRevolutionFarming2023 profile picture
It might be that these "niche" companies could benefit from a "farm to gate" policy :-)
Oh Look! Another short attack hit piece, sheepishly disguised as an objective thesis.

What are the bull points our of curiosity?
Martin Brenner profile picture
Are you serious? He was being generous.
@Martin Brenner Exactly, more accurately the outlook would be to avoid $TGODF like the plague!
Unbelievable the amount of shareholder value destruction due to amateurish (in many cases) CEO missteps. Seeing it quantitied is cringeworthy. Billion dollar green houses selling for nothing....the failed pipe dreams sold to retail investors now stuck holding the bag in many cases.

Hopefully many learned not to hold their shares while getting massively diluted.
@SPAC to the Future “Hopefully many learned not to hold their shares while getting massively diluted.”
- Just judging by the cult following of Sundial, not enough have learned!
hahah good point. I'm optimistic the sundialers are a different breed that hasn't followed the history of the industry.

They need to pay $50K a year tuition to CannU and get their MJ investing degrees.
nick7558 profile picture
TGOD CEO brain Atheda big thief and crooks
mookdoc profile picture
I think the corrective actions taken cash on hand bode well for this truly 1 of kind company. Premium prices will always be had on their products and 3qtr from now...somebody will be looking at picking up this Organic differentiator!
Check out the AgeX merger Mook!
Long TGOD from 20 cents
mookdoc profile picture
Yes, I am aware of it! I will be buying more TGOD this week....Your Gap on LCTX is almost here...patience
Stay away from TGOD, and most/all Canadian LPs. USA MSOs and picks and shovels are much better bets.
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