WeedMD Is Now Fully Funded and On Its Way To Producing EBITDA

WeedMD Is Now Fully Funded and On Its Way To Producing EBITDA

Last week, WeedMD (WMD.V) (WDDMF) released second quarter financial results that showed impressive growth and we expected to see a more favorable response from the market. We believe that the market responded negatively to the amount of cash that WeedMD reported to have on hand at the end of the quarter and are favorable on the recent developments to help strengthen the balance sheet.

Earlier this week, the Canadian cannabis producer announced a $10 million private placement of convertible debenture units. The net proceeds are expected to be used to advance its automated processing facility in Strathroy and to increase extraction capacity at its CX Industries operation.

A Growth Story to be Watching

When looking at WeedMD, we see a business that has significant growth prospects and the capital from the private placement will play a key role in the company’s planned expansion. We believe the raise take a very large overhang off the stock (where investors may have been expecting this raise to occur) and find this to be significant. With a small raise and minimal dilution, WeedMD is well capitalized to reach EBITDA positive in the fourth quarter.

From a distribution standpoint, WeedMD has been nothing short of an execution story and has successfully secured multiple distribution channel with agreements with six Canadian provinces. When you combine this amount of distribution with the relationship that WeedMD has with Shoppers Drug Mart, you have a company that is positioned to capitalize on the increasing demand for cannabis products.

One of the most exciting aspects of the Canadian cannabis industry is related to the upcoming change in the types of products that can be sold to recreational consumers. A few months ago, the company formed CX Industries as a wholly owned subsidiary that is laser focused on the cannabis concentrate opportunity. WeedMD is focused on creating high-margin cannabis derivative products and the capital from the financing will play a major role when it comes to executing on this attractive growth vertical.

WeedMD currently has 220,000 sq. ft. of licensed greenhouse production space as well as a 27-acre outdoor cultivation site. These assets look to yield 20,000 kilograms from greenhouse and 20-25,000 kilograms from outdoor respectively. Additionally, WeedMD is now fully funded up to 600,000 sq. ft. of indoor cultivation and we are bullish on WeedMD’s cultivation output on a go forward basis.

Based on the amount of current and fully funded production capacity, WeedMD is well positioned to continue to record incremental revenue growth and believe that this aspect of the story is not fully appreciated by the street. We find the risk-reward scenario to be attractive and expect to see a re-rate by leading cannabis broker-dealers as the management team continues to advance the operation.

Pursuant to an agreement between StoneBridge Partners LLC and WeedMD Inc. we have been hired for a period of 180 days beginning April 22, 2019 and ending October 22, 2019 to publicly disseminate information about (WMD) including on the Website and other media including Facebook and Twitter. We are being paid $6,000 per month (WMD) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero (0) shares of (WMD), which we purchased in the open market. We plan to sell the “ZERO” shares of (WMD) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (WMD) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.


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Authored By

Anthony Varrell

Anthony Varrell is Managing Director of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

Published at Thu, 05 Sep 2019 14:23:20 +0000

Filed in: News

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