The Green Organic Dutchman Q3 Revenue Grows 36% YoY, Here Are The Details

Zinger Key Points
  • Gross Profit for the nine months ended September 30, 2022 has increased 103% compared to the same period in the prior year.
  • Subsequent to the quarter-end, completed the merger with BZAM Holdings Inc.
The Green Organic Dutchman Q3 Revenue Grows 36% YoY, Here Are The Details

The Green Organic Dutchman Holdings Ltd. TGODF TGOD released its financial results for the quarter ended September 30, 2022, revealing net revenues of CA$9.92 million ($7.38 million), a 36% increase from Q3 2021. The increase is due to the launch of new premium flower strains, the launch of new pre-roll SKUs, and the company's Highly Dutch Organic flower continuing to gain traction in 2022.

Q3 Financial Highlights

  • Gross profit was CA$997,000 for Q3, 2022, representing a 10% gross profit margin reflecting the CA$1.7 million inventory provision and a fair value adjustment on that provision of CA$4.3 million. Normalized gross profit without this provision would be CA$7.0 million or 71%.

  • General and administrative expenses were CA$4.19 million for the three months ended September 30, 2022, a 34% decrease in comparison to CA$6.37 million for Q3 2021. In comparison to Q2 2022, G&A expenses decreased by CA$0.71 million which is primarily a result of company's efforts to decrease costs including the reduction of overhead personnel.

  • Comprehensive loss was CA$8.85 million compared to CA$14.06 million in Q3 2021.

"In Q3 2022, TGOD continued its focus on quality and execution," stated Matt Milich, CEO of TGOD. "The consistent improvements in TGOD's operations and product offerings paved the way for the transformational merger with BZAM that was concluded after the quarter end. The merger is expected to more than double net revenue relative to TGOD on a standalone basis while substantially reducing duplicate costs. In fact, the integration process and realization of savings is already well underway as we drive hard toward our positive EBITDA and free cashflow goals in the course of 2023"

BZAM Acquisition

Subsequent to quarter end, on November 3, 2022, the company completed the acquisition of BZAM Holdings Inc., a corporation incorporated under the laws of the province of British Columbia, from its sole shareholder BZAM International Inc. TGOD paid a purchase price as follows:

  • Following the release from escrow on December 31, 2022, of the milestone escrow shares, the company shall issue such number of common shares equal to 49.5% of the aggregate number of milestone escrow shares not returned to treasury.

    • A nominal cash payment of CA$100 and the issuance on Closing of an aggregate of 655.2 million common shares, which constitutes on a pro forma basis immediately following closing, 49.5% of the aggregate number of common shares issued and outstanding immediately following the closing. For purposes of calculating the closing shares, the determination of the issued and outstanding common shares as of immediately following the closing did not take into account any securities issued by the company that are convertible into, or exercisable for common shares or the 85.7 million common shares held in escrow pursuant to a certain indemnity escrow agreement dated November 17, 2021, between the company, Computershare Trust Company of Canada, and certain securityholders of the company related to the acquisition of Galaxie;

    • Following the release from escrow on December 31, 2022, of the milestone escrow shares, the company shall issue such number of common shares equal to 49.5% of the aggregate number of milestone escrow shares not returned to treasury.

Stock Option and RSU Grants

The company has granted options to purchase an aggregate of up to 5 million common shares of the company to certain directors, officers, employees, and consultants of the company, of which 2 million options were granted to directors and executive officers, and 3 million options were granted to employees and consultants. Each option is exercisable into one common share at an exercise price per common share equal to CA$0.69. The options vest as to 1/3 of the total number of options granted on each of the first, second and third anniversaries of the grant date, and expire five years from the grant date. The options are granted in accordance with the company's share option plan adopted by the board of directors of the company on May 12, 2021.

Pursuant to the terms of the company's amended and restated restricted share unit plan dated October 9, 2020, restricted share units representing the right to receive up to an aggregate of 330,000 common shares, subject to the satisfaction of certain vesting conditions, were also awarded to certain directors and officers of the company.

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Photo by Giorgio Trovato on Unsplash

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