ORAGIN Foods Inc V.OG.H

Insolvency Filings Incoming?

[financemajor]

October 25th is quickly approaching, which means the convertible debentures will come due. I believe I speak for everyone, at least I hope, that they will not be converted. What will save the company this time then?

[rationalexuberance]

I guess we'll find out today or tomorrow.  Hard to believe such a small debt could wipe out a company but it is possible.  We'll see if management is up to the task of finding a solution.

[rwfresh]

Nah, I don't think it's possible. Why would it be?

[rationalexuberance]

What do you mean when you say you don't think it's possible?  Can you expand on it?

[rwfresh]

Well from what I can see they have about ~10s of millions in assets. The have a decent history of good revenue and have just overhauled multiple stores with renovations in the last couple of quarters. They have a relationship with Loblaws which is the largest food distributor in Canada. If they need money for continued growth I just don't see any problems with them getting it. And likely the

[financemajor]

The interest was payable in stock. The principal amount is convertible only at the disrection of the debenture holders. I highly doubt the holders are going to convert the remaining $3M principal into stock at $0.11 when the stock is currently trading for less than half of that amount. It is therefore likely that OG will have to pay the remaining balance in cash. 

[financemajor]

Maybe I am wrong about the holders' willingness to convert the outstanding principal into stock? I do not believe I am and think it is more likely than not that they choose not to convert, but let's just hypothetically say they do convert the remaining balance into stock... Where does this leave the company? Stock gets dilluted an additional 33%, valued at ~ $0.03. And the company will

[rwfresh]

I don't think they will convert. They will just continue collecting 80k interest every quarter. > significant short-term cash flow problems that they cannot overcome through operations alone.  They don't really seem to have significant cash-flow problems. They just completed major renos. They are done. Expenses are way way down this quarter compared to previous couple of

[financemajor]

They don't really seem to have significant cash-flow problems. They just completed major renos. They are done. Expenses are way way down this quarter compared to previous couple of quarters. If they simply focus on selling groceries they can eliminate any cash flow issues. Seems to be what they are doing. What does this mean? "Expenses are way way down" -- can you please say what

[rwfresh]

> Expenses are way way down They just completed major overhaul renos on multiple existing locations. While the stores were being overhauled they were CLOSED. This is why revenue was down. All the stores are back open now and bringing in the revenue they were previously bringing in. This is in their reporting and PRs. I'm not making it up, not guessing.

[financemajor]

"While the stores were being overhauled they were CLOSED."  The stores were not closed. This is false. Renovations does not equal store closure, which was the case here. Please find me supporting evidence that the store was actually closed for renovations. I am aware of which store was being renovated and it was, in fact, not closed.  All grocery store chains locations

[rwfresh]

Sorry you are right, I don't have any official statements referencing closure time. In a recent PR: Sales decreased from $7.0 million to $5.7 million and was significantly impacted by Organic Garage’s renovation to one of its older retail store locations as well as changes to Government COVID-19 lockdown policies compared to the previous comparative period; That entire PR is forward

[rwfresh]

I'm taking a bit of a gamble here but I've over doubled my investment since the stock started falling below .08 cents. The reason I've done this is because the reno'd stores are back open. But you are entirely right to be cautious because it's unclear what the lender will do. But I believe the value in the company is not missed on other food retailers. Especially since OG is

[rwfresh]

> Can you provide any supporting evidence that they have any significant relationship with Loblaws?  No I can't, I thought there was something announced. Relevance would be avenue for cash. > no problem securing additional investors comes off as blindly optimistic I don't think so. The company has healthy revenue. They just re-opened another store this past quarter

[financemajor]

Typically, I would tend to agree with this point. It is a reasonable option. However, why does any lender demand payment of principal? The lenders in this case may feel as if the stock options accrued on interest are not worth the risk of extending the loan payment. I know you do not believe it, but there is a serious risk of insolvency -- although investors holding debentures have preferential

[rwfresh]

> What money has been pumped back into growth the last five years exactly They've added stores (liberty village off the top of my head) and reno'd existing, they've added services and product > but their revenue has stagnated/decreased from years prior. because they've been closing existing stores for renos. Check the news history. > Profit matters after 16

[financemajor]

Well this is true, but means very little to your point. When they went public is when they started going wrong. They added two stores that have never been profitable and continue to drain the company of resources over the past 6 years. Oakville was the only location that ever made money and has not been profitable as well over the last couple of years. Overall, there is way less value than you

[rwfresh]

Well this is true, but means very little to your point. When they went public is when they started going wrong. They added two stores that have never been profitable and continue to drain the company of resources over the past 6 years. Oakville was the only location that ever made money and has not been profitable as well over the last couple of years. Why does any profitible private company go

[financemajor]

Off the top of my head, I think of Nature's Emporium, Goodness Me, Ambrosia, Whole Foods (which directly competes with them in multiple location areas), and then there's the chain stores which continue to expand their organic selection. A lot more competition than you think in this sector.

[rwfresh]

> Profit is always the goal of every company You would think that.. but you are wrong. It is the goal of private companies OR well long established businesses that pay dividends. Growth companies are not concerned with profit. You are just wrong. This company is not in that category. Most aren't. Most tech companies on Nasdaq are not profitable. > Off the top of my head, I

[financemajor]

This is your biggest problem. You are treating this like it is a growth tech company. They are completely different models. Those companies have far superior financing access as VCs and lenders have, for the past 20 years, been willing to throw money at them hoping for the next big thing. This is not comparable at all to what OG is. You are literally going to go broke when investing if you think

[rwfresh]

Thanks for your input. I will tell you straight up: If you are invested in this company and waiting for PROFIT then SELL right now. I can guarentee that PROFIT is nowhere in sight for this company. They are in growth mode. That's why they went public. There is no profitability on the horizon. This is a speculative stock and stock price is based on growth and revenue. Not profit. Profit would

[rationalexuberance]

it was an interesting dialogue between you two until rwfresh's argument fell apart at the end is it fair to say the market is composed of many diverse interests? for some, it's profitability, for others it's  revenue and growth...for myself it's cash flow from operations....long term it will always be profit.... one thing about the stock market is how things can turn quickly

[rwfresh]

I'm not saying anyone is wrong for seeking to invest in profitable companies. I am saying if you are invested in OG because you are betting it's going to be profitable in the next 10 years then you are not listening to what OG is saying. Read their financials. I quoted right from their last annual release. They are not pursuing profitability. They are pursuing growth and market share. That

[financemajor]

You are misinterpreting what I wrote. I am not saying that the company's main goal should be profitability. It is obvious that the company is attempting to rapidly grown and therefore would invest in expansion. I am saying that the goal should be positive cash-flow and that the existing stores themselves should be profitable -- or at the very least, growing in revenue. This is clearly not the

[rwfresh]

> Problem is .... revenue growth within their existing streams of revenue.  100% guarentee. And now we see you are right about them defaulting on the loan. So I guess we will see what happens now. They did just finish renos at Bathurst, so they are making some progress. And covid bs didn't help. There is significant cost to accomodating the lockdowns. Bigger companies can absorb

[rwfresh]

I said "100% guarentee", I meant 100% agree.

[financemajor]

It's sad, rwfresh. I hope I did not come off as condescending or rude throughout our conversation. Trust me, I hate seeing investors potentially lose money. This company has just gotten under my skin.  I saw the potential in this company at one point too -- it's been mismanaged to the ground.  That's the name of the investment game I guess though. Hopeful you'll be able

[rwfresh]

Hey no worries, been losing and making money in the market for 30+ years. Nothing new :) I'm not particularily panicked. Minor investment for me. They aren't closing any time soon. People are reacting to the PR, let's see what happens!

[rationalexuberance]

"They aren't bad at communicating. You need to read their releases. You and the other poster believe something that is incorrect. That yesterday was some kind of critical day for OG. It was nothing of note. OG continues to pay the interest on the loan. No biggie. " Rose-colored glasses off now? For my part, I'm disappointed that the debentures are calling for payment. 

[rwfresh]

Yeah, I'm on the buy side of the trade. Made that clear. Should be obvious there is risk, this is a penny stock with debt. But they do have assets, brand, revenue. It's not the greatest news that's for sure lol.

[rwfresh]

I'm not seeing the grim outlook you are. What am I missing? 

[financemajor]

?? I thought it was clear. Company has to pay the full outstanding principal amount of the convertible debenture loan ($3M) on the 25th. On top of that, the company has accrued nearly $3M in additional short-term debt.  How does a company that has virtually no cash and is bleeding money going to get additional financing to survive? I don't see it.   

[rwfresh]

> Company has to pay the full outstanding principal amount of the convertible debenture loan ($3M) on the 25th Can you show me the source? You believe OG needs to cough up 3M liquid cash today? I doubt it. I could be wrong. My guess is the lender just holds shares as per the agreement. But interested in seeing sourced details that state 3M required today.

[rwfresh]

"The Debentures will mature 36 months from October 25, 2019 (the “Maturity Date”) and bear interest at a rate of 9.5% per annum (the “Interest”). The portion of the Debentures equal to the Subscription Price ($2,925,000) will become convertible at the option of the holders into units (the “Conversion Units”) on the Maturity Date at a conversion price of $0.11 per Conversion Unit (the