I’ll admit, the way the weed scene has lit up over the last few months, I hear about new weed companies every day that have me wondering how they got into the public markets without me knowing about them. Some are huge and emerge without a seeming need for retail investors, others are tiny and give the impression that some broker somewhere arranged a deal to keep his job.
DOJA is none of the things I’ve seen before.
To get to what it is, first we’ve got to go back.
Back to season two of Dragon’s Den.
Saxx were a big hit. In fact, I’m wearing them as I write this. I’ve been a Saxx man for a few years now, so when the guys who started that company came out of the woodwork with a weed deal, you could say I wanted to explore the package (sorry).
Trent Kitsch was eventually bought out of Saxx for a tidy profit by a hedge fund and, in 2013, co-founded the company that would become DOJA, then known as Northern Lights.
In October of 2013, NL submitted its application as an MMPR licensee to Health Canada. They cleared security just a little over a year later. In March of last year, they received their pre-license inspection notice. In October, they purchased the building associated with their application and began their build-out. That build-out is, today, receiving its final lick of paint.
On the staff side, their master grower has a decade of experience under the MMAR progrram, and their COO, Zena Prokosh, came over from THC Biomed (THC.C) in December, where she helped them receive their licensing. She was also the Alternate Responsible Person in Charge of that facility.
In essence, DOJA is where Beleave (BE.C) is.
Except Beleave is a public company with a $52m market cap, and DOJA is going public in a few weeks with a current value, from what I can discern, of about half that.
The detail: 7k sq. ft growing space with permitting requests in for 660kg of production annually. Initial financing of $1.8 million was from family and friends, including six local doctors near the Kelowna BC facility, which has taken just five months to build out. Phase II plans will look to expand to 43k sq. ft.
The letter to Health Canada requesting final licensing review has reportedly been sent, and the company has been in touch with the relevant parties at HC to coordinate that appropriately.
The shell the company will be RTOing into is Spirit Gold (SG.V), which you’ll note went on a bit of a run before it was halted, so there’s already buzz on the thing.
Fully diluted, there’ll be 57 million shares out, with a good 30m or so tied up for three years in escrow, so it should be a tight little mover.
Now the big question: How many tens of millions will they be raising when they go public?
The answer: Not so many.
While other weed deals are raising crazy cash because it’s out there on offer and when someone offers you $20 million you take it, and then making huge plans to spend that cash accordingly, and as others are pulling in thousands of investors into pre-listing financing deals, the folks at DOJA are going in another direction.
“We’re just going to market, and we’ll let the market decide our value,” said an insider on a call to me just now.
The company believes it presents real value in the current marketplace and is prepared to let the little guys buy in at that value price, which they believe will then rise accordingly. If they’re going to take any bought deals or do any financings, it’ll be at a premium price, after retail investors have been able to stake their piece and make some dough.
And that’s something they can afford to do because, currently, DOJA has around $2.6 million in the bank, and if it needed to wait a year for that final Health Canada license visit, it’d still have $1.6 million left at the current burn rate.
In addition, the company has 20.9 million warrants out that can be forced when the stock hits $0.75 for a period of 20 consecutive trading days. The stock is halted at $0.57 now, so a nice rise on public listing would likely see an extra $15 million-plus roll into the company coffers.
To be sure, the big ‘what if’ here is the licensing review. As Supreme Pharma (SL.C) holders know all too well, the process can take a long time, even if your facility is a sterling set-up. Nobody at DOJA is claiming they’ll have a license next week, but it does appear they’ll be near the top of the queue, especially with recreational use planned by the powers that be… soon?
This is a rare weed deal in which you literally can’t buy in right now, no matter how much cash you flash and how big a swinging dick you have in the business, and that should make it very interesting to Joe Average because, for once, the field is level for all.
I’ll let you know when the final listing date goes down and then it’s every man for himself.DOJA Investor Presentation February 18, 2017
— Chris Parry