Green Growth Brands (CSE: GGB) released their second quarter financials this evening, following the announcement that the firm would be selling off its CBD business unit to a related party in a bid to cut capital expenditures. The firm recognized a total of US$21.0 million in sales during the period ended December 28, 2019, while posting a net loss of $35.8 million.
Despite the decision to sell off its CBD segment, the largest portion of its revenues came from this segment, with total CBD revenues of $10.9 million versus $10.1 million in revenues for the multi state operator (MSO) segment of the firm. However, the CBD segment of Green Growth is much more capital intensive, with the segment posting a net loss of $13.7 million, versus the MSO segment loss of $1.7 million. Corporate losses were also significant, with the segment accounting for a total loss of $20.4 million overall.
In terms of operating expenses, its clear why Green Growth is facing “severe financial difficulty.” The firm spent $29.9 million in operating expenses overall during the quarter, with general and administrative expenses accounting for $$8.1 million, while sales and marketing amounted to $14.4 million. The company effectively spent $1.07 in sales and administrative costs for each dollar of revenue earned – a math equation that simply does not favor profitability. The remainder of operating expenses consisted of $1.6 million in share-based compensation and $5.6 million in depreciation and amortization.
The real story here however is Green Growth’s balance sheet. With $18.4 million in current assets and $151.09 in current liabilities, the firm is severely under capitalized and deep in the red on a working capital basis with a working capital of -$133.4 million. With just $3.5 million in cash, the prospects of Green Growth paying off its currently outstanding $32.0 million in accounts payable are extremely thin at best. Other current liabilities include notes payable of $35.0 million and convertible debentures of $67.1 million.
Green Growth Brands has not as of the time of writing filed full financial figures for the current quarter. As a result, it is unclear specifically what the due dates are for currently outstanding current liabilities.
Green Growth Brands last traded at $0.43 on the CSE.
Information for this briefing was found via The CSE and Green Growth Brands. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
