Green Organic Dutchman Holdings Ltd (OTCMKTS:TGODF) has introduced a new strategic plan, which will not only help the company lower its financing requirements, but will also help achieve its profitability targets. Brian Athaide, the CEO, expressed that these actions mark as the next logical measures towards the firm’s road to profitability. Their strategy has always focused on an unparalleled scale, but they will not shy away to focus on operational efficiencies where the scale will fail.
Increase production, lower costs
Green Organic is scaling back SG&A to bring its emphasis on operational readiness in sales, production, and Cannabis 2.0. The company will advance its project in Valleyfield in smaller phases. Six rooms are finalized in Valleyfield hybrid greenhouse.
The focus is also on Ancaster processing facility, which is approaching material completion. The Ancaster site is expected to be fully completed by the close of the fourth quarter, including the Ancaster processing facility. Green Organic is expected to achieve a production of 20,000 kg to 22,000 kg, both facilities combined, in 2020. Ancaster is expected to achieve an annual production of around 12,000 kg in 2020.
The current market conditions have made Green Organic opt for new construction and operating strategy. This new plan will lower cash requirements, with a production increase, which will eventually help the firm to record positive operating cash flow in the second quarter of 2020.
The firm will need around $70 million to $80 million until Q2 2020 to implement the plan. Green Organic has appointed an advisor to evaluate different options for getting the expected funding. The funds may be arranged either from lower-cost financing, or operating cash flow, provided they achieved planned production and revenue from the company’s Ancaster and the smaller initial phase of Valleyfield.
The existing legal market in Canada is still growing at a sluggish pace, mainly following a slow launch of retail sites in major provinces. As a result, the new strategy will enable Green Organic to right-size its production that will help capture the organic segment. Further, it will maintain their option to accelerate and grow quickly as more retail sites begin to open.