Form DEFA14A Greenrose Acquisition

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934

 

September 10, 2021 (September 8, 2021)

Date of Report (Date of earliest event reported):

 

GREENROSE ACQUISITION CORP.  

(Exact name of registrant as specified in its charter)

 

Delaware		001-39217		84-2845696
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification Number)

 

111 Broadway Amityville, NY 11701		11701
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (516) 346-6270

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☒	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class		Name of Each Exchange on Which Registered
Units, each consisting of one share of common stock and one redeemable warrant		OTC Pink
Common stock, par value $0.0001 per share		OTCQX
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share		OTCQB

 

 

 

Item 1.01 Entry into a Material Definitive Agreement

 

On September 9, 2021, Greenrose Acquisition Corp. (“Greenrose” or the “Company”) issued an unsecured promissory note (the “Note”), dated as of September 9, 2021, in the principal amount of $180,000 to Greenrose Associates LLC (the “Sponsor”), the Company’s sponsor and owner of more than 10% of the Company’s issued and outstanding Common Stock, evidencing a loan in the amount of $180,000. The Note is non-interest bearing and payable upon the consummation of a business combination.

 

The Note was issued in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Note has not been registered under the Securities Act, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration under or an applicable exemption from such registration requirements. This Current Report on Form 8-K does not constitute an offer to sell, or a solicitation of an offer to purchase, the Note in any jurisdiction in which such offer or solicitation would be unlawful.

 

The disclosure set forth in this Section 1.01 is intended to be a summary only and is qualified in its entirety by reference to the Note, a copy of which is attached as Exhibit 10.1 hereto.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

 

Reference is made to the disclosure set forth under Item 1.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

 

Item 8.01. Other Events

 

Business Combination Extension

 

On September 8, 2021, Greenrose notified Continental Stock Transfer & Trust Company that it was exercising its option to extend the time available to consummate a Business Combination with the target businesses by an additional month, thereby extending the de-SPAC deadline from September 13, 2021 to October 13, 2021. Furthermore, in accordance with Investment Management Trust Agreement between Greenrose and Continental Stock Transfer & Trust Company, dated to February 11, 2020, Greenrose authorized the trustees to deposit $569,250 into the trust account.

 

Investor Conference Transcript

 

On September 9, 2021, the Company held a video conference call at the KCSA Cannabis Virtual Investor Conference to discuss the Company’s previously announced anticipated business combinations. With this Current Report on Form 8-K, the Company is furnishing a transcript of the conference call. The information contained on this website is not included as a part of, or incorporated by reference into, this Current Report.

 

The conference call transcript and the information in Item 7.01 of this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 9.01. Financial Statement and Exhibits.

 

(d)

Exhibits:

 

Exhibit		Description
10.1		Promissory Note in the principal amount of $180,000 dated September 9, 2021
99.1		Transcript of September 9, 2021 virtual investor conference call
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

Forward Looking Statements

  

This Current Report on Form 8-K includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations, Greenrose’s ability to enter into definitive agreements or consummate a transaction with any of Shango Holdings Inc., or Shango, Futureworks LLC (d/b/a The Health Center), or Futureworks, Theraplant, LLC, or Theraplant, or True Harvest, LLC, or True Harvest to obtain the financing necessary consummate its previously announced proposed transactions; and the expected timing of completion of the Proposed Transactions. These statements are based on various assumptions and on the current expectations of Greenrose’s and any of Shango, Theraplant, True Harvest, or Futureworks’ management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Greenrose and any of Shango, Theraplant, True Harvest, or Futureworks. These forward-looking statements are subject to a number of risks and uncertainties, including general economic, financial, legal, political and business conditions and changes in domestic and foreign markets; the inability of the parties to enter into definitive agreements or successfully or timely consummate the Proposed Transactions or to satisfy the other conditions to the closing of the Proposed Transactions, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the combined company; the risk that the approval of the Greenrose Stockholders for the Proposed Transactions is not obtained; failure to realize the anticipated benefits of the Proposed Transactions, including as a result of a delay in consummating any of the Proposed Transactions or difficulty in, or costs associated with, integrating the businesses of Greenrose and any of Shango, Theraplant, True Harvest, or Futureworks; the amount of redemption requests made by the Greenrose Stockholders; the occurrence of events that may give rise to a right of Greenrose and any of Shango, Theraplant, True Harvest, or Futureworks to terminate the respective Merger Agreements or Asset Purchase Agreements, as applicable; risks related to the rollout of Greenrose’ business and the timing of expected business milestones; the effects of competition on Greenrose’s business; and those factors discussed in Greenrose’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 under the heading “Risk Factors,” and other documents of Greenrose filed, or to be filed, with the SEC. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that neither Greenrose nor any of Shango, Theraplant, True Harvest, or Futureworks presently know or that Greenrose and any of Shango, Theraplant, True Harvest, or Futureworks currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Greenrose’s and each of Shango, Theraplant, True Harvest, or Futureworks’ expectations, plans or forecasts of future events and views as of the date of this Current Report on Form 8-K. Greenrose and each of Shango, Theraplant, True Harvest, and Futureworks anticipate that subsequent events and developments will cause their assessments to change. However, while Greenrose and any of Shango, Theraplant, True Harvest, or Futureworks may elect to update these forward-looking statements at some point in the future, Greenrose and each of Shango, Theraplant, True Harvest, and Futureworks specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing Greenrose’s or any of any of Shango, Theraplant, True Harvest, or Futureworks’ assessments as of any date subsequent to the date of this Current Report on Form 8-K. Accordingly, undue reliance should not be placed upon the forward-looking statements.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	GREENROSE ACQUISITION CORP.
Date: September 10, 2021	By:	/s/ William F. Harley III
	Name:	William F. Harley III
	Title:	Chief Executive Officer

 

 

3

 

Exhibit 10.1

 

THIS PROMISSORY NOTE (“NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

PROMISSORY NOTE

 

Principal Amount: $180,000

Dated as of September 9, 2021

 

Greenrose Acquisition Corp., a Delaware corporation and blank check company (the “Maker”), promises to pay to the order of Greenrose Associates LLC, a New York limited liability company, or its registered assigns or successors in interest (the “Payee”), or order, the principal sum of One Hundred and Eighty Thousand and 00/100 Dollar ($180,000) in lawful money of the United States of America, on the terms and conditions described below. All payments on this Note shall be made by check or wire transfer of immediately available funds or as otherwise determined by the Maker to such account as the Payee may from time to time designate by written notice in accordance with the provisions of this Note.

 

1. Principal. The principal balance of this Note shall be payable on the date on which Maker consummates an initial business combination. The principal balance may be prepaid at any time.

 

2. Interest. No interest shall accrue on the unpaid principal balance of this Note.

 

3. Application of Payments. All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this Note, including (without limitation) reasonable attorney’s fees, then to the payment in full of any late charges and finally to the reduction of the unpaid principal balance of this Note.

 

4. Events of Default. The following shall constitute an event of default (“Event of Default”):

 

(a) Failure to Make Required Payments. Failure by Maker to pay the principal amount due pursuant to this Note within five (5) business days of the date specified above.

 

(b) Voluntary Bankruptcy, Etc. The commencement by Maker of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.

 

(c) Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.

 

5. Remedies.

 

(a) Upon the occurrence of an Event of Default specified in Section 4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note, and all other amounts payable thereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.

 

 

(b) Upon the occurrence of an Event of Default specified in Sections 4(b) and 4(c), the unpaid principal balance of this Note, and all other sums payable with regard to this Note, shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.

 

6. Waivers. Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to the Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment: and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.

 

7. Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to Maker or affecting Maker’s liability hereunder.

rsers, guarantors, orsureties may become parties here to without notice to Maker or affecting Make r’s liability hereunder.

 

8. Notices. All notices, statements or other documents which are required or contemplated by this Agreement shall be: (i) in writing and delivered personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number as may be designated in writing by such party and (iii) by electronic mail, to the electronic mail address most recently provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery to an overnight courier service or five (5) days after mailing if sent by mail.

 

9. Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

 

10. Severability. Any provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

11. Trust Waiver. Notwithstanding anything herein to the contrary, the Payee hereby waives any and all right, title, interest or claim of any kind (“Claim”) in or to any distribution of or from the trust account established in which the proceeds of the initial public offering (the “IPO”) completed by the Maker (including the deferred underwriting discounts and commissions) and the proceeds of the sale of the units and warrants issued in a private placement, that occurred prior to the effectiveness of the IPO have been deposited, as described in greater detail in the final prospectus (collectively, the “Prospectus”) filed by the Maker with the Securities and Exchange Commission in connection with the IPO, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the trust account for any reason whatsoever.

 

12. Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Maker and the Payee.

 

13. Assignment. No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed by the undersigned as of the day and year first above written.

 

	GREENROSE ACQUISITION CORP.
	a Delaware corporation
	By:	/s/ William F. Harley III
		Name:	William F. Harley III
		Title:	Chief Executive Officer

 

 

3

 

Exhibit 99.1

 

 

Cody Slach: Good morning or good afternoon, depending upon where you’re joining us today. For our next presenting company, we have Greenrose Acquisition Corp, and presenting from the company, we have Paul Otto Wimer, president. Paul, I’ll kick it over to you.

 

Paul Otto Wimer: Great. Thank you. Dan, if you want to start off, I’d appreciate it.

 

Daniel Harley: Sure.

 

Paul: Just advance to the next page?

 

Daniel: Yes, okay. Do you want me to just go to the first slide?

 

Paul: If you just go to the disclaimer first, just want to remind everyone that this is a presentation that has been shared with the SEC, that describes forward-looking statements and that this is not a solicitation for investment, but to inform the audience on the plan of Greenrose Acquisition Corp. Today, I’d like to cover a number of different things in the presentation today, a summary of the overall business combined company overview, then get into the meat of the financial overview and valuation.

 

There’s additional materials, which can be viewed either in this presentation or if you go online with the SEC or to our website to look at the market overview and target company detail. Also, information can be found on our website and at the SEC regarding our proxy filings. In terms of the summary of the business- next slide.

 

Daniel: Oops. Sorry, this good, Paul?

 

Paul: Yes. Next slide. The overview slide, please.

 

Daniel: That’s what I have up, can you see it?

 

Paul: Oh, keep going. I just see table of contents right now.

 

Daniel: Oh, really? Because I have “Overview of the Business Combinations” up.

 

Paul: There you go, right there. In short, Greenrose Acquisition Corp has aligned four target companies that will be in total our business combination with the first two, Theraplant and True Harvest, being the first two that will constitute our business combination with The Health Center and Shango to follow. I want to direct you near the top of the page where we describe the revenue and profitability projections for the business, and I’d like to focus on 2022 projected revenue and projected EBITDA in a range of $260 million to $295 million for revenue, and $110 to $135 million in adjusted EBITDA.

 

The four businesses will provide to us over 120,000 pounds of annual cannabis flower, will give us positions in 7 states with over 300,000 square feet of cultivation, 9 dispensaries, 9 cultivation facilities, and 6 processing facilities. It’s important to note that the first two companies that will come through on our business combination, Theraplant and True Harvest, are cultivation businesses with some manufacturing operations. With Theraplant being Connecticut-based, they’re one of four cultivators, and True Harvest being a cultivator in Arizona that competes in a high-end flower marketplace, so they are purely indoor.

 

With Shango focused on four states, their headquarters in Nevada, with operations also in Oregon, Michigan, and California. The management team at Shango are responsible for managing the True Harvest grow operations, and THC is a standalone business in Colorado, vertically integrated with three dispensaries and significant cultivation. Next slide please, Dan.

 

Daniel: Okay.

 

[pause 00:04:35]

 

 

 

Paul: Our strategy is one that focuses on growth. At the top, we’re looking at top-shelf market alignment. We’ve targeted acquisitions who are considered as players in the high quality or top-quality product at retail, selling very reputable products in their respective markets at premium prices. We believe cultivation is absolutely essential to any cannabis business, because it provides you the starting materials which you can then flow through your value chain. With flower constituting 50% or approximately 50% of sales of virtually every marketplace, it’s important to start with a focus on that category.

 

As we use that as our bellwether, we’ve looked at emerging markets, developing markets, and medical markets. In emerging markets, looking at Arizona, Michigan, Nevada, and Connecticut, we’ll be expanding cultivation to support new retail outlets, tapping into rising wholesale prices and market demand, in particular in Connecticut and Arizona, where Arizona has recently tipped from medical to rec, and Connecticut has just recently voted in recreational legislation, which will make those significant opportunities for us as we move into the future.

 

We’re also looking at developing and mature rec markets—California, Colorado, and Oregon—where the players that were acquiring are known competitors and have been able and capable of being able to defend their positions in their marketplaces. Each of those markets highly competitive, lots of retail, lots of cultivation. To be able to differentiate and build a profitable business, you have to be able to communicate clearly to consumers how you’re different, and to be able to compete with the folks down the street.

 

These are states where we’ve targeted folks that have demonstrated profitable growth, and we see in the future the ability to consolidate and bring vertical integration to manage margins through the value chain. And then in medical markets, as we talked about, Connecticut is a market that just recently voted in recreational, which will start taking effect in the beginning of 2022. Our position as one of four cultivators, particularly with the way the legislation was written, will give us a significant opportunity to deliver both- continue delivering to the medical market, as well as the newly legal rec market. Next slide.

 

Our management team at the corporate level represents a variety of skill sets from managing financial markets, as well as managing integration of assets and operating at a public level, which will be critically important as we become an operating business. Our goal is to stay on and to continue to help to operate the business, bringing our skillset from a variety of different careers to bear on the cannabis marketplace. The management team and leadership, if you go to the next slide, Dan, that we’re bringing in through our acquisitions with Dan Emmans, who runs the Connecticut Theraplant operation, to Brandon Rexroad, who runs Shango, to Chris Schonbachler, who runs THC in Colorado.

 

All three are executives with significant long-term experience in the cannabis industry, building businesses both in the states they’re in, as well as elsewhere. We will be leveraging their knowledge, their networks, and their capabilities to manage the businesses on a day-to-day basis. Leveraging our corporate overhead to assist in all things financial markets, as well as helping in alignment on strategy on where to go, where acquisitions will take us next. Next slide. [silence]

 

The business, as we focus on the four acquisitions, as I mentioned, there will be two that will constitute our business combination for our De-SPACing transaction. They are Theraplant and True Harvest, with Shango and The Health Center to close later, based on license transfer processes that are governed at the state and municipal level. Next slide. [silence] To support our acquisitions, we will be tapping into the cash and trusts, as well as senior secured notes provided by SunStream Bancorp, a Canadian institution and fund, as well as convertible notes and PIPE equity.

 

Where I’d like to direct is looking at the cumulative purchase consideration, which is a mix of cash and stock and debt, with some earnouts involved that reward our target acquisitions for continued performance, and delivering exceptional performance out into the future. If I look at our comparison, in terms of purchase price versus revenue and purchase price versus EBITDA, if you look at our 2022 projections, our purchase price is roughly 1.1x revenue, and only about 2.4x projected EBITDA, which puts us as a significant opportunity for those that are looking at value. These are businesses that are profitable from the outset.

 

They’re not requiring our additional cash to bring them to profitability and will set us in good stead versus the rest of the public cannabis company marketplace as a profitable and growing MSO. Can you go to the next slide, Dan? In summary, we’ve picked proven success operators in grow-centric, vertically integrated businesses. Experience in both limited license markets and rec markets.

 

 

 

Importantly, cash flow positive and free cash flow positive, which are critical in this industry to be able to support ongoing growth with cash flowing businesses, comprehensive management team in place that includes both our team at the corporate level, as well as the teams from the targets that we were acquiring, who will help collectively to grow this business into it an ongoing national presence. If you go to slide 13, Dan. This gives a little bit of detail to the businesses. Theraplant, one of four cultivators in Connecticut, they are the largest player today. All businesses are in some stage of expansion.

 

Two players have just recently in the past year either leased new space for expansion, purchased space for expansion, but are still in process, versus Theraplant that is almost complete with its expansion work, at least its next phase of expansion, which will allow them to supply significant product into the Connecticut marketplace, both for as medical continues to expand and the new rec market. True Harvest, one of the largest indoor cultivators in Arizona, is in a process of doubling its productive capacity, which will allow True Harvest and Greenrose to capitalize on the expanding rec market in Arizona.

 

The facility also has room for continued expansion to allow for a significant continued expansion and a roadmap over the next couple of years. Shango, as I mentioned, operates in a number of states, Nevada being their largest, which is in the process of doing its own expansion of its cultivation; with long-term operations in Oregon, with room for expansion; new operations in California, where they have a dispensary and a distribution location; and Michigan, where they’ve got three dispensaries and a cultivation facility that’s in process of being built out.

 

Lastly, The Health Center I mentioned earlier, focused on Colorado, large indoor cultivation facilities with three dispensaries in the Metro Denver Marketplace. Next slide, Dan. Our immediate pipeline is those four companies we’ve described. Our post-business combination pipeline includes going deeper in the markets we’re already in, as well as looking selectively at new states where we can buy efficiently and deploy our capital in ways that allow us to buy profitable businesses without having to fund loss-making business. Next slide. [silence]

 

The next two slides, if you’re flipping through, give you an indication to the brands that our businesses support. Whether they’re Theraplant, Shango or The Health Center, we believe brands will be important in the future, both at our product level and at our marquee outside the dispensary. Having those complementing our own flower will be helpful, particularly as we continue to sell wholesale to other dispensaries that will help to expand our brand names, but also thinking about taking those brands on a data-driven basis to new states, and experimenting with the Shango brand on the East Coast, for instance, to leverage the brand portfolio that we start with.

 

If you think about the way our strategy has been working, looking at slide 18, we have a Southwest and West footprint driven by our Shango operations, which will give us access in Oregon, Nevada, California, and Arizona, because the products being sold by True Harvest are Shango-branded products. Our ability to expand that footprint, whether it’s in New Mexico, Utah, Colorado, and then on the East Coast using Theraplant as a cornerstone to a Northeast strategy, which allows us either to provide federal legalization and a very large indoor cultivation footprint to be able to supply the region, or to leverage acquisitions into other states in the region.

 

You go to the next- if you go to slide 21, Dan. The pro forma for the combined De-SPAC financial summary for Theraplant and True Harvest would suggest the business that just with those two assets will be generating between $140 and $160 million in revenue in 2022, with projected EBITDA of $85 to $100 million. So it’s a very significant and profitable business, generating a lot of cash to support the overall business. If you look at slide 22, with all four businesses under our umbrella, 2022 would have projected revenues of $260 to $295 million, with EBITDA between $110 and $135 million.

 

So, putting us nipping at the heels of the top 10 public MSOs, but certainly from a profitability standpoint, with the assets under management, it gives us an edge. The last thing I’d like to direct you to are slide 27, which is our comparable EBITDA multiples. As I mentioned earlier we’re at 1.1x revenue multiple on projected 2022 numbers, our De-SPAC. Then post De-SPAC, multiples for EBITDA are 2.9x to 3.9x versus a mean of 10x, in 2022. We’re trading significantly at the moment below the rest of the competitors, and believe that as a public operating company with free cash flow and positive EBITDA, that will be generating- that will be making up the difference there.

 

Lastly, I’d like to say Greenrose Acquisition Corp has four outstanding assets that we have that will be bringing into the umbrella, with the first at De-SPAC being Theraplant and True Harvest, who are significant players in the two markets they operate in. We believe that there’s a tremendous opportunity for folks who want to invest in companies with great profitability and great profitability profile, that we believe we’ll be offering that in the marketplace in 2022 and with the close of the deal in 2021. Thank you for your attention today.

 

Cody: Thanks, Otto. I appreciate that. We have gone through the 25-minute allotted time. I do want to be respectful of everybody’s calendars and meetings they’ve got to get to, so if there’s any questions that you have that we weren’t able to answer, please contact Gateway, and we’d be happy to connect you with the team. Thanks, Otto. We appreciate everybody being a part of our event.

 

[00:20:00] [END OF AUDIO]

 

 

3

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• SambaNova raises $1 billion at $11 billion valuation
• Fathom Entertainment appoints Jason Brenek as new CEO
• IMAX Corporation (IMAX): Recent 18% Pullbacks an 'Attractive Buying Opportunity,' Says Benchmark