Absolutely fantastic announcements and quarterly. For those who are short on time, i have cut and paste what i consider as the highlights for THC currently. I have also added my own commentary and these are purely my own opinions, not financial advice. I'm very bullish here and am considering loading up more based on the following:
- With the Australian Office of Drug Control providing guidance that importation of crude extracts by licenced andpermitted Australian manufacturers – such as THC Global – the Company expects to take advantage of this toimport crude from overseas markets for further extraction at the Southport Facility into a pharmaceutical GMPend product. This will accelerate the Company’s timeline for commercial medicines manufacture at significantscale, and reduce the near term capital expenditure required for further cultivation facility establishment.
THC are not rushing into cropping as they know that the oversupply of high grade medicinal cannabis worldwide will provide opportunities to import crude at prices that are that low, its not worth their expenditure and the risk involved in the expansion of cropping and cropping facilities currently. There are provisions/plans to expand this later when global demand for products increases. Tick (makes you wonder how Australian cultivators will make a profit in the short to medium term, if not ever).
- Angela has over 30 years’ experience in thepharmaceutical industry, having held managerial positions at PCI Clinical Services, LEO Pharma, and IDTAustralia as well as technical roles at GlaxoSmithKline and Pfizer.
We have appointed Angela to upscale production, having come from one of our market competitors. She has the experience in the industry and will surely save costs and streamline production processes for our Southport Facility. Tick.
- THC Global’s 2019 full year unaudited trading revenue was $4.79 million representing an 81% improvement on
2018 full year audited revenue. Cash receipts in Q4 2019 totalled $1.87 million representing 30% quarter-onquarter growth and 189% growth against Q4 2018.
Revenue increasing at a dramatic rate. Proof that the BOD are actually getting it done. Tick.
- With unaudited trading revenue for Crystal Mountain in 2019 already nearing the $5 million forward estimatethe Company provided for Crystal Mountain’s 2020 full year revenue, the Company now expects CrystalMountain’s 2020 full year revenue to exceed $7 million on a conservative basis.
The hydroponics sales to the pot smokers in Canada is providing a revenue stream that is allowing the company to grow the Medical Cannabis arm of the business towards profitability at an alarming rate. This means that current holders are not having their holdings diluted by capital raises and institutional investments. FY2020 revenue is $7mill conservatively. This is the knight in shining armor for the company. IMO, they will look to expand into other country's markets if recreational use becomes legalised and hydroponics equipment is legal for sales. NZ have a referendum on the 19th Sept 2020 to legalise recreational use of cannabis. There's a potential market opening across the ditch. Tick.
- From late Q1 2020, THC Global will be supplying a full range of ‘Canndeo’ branded medicines in Australia andNew Zealand, with product being sourced from the Company’s own production facility as it scales up and initiallysupplemented by imported European product through a white labelling agreement with MGC Pharmaceuticals.As production of medicinal cannabis from the Company’s Southport Facility scales up through 2020, theCompany will be able to offer price competitive pharmaceutical GMP medicines to Australian patients and theglobal export market.
We are providing our own full range of products from late Q1. We are already 1 month into the current quarter, so this is in the next 6 weeks or so, meaning production and products are or have been already produced and are awaiting the stabilisation testing to be completed. We can already supply patients in NZ are are awaiting this test to supply the Australian market. We have the capacity to supply the entire Australian market and through our partnership with MGC Pharma will have additional production to supply global markets on top while full production is scaled up.
- THC Global’s balance sheet remains strong,with the Southport Facility on balance sheet at over $16 million, no debt across the group, and unaudited net equity for 2019 of $22.6 million.
THC have $3.55 million in the bank with revenue streams from Medical Cannabis products on the very short term horizon which will support it's revenue from Crystal Mountain's hydroponics sales. Looking at forward estimates on expenditure, THC will require $1.9 million in the Jan-March quarter; this does not include sales revenues for that quarter (i am no accountant). Current revenues were $1.869 million in the 4C, meaning that if our revenue holds for the next quarterly, we will be pretty close to running at even money, IMO. However, production estimates going forward seem a lot less for the next quarter. Even if we are not at even money, there are products coming online throughout the rest of the year. Wowee, Tick. IMO, no one else in the Australian industry is anywhere close to profitable like this.
IMO, it looks increasingly likely that THC will not need to secure additional funding, and if they do, the company have a $16 million facility to borrow against and unaudited net equity of $22.6 million if there is a need for a line of credit to be established before revenue outpaces the spend. Looking at the numbers, IMO, THC may be profitable by mid year or even sooner depending on their Canndeo products hitting the market in Australia and the continued sales in NZ. Bullish - yes indeed!
This is not financial advice, just my thoughts on where the THC currently sit based on company announcements and my own opinions of THC in the industry. Do your own research.
(20min delay)