Key Highlights

  • The Yield Growth Corp. (“Yield Growth”, “Company”) announced their Q3-FY2019 financial results and provided an update on its product lines.
  • With the recent legalization of cannabis edibles and alternative cannabis products in Canada, the company entered into a Letter of Intent (“LOI”) with Apothecary Botanicals for the launch of a new product line called Jack n Jane. With annual market demand data taken from Deloitte, we estimate the potential addressable market for Jack n Jane is $404 million.
  • The company announced that its Wright & Well product line is expected to have a United States (“U.S.”) commercial launch by Q1-FY2020. According to Brightfield Group, hemp-derived CBD products in the U.S. could generate sales of up to US$23.7 billion by 2023.
  • In an attempt to enter into the edible mushrooms market, the company established Flourish Mushroom Labs. Subsequently, on November 2019, the company entered into a distribution agreement with Eurolife Brands (CSE: EURO) for its edible mushroom products. Commercialization of said products are expected to start in the first half of 2020.
  • The company reported Q3-FY2019 revenue of $1.90 million – a 61% quarter-over-quarter (“QoQ”) increase and a 355% year-over-year (“YoY”) increase. We are revising our revenue forecast for FY2019 to $5.28 million (previously $5.16 million) and are revising our revenue forecast for FY2020 to $7.37 million (previously $6.24 million).
  • The company reported Q3-FY2019 earnings of -$1.87 million (EPS: -$0.02) versus Q2-FY2019 earnings of -$4.15 million (EPS: -$0.05) and Q3-FY2018 earnings of -$3.74 million (EPS: -$0.05). Our revised earnings forecast for FY2019 and FY2020 are -$12.59 million (EPS: -$0.12) and -$9.77 million (EPS: -$0.07), respectively. Previously, our earnings forecast for FY2019 and FY2020 were -$12.80 million (EPS: -$0.13) and -$6.13 million (EPS: -$0.05).
  • As the company is still in its ramp-up phase, we anticipate that the company will need to raise additional capital shortly.

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