Millennium Sustainable Ventures (MILC) research, news, and more from GeoInvesting

Company description

Thu, 02 Sep 2021 13:52:39 GMT

"MILC is investing in greenhouse facilities for the cultivation of cannabis. We believe this is the sustainable approach to cannabis cultivation since the cost of such facilities is lower than indoor cultivation facilities and the cost of operation/production is also lower.

As of September 2, 2021, MILC has made two investments in cannabis cultivation:

1) A short-term loan to Walsenburg Cannabis LLC ("WC") and is currently seeking Colorado cannabis regulatory approval to take an ownership interest at which point MILC expects to own a 77.5% preferred equity position. WC is commencing operation of an approximately 102,800 square foot greenhouse cultivation property located in Walsenburg, Colorado.

2) MILC owns a 77.5% preferred equity interest in VinCann LLC which is operating a 9.8 acre greenhouse and outdoor cultivation facility in Vinita, Oklahoma."

(source: website)

Research

Mon, 21 Nov 2022 12:24:43 GMT

Millennium Inv & Acquisition Co (OTC:MILC)mainly focuses on opportunities in sustainable cannabis cultivation facilities. The company filed its Q3 2022 10-Q. Zero revenues for the quarter as it continues its legal battle in Michigan.

On June 30, 2022, PW Marengo, filed a Verified Complaint in the Court of Appeals/Circuit Court of Calhoun County Michigan, (the “Calhoun Complaint”) and the Case Number is 22-1760-AW. The Complaint is an action to compel the Township to allow PW Marengo to appear before the Marengo Township Zoning Board of Appeals (“ZBA”). On June 10, 2022, PW Marengo filed an application to the ZBA to secure an affirmation that, because the greenhouse property is zoned as Agricultural, it is exempt from requirements of seeking building permits and a Certificate of Occupancy. To date, the Township has refused to schedule such a meeting and on June 24, 2022, two representatives of the Township indicated that they were rejecting the application to the ZBA because the property is zoned agricultural and exempt from requiring a Certificate of Occupancy and therefore there is no reason to hold the meeting. Unfortunately, when pressed, the representatives were unwilling to put this in writing which we believe would have been sufficient to resolve the requirements for the State of Michigan cannabis licensing. PW Marengo was seeking documentation that is necessary to secure cannabis licenses from the State of Michigan which has agreed to accept in the form of a simple two sentence statement from Marengo Township that because the property is zoned Agricultural it is exempt from requiring a Certificate of Occupancy.

After commencement of the litigation process, we ultimately secured the CO Letter from the Marengo Township Supervisor confirming that the property does not need a CO. The CO Letter is in the form that the CRA previously agreed to accept. Based on the receipt of the CO Letter, the CRA licensing process moved forward and on August 9, 2022, CRA performed a pre-licensure inspection and identified that no deficiencies existed. In addition to the CRA approval we received, we are required to secure the approval of the Michigan Bureau of Fire Services (“BFS”). The BFS process is currently underway but there is no certainty as to the timing to complete this process. Unfortunately, after receiving the CRA pre-approval for the property, the attorney for the Township sent an email to the CRA indicating the facility was not in compliance with the Township requirements. Based on this, we once again sought to convene the ZBA which occurred on September 7, 2022. Unfortunately, the ZBA did not vote on what was requested in the application but rather “denied a change of zoning” which was not sought. Accordingly, on September 27, 2022, PW Marengo filed an appeal of the outcome of the ZBA in the Court of Appeals/Circuit Court for the County of Calhoun in the State of Michigan (Case Number 20222609AA).

On October 14, 2022, the Calhoun Complaint was amended in its entirety with a focus on securing the necessary cooperation from Marengo Township as well as seeking damages.

We continue to try to work with the Township to establish a path forward but will continue to pursue a parallel track in litigation including a court ordered mediation process.

Research

Tue, 19 Jul 2022 04:00:00 GMT

Millennium Inv & Acquisition Co (OTC:MILC) ($0.50; $4.5M market cap) - MILC’s partner, Power Reit (Md) (NYSE:PW), has been tied up in a legal battle pertaining to trying to secure its Michigan cannabis license which would allow MILC to start generating revenue by managing/operating a PW property in Michigan. The company mainly focuses on opportunities in sustainable cannabis cultivation facilities.

Part of the issue has been that PW was not able to obtain a Certificate of Occupancy from Marengo Township, even though its management contended that they did not need one. This outstanding issue has prevented PW from submitting its license application to the Cannabis Regulatory Agency (CRA).

Per an 8K filing yesterday after hours, it seems like PW was able to resolve the CO issue and submitted its application to CRA:.

“Pursuant to the Marengo Township zoning map, the Property is zoned Agricultural and was given a Marijuana Overlay, which according to the Marengo Township Ordinance does not change the underlying zoning. As such, the Property does not require a CO and the CRA agreed in writing to accept a simple two sentence letter (the “CO Letter”) as an alternative to providing a CO. PW Marengo, pursued the agreed upon CO Letter from Marengo Township which was initially unwilling to cooperate which ultimately led PW Marengo to initiate litigations against Marengo Township.

On July 8, 2022, PW Marengo ultimately secured the CO Letter from Marengo Township confirming that the property is currently zoned Agricultural and does not need a CO. The CO Letter is in the form that the CRA previously agreed to accept. Based on the receipt of the CO Letter, the complete licensing application has now been submitted to the CRA.”

For those not familiar with the MILC story, obtaining the Michigan license was a major catalyst the Company was counting on for future growth, as MIchigan is one of the largest markets in the country.

MILC had previously provided guidance based on having the Michigan facility up and running. The stock initially ran up from $1.00 to $11.00 , but sharply pulled back to current prices when the company pulled the guidance due to major downward pricing pressure in the cannabis market, and the fact they had not obtained the license within their expected timeline.

However, the guidance indicated that the facility was projected to generate 27,000 pounds per year versus a total of 24,000 from its other 3 facilities.

In regards to the pricing in the industry, the 8K mentions:

“In terms of the Michigan cannabis market, wholesale prices to date do not appear to have compressed as significantly as other states such as California, Colorado, and Oklahoma. We continue to believe that the Property was acquired at an attractive basis and that, once fully operational, Marengo Cannabis can be a high quality, low-cost producer in the developing Michigan market.”

So, while the lofty numbers the company had previously projected may not still be accurate, obtaining the Michigan license and becoming fully operational in Michigan will likely still have a robust effect on the company’s growth profile in the coming years.

While this is certainly a positive development for MILC, investors need to be aware of related party risk with PW and certain transparency issues at PW.

Research

Wed, 16 Mar 2022 18:15:12 GMT

Millennium Inv & Acquisition Co (OTC:MILC) ($3.00; $36.5M market cap) mainly focuses on opportunities in sustainable cannabis cultivation facilities. The company filed its 10-K, as we mentioned in our prior coverage, revenue generation is slated to start in early to mid 2022. The company provided the following outlook in the 10-K:

We are excited about our new area of focus – sustainable cannabis cultivation in greenhouses. We are also proud of the rapid progress we are making at each site as well as the teams we are building. We are very focused on building teams that draw from the broader business community and people with a focus on greenhouse cultivation rather than just drawing from the cannabis industry. Revenue received in the fourth quarter of 2021 was approximately $42,000. We expect to ramp up significantly in 2022 as we seek to generate operating income from these operations. The cannabis industry is growing at a rapid rate and our approach, which is focused on low-cost and sustainable cultivation in greenhouses, is a key component of our long-term business model. Our projects in Colorado and Oklahoma benefit from the potential for rapid speed to revenue. Our most recent project in Michigan is the largest cannabis cultivation facility in Michigan and, once operational, should compete very well in this rapidly growing market. We are focused on bringing best in class, large-scale mainstream greenhouse agricultural cultivation techniques to the cannabis industry.

One thing we need to point out is that the latest investor presentation and the 10-K do not give the same specific guidance the company laid out in the fall of 2021, which was for fiscal 2022 and 2023 revenue and annual profit projections. The company expected sales of $14.4 million and $54.7 million with annual profits of $6.2 and $35.0 million, respectively. We believe this may be due to declining cannabis pricing trends across the U.S. and/or timing issues related to receiving its Michigan license.

Research

Fri, 12 Nov 2021 17:57:27 GMT

Millennium Inv & Acquisition Co (OTC:MILC) ($8.80; $96.4M market cap) - As we recently stated, MILC, a company that mainly focuses on opportunities in sustainable cannabis cultivation facilities, has been catching up on past filings to become current with the new SEC rules. It has done so over the last few weeks and today filed its 10-Q for 3rd quarter of 2021. The company is still in the pre revenue stage, setting up for commericalizion in 2022.

MILC currently expects to begin generating revenues by mid-2022 and hopes to have full planting by the end of 2022. Current guidance for fiscal 2022 is $14.4 million in sales with $6.2 million in profit.

Research

Mon, 18 Oct 2021 11:25:17 GMT

Millennium Inv & Acquisition Co (OTC:MILC) mainly focuses on opportunities in sustainable cannabis cultivation facilities. With the new SEC rules that took effect in late September, MILC is classified as a dark stock until they are fully reporting. The company stated it is in the process of becoming current.

On Friday, the company filed its 10-Q for the June quarter, bringing itself a step closer to meeting all the necessary requirements. You can see more on the dark stocks implications in a series we issued over the past few months.

Interviews

Fri, 17 Sep 2021 04:00:00 GMT

Fireside Chat With Jared Schrader, President of Millenium Investment & Acquisition Company Inc (MILC)

Millennium Investment & Acquisition Company Inc. (OTC:MILC) ($5.55, $60.8M market cap), President Jared Schrader was our guest on September 16, 2021, to engage in a fireside chat that includes our normal format of conversation and Q&A. Below is a brief summary of coverage and introduction to MILC.

MILC has been operating as a non-diversified, closed-end investment company. However, the company is in the process of terminating this designation.

The company’s main focus will be on operating cannabis cultivation facilities through lease agreements on land owned by Power REIT (MD) (NYSE AMEX:PW).

As we have stated before, we are becoming really excited about this company’s new cannabis focused business direction. On September 10, 2021 we mentioned shares jumped on a press release stating that the company entered into a long term lease agreement with Power REIT for a 556,146 square foot greenhouse cultivation facility. The Michigan cannabis market is the second largest market, second only to California. The company also has agreements with PW in Colorado and Oklahoma.

The company also provided an investor presentation which has fiscal 2022 and 2023 revenue and annual profit projections. The company expects sales of $14.4 million and $54.7 million with annual profits of $6.2 and $35.0 million, respectively. The company has 10.9 million shares outstanding and it is our belief that it won’t need to raise significant capital to fund its near-term goals.

We still need to understand the story a little better to construct some valuation ratios, but we could see a scenario where shares could trade between $10.00 and $15.00 on 2022 financial estimates.

See our full note including some possible caveats associated with the story here.

Research

Fri, 10 Sep 2021 19:23:23 GMT

**Call To Action - Added MILC To Our Speculative Long Screen

Millennium Inv & Acquisition Co (OTC:MILC) ($5.80 $63.5M market cap) main focus is on opportunities in sustainable cannabis cultivation facilities. MILC had been operating as a non-diversified, closed-end investment company, however, the company is in the process of terminating this designation.

Yesterday afternoon, we sent the following tweet out to premium members:

Shares jumped initially in the morning, approaching $4 per share on a press release stating that the company entered into a long term lease agreement with Power REIT (MD) (NYSE AMEX:PW) for a 556,146 square foot greenhouse cultivation facility. The Michigan cannabis market is the second largest market, second only to California. These comments from management is what really caught our attention:

“We currently see prices of $3,500 - $4,000 per pound in Michigan. In the near-term this represents an opportunity to generate significant cash flow. Given our focus on using greenhouse technology to lower the cost of cultivation, we are confident we can compete favorably even as the prices inevitably compress in this market. With over 500,000 square feet of greenhouse cultivation space, we are initially targeting approximately 90,000 plants. Conservatively assuming 3 harvests per year this could produce more than 40,500 pounds of cannabis flower annually."

Based on those comments, production of 90,000 lbs at $3500 per lb would lead to revenues of $140 million at full capacity. The company currently expects to begin generating revenues by mid-2022 and hopes to have full planting by the end of 2022. Current guidance for fiscal 2022 is $14.4 million in sales with $6.2 in profit.

On the company’s website, we noticed on page 15 from an investor presentation where management laid out its project summaries for 2022 and 2023.

*For Vinita, OK and Walsenburg, CO MILC owns a 77.5% Preferred Equity position

In the table, with the Michigan facility producing 13,500 lbs (out of the 90,000 at full capacity) the company projects $48.6 million in revenue. Coupled with its other greenhouses, 2023 revenue projections stand at $70.9 million, with $48.0 million in profit.

Power Reit is likely to be MILC’s long-term partner which might mean further lease announcements in the future. The reason for this partnership stems from a key common shareholder, David Lesser. He owns about 21% of MILC and 29% of PW as per the most recent proxies. He is the CEO of both MILC and PW. One of Mr. Lesser’s strategies might be to buy the greenhouse properties with PW and then operate them through MILC.

This seems to be the case with this lease announcement as PW will fund most of the needed capital improvements and MILC will be operating the property, potential tempering concerns that MILC might have to raise capital to generate the revenue to meet its guidance.

Roughly 30 minutes after our tweet, the stock went on to hit $6.00 before closing at $5.80, up 103% for the day. Shares traded below $1 per share in late June. This is a highly speculative play and will likely have significant share price volatility.

Now, as far as valuation goes, we do not want to get too sensational based on annual profit guidance. We need to be aware that a lot can happen between now and 2023, such as regulatory issues, cannabis pricing pressure.

Furthermore, we need to dig into the annual profit guidance and determine if that is truly a consolidated bottom line guidance number. The guidance translates into 2022 and 2023 EPS estimates of $0.56 and $4.40, respectively.

Additionally, since the company did not provide EPS guidance, the door is certainly open for dilution.

Finally, we would need to gain a better understanding of the costs associated with building out the company’s legacy carbon business ( producing Activated Carbon from a waste stream). However, we do believe investors could start to notice the potential of the company’s cultivation business and compare the company to high flyer comps like PW and IIPR.

We will be interviewing the CEO today or Monday.

Caveats:

MILC has not yet received a license to grow cannabis in Michigan.

“Property improvements will begin immediately, and Millennium Cannabis is working with the state and local jurisdictions on the final steps for licensing which will allow us to start growing plants.”

It is our belief that after entering into the lease agreement, the company is very confident that it will receive the necessary licenses for Michigan, which would be another potential catalyst for the next leg up.

The company has not filed quarterly or annual reports for 2020 or 2021. This is due MILC’s transition from an investment company (act 1940) to a regular SEC filer. The company is expecting the transition to be done sometime in the next few quarters as per below quote.

“On August 12, 2021, MILC retained MB to perform the audit of the 2020 Financial Statements and perform a review of a Form 10-Q for the period ended June 30, 2021.”