Double Feature: TGOD.T renews vows in Ancaster ’til 2022 while GTEC Holdings (GTEC.V) takes heat over debentures

First up, The Green Organic Dutchman (TGOD.T) has just renewed its Ancaster, Ontario, license until 2022, guaranteeing the company’s ability to grow, process and sell product from their facility.

TGOD previously ran afoul of Hamilton’s city council, which oversees Ancaster, eventually reaching a settlement in May 2019 to build out a facility capable of producing 17,500 kilograms of cannabis annually.

“From day one, the entire team at TGOD placed a strong focus on ethics and compliance. These core values have been paramount to our success,” commented Brian Athaide, CEO of TGOD. “Our team continues to work diligently as we ramp up production and execute our business plan.”

By the end of the month, TGOD expects to have completed construction on its third building at the Ancaster location: a state-of-the-art hybrid greenhouse bringing the company’s total square footage to 166,000 square feet with annual production capacity of 17,500 kilograms.

With this new production capacity soon to be brought to bear, TGOD has turned its attention to seeking EUGMP certification for the Ancaster facility to allow for European exports of its craft cannabis.

EUGMP requires that medicines:

The Deep Dive takes on GTEC Holdings

Next, GTEC Holdings (GTEC.V) has some ‘splainin to do, at least in the eyes of some naysayers.

On July 30, 2019, The Deep Dive published a story with the headline, “Is GTEC Holdings Essentially Bankrupt?”

On one hand, there’s an inconsistency within the headline’s premise. One is either bankrupt or not, much in the same way one cannot be ‘a little pregnant.’

A story about FedEx’s (FDX.NYSE) founder, Frederick Smith, illustrates this point perfectly:

Smith impulsively flew to Las Vegas and played blackjack with the last of the company money.

Amazingly, when he came back the next week, he had turned the remaining $5,000 into $27,000— just enough for the company to stay in operation for another week.

–Maggie Zhang, Business Insider

Despite being on the verge of bankruptcy, Smith persisted and managed to save his company on a desperate gamble. The same argument could, and should, be made for GTEC.

Since the company has not yet filed for bankruptcy, there is nothing more to say.

Secondly, the article goes into discussion about the company’s losses, debentures and burn rate. The fallacy here is that GTEC, due to some difficulty raising capital and a supply glut, is destined for failure.

The same was said about industry whipping boy, Aphria (APHA.T), not so long ago and, surprisingly, the company turned things around after teetering on disaster.

The company reported fiscal fourth-quarter net income of C$15.8 million, or 5 cents a share, compared with losses of $C5 million, or 43 cents a share, in the year-ago period. Revenue rose 75% to C$128.6 million, net of excise taxes, compared with the prior quarter.

Aphria said it sold 5.5 metric tons of pot, with a cash cost per gram of C$1.35. Of its C$128.5 million in revenue, C$18.5 million was from sales to the adult recreational market in Canada.

–Max Cherney, Marketwatch

If Aphria can do it, anybody can. In an article published by capital10x.com, Evan Veryard made a counter-argument for GTEC shareholders to stay long.

Revenue not impressive? Well, the company did the next best thing and increased inventory. EBITDA losses of $1.5M? GTEC is in a production ramp-up and will soon have a greater output than before.

As far as the debentures go, particularly the $5M convertible which is coming due in 2020, Norton Singhavon, GTEC’s CEO, told Veryard the company will likely have enough cash flow from their three growing facilities to pay back the debt.

To quote The Deep Dive, GTEC shareholders have more to be optimistic about than their detractors want to admit.

The company has acquired a sales license in late July 2019, ” reducing its reliance on Namaste Technologies’ CannMart to generate sales for the firm and thus opening provincial distribution lines.”

We’ll be checking in with GTEC’s management in a couple of weeks when the dust has settled to talk strategy in the near-term. Stay tuned.

–Ethan Reyes

Full disclosure: The Green Organic Dutchman and GTEC Holdings are equity.guru marketing clients.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

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