Debra Borchardt
Green Growth Brands
Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) reported its results for fiscal first-quarter 2020 ending September 28, 2019. Revenues for the period totaled $12.7 million, a 77% increase over the previous quarter. However, the company delivered a whopping net loss of $30 million versus last year’s net loss of $2.8 million for a net loss of 15 cents per share over last year’s net loss per share of three cents per share.
Expenses Are Very High
General and administrative costs were $11,433,502 for the 13 weeks ended September 28, 2019, compared to
$2,450,960 for the three months ended September 30, 2018, of the prior year. This included head office salaries of
$5,654,77, legal and professional fees of $3,290,363, travel-related costs of $405,474, occupancy costs of $435,863, insurance costs of $349,938, and other expenses of $302,032 for the 13 weeks ended September 28, 2019. Also included in general and administrative costs for the 13 weeks ended September 28, 2019, are termination and severance payment of $421,396 and write-down of technology of $573,662.
“As we approach the holiday shopping season, we are confident in our growth trajectory,” said Peter Horvath, CEO of Green Growth Brands. “We are proud of the topline growth we accomplished in Q1 and are extremely pleased with our current results, which are an indication of future growth. In fact, the four weeks of fiscal November, retail CBD sales were two-thirds of our total CBD sales reported in all of the thirteen weeks of first quarter fiscal 2020, which we are reporting today. This topline growth is reflective of our shift from investing in the foundation of our CBD business to focusing on its execution.”
CBD Biz Costs More Than It Makes
While the company is touting its CBD success, the hard numbers aren’t that great. For the quarter CBD sales came in at $5.1 million. The CBD segment, however, incurred operating expenses of $11,225,559. Sales and marketing include personnel costs of $3,319,371; advertising costs of $1,966,655; occupancy costs of $570,254; professional fees of $229,852; supplies, postage and credit card fees of $483,125; travel of $303,657; and other expenses of $606,147.
“In a very short time, we have grown a meaningful CBD footprint. We believe our products, network of shops, rapidly growing web business and wholesale relationships position us as a leader in the industry. In the coming quarters, we look forward to reporting similar trends and results for our MSO segment of the business. As we begin to reach scale our consumer and operations expertise will be clearly reflected, not only in the customer experiences we create and the loyalty we drive but also in our financials as we work towards profitability.”
Harvest One
Harvest One Cannabis Inc. (TSX-V: HVT)(OTCQX: HRVOF) announced a net revenue of $4.1 million for the three months ending September 30, 2019, representing a 34% increase over the previous quarter, and a 142% increase over the same period in 2018. The company also reported a net loss of $5.2 million, which was slightly less than last year’s net loss of $5.7 million for the same time period.
Grant Froese, CEO of Harvest One, said, “We are very encouraged by strong revenue growth in the first quarter of fiscal 2020. Cannabis sales throughout the industry have been greatly impacted by provincial and regulatory challenges, particularly the slow rollout of retail stores in both Ontario and British Columbia. Unlike some other Canadian Licensed Producers, we are in a fortunate position of having a diverse product portfolio, where cultivation equates to approximately 50% of our revenue, with our remaining revenues coming from our medical and consumer divisions.”
Cost Cutting Measures
Mr. Froese continued, “In light of recent challenges within the cannabis industry, the company has made some difficult but necessary decisions to improve cash flows and reallocate capital to ensure the long-term growth of the Company. Harvest One has implemented significant cost-saving measures across all its divisions and expects to realize these savings immediately and improve upon them in future quarters.”
The company is laying off 20% of its workforce across all divisions. Harvest One also said it is planning on divesting its 50.1% interest in the Greenbelt Greenhouse facility and its outdoor growing site located in Lillooet, British Columbia. It said the sale of these non-core assets will provide cash proceeds to support the expansion of the company’s core business lines and operational strengths.
It is repurposing its Lucky Lake facility to focus on the company’s core strengths: namely, the development, production, and distribution of its value-added infused products, including the manufacture of its Satipharm Gelpell capsules in Canada.
