The Green Organic Dutchman announces liquidity for 7 weeks

The Green Organic Dutchman, a company licensed to produce and sell cannabis in Mississauga, Canada, announced that the company's loss had increased by more than 500% to 145 million Canadian dollars. The company will now need a capital increase by the end of April, as a result of the results of the last quarter of 2019.

500% increase in losses
The presentation of The Green Organic Dutchman's results for the last quarter of 2019 was a bucket of cold water for investors after the Ontario-based company announced a loss escalation to 145 million Canadian dollars ($105 million ).

This year's figure is substantially higher than the previous quarter's $20 million loss. These results are largely related to impairment charges amounting to CA$127,7 million. In the note published for investors, the company assumes that it needs a capital increase by the end of April, as a result of the results.

The Green Organic Dutchman (TGOD) reported Canadian sales of just $690.000 for the quarter ended December 31, 2019, while European hemp sales reached $2,56 million.

Cannabis grower coffers are shrinking
"TGOD's available funds are expected to finance operations through the end of April 2020, at which time the Company will require additional capital," it said in a regulatory document this week.

The company's working capital dropped to 15 million Canadian dollars on December 31, 2019, when the same value of working capital was 213 million dollars.

According to MjBizDaily, tempers flared among analysts in a conference call on Wednesday morning, where CEO Brian Athaide was forced to defend the continuity of his leadership in the company, at a time when he presents increasing losses to investors. Athaide said the company intends to operate with positive cash flow "later this year".

Instead of substantial income, the company explained that it has financed its operations to date through the issuance of common stock, subscription bonuses and loans. “If adequate funds are not available, the company may be forced to postpone or reduce the scope of one or all of its projects,” warned TGOD in last week's archives. "These conditions indicate the existence of a material uncertainty that could cast significant doubt on the company's ability to continue as an ongoing concern." This same notice appeared in previous financial filings last year.

Good Manufacturing Practices delay processes in Europe

In the call to investors, Athaide said that the company continues to work to obtain the certification of the Good Production Practices Process from the European Union, with the aim of exporting later this year. However, the CEO confessed that regulatory developments are proceeding more slowly than the company expected.

Among the capital-saving measures, Athaide said that TGOD has taken measures such as reducing non-production employees by 20%, as well as delaying and reducing international projects. The cannabis production target has been reduced by 85% in 2020. Green Organic Dutchman's shares, traded as TGOD on the Toronto Stock Exchange, are down about 85% in the past year.