Australis Capital Inc. (CSE:AUSA) (OTC:AUSAF) CEO Terry Booth, who famously started Aurora Cannabis in 2006 before departing under duress in 2019, has a lot on his mind and his plate these days as he undertakes for the second time in his career the truly formidable task of steering a large cannabis venture into market relevance. This time, however, he is competing on a fragmented and volatile U.S. stage stuffed to the rafters with equally determined multiple state operators (MSOs) angling for top billing (and a dominant market cap). January will mark one year since Booth, 57, assumed leadership of the rechristened Audacious, a moniker clearly meant to express both an attitude and its business model going forward. Well underway establishing itself in a handful of states, Audacious celebrated its official debut at MJBizCon, where Booth made the media rounds talking up his newest project. “It was the most times I’ve ever been interviewed at MJBizCon,” he enthused on a recent call with CBE, during which the veteran entrepreneur talked at length about the services and products he is bringing to market that he believes will set Audacious apart from the pack, and why he is so determined to do things very differently this time around.
“I was effectively not a part of Aurora almost exactly two years ago,” said Booth when asked about the timeline of his departure from Aurora. “It was November [2019] when we made the decision for me to do my retirement, and that was bounced back and forth as to when I was going to retire. We ended up at the date that they had the first cutbacks. I retired shortly thereafter, and I resigned from the board in May, the day they got rid of a young man who was our Chief Product Development Officer, Shane Morris, because he would have been one of my last 10 employees, and I just couldn’t be with a board that made those types of decisions on people like him. So that was sort of my last foray, but it was just a board position.
“You know when you’re out as CEO of a public company,” he continued. “We have a lifespan in Florida of seven years, and Steve [Dobler] and I lasted eight, so we’re pretty proud of that. We did last longer than the others, but you just started to get the feeling, and you know someone has to go when you go from 10 bucks to two, period. But it was a tremendous company, even though it was not executed well in the last couple of years. I don’t think that’s just because of me; I think it was because of a number of people that remain there that don’t get it. But it’s still growing great cannabis at amazing facilities, the best facilities in the world, it still leads the medical cannabis space in Canada, it still leads the global medical space, which isn’t nearly as big as adult, and I wish them the very, very best.”
When asked what lessons he took from his time at Aurora that he keeps in his hip pocket, Booth had a ready answer. “You don’t want to buy a Tonka Truck, and have it break, because a broken Tonka Truck costs a lot more to fix,” he said. “We’re not looking at any companies that are not at least in the positive. We have this opportunity call once a week that lasts three hours, and there are so many opportunities in the space, it’s incredible. These guys and gals will pitch me, and if they bring one to the table that is losing money, I don’t want to talk about it. They’ll be, like, ‘But what about…’ No, I don’t want to talk about it! There’s enough opportunity with companies – and I take my hat off to them – that are making money in this environment. Those are our target companies, and let’s try and do paper deals the best we can.
“Another lesson I learned; don’t do too many deals, Terry,” he said emphatically. “Integration is very important; even when you buy the little companies, it’s mainly because you bought the mind of the people that started the little, profitable company. You don’t want to alienate them by going to buy three more companies without even talking to them again; integration is key to reduce attrition. If you don’t integrate properly, you’ll lose what made the company great, normally the people or the market that it helps. So that’s another lesson I would have learned. Spending a bunch of dough on huge facilities when you’re thinking that demand is going to be a certain amount is dangerous, and that’s what happened in Canada. Canada told us there would only be fifty licensed producers, and now there’s 400, so the supply of cannabis clearly outstripped demand, and the nimbler companies, the smaller ones, were able to get into the retailers better than the big one, believe it or not. Maybe Aphria did, too, because they hired an outside sales force. That’s what Aurora should have done. That was one of my big things; I was pounding my fist on the table. They didn’t do it. They’ve done it now, but a little bit too late.
“So, watch what you build,” he added. “Don’t blow the money out the door. As far as buying something, I love doing that. There’s not one acquisition of the big ones at Aurora that I would ever take back, because we did what? We built up our market cap to such a high level through our branding and through executing that there were companies that were probably better than us that were only half our value. So, why wouldn’t you deploy that market cap to acquire? We did one $3.2 billion deal, another one was $2 billion, but we were trading at $14 billion.
(L to R): Paul Larsen, General Counsel; Hanoz Kapadia, Chairman of the Board; Terry Booth, CEO; Marc Lakmaaker, SVP Communications & Capital Markets; Leah S. Bailey, Chief Business Development Officer
“I remember the CanniMed and the MedRelief deals,” he added suddenly. “Two quick stories, and I don’t want to talk about Aurora all day, but CanniMed was a hostile takeover. We didn’t buy them because we were hostile. Their investors came to us, to say, ‘We don’t know why CanniMed is only half your value; please put a bid in for it.’ So, we closed that deal. I’m still friends with the CEO of CanniMed, even though those hostile takeovers are always bitter on both sides. And then we did the MedRelief deal, and I was so happy we bought them because their facilities were better than ours, their technology was better than ours, and they were farther ahead than us; they’d been operating for 16 months longer. I was sad that they were better than us, but happy that we closed the transaction, and now it was ours. It really was the steppingstone that moved Aurora up the pipe as a world leader, because it brought a lot of respect from the medical community on the consistency and quality of the medicine MedRelief was growing.”
I asked Booth if the plan is to grow Audacious organically or take on debt to fuel growth. “There are so many different instruments out there, it depends on what the debt looks like,” he replied. “We’ve got 20 million locked up very shortly. I’ve just done $5 million with friends and family – high-net worth individuals that came in quite easy because they believe in us, and they believe in the story going forward. But our market cap is only 50 million bucks, so it’s my job to move that needle and you can only move that needle through execution and liquidity. Money is being spent on liquidity, and that is making sure that our six IR firms and PR firms and media firms are all aligned and are all giving the same message, making sure we get on reddit, get on Robinhood, making sure our social media is looked after. I’ve done this before, and we’re starting to see the liquidity.
“If you look back when I came in,” he added, “it was like 1000,000 shares a day, and now it’s 600,000 shares. That’s a nice move, and you got to continue that, and you’ve got to lift the chins of the Australis shareholders. They also went through six months of hell in a dissident battle, walking around with their heads down, and I want to pick their heads up, and excite, ignite, and delight them, is what we say. Because we do have a decent number of shareholders; we have over 150,000 shareholders because of the Aurora spin-out, so you get those 150 talking the talk, you bring in your new shareholder base through raises, and you don’t do your big raises in the front end. You’ve got to build the share price, and the only way to do that, in my opinion, is through execution of decent deals, having quarter over quarter increase, having some profit – wouldn’t that be cool – and that’s what we’re doing now.
“Again,” he concluded, “I’ve been here since March and what the team has accomplished… we were only in Nevada in March, and what we have accomplished and the deals that we’re looking at, and what the lobbyists are doing in New York, it’s a very professional team. But it’s not a big one. There’s not a lot of people; the C-suite is only four people. I think we have about 120 people combined, so it’s manageable, and it’s not a big burn rate. Am I scared of any big deals? Hell, no. We’re looking at one right now that’s 200 million bucks in Florida. I’d be crazy to do that with paper, so maybe you do a reverse SPAC; a SPAC comes in and buys the article and the article buys us. I mean, there’s lots of ways.”
50 Different Countries
This time around, Booth is singularly focused on the fragmented U.S. market. “We see this as 50 different countries, for sure,” he said. “In 35 of those countries, you can sit on your stump right now and smoke a joint, and whether it be for medical or adult use, you’re not going to be arrested in that state for doing it, and that’s a huge step and it continues to grow. Other states are coming online, and time heals all wounds, but you do have to take a very strict regulatory approach, and that’s my background. I don’t know if you’ve seen the MJBiz book that has state-by-state descriptions [of regulations], but we have those times five. And this is historical – a lot of it was from the Aurora days – but we went into every single state that currently has cannabis as well as the ones that are projecting to have cannabis for sale, whether it be medical or adult usage, and we looked at what verticals we want to be in in each state, and what verticals we are allowed to be in in each state. Washington state is a good example; you have to be a resident. So, there are all sorts of different rules that you need to understand before you decide on how you prioritize which states to be in. California is an interesting one – difficult to navigate towards profitability, but at the same time, California is the state you can’t not be in, and if you are in California, you’d better be vertically integrated, you’d better be in each segment, and we are, and that was one of our goals.”
I asked Booth how many states Audacious is presently in. My list included Arizona, Nevada, Washington, Michigan, Missouri, Oklahoma, and California, but I was a little unclear. “If we define it as the sale of adult-use cannabis products being Audacious, we would be in Nevada, California, Missouri, Oklahoma, Washington, and Missouri,” said Booth. “In the other state you mentioned, Arizona, ALPS is doing something big for the guys at Copperstate [Farms]. ALPS also is doing something pretty big in Massachusetts for Belle Fleur, which includes us getting cannabis and us taking down their manufacturing contract. We also have a lot of people working in a lot of states, including three lobbyists in New York right now working to see if the regs can be tweaked and the bar can be raised. It’s been a bit of a disappointing year, because New York is going to be a way down the road yet, but it’s someplace you cannot not be. In California, I think we’ve done three deals now, so we can say we’re fully integrated, but we need to integrate those companies we bought in the edible space. Herbs in San Jose with the Eaze deal is I think an amazing deal. We’ve already sold out of our product that we had in county, and with this raise that we’re doing, we have to buy product, because we’re not growing enough of it to support a brand build.”
I asked Booth to drill down a bit on their plans for California. “The strategy so far in California has been to acquire cherries, smaller cherries, and to build on those cherries,” he explained. “We acquired LOOS, an edibles company, which also has an excellent sales force, so we bought the people as much as we bought the product. The Herbs deal in San Jose brought in Eaze, which is the top delivery company probably in North America, and certainly in California. Eaze had a deal with Herbs, so they took on 16 of our SKUs and we sold out all of our product immediately. We have cartridges right now in California and we have the two-ounce shot with LOOS, and we’re working on deals to bring flower to California. It’s pretty easy to get flower in Cali right now, but you’ve really got to watch who you’re getting it from. I know a lot of great players in the California market. I know Berner very well, and Mr. Natural knows Berner very well. Berner used to sell dope for Mr. Natural. These essential relationships put us on shelves. We need top shelf, front shelf, side shelf, and that’s really what a sales force should be working on once they have the product. So, we’re there as far as the license requirements, and now we’ve got to start building our brands. We’ve got some great bands – Tsunami, Mr. Natural, Provisions – and if you look at the state, there is not a lot of brand building going on. Cookies has done a good job, truly a good job, and Charlotte’s Web has done a pretty good job, but nothing really state-to-state, and you don’t see the consistency of the cultivars crossing state lines, like we did in Colorado with the guys from Green River, where we were able to move our genetics state-by-state in petri dishes, which is not seen as cannabis, so at least you’re bringing in a product. So, the California strategy is to build on what we’ve acquired, and most of those deals were paper, and most of the people we brought on are sticking around.”
Booth’s retail strategy is equally fluid. “I guess it depends on if you’re talking about owning or operating,” he said in response to a question about how many stores they currently have. “We operate two stores now, I think, but we’re really operating more than we own, because we back-end for other shops. Where we’re involved in retail, I would put it at 10. Where we’ve acquired retail, it would be two.
“Your entry point has to be through getting a license,” he further explained. “We acquired a California retail license through the acquisition of Herbs, and now we’re going to build it out. We’re also looking at another shop in San Jose because the city said, ‘We’ll give you guys 16 more,’ but they’re only giving them to the 16 present license holders, so then they’ll have 32 in San Jose. Big whoopie. But they also took the barrier down on where they could be in San Jose, so we’re going to be in a very good area, and there’s an example of what we’re doing. We’re working with indigenous reservations in New York state; there’s another three stores that fit into the fold. The deal we did with Massachusetts on the social equity license with Belle Fleur; they got four licenses with that. So, your entry into the state has to be via license, and then you have to build it out, whether it be through acquisition of buildings and adding on new stores, or the acquisition of successful retailers. You need shelf presence to be able to brand, of course, so we also will be on Cookies’ shelves, and [Berner is] one of the top retailers in America, so there’s a place to put our products and our brand. Now, what you need to do in order to have successful retail, you also have to have some product. We’re not just going to be a retailer of other people bud and white label it with our brand, because that would be a disaster, and you’re seeing that happen to a few companies.
“Then again, look at Florida; there’s a different set of rights,” he added. “You can only sell your own product, but if you’re not in Florida yet, good luck making any dent. An entry into Florida would probably mean a major acquisition, spending a bunch of money, and I don’t want to spend a bunch of money while we’re sitting here with a special price. We have got to organically grow this in a smart way. We’re going to have our own grows, of course, but they won’t be big; they’ll be pieces of other grows. A lot of thinking said that’s not going to work, but it’s working. Once people see the ALPS advantage, they want us there after the fact, and if we have cannabis in their facility and we’re good partners with them and structure the deal properly so that we’re not competing with each other, they love it, and we can white label with them. That’s the Rapper Weed guys, who have a bunch of influencers we want to tap into – Machine Gun Kelly, Cardi B – and get them retweeting our stuff. Building a brand has to be across all pieces of the puzzle, including social media and CPG. I know a little bit about building a brand. Aurora was never not the number one brand in Canada with combined medical and adult usage. It’s about building an army of followers not only in the community and the culture, but also in the investment community and the medical establishment, and if you can balance that, you’re in very good shape. I didn’t know that before, but in retrospect you learn what mistakes were made and what you need to do to go forward and avoid the mistakes and still have the same successes.”
The ALPS Advantage
Booth’s Rapper Weed comment referred to a deal struck in June between Australis majority owned ALPS, a Colorado, based engineering and design company, and Massachusetts-based Belle Fleur. According to a press release, “Belle Fleur, founded by the powerhouse cannabis and music industry entrepreneurs behind Californian brand Rapper Weed, Rolandy Romelus, Irvin Whitlow and Domenico Cardarelli, are the holders of a license allowing the development of a Tier 11 high-tech indoor grow facility in Blandford. The Tier 11 license, the largest cultivation license tier available in Massachusetts, allows for up to 100,000 sq ft of canopy space.”
Indeed, the story of this deal illustrates a core facet of the Audacious strategy. “ALPS got the contract for the Rapper Weed facility in Massachusetts, but they originally called us for cash because they thought, ‘Oh, Australis Capital, maybe they can give us some cash,’” explained Booth. “And we said, no, we’re not a loan company anymore, but what are you guys up to? They were cool guys from Cali, building this facility. They had managed a million square feet of canopy in the gray market in California, they know their cannabis very well, and they had some excellent brands and cultivars. So, I said, maybe we could help you build your facility, but they were, like, ‘No, no, no, we’re cool.’ I said, can you please just take a call with [ALPS founder] Thomas Larssen and [ALPS SVP of Innovation] Joel Fuzat for 15 minutes, and it lasted another two hours and 15 minutes. After that call, the young men knew without a doubt that they needed ALPS to do this facility. It’s an agnostic approach; we don’t make a bunch of money on equipment. It is the design, the engineering, the commissioning, the construction management, and the post-commissioning work they do, from monitoring systems in a place that increases yield, but also de-risk from disease. Diseases are systemic in cannabis and a lot of the cultivars have been modified so much that they’re susceptible to certain diseases like bud rot, powdery mildew, those types of things where we – and it’s not like we’re a bunch of smarty pants, but we’ve done this for 10 years up in Canada, and we took our lumps, and we got punched in the face, and we fixed facilities. We now know, but I could tell you so many stories about where we had failures and made the corrections.”
The services offered by ALPS and its APIS Compliance and Maintenance services had the intended effect. “Good growers like the Belle Fleur guys were like, ‘Holy shit, these guys know what they’re talking about; let’s do it,’ and they signed ALPS before I ever spoke to them about the contract to supply us weed. So, they signed ALPS, and I go back to them and said, ‘What do you think about us taking some of your canopy?’ ‘What do you mean?’ ‘Well, we’d love to have 12.5 percent of your canopy, but we’re going to pay you for the weed. You grow it and we’ll pay your costs, but it’s our cultivars; we’ll get you the genetics, and we’re going to be a part of your facility. They loved it.”
Is it a model they intend to replicate? “100 percent,” said Booth. “Thankfully, the capex that we have to spend on building a big facility immediately gives them a future revenue because they signed a contract, so they can go to their bank and say, ‘Look, we’ve already sold 12.5 percent of our pod.’ And we give them a profit on it, so say it costs us 10 or 5 percent – I think it was 5 percent with Belle Fleur – guess what happens after that? They said they also have some manufacturing licenses, and they really don’t know a lot about that, so what do we think about taking that over? Boom.”
Will ALPS also build facilities under Audacious-owned licenses? “Yes, but not big ones,” said Booth. “Just where we need to have them when we need production but we’re not able to build for others. We’re not afraid to build for ourselves – absolutely not – but we have to watch the competitive environment. If we went and built a facility in Massachusetts, I think the guys at Belle Fleur might be a little bit pissed off.”
That may be true, but every state is different, so depending on the circumstances, is everything on the table? “100 percent,” Booth replied. “But it will depend on where we get with the market cap, and where we are with our structure. Can we manage to build a $35 million facility? Do we have the resources to employ and deploy it? Those are decisions of the future, but we’re looking at building smaller facilities for ourselves. We’re expanding the facility in Nevada as we speak.” The was in reference to Australis’s acquisition this March of Green Therapeutics, which supplies over half of Nevada dispensaries with cannabis products, according to the company, including the Tsunami and Provisions brands. The acquisition includes an “8,000 sq ft cultivation and manufacturing facility, as well as a management and brand licensing agreement with an entity in Oklahoma owned by [Green Therapeutics founder] Dr. Duke Fu and licensed for extraction and processing, and a brand licensing agreement with an entity in Missouri owned in part by Dr. Duke Fu, which is completing a process to obtain a license for extraction and processing.”
ALPS is involved in much more than cannabis, including a partnership deal struck in November with Priva, “a technology company that develops hardware, software and data services in the field of climate control, energy saving and optimal reuse of water.” According to a company announcement, “The partnership will focus on the joint marketing of ALPS’ advanced compliance and maintenance service solution, APIS, across the global horticulture industry.”
For Booth, the deal could be a game-changer. “That is such a great deal, but it’s been a tough time to sell it to the investor market, because nobody knows who the hell Priva is,” he said. “But if you read between the lines, they are without a doubt the largest environmental control company for the greenhouse industry in the world. And the reason they signed it exclusively with ALPS is because of the APIS system, which deploys technology into the grows that monitors every single part of the environment, to ultimately increase yield and the safety of products. They have 20,000 facilities that they provide maintenance for, and ALPS is now going to slide in, pitching the APIS system for the facilities. That’s going to be a tremendous source of revenue, but where I worry is if we have the engineers in place to services this. We’re going to have to watch how we pitch it, and to whom, but that’s huge in the in the greenhouse world. When the greenhouse guys read that we signed with Priva, they’re buying our stock.”
The ALPS play also is international in scope. “Thomas is international in sustainable growth, and that space is big,” added Booth. “It’s getting more and more notoriety, because it’s coming close to the price of farming, and the quality is better, and it’s better on the environment. One example of this is a project we have in Maine. It’s an eight-story building with three levels per story, growing vegetables, so there’s 24 levels in a high-rise just growing vegetables, and doing it at low cost without eating a bunch of land, without having a bunch of tractors, and 90 percent water reclamation through environmental control. There’s not much water reclamation at farms.
“On the protein side of things,” he added, “we’re going to run out of protein in the world in 2040, and it’s going to get pretty tough to get protein based on animals if the population continues to grow like it is. So, it all sort of ties into the same thinking of our strategy, this global and noble approach to not only medical cannabis and adult usage – why was it made illegal? – but also to reducing our impact on the environment in the cannabis. Again, we could put that into the regs. Imagine if you had to have 90 percent water recovery on your cannabis grow. It would put so many growers out of the picture.”
I asked Booth if Audacious is looking international as well. “We have international inquiries all the time,” he said, “but the medical cannabis internationally is a slow growth. There’s no big rush, and of course, ALPS is not going to say no to a cannabis facility. Alps won’t, but will we as Audacious jump into the medical cannabis industry in Germany? Not anytime soon. We’ve got to sort out this house, I think that would just take some focus off of proper integration and proper planning in America, and America is an amazing opportunity compared to any other medical opportunities internationally. So yes, we could, but are we ready to now? Not yet. Do I want to? 100 percent. Just keeping the eye on the ball for now.”
That said, Audacious, in a press release issued November 3, announced that it has “entered into a term sheet in regard to the formation of a strategic partnership with Golden Triangle Health (GTH), a subsidiary of NR Instant Produce PCL, a leading southeast Asian food manufacturer and distributor based in Thailand, producing its own signature brands private label products and co-packaging lines.”
The announcement added, “The purpose of the partnership is to develop GTH into the most meaningful CBD player in the Asian market. Audacious will provide advisory services, operational intelligence, including cultivation, manufacturing, and product development, and expansion of brand visibility in Thailand and beyond. Further, the potential exists for Audacious to become an export partner for GTH’s Thai product portfolio, to include CBD and Hemp consumables, topicals and other hemp derived commodities. Products will be sold under the GTH brand, as well as through B2B channels under white label agreements.”
Bull Riding and Beyond
In addition to putting down footprints in an increasing number of states, Audacious also is forging relationships with entities not usually associated with cannabis, including PBR, the world’s leading organization for bull riders. Based in Pueblo, Colorado, PBR has entered into a multi-year agreement that will make Audacious the “Official CBD of Professional Bull Riders.”
According to Booth, it’s a match made in heaven. “They have very good fan loyalty and they’ve got the retail. We’re the only company that has entered in a deal with any league or association. But that’s just for CBD. On the THC play in America, every state has a different regulation with respect to how you can brand, and that’s also [a consideration] in our selection of what states to be in. Can we build a brand in Vermont? Can we build a brand in Florida? You can’t, because Florida is similar to Canada in that it’s got some weird rules; as far as packaging – white, red, and black, that’s it, and it can’t be different from your neighbor, and you can only sell your own cannabis. That’s pretty difficult to brand. You can make a lot of money if you’re a front runner like Trulieve, sitting on about a $4.6 billion market cap, but paring down the question, you need to have regulatory experts, and you don’t want to hire one lawyer to have all that in their skull on a state-by-state basis.
“I don’t think I mentioned this already,” he added, “but there’s a fellow we brought on board, Vince Field, who worked for Justice Grown, and he is responsible for securing 56 licenses in multiple states, which is a lot. He knows how to navigate towards licensing, and it’s important that for any of the new states that are opening up, or for states like Florida that pop up another 16 licenses, that we are front and center if we want to be. It also matches our regulatory discipline, and as you said, discipline is important. Stick to your knitting. Know what you know where you know it; have the right people in place that can execute on it; integrate properly, those are the pieces of the puzzle scale. Watch how you scale. Read the Rockefeller book on scale-up and scale-down, but guess what, you better have the cash to do that, because you can always scale up beyond your means and make sure that every pigeonhole has failed and then you scale down at the proper time, but that’s expensive if you’re not generating the revenue to support it.
“So,” he continued, “we have list of lawyers who are the experts in a particular state in the cannabis space – and then you add in a Vince Field, who is navigating through legislation and regulations to get licenses, and also advising the lobbyists on how to tweak regulations to raise the bar – and all of that plays into the bigger picture of how we’re going to build Audacious.
“Imagine, if you will, in New York, they’re still saying no vertical integration,” continued Booth. The only people allowed to vertically integrate are the medical companies that already exist. But they said the same thing in New Jersey, and then they changed their mind, because they saw it as unfair for new entrants, and now you can vertically integrate in New Jersey. That was because lobbyists had an impact on final regs, and that’s my background. I’m a regulatory guy, and I also know how to deal with bureaucrats. You can’t change legislatures, it’s very hard, that’s law, but you can change policy, and you can change regs. So, imagine if, in New York, they said that applicants can only apply for production if you’re GMP compliant and GACP compliant, and have demonstrated experience to have those features. Imagine if we were getting our lobbyists to do that. That would limit the number of production facilities exponentially, because it’s not really considered in the States, and it was considered in Canada, because Canada set up a system to fail. They made it so strict on the grow side that the ones that were able to knock down the barriers and get it done know what a high bar looks like. So, I’m not afraid of any high bars, and nor is the executive team, and we’re the ones that will break the fence down instead of follow others through it, because you know what? The fence is broken. But we’re small, we’re little, we’re the little guy in a David and Goliath-type of situation.
“I do think because of this consolidation, and because of this critical mass thing that’s happening in the states, because of the money the MSOs, the larger ones, are getting access to, that someone’s going to take a run at us,” he added. “But we’ve set up poison pills to protect against that, and hopefully, we can take them out in three years instead of them taking us out next year.
“That is my thinking, to some extent,” he continued, “but on a state-by-state basis, you need your regulatory experts, and you need to pick your poison in those states. I’m also a big proponent of postmortem when a deal goes south or doesn’t close. We just had one happen in Florida about eight weeks ago. They pushed us to the side and said, ‘We’re talking to these new guys at the big MSO.’ Guess what? They put them into a standstill for six weeks; after six weeks, the deal fell through, and now we’re renegotiating with the same company. So, don’t have any enemies. Don’t get mad at people. Don’t burn bridges. Build them and make sure that the team, that the army, if you will, of not only your employees but your investors, your clients, and your associates, make sure they’re getting paid, don’t get a bad name, don’t run out of money, and that’s happening a lot in America with the smaller companies. Access to capital is tough.
“Belle Fleur, by the way, would not have gotten a penny if it wasn’t for ALPS doing that job for them, and me being involved” he added. “We also brought in a general contractor to review the budget as it goes along, a company called Dawson Wallace that built a million-square-foot facility in Alberta. With these pieces of the puzzle, when we went out looking for money for Belle Fleur, not for us but for them, we got it. Now, that goes a long way in building an awesome relationship with these guys, who are super connected to the social media side of things – the Kardashians, the drummer guy marrying Chloe Kardashian – and we have these types of people retweeting our cannabis in the states where we’re prevalent? That’s big stuff.
“I know I’m bouncing around here, but the future is bright for Audacious,” he concluded. “We obviously in my opinion would take out the other 49 percent of ALPS when the time is right. It’s a dilutive deal, a paper deal, and Thomas has to hit certain targets, but if he hits those revenue targets, top line and EBITDA, the stock price will be way beyond the $50 million market cap. His first target is $26 million top-line. But go look at comps of other MSOs. There are MSOs trading north of $500 million that don’t have [ALPS’] top-line revenue.
“Here’s a good comparison,” he added, almost as an afterthought. “I don’t want to dump on them, because I don’t know them, but the company is called Agrify. They do a very, very similar thing to ALPS. They’re not as agnostic, they make a little bit of scratch on their equipment, but they just reported and their market cap is $350 million, and [ALPS’] revenue in just the quarter we’re in doubled theirs. We’re undervalued! That’s my job, though. I have to get that message out by talking to cool guys like you, having our social media, having it explained properly in our releases, and reporting quarter after quarter the differences that we bring to the table, because again, we’re little, we’re a company that has gone through a little bit of a grinder with a dissident battle, but it’s all sunshine on our shoulders now. We’ve just got to roll.”
Q2 2022 Financial Results
Subsequent to our interview, Audacious released Q2 2022 financial results and held a follow-up earnings call November 23. Notable bullet points included:
Q2 Revenue Increased 2,068% Year-over-Year to $2.3 Million
Pro Forma 2,702% YoY Growth (vs Reported)
Solidifies Entry into New Markets, including California and Massachusetts
Working towards Operationalizing Missouri Asset
Expands Brand Portfolio – Continued Growth Initiatives in Nevada
ALPS Continues to Expand with Cannabis and Non-Cannabis Contracts Strengthens Leadership in Environment, Sustainability and Governance Driven Horticulture Projects
“We saw continued strong growth,” Booth stated on the earnings call. “Sequentially, our reported revenues increased by 31 percent, while on a year-over-year basis, our growth was well in excess of 2,000 percent. Not bad, but this is only the beginning. To-date, most of our reported growth is coming from ALPS, our engineering and design consultancy, that is at the heart of our ability to execute on our unique strategy, as we are not yet able to fully consolidate GT, that’s Green Therapeutics. However, we anticipate being able to consolidate GT revenues next quarter.
“To provide some insights into the actual size of our business on a pro forma basis, we achieved 3,149 percent growth over what we reported last year,” he added. “In summary, we continue to execute, continue to grow, and we’ll continue to work towards high margin profitable operations. We’re doing well and I’m very pleased with the progress made this quarter.” As of November 29, Australis Capital has a market cap of approximately $40.1 million.
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