/r/TheCannalysts x-post on TGIF"
I've been picking up some shifts from Butch in the Dive lately, and it's been great to be walking the boards again. I didn't get home until late last night....and found myself needing to step over a couple of elves to get into my door. This was stapled to one of their shirts. They haven't looked at TGIF since last December, and I too am curious how things are going.
Friday Night Inc. - July 2018
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Still not profitable as of reporting.
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'Accretion' expense originating from convertibles is a novel way of reporting expenses. It's not particularly notable, but......it comes from Note 5, which, should be very notable to investors.
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Note 5's warrant overhang comes in at a modest $200k. Share price softness is lowering potential hit. Another $4MM in SBC is live.
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Cheap stock options in SBC getting struck in full as fast as they come due.
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Notable is 65MM shares issued earlier this year from warrants at steep discount to market. Ranging from $0.10 to $0.35 cents it represents significant dilution, and demonstrates the cost of capital structure optionality.
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7MM more shares issued + cash to pay $5MM for a company worth $6,498.00 (Spire). Seriously?
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Hell, Note 4 is uglier than the elves livers after the last long weekend of the summer.
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I would ask some detailed questions about reported inventory. Starting with: "Why is 'harvested trim' 2x the amount of flower value, and 3x the amount of oil listed?"
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Questions around USD/CAD uplift. Sales are at a 30% premium (vs native currency on the financials). Not a whiff of that anywhere. They're reporting $6/gr, which implies they're realizing $4.60 USD/gram at storefront.
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Goodwill (thanks to Spire) greater than the entirety of actual assets.
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Wages are relatively cheap. Professional fees, mgmt fees, share based payments, and G&A aren't.
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Looks like they rolled an FX differential ($500k) into goodwill. I've never seen that before.
Ok. This could (defo) use more time. If I was an investor, I'd have some direct questions of mgmt. While the MD&A appear fulsome, it leaves out much of the real operational meat.
Their execution on the new build has been laborious, apparently due to permitting and (ugh) design changes. Apparently completing it is their priority. They've dropped another $2.25MM for a 12k ft2 building beside it.
An unspecified number of LOI's have fallen through, which, has been mentioned as a driver of the mgmt/consulting fees. And....they're still actively fishing around for acquisitions. I'd like to have been in the room when the Spire deal was decided on.
I don't know. Thing looks middling to me. They've got sales, but as a guess, they aren't very good at growing. They're realizing only $2/gr margins (despite being vertically integrated), and seem to be focused on everything but that.
This one would take a day or two to drill into. Given the elves attention span....
The preceding is the opinion of the author, and is not intended to be advice on the purchase or sale of anything"
source:
/u/mollytime, Tue, July 17th https://www.reddit.com/r/TheCannalysts/comments/8znf7a/dive_bar_tuesday_friday_night_inc/ ____________________________________
Interesting comments, what do you guys think?