MJardin Group Inc. (CSE: MJAR) generated revenue of $10.8 million in Q1 2019 as comprehensive loss widened to $10.2 million.
Year-on-year revenue increased 59% for the quarter and it reported a gross profit of just over $4 million. Operating expenses totalled $7.7 million, resulting in a net loss from operations of $3.6 million.
Total net loss was $7.7 million and it took a $2.5 million hit on foreign currency translation on consolidation, resulting in a comprehensive loss of $10.2 million for the quarter. It recorded a loss of $84.3 million for 2018.
The firm has just emerged from a somewhat tumultuous period in which its founder, chief operating officer and chief strategy officer resigned and the CSE briefly halted MJAR for being in default of exchange requirements. However, Montgomery is confident it can flourish in the year ahead, while he noted that corporate cost-cutting measures implemented late in Q1 will bear fruit when it releases its Q2 financials, bringing expenses down.
“In Q2 we will start recognizing the benefits of the SG&A cost-cutting initiatives we started at the end of Q1,” he said. “We will continue to develop and build demand for our premium product lines and evaluate more tuck-in opportunities where we can confidently and responsibly deploy smart capital.”
Expanding Cultivation Capacity
The stock began trading on the CSE in November 2018 and within three days it increased from $7.79 to $8.80. It was a tough winter for pot stocks and MJardin decreased to $2.89 by Dec. 21.
The stock rallied and returned to $5.25 by Dec. 31, but it has decreased significantly this year and it hit $1.08 by May 15. It opened at $1.47 today after gaining throughout the week amid a raft of news releases.
MJardin announced the completion of its third Canadian cultivation facility. GRO is based in Dunnville, Ontario, and it can produce 1,260kg of flower and 454kg of trim per year, for a total of 1,714 kg. The firm owns 75% of this facility, while Grand River Organics owns the rest.
MJardin partners with a range of companies within the cannabis sector, providing provide them with turnkey services and often investing in them before ultimately becoming a partner or acquiring them.
It built its reputation as a turnkey service provider, and it manages 36 facilities and produces 65,000 kilos of cannabis flower per year. But it also produces its own cannabis and the plan is to increase capacity to 31,000kg by next year. It has another facility in Ontario called WILL, which continues to expand, plus a third facility in Canada and cultivation operations in the U.S.
A New Debt Structure
MJardin has also just announced a new debt structure during a busy week for the group, which has offices in Denver, Toronto and Barcelona and 450 staff worldwide.
It amended the terms of its existing loan with the senior lender to remove the callable feature and convert it into a term loan. This is designed to allow MJardin to simplify the its capital structure and fully focus on executing its operational plan: growing high-yield, premium cannabis and expanding through investments, partnerships, mergers and acquisitions.
“This amendment represents a significant improvement to our balance sheet and puts MJardin on a clear path to achieve our plans in the coming years,” said Montgomery, who was president of Tuckamore Capital Management before taking over as interim chief executive at MJardin. “This transaction bolsters our ability to execute predictable results in the markets we presently serve, and will help us to deliver enhanced growth in new markets and verticals.”
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