An Ottawa-Gatineau hemp firm is laying off a substantial number of employees as it searches for an acquisition, additional financing or another strategy to remain in business.
Eureka93, previously known as LiveWell Canada, announced Friday the firm is undergoing a strategic review of its operations and is suspending all non-critical work until it finds a viable path forward. It cited a lack of capital and “recent adverse conditions in the public capital markets and CBD isolates market” as reasons for the review.
Eureka93 management wrote in the company’s first-quarter financial filings that the firm, which had an accumulated deficit of $30.8 million as of March 31, expected to start generating cash flows this year but would likely need additional financing to remain a going concern.
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The company said in a release Friday that it has “temporarily laid off a substantial portion of employees at all locations.” Eureka93, which has its head office in Ottawa-Gatineau, did not respond to requests for comment Friday afternoon as to how many employees work in the National Capital Region, nor how many have been laid off. Records from OBJ’s 2018 Book of Lists indicate the firm had 43 local employees as of last year.
Eureka93 burst onto the scene in early 2018 with plans to convert 550,000 square feet of vegetable growing space in a Metcalfe greenhouse to cannabis cultivation. The firm had lofty goals that could have eventually seen up to 800 employees working in the grow-op, but the company never received a cultivation licence for the local facility and announced last month it would be exiting the cannabis field to focus solely on developing products from CBD extract.
The firm had also planned to raise $15 million in a private placement, but has not reported proceeds from any such financing.
Eureka93 went public on the TSX Venture Exchange last year via a reverse takeover, later transferring to the Canadian Securities Exchange to more readily pursue business opportunities in the United States. It went on to merge with companies in both Canada and the U.S. and took over an existing production facility in Montana.
Eureka93’s shares have now been halted in trading on the CSE, as the firm said it was unable to file its requisite financial statements for the most recent quarter.
The company was an early member of Canopy Rivers’ portfolio, but ran into legal disputes with the cannabis investment firm and its parent company, Smiths Falls-based Canopy Growth. The Canopy firms terminated the investment agreement after they alleged that Eureka93 failed to alert the investing companies about its RTO plans. Eureka93 previously wrote in financial filings that the Canopy claims were “frivolous,” but the firm ultimately paid an undisclosed settlement in July to wrap up the dispute.
Eureka93 said in a release that it does not know how long the strategic review process will last, but noted it would like to find partners that could make use of its existing extraction facilities to develop consumer products.
