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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.