I’m just seeing this, HR. You still have this as a strong buy in your mind?
Also, may want to check out Rockwell Medical (RMTI). They’ve historically been in dialysis concentrates business but have developed an innovative iron replacement product/therapy. It could be a game changer. There’s plenty available to research on-line, but I really like what I’ve seen so far.
I am buying AgraFlora on any decent pullback, which I have been doing since .225. They have plenty of catalysts over the next 18 months that will put it over $3.00 conservatively IMO. I think this breaks $1.00 by end of June as that is when Phase 1 of their retrofit will be completed. The next catalyst will be approval of their license by Health Canada shortly thereafter. That in particular will light the fuse on it. Then it will be first plantings. Then it will be completion of Phase 2, then first shipments/revenues. Then it will be completion of Phase 3 which will be by Q4 2020. At that time their Delta facility will have the capacity to be one of the top 5 producers of cannabis in the world. There will certainly be plenty of news along the way.
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AgraFlora Organics International Inc (OTCMKTS: PUFXF) Destined For New Highs
ByJim Bloom
Posted on April 1, 2019
AgraFlora Organics International Inc (OTCMKTS: PUFXF) bulls are certainly in control and the bears are fighting a losing battle with AgraFlora Organics. The stock has continued to edge higher after an excellent start to the year, supported by improving fundamentals.
PUFXF SHARE PIECE ANALYSIS
The bounce back is well supported by improving fundamentals key among them being the progress the company has made in affirming its long-term prospects in the cannabis industry. The company’s 2.2 million square foot Delta Facility is on course for completion, on the company securing the much-needed funding.
In addition, the company has inked a strategic partnership with Dixie Brands as it seeks to expand its operations into Europe in pursuit of opportunities for growth. AgraFlora is also eyeing international listing as part of an effort of creating a leading international medical cannabis company.
Investors have continued to push the stock up the charts in response to the string of positive developments that affirm push for growth in the multibillion-cannabis sector. The stock is currently trading in an uptrend with bulls in control.
After pulling back from the $0.60 handle, the stock has once again started surging in what appears to be a continuation of the emerging uptrend. A breach of the $0.60 resistance level should affirm the emerging uptrend, setting the stage for AgraFlora to make a run for $1.10 mark, which is the next substantial resistance level.
PUFXF Daily Chart
Conversely, sell-offs will in the meantime be restricted to the $0.40 mark, which appears to be the immediate support level, supporting the upside action. A breach of the support level would leave the stock susceptible to further drops, in continuation of the long-term downtrend.
WHAT DOES AGRAFLORA ORGANICS DO?
AgraFlora casts itself as a growth-oriented and diversified company focused on the cannabis industry. The company owns an indoor cannabis cultivation facility in London and Ontario.
WHY IS AGRAFLORA ORGANICS SURGING
Shares of AgraFlora are surging in response to the milestone achieved in the development of the company’s marquee 2.2 million square foot cannabis facility in Delta British Columbia. The Company has closed two tranches of a $40 million equity participation with Delta Organic Cannabis Corp.
The company’s state-of-the-art cultivation facility under construction is now fully funded and will become the second largest in Canada upon completion. With the new facility, the company is on course to become one of the mainstay players in the burgeoning Canadian cannabis marketplace.
“With the completion of all three retrofitting phases at the Delta facility, AgraFlora estimates that, as of 2020, it will be capable of growing 250,000,000 grams of high-quality cannabis every single year. Based on the landscape of the current Canadian marketplace, this would make the Delta operation the fourth largest grower in the country on a per gram basis,” AgraFlora in a statement.
In addition, the company has acquired an additional 10% stake in Propagation Services Canada for $14 million. The acquisition takes the company’s stakes in the cannabis flower company to 60%.
EUROPEAN UNION EXPANSION
Even as AgraFlora continues working on strengthening its cannabis production capacity, it has also set sights on the European Union, as its next frontier for growth. The company has since inked a strategic partnership with Dixie Brands.
The two are to work together on the manufacturing, sale, and distribution of cannabis-infused products, in legalized markets across the European Union.
“The European Union is a significant opportunity with more and more countries embracing medical cannabis and cannabis-based products. By exploring these opportunities with AgraFlora, we can leverage our experience in the United States to bring high-quality products to the European market,” saidChuck Smith, President of Dixie Brands.
BOTTOM LINE
A surge in share price and market activity attests to growing investor confidence about AgraFlora growth prospects. Completion of the Delta Cannabis facility would be a major milestone that would propel the company to the top of the charts when it comes to cannabis cultivation and production in Canada.
Expansion into Europe also underscores the company’s push for new opportunities, sure to accelerate its growth prospects. Recent developments provide clear evidence of a company destined for success as the Canadian cannabis market continues to expand.
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AgraFlora Provides Guidance Regarding Timing of Cultivation License Award
NEWS RELEASE
AgraFlora Organics
Vancouver, British Columbia / June 4th, 2019 – AgraFlora Organics International Inc. (“AgraFlora” or the “Company”) (CSE: AGRA) (Frankfurt: PU31) (OTCPK: PUFXF), a growth oriented and diversified international cannabis company, is pleased to announce that its Joint Venture entity, Propagation Services Canada (“PSC”), continues to achieve material progress with regards to the retrofit and licensing of its flagship 2,200,000 square foot Delta Greenhouse Complex.
After a careful review of its anticipated final preparations and submissions, including its Affirmation of
Readiness and Video Evidence Package (the “Evidence Package"), the Company anticipates, based on recent standard timelines for review and award and assuming no major required amendments or
augmentations, the award of a cultivation licence from Health Canada by the fourth quarter of 2019.
Chris Brocklesby of PSC commented, “We are largely complete on grow room build-out and we are now turning our attention to wrapping up security details while we await structure and supplies to complete the post harvest area. We are pleased with the rapid progress that we are making and feel confident that we will achieve the timelines and milestones noted below.”
Additionally, AgraFlora reaffirms that the aforementioned Evidence Package will be finalized during the
third quarter of 2019 and anticipates submission to Health Canada shortly thereafter. Upon extensive
deliberations with PSC and its industry consultants, the Company’s internal forecasts indicate that the
inaugural harvest at the flagship Delta Greenhouse Complex is scheduled for the first quarter of 2020.
AgraFlora also announces that all prerequisite cultivation infrastructure has landed on-site in Delta, BC
and has been secured prior to installation. Post-harvest equipment and supplies are en-route from Europe by way of airfreight and sea vessel and are anticipated to arrive within the required timeline for a Q4 harvest.
The retrofit for all applicable grow rooms located at the Delta Greenhouse Complex are complete and the Company reports that the installation of CCTV systems, as well as advanced perimeter and post harvest access controls will be completed by the second week of July.
Brandon Boddy, Chairman and CEO of AgraFlora stated, “With two significant off-take agreements
already in place, one with Namaste representing 25,000,000 grams per annum and another with ICC
International Cannabis Corp representing up to 100,000,000 grams over a 5 year period, we are eager to finalize the retrofit of the Delta Greenhouse Complex – an outstanding facility with an estimated
~$190,000,000 replacement value, with 2.2 million square feet under glass.”
About AgraFlora Organics International Inc.
AgraFlora Organics International Inc. is a growth oriented and diversified company focused on the
international cannabis industry. It owns an indoor cultivation operation in London, ON and is a joint
venture partner in Propagation Service Canada and its large-scale 2,200,000 sq. ft. greenhouse complex in Delta, BC. The Company has a successful record of creating shareholder value and is actively pursuing other opportunities within the cannabis industry. For more information please visit: www.agraflora.com.
https://puf.ca/pdf/AGRA_NR_2019_06_04_-_Announce_Timing_of_Cultivation_License_Award.pdf
After this update on AgraFlora, I’m gonna have to pump the brakes a bit on expectations. I still maintain that it has 10-bagger or more potential, but the timeline has moved further out than originally projected by the company. Here are the catalysts and timeline shareholders should be looking at:
End of June, 2019 - Shareholder tour of Delta facility. Should provide some nice boots-on-the-ground feedback of the facility.
Q3 2019 - Finalization and submission of Evidence Package required for license from Health Canada.
Q4 2019 or Q1 2020 - First harvest at Delta Facility (contradiction of timeline in PR).
Upon receiving license approval from Health Canada, that will add credibility to the greater market about AgraFlora’s potential and the stock should be trading at much higher levels once approved.
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Rick. Did you see the banter on David’s twitter from the Joe Natural guy today? What was that all about? What are the “very very shady transactions”? Is he referring to the organic flower deal?
You’d have to ask Joe Natural what he means by “very very shady transactions”. AgraFlora has no revenues at present so they have to issue shares as compensation for business transactions, salaries and so forth. That always pisses shareholders off, but at least in my case, when I know a company doesn’t have revenues, there are never any shareholder-friendly ways to raise funds to build out their business and I consider that a cost of my investment that I must pay for being an early entrant.
One transaction which gave/gives me pause was 7,000,000 shares to outgoing CEO Derek Ivany. Granted, he moved the company into the position it is today, but the compensation seems a bit rich for a company that has not sold any cannabis as of yet. If anything, the reward should’ve been due upon certain milestones such as achieving the Health Services cannabis license or attaining the first $100 million in revenues or something of that nature. It’s an expensive amount of dilution for a company that isn’t producing yet. So I get shareholders being dismayed at that.
As far as Joe Natural is concerned, I’ve known (of) him for some 10 or more years. I’ve debated him in the past on some stocks, though I’d be hard-pressed to remember which ones. I’ve caught him blatantly lying in some cases so as much as I do respect some of his opinions and ability to find undiscovered gems, I am also very cautious as to some of the things he says. He’s a character - very savvy investor/trader with some big scores over time and he’s developed a following. He got into AgraFlora around .10 or so I think, so he’s playing/trading with house money. But he’s also very emotional to the point where he can become unhinged. I believe that is what was on display with his back-and-forth with David Parry, though I don’t know the specifics of their personal relationship. I can only comment on what I’ve read. In short, I take his excessive bullishness and excessive bearishness with a grain of salt and I try to sort out the facts underlying where his emotional extremes come from.
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Hi Rick. In the latest news release it states:
Furthering its vertically integrated mandate, AgraFlora is also contemplating establishing an on-sitedispensary at the AAA Heidelberg facility, as per Alcohol and Gaming Commission of Ontario(“AGCO”) regulations, capitalizing on a 1,500,000-purchaser catchment area within a 90-minute radius.
Will this mean further dilution and if so, is it worth it?
A few things you have to keep in mind here:
-
They said they are “contemplating” establishing an onsite dispensary. I don’t really concern myself when a company says they are contemplating anything - aside from something that has a profound effect on the stock or business as a whole. For example, they also have said they are contemplating a move to a higher exchange. Sure, it’s nice to know what the company’s vision is going forward, but until it becomes a reality, I don’t really get too concerned about it.
-
They are considering an “on-site” dispensary. a few things here:
- It is on their existing site so it is not like they are going out and buying a new property and building and so forth, so I would assume that capital expenditures are not too burdensome.
- A dispensary is akin to a liquor store for pot. It’s not some huge expensive facility so the footprint is assumed to be small. It is merely an outlet to sell on site as opposed to growing and shipping wholesale crops.
- If you are concerned about this being dilutive, then I would email IR and ask if you could have a ballpark figure on what it will cost to get the dispensary up and running, how much it will cost to operate annually and what sort of revenues does management anticipate on an annual basis. I personally am not too concerned about this as I am invested in AgraFlora for the Delta Facility conversion.
-
As far as dilution is concerned - Everything a company incurs expenses for (staffing, facilities, product, professional services, etc.) will be dilutive in some form if the company does not have revenues to pay for such expenses.
-
When you say “Is it worth it?” - how can you or I possibly answer that? This is where shareholders put faith in management that they’ve run the numbers and have determined it is worth contemplating. And if a shareholder has questions or concerns, then direct that to IR/management.
From their PR, it sounds like they see an opportunity to capitalize on:
“Furthering its vertically integrated mandate, AgraFlora is also contemplating establishing an on-site dispensary at the AAA Heidelberg facility, as per Alcohol and Gaming Commission of Ontario (“AGCO”) regulations, capitalizing on a 1,500,000-purchaser catchment area within a 90-minute radius. _
_ London, Ontario is Canada’s 11th largest metropolitan area and is tactical located at the nexus of Toronto, Ontario , Detroit, Michigan and Buffalo, New York ; affording the Company a lucrative opportunity to capture a significant portion of the cannabis tourism marketplace.”
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AgraFlora Organics Reviews Vertically Integrated Asset Portfolio
News Provided by GlobeNewswire2019-06-18
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VANCOUVER, British Columbia, June 18, 2019 (GLOBE NEWSWIRE) – AgraFlora Organics International Inc. (“ AgraFlora ” or the “ Company ”) ( CSE: AGRA) (Frankfurt: PU31) (OTCPK: PUFXF ), a growth oriented and diversified international cannabis company, is pleased to provide the following corporate updates pertaining to the Company’s vertically integrated cannabis (“THC”) and cannabidiol (“CBD”) asset portfolio.
Over the past four quarters, AgraFlora has continued to deploy an assertive corporate acquisition stratagem, amassing a diverse portfolio of vertically integrated cannabis assets and industry partnerships. Culminating with the Company’s recent acquisition of a suite of unique downstream and cannabinoid product formulation assets from Organic Flower Investments Group Inc. (“ Organic Flower ”) (CSE: SOW)(FWB: 2K6)(OTC: QILFF), AgraFlora now boasts the following upstream/downstream operations, partnerships, off-take agreements, exclusive licences and asset exposure:
70 PER CENT OWNERSHIP STAKE IN PROPAGATION SERVICES CANADA (“PSC”)
Pursuant to the terms of an executed asset purchase and sale agreement between AgraFlora and Organic Flower, the Company now controls 70 per cent of PSC’s flagship Delta Greenhouse Complex. The Delta Greenhouse Complex is equipped with 2.2 million square feet of dedicated cultivation area under glass and is widely considered to be one of the most technically advanced and environmentally efficient greenhouse operations in the world.
AgraFlora continues to achieve material progress with regard to the retrofit and licensing of its bellwether Delta Greenhouse Complex. After a comprehensive review of its anticipated final preparations and submissions, including its affirmation of readiness and video evidence package, the Company anticipates, based on recent standard timelines for review and award and assuming no major required amendments or augmentations, the award of a cultivation licence from Health Canada by the fourth quarter of 2019.
Upon successful award of its aforementioned Health Canada cultivation license, the Delta Greenhouse Complex will hold claim to the highly coveted spot as the world’s second largest cannabis cultivation operation under glass, with an estimated replacement cost of $190,000,000.
AgraFlora’s internal corporate projections indicate that upon receipt its aforementioned cultivation license from Health Canada, the Company’s Delta Greenhouse Complex will be the fourth largest Licensed Producer (“LPs”) in Canada by 2020 funded production metrics (see Figure 1), strategically positioned in close proximity to Canada’s largest cannabis economic centres; Toronto and Vancouver.
Figure 1.
| Issuer | 2020 Estimated Annual Capacity (in grams) | Current Market Capitalization |
|---|---|---|
| Aurora Cannabis | 700,000,000 | $10,272,832,000 |
| Canopy Growth Corp. | 525,000,000 | $19,036,764,000 |
| Aphria | 255,000,000 | $2,283,968,000 |
| AgraFlora & PSC | 251,250,0001 | $173,852,000 |
| Tilray | 225,000,000 | $3,793,000,000 |
| The Green Organic Dutchman | 195,000,000 | $894,586,000 |
| Cronos Group | 150,000,000 | $6,910,173,000 |
| OrganiGram Holdings | 113,000,000 | $1,304,743,000 |
| Hexo Corp. | 108,000,000 | $1,930,895,000 |
| CannTrust Holdings | 105,000,000 | $944,630,000 |
AgraFlora’s forecasted production metrics are further substantiated the Delta Greenhouse Complex’s industry-leading cultivation infrastructure, including:
- Fully integrated on-site natural-gas-powered power plant;
- Providing ample heat and electricity, while repurposing carbon dioxide emissions to benefit the plants;
- Proprietary energy-efficient air exchange;
- Advanced climate and humidity control management infrastructure;
- Ebb-and-flow watering systems to enhance complete irrigation recapture and water treatment;
- 1.5-million-gallon hot water storage tank configured to store energy produced during the day, for redistribution during non-peak hours, thereby increasing operational efficiencies and reducing associated energy costs; and,
- Multistage supplemental lighting augmented by natural sunlight to foster optimized illumination equilibrium.
ACMPR LICENSED AAA HEIDELBERG FACILITY
AgraFlora’s wholly-owned subsidiary, AAA Heidelberg Inc. is a licensed cannabis cultivation facility under Health Canada’s Access to Cannabis for Medical Purposes Regulations (“ACMPR”). The AAA Heidelberg facility is equipped with five partitioned flower rooms, affording the company ample canopy earmarked for ultra-premium, artisanal craft cannabis cultivation.
Once fully optimized, it is forecasted that the AAA Heidelberg facility may achieve annualized dried cannabis production capabilities of circa one million grams, including the successful recapture of 225,000 grams of premium cannabis trim to be manufactured into ancillary value-added cannabis products.
The Company previously provided the following Q3 2019 - Q4 2020 operating guidance and licensing milestones pertaining to its AAA Heidelberg facility:
- Application and anticipated receipt of a Health Canada awarded sales licence;
- Application and anticipated receipt of a Health Canada awarded processing licence;
- Application and anticipated receipt of a Health Canada issued export permit;
- Proposed on-site dispensary as per Alcohol and Gaming Commission of Ontario (AGCO) regulations;
• Potential 1.5-million-purchaser catchment area within a 90-minute radius; - Importation of a catalogue of premium craft cannabis genetics;
- Fully optimized production capabilities of circa one million grams of ultra-premium dried craft cannabis flower, with potential production expansion based off surplus cultivation areas contemplated;
- Successful recapture of 225,000 grams of premium cannabis trim to be manufactured into ancillary value-added cannabis products;
- Successful harvest of inaugural ultra-premium craft cannabis crop;
- Proposed export of finished cannabis form factors to emerging marketplaces, including India and Thailand, achieving unit contribution of up to $15 per gram.
INDUSTRIAL HEMP LICENSE
AgraFlora has applied for licensing with Health Canada under the industrial hemp regulations of the Cannabis Act. The Company anticipates that licence approval could be granted in the third quarter of 2019, which will subsequently equip AgraFlora with the ability to seed, cultivate and harvest industrial hemp at its flagship 2.2 million square foot Delta, B.C. facility.
Upon successful grant of an industrial hemp licence, AgraFlora intends to aggressively pursue proprietary CBD cultivar development, as well as:
- Seedling development;
- Cultivar experimentation; and,
- Specialized fibre production.
AgraFlora anticipates that upon achieving full scale production, its planned industrial hemp operations will provide ample feedstock for its unique portfolio of product formulation and downstream THC/CBD assets, including cannabinoid-infused beverages, edibles and topicals.
CANNABINOID-INFUSED CONFECTIONARY, CHOCOLATE AND EDIBLES MANUFACTURING
By way of an executed Asset Purchase Agreement (the “Agreement”) with Organic Flower, AgraFlora controls an 80 per cent interest in The Edibles and Infusions Corp. (“Edibles and Infusions”), a joint venture (the “JV”) with one of North America’s largest and most storied manufacturer and distributor of chocolate and sugar confectionary products.
The Company’s JV partner was established nearly a century ago and has since become North America’s largest confectionary fruit slice manufacturer, supplying products to over 20,000 locations across North America - most prominently Costco and Wal-Mart. AgraFlora’s JV partner currently manufactures and distributes several hundred unique stock keeping units (“SKUs”).
The JV will design and develop a 50,000-square-foot manufacturing and product formulation facility, located in Winnipeg, Manitoba. The facility will be operated by a roster of experienced chocolatiers and confectioners, as well as equipped with state-of-the-art manufacturing equipment capable of producing an assortment of both cannabinoid/terpene-infused products for medicinal, functional and adult use, including:
- Gourmet snacks including caramel popcorn, cheese biscuits, cocoa cookies, glazed pecans and salty pretzels;
- Chocolates, toffees, caramels;
- Gummies, confectionary, gum;
- Baked goods;
- Flavoured tinctures;
- Powdered drinks; and,
- CBD- infused pet products.
Edibles and Infusions is working to finalize its applications for a Health Canada standard processing licence, as well as a cannabis sales licence. The Company anticipates the facility will be fully operational by the first quarter of 2020 and, once optimized, will be capable of generating in excess of $750 million in annual sales revenue. Projected revenues are derived from logical assumptions including the facility achieving full capacity and the equipment operating seven days per week, 20 hours per day with all product being sold to downstream distributors, with the sales price based on current comparable retail pricing in the USA.
Existing downstream capabilities will be buoyed by one of Canada’s leading sales forces, affording the JV the ability to secure immediate shelf space across all major retail channels, including:
- Groceries;
- Pharmacies;
- Convenience stores;
- Gas stations; and,
- Quick-service restaurants.
NON-ALCOHOLIC CANNABINOID-INFUSED BEERS AND CIDERS FORMULATION
Through an exclusive partnership agreement with a leading Toronto-based brewery (the “Brewhouse”), AgraFlora holds claim to the exclusive formulation, manufacturing and distribution rights for all cannabinoid-infused beverages developed at said Brewhouse. Composed of a consortium of experienced brewery partners, the Brewhouse has completed multiple production runs for prominent European beverage brands, such as:
- Guinness;
- Augustiner; and,
- Innes & Gunn.
This exclusive partnership provides AgraFlora with preeminent exposure to a collective of domestic and global brewery partners, as well as further crystallizes a leading production platform for the Company’s cannabinoid-infused carbonated beverage product offering, including:
- Non-alcoholic beers;
- Seltzers; and,
- Ready-to-drink (“RTDs”) beverages.
With its exclusive brewing partner, the Company plans to commence product formulation and batch testing during third quarter of fiscal 2019, with forecasted commercial production slated to begin in fourth quarter 2019.
Equipped with custom production equipment and a captive research, development and testing facility, as well as a state-of-the-art brewing infrastructure, the Brewhouse is armed with annual output capacity capabilities of 120,000 hectolitres (“hl”). By comparison, Canadian brewer Steam Whistle Brewing produces approximately 95,000 hl on an annualized basis.
The Brewhouse is nearing completion of major facility retrofit initiatives, which are projected to increase its output capacity to over 200,000 hl per annum. Upon completion of the retrofit, aggregate capital expenditures deployed on the Brewhouse build out will exceed $20 million.
In addition, the Brewhouse possesses the ability to package both steel kegs and plastic one-way kegs in a plethora of fittings, and is equipped with a 24-head rotary canning line, capable of packaging a variety of container dimensions at a rate of over 100 million containers per year. The Brewhouse also boasts an adjoined tasting and viewing facility (the “Taproom”) affording AgraFlora the ability to showcase product launches, beer dinners, community events and gallery showings.
CBD-INFUSED/HEMP OIL COSMETICS MANUFACTURING
Via its wholly-owned subsidiary Canutra Naturals Ltd. (“Canutra”), AgraFlora is equipped with cultivation, extraction, manufacturing and distribution capabilities from its flagship facility in Kent County, New Brunswick. Canutra manufactures and distributes premium skin care, cosmetics and cannabinoid product lines, including a suite of trusted consumer brands such as Whole Hemp Health; a Canadian all-natural, hand-made skin care line, formulated with organic hemp seed oil.
Canutra markets the Whole Hemp Health product line by way of brick-and-mortar retail outlets, Amazon Prime, as well as direct to consumer, through an integrated Shopify e-commerce platform.
Canutra’s wholly owned subsidiary, Canutra Farms, owns and operates 76 acres of unzoned agricultural land with 1,000 feet of river frontage in Kent county, New Brunswick. Canutra Farms was formerly a federally owned farm and research facility and is equipped with over 17,500 square feet of commercial-grade facilities and 12 separate structures. Canutra Farms was granted an industrial hemp licence by Health Canada for its New Brunswick land parcel in 2017.
Canutra was also awarded a cannabis research licence by Health Canada in 2018. Additionally, Canutra boasts a research and development partnership with the Universite de Moncton (“UM”). Canutra will collaborate with UM to augment its portfolio of IP including:
- Optimized cannabis/hemp cultivation techniques;
- Extraction methodologies;
- Cultivar development;
- Inoculation formulations;
- Proprietary cannabinoid profiles for future skin care product lines.
Canutra’s products are strategically manufactured in the same county as Canutra Farms, affording Canutra the ability to swiftly expand the breadth of its product line from its current SKUs to more than 40 SKUs.
This turnkey manufacturing infrastructure positions AgraFlora to capitalize on current and future market trends in the rapidly expanding cannabis consumer products space. Canutra is finalizing the development phase of a suite of innovative SKUs including:
- Organic cosmetics with anti-aging properties;
- Shampoos and conditioners; and,
- Sunscreens.
CBD-INFUSED PERFORMANCE PRODUCTS
By way of an exclusive North American manufacturing and distribution agreement with the Toronto Wolfpack RLFC (“TWP”) and HowlBrands, AgraFlora is positioned at the nexus of the burgeoning CBD-infused performance products marketplace and the vast captive audience of professional sports.
In collaboration with TWP and HowlBrands, the Company will leverage its unique downstream and product formulation asset portfolio to manufacture and distribute a suite of athlete-focused, CBD performance products, including:
- CBD-infused topical creams;
- Therapeutic relief balms;
- Sport pain CBD tinctures;
- CBD-infused soaks; and,
- CBD-infused roll-ons and healing sticks- engineered for optimal topical absorption.
AgraFlora and HowlBrands are preparing to launch an inaugural CBD-infused SKU, Rugby Strength; a replenishing body topical cream infused with 125 milligrams of CBD extract, derived from organically grown cannabis sativa L.
Rugby Strength is uniquely formulated to optimize the transdermal absorption of CBD’s analgesic, anti-inflammatory and anti-anxiety healing properties. HowlBrands and TWP aim to cater to professional and amateur sports teams, as well as individual athletes through diverse product offerings formulated to:
- Reduce the pain and discomfort resulting from intense and/or frequent wear and trauma on weight-bearing joints;
- Support reparation and recovery; and,
- Enhance fitness and performance.
NICORETTE-INSPIRED SUBLINGUAL CANNABINOID PRODUCT LINE
AgraFlora has secured the exclusive North American rights to a proprietary manufacturing system, enabling the production of cannabinoid-infused therapeutic gum, chewable tablets and capsules.
The Company’s next-generation line of medicinal-use cannabis products is inspired by popular demand of Nicorette’s branded therapeutic products, boasts the following:
- Proprietary dual-delivery technology: advanced patented processes reduce surface tensions, increase binding of molecules and enable homogenous mixing;
- Rapid sublingual activation: optimized absorption methodologies facilitate a rapid onset within the first 15 minutes of application; and,
- Metabolism efficacy: metabolizes in the liver to create a more lasting effect.
LIBRARY OF PATENTED PRODUCT FORMULATIONS
AgraFlora has also obtained the Canadian exclusive rights to a catalogue of cannabinoid-infused product formulations from a global formulation provider with over three decades of experience working with leading consumer product goods (“CPG”) brands. The Company has engaged a roster of food engineers, nutritionists and scientists to optimize bioavailability, consistent dosing protocols and flavouring of the AgraFlora’s licensed formulations.
AgraFlora will continue to leverage its production and processing assets, while further activating its downstream activities by launching cannabinoid-infused beverages, edibles and personal care products; specifically formulated with patented micro diffusion technologies.
These proprietary formulation and manufacturing processes are specifically adapted to ensuring consistent dose delivery, while maintaining taste and texture integrity. AgraFlora’s patented formulations will be adjusted based on a various production variables, including:
- Altitude;
- Barometric pressures;
- Production time of day; and,
- Humidity.
BEVERAGE BOTTLING AND DOWNSTREAM DISTRIBUTION
The Company holds claim to a complementary exclusive cannabinoid-infused beverage supply and distribution agreement with a Canadian bottling facility (the “Bottler” or the “Facility”). The Facility is strategically situated in the Greater Toronto Area (“GTA”), affording AgraFlora unbridled access to the largest addressable Canadian marketplace. The GTA is buoyed by established infrastructure, offering the flexibility to accommodate shipments from multiple ports and hubs across North America.
The Facility is equipped with state-of-the-art bottling equipment, configured to conduct rapid production runs, with minimal downtime for production line changeovers. Fully operational, the Facility has been granted the following industry certifications:
- Good manufacturing practices (“GMP”);
- Canadian organic standards;
- Certified vegan;
- Fair trade certification (“ISO 17065”); and,
- Kosher facility status.
AgraFlora will leverage the Facility to produce a suite of both cannabinoid-infused and functional beverages. The Facility is currently configured to produce formulations for water, coffee, tea, juice and carbonated sodas in a variety of formats, including glass bottles, polyethylene terephthalate (“PET”) bottles and aluminum cans.
The Bottler has the capabilities to develop and produce premium beverages that exceed market standards, by leveraging innovative industry technologies, including:
- Pharmaceutical-grade mixing tanks;
- Advanced UV sterilization; and,
- Custom extended-shelf-life (“ESL”) bottling lines.
UNIQUE CANNABINOID DELIVERY SYSTEMS INTELLECTUAL PROPERTY (“IP”)
AgraFlora controls the exclusive rights to a portfolio of disruptive cannabis beverage delivery assets and intellectual property (IP). This acquisition will position AgraFlora as the industry’s sole Canadian manufacturer and distributor of an innovative beverage dispensing cap technology, equipped with a proprietary cannabinoid delivery mechanism.
The Company will incorporate its planned cannabinoid-infused beverages lines with its patented pharmaceutical-grade dispensing cap technology, as well as advanced delivery mechanisms, providing optimized ingredient effectiveness for the end consumers. Refined over five years, with research and development expenditures of $30 million, AgraFlora will leverage its exclusive rights to a marquee dispensing cap technology and delivery mechanism to revolutionize the North American cannabinoid-infused beverage marketplace.
The state-of-the-art delivery technology is certified for health care and pharmaceutical applications; AgraFlora anticipates that it will pioneer an elevated industry standard of quality.
The delivery mechanism boasts a patented airtight and moisture-resistant bottle cap to protect volatile ingredients such as cannabinoids, antibiotics, probiotics, vitamins and minerals resulting in superior shelf stability for infused bottled beverages. The dispensing cap technology allows for increased efficacy when compared with premixed beverages, which are susceptible to rapid nutrient deterioration.
THC OVERDOSE ANTIDOTE
The Company has been granted the Canadian exclusive sublicense (the “sublicense”) for True Focus Canada’s product suite and proprietary IP portfolio, including its patent pending ‘THC Overdose Antidote’. The sublicense permits the exclusive domestic marketing, distribution and development of the aforementioned THC Overdose Antidote for a period of ten years.
With this exclusive sublicense, AgraFlora is now armed with a suite of all-natural, nutraceutical formulations, coupled with an intuitive delivery system designed to mitigate the negative side effects associated with excessive THC consumption. The aforementioned product formulations are considered patent pending by way of a U.S. Patent and Trademark Office (“USPTO”) patent application.
Delivered to the end consumer through a pocket-sized, user-friendly spray bottle, True Focus’s revolutionary formulations are designed to be ingested in a sublingual manner.
Recreational cannabis consumption for the purpose of achieving desired levels of euphoric or psychoactive effects can at times lead to adverse and unwanted side effects, given the lack of consistent doses distinction or historical use. True Focus’s patent-pending formulation offers a unique solution to alleviating undesirable symptoms associated with a THC overdose.
EXCLUSIVE REGISTERED TRADEMARK PORTFOLIO
By way of its wholly owned subsidiary, Trichome Cannabrands Inc. (“Trichome”), the Company has aggregated portfolio of 57 registered trademarks in Canada for a diversified range of cannabis products and services, including:
- Medicinal cannabis: for the relief of nerve pain, treatment of muscle spasms caused by multiple sclerosis, relief of nausea caused by chemotherapy, temporary relief of seizures and cannabis oil for the treatment of cancer;
- Recreational cannabis: on-line and retail sale of cannabis, cannabis-related products, derivatives of cannabis and natural health products containing cannabis;
- CBD-infused performance products: CBD oil for medical purposes, topical anesthetics, antibiotic cream and anti-inflammatory ointments;
- Packaging and vape products: packaging of cannabis, cannabis-related products, derivatives of cannabis and natural health products containing cannabis, and cannabis oil for electronic cigarettes;
- Cosmetics: makeup, beauty care cosmetics, eye cream, body creams, massage creams, massage oils, skin care preparations, body powders, body oils, bath soap, moisturizing skin lotions, body sprays used as personal deodorants and fragrances, non-medicated bath salts, exfoliating scrubs for the body, and bath oils;
- Candy, chocolate and edibles: cannabis oil for food and edible oils, chocolate bars infused with cannabis, brownies containing marijuana, chocolate, and sugar confectionery;
- Beverages and bottling: non-alcoholic fruit-based beverages, carbonated soft drinks, sports drinks, beverage flavourings, beverages made of coffee and tea;
- Cannabinoid infused beers and ciders: alcoholic-based beverages, alcoholic fruit beverages and alcoholic tea-based beverages.
Included in the portfolio of trademarks are regional airport codes, telephone area codes and other such recognizable regional identifiers that show significant branding potential for the cannabis space.
AgraFlora intends to leverage these registered trademarks throughout a wide array of corporate branding exercises.
OFF-TAKE AND COMMERCIAL RIGHTS AGREEMENTS
Furthermore, AgraFlora has secured commercial rights and off-take agreements with ICC International Cannabis Corp. (CSE: WRLD.U)(FWB: 8K51)(OTC: WLDCF) (“ICC” or “International Cannabis”), as well as Namaste Technologies Inc. ( TSXV: N)(FWB: M5BQ)(OTCQB: NXTTF) (“Namaste”), whereby ICC and Namaste may purchase up to 100,000,000 grams and 25,000,000 grams of premium dried cannabis from the Company’s Delta Greenhouse Complex, respectively.
These off-take agreements will further de-risk AgraFlora’s low cost domestic cannabis production by providing the Company with the opportunity to capture significant cash flows at both the upstream and downstream layers of the cannabis value chain; realizing material exposure to both the wholesale and eventual retail distribution of dried cannabis into high-value domestic and international patient populations.
In addition, AgraFlora and ICC have entered into a commercial rights agreement, affording the Company unencumbered access to cannabis processing/finishing at ICC’s EU-GMP certified facilities.
In anticipation off-take delivery from AgraFlora, ICC is architecting its first purpose-built, EU-GMP compliant cannabis processing, manufacturing and packaging facility. It is anticipated that ICC’s finishing facility will function as a premier European cannabis-processing hub, through which:
- Cannabis produced/procured from ICC’s contract farming and off-take agreements can be securely shipped to the finishing facility;
- Cannabis manufacturing and processing will then be initiated at ICC’s finishing facility according to GMP-certified manufacturing specifications and,
- The now finished GMP-certified cannabis can be packaged for export and/or leveraged as GMP-compliant cannabis inputs to produce a portfolio of diverse, designer product formulations.
GMP-certified cannabis products are eligible for import/export to the European Union, thus achieving higher margins, all while removing barriers to entry for the penetration of high-value EU patient populations. GMP certification is an internationally recognized system, mandated with ensuring all produced goods meet the highest consumer health and safety standard.
The aforementioned commercial rights and off-take agreements are contingent on AgraFlora receiving its cultivation and sales licences from Health Canada for its Delta greenhouse complex operations.
EUROPEAN DISTRIBUTION AND COLLABORATION AGREEMENT
In addition, AgraFlora has inherited a European distribution and collaboration agreement with ICC, affording the Company unbridled access to a trans-European distribution network is composed of 80,000 retail outlets and pharmacies, spanning 16 countries, including: Germany, the United Kingdom, Ireland, Denmark, Italy, France, Spain, Poland, the Netherlands and Greece.
AgraFlora’s European distribution network is augmented by various value-added services, including:
- Strategic procurement;
- Warehousing;
- Product registration;
- Regulatory representations.
AgraFlora will remunerate International Cannabis according to a floating royalty matrix based on the net sales of products sold through ICC’s European distribution channels.
Brandon Boddy, Chief Executive Officer and Chairman of AgraFlora stated: “By way of astute acquisitions, synergistic partnerships and surgical execution, AgraFlora has grown from a $2.5 million market capitalization to over $175 million in rapid fashion. The acquisition of Organic Flower instantaneously amplified our enterprise value by a factor of two, in addition to crystalizing our corporate roadmap as the Company prepares to enter the billion-dollar arena.
These tactical acquisitions from proven operators further augment our existing portfolio upstream cannabis assets with a suite cannabinoid-infused food/beverage product formulation and manufacturing assets. Turnkey solutions, including ingredient sourcing, manufacturing, testing and analytics, will further crystallize AgraFlora’s pole position as a thought leader throughout the next phase of cannabis normalization,” continued Boddy.
Further to the Company’s recently completed transaction relating to the acquisition of downstream and product formulation portfolio (the “Asset Portfolio”) from Organic Flower (see June 7th, 2019 news release), the aggregate purchase price (the “Purchase Price”) payable by AgraFlora to Organic Flower for the Asset Portfolio shall be the issuance of an aggregate number of common shares in the capital of AgraFlora that is equal to 1.15 multiplied by 302,703,697 (the “Payment Shares”), as fully paid and non-assessable.
AgraFlora and Organic Flower also agree that with respect to the issued and outstanding convertible securities of the Company (the “Convertible Securities”), the holders thereof (the “Organic Flower Convertible Security Holders”) shall have the option to exercise their respective Convertible Securities into either common shares in the capital of Organic Flower or AgraFlora on identical terms and conditions of the Convertible Securities effective as at closing of the transaction. For greater certainty, the Convertible Securities may be exercised for either common shares of Organic Flower or common shares of AgraFlora, and not common shares of both parties. The Company and Organic Flower will do all such acts and things as may be necessary or desirable, including without limitation, amending the certificates and documents evidencing the Convertible Securities, to assure that the exercise rights are fully effected. There will be a voluntary 12-month hold period applied to all Convertible Securities exercised into the share capital of AgraFlora.
About AgraFlora Organics International Inc.
AgraFlora Organics International Inc. is a growth oriented and diversified company focused on the international cannabis industry. It owns an indoor cultivation operation in London, ON and is a joint venture partner in Propagation Service Canada Inc. and its large-scale 2,200,000 sq. ft. greenhouse complex in Delta, BC. The Company has a successful record of creating shareholder value and is actively pursuing other opportunities within the cannabis industry. For more information please visit: www.agraflora.com.
ON BEHALF OF THE BOARD OF DIRECTORS
Brandon Boddy
Chairman & CEO
T: (604) 682-2928
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The previous news release was the most comprehensive news release a company could give shareholders. I don’t have anything to add except the above table which highlights the significant disparity between AgraFlora’s production capacity vs. Market Cap compared with the top industry players. That disparity is why I’ve invested in PUFXF and also why I believe this will be a 10- bagger from current levels when they are producing cannabis from their 2.2 million sq ft Delta Greenhouse. First things first though - the Delta facility has to be licensed by Health Canada - anticipated in Q4 2019.
Next week is the company annual shareholder meeting and they are opening up the doors to the Delta facility for shareholder and analyst tours. I imagine there might be a bit of a run-up for this event or afterwards, but that’s just a guess on my part.
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Comprehensive interview with strategic advisor to AgraFlora.
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Rick. I noticed last year that all of the main cannabis stocks increased in price between mid August and end of September.
ACB +111%
CGC +82%
APHA +74%
TLRY +564%
TGODF +58%
CRON +89%
OGRMF +50%
Was there some catalyst that caused this? Is it harvesting and cyclical? What are your thoughts for the boost?
That run up was due to the impending legalization of recreational marijuana in Canada which occurred last fall. I forget the exact date. It was definitely a “sell on the news” type of catalyst.
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Rick, what are your thoughts on a secondary cannabis stock to own for the next 4 months? I’m looking at Zenabis, Aleafia, 48 North or Village Farms. I am pretty much down to 48 North or Village Farms, but you might have other thoughts.
4 months is a short time frame…more of a swing trade, so in that case I’d be looking at either a catalyst or the chart more than the fundamentals.
My 2 favorite pot stocks other than PUFXF are OGI and HEXO…both mid-range players. OGI is a solid company and I’ve successfully traded that previously. They haven’t dipped as harshly as their industry peers so their relative performance makes them a safe and intriguing buy.
HEXO already has a beverage deal with Molson so there’s a degree of confidence in that one fundamentally. It’s on my radar to take a position because the chart is nearing a compelling buy point - bouncing off the lower support line of an ascending channel. I kinda like it in the low $4s.
ALEAF I got burned on 6 months or so ago, so I’m jaded with that one. It didn’t move well with the sector so it’s no longer on my watch list. Maybe things have changed though, who knows?
ZBISF - Don’t know much about them to comment on.
Thanks Rick. You still think PUFXF still has the biggest upside in the sector? Not sure what is going on with HEXO. Don’t no what your buy in position is, but you probably didn’t expect it to drop below $4.
I do like what is going on with VFF. Like you mentioned, they are not much different than PUFXF in that they converted a tomato greenhouse into cannabis. They have been climbing the last couple weeks. 48North intrigues me too. They have a good management team, just received there license from Health Canada. Have the first harvest going, 100 acres, and are sitting at $.60 with a float of 121M shares. Here is a video. 48North
Focusing on HEXO…it is confounding how hard hit HEXO has been recently and in particular last week where it lost nearly 20%. Regardless, it remains one of the better risk-to-upside ratios that I’m aware of in the sector.
Chartwise…it is breaking down from a technical standpoint. While it is hitting the bottom of the long term ascending channel at $4.00, it is doing so with a precipitous drop which makes me a bit more cautious about entry until I see a bottom confirmation.
From a fundamentals standpoint, this recent Yahoo article sums up HEXO’s situation pretty well - which is why it is on my radar. I just need the technicals to show less risk of continued downside.
HEXO Stock: When Will the Pain End?
After another new 52-week low, HEXO ( HEXO ) has become a perplexing stock that should benefit from some of the chaos in the Canadian cannabis sector that isn’t getting any benefit of the doubt. The market is selling most cannabis stocks regardless of valuations and forecasts providing the opportunity to build a solid position in the stock that uplisted to the NYSE in July.
Path Forward
HEXO hasn’t taken the path of massive cannabis cultivation growth like several other competitors in the Canadian market. Possibly the less promotional and aggressive nature of the management team is hurting the short-term stock price.
The company closed the Newstrike merger on May 28. The deal gives HEXO cultivation capacity of 150,000 kg for a company that generated only 9,800 kg of dried cannabis in FQ3. The plan increases quarterly cultivation to 37,500 kg.
In addition, HEXO has a massive supply of hemp lined up. The supply includes 200,000 kg of hemp for CBD in fiscal 2020 that starts next month. On top of this supply, the company has a second supplier providing 60,000 kg of hemp in the current quarters.
This huge supply will provide the company with the hemp needed for the legalization of edibles and concentrates in mid-December in Canada and a plan to enter eight U.S. states in 2020. Even smarter, HEXO is working with Valens for cannabis and hemp extraction of up to 50,000 kg next year.
The extraction agreement allows HEXO to smooth out the operating ramp-up to meet initial demand without having to have all of the facilities internally. Again, the company can focus on building the brand and sales and less on farming.
What To Watch
HEXO has now sold off to $4 following a weak market for cannabis stocks due in part to some management and legal issues in the sector. The market value is now below $1.1 billion for a company forecasting revenues of C$400 million in the upcoming fiscal year or the equivalent of $300 million.
Some question will exist on the revenue impact of the push back on the Cannabis 2.0. HEXO is focusing on gummies and premium vapes on top of the cannabis-infused beverages from the Truss Beverages joint venture with Molson Coors (TAP).
The Truss Beverages joint venture includes a 42.5% investment position from HEXO with Molson Coors owning the other 57.5%. These results won’t be consolidated in the quarterly and annual financials, but the business could become a large part of the investment thesis of the stock.
The near-term focus in the market will shift towards margins. HEXO hit 50% gross margins in the April quarter and Newstrike provides about C$10 million in annual synergies along with higher sales to cover corporate expenses.
Revenues are forecasted to double in the FQ4 quarter ending here at the end of July or somewhere around C$25 million.
Takeaway
The key investor takeaway is that HEXO is trading at the lows as the cannabis sector hits a lull. Investors need to remember that companies like HEXO are going to see revenues nearly double sequentially in each of the next couple of quarters. By next year, the company will look far different with sales forecasted to top C$100 million, up from only C$12 million in the last quarter.
One can’t predict when the pain ends for HEXO or any of the other cannabis stocks, but the stock appears set to outperform over the next year from the $4 levels.
Merrill Lynch analyst Christopher Carey has recently reiterated a Buy rating on HEXO stock with a $10 price target, which implies nearly 150% upside from current levels.
Based on the chart I posted back on June 18, absolutely. But that doesn’t mean it won’t experience growing pains like it is now.