"The results this quarter are a reflection of our ability to create products and experiences that consumers want," said
"The initiatives we announced today to sell the CBD segment, restructure debt and raise equity financing improves the financial infrastructure we need to scale our MSO segment. We believe focusing our expertise on the MSO segment will yield the highest long-term value for our shareholders and customers."
In light of today's announcement regarding the CBD Transaction and related matters, GGB has rescheduled its conference call and audio webcast with Chief Executive Officer,
Second Quarter Fiscal 2020 Highlights
- Total revenue for the quarter was
$21.1 million , a sequential increase of 66% over the prior quarter - CBD revenue for the quarter was
$11.0 million , a sequential increase of 113% over the prior quarter - MSO revenue for the quarter was
$10.1 million , a sequential increase of 33% over the prior quarter - Total gross margin for the quarter was 30%, compared to 11% for the prior quarter, resulting in a sequential increase in gross profit of
$5.0 million over the prior quarter - Total operating expenses for the quarter were
$29.9 million , compared to$25.0 million for the prior quarter, due to growth in mall-based CBD shops from 139 to 195 - Net loss before taxes for the quarter was
$34.8 million , including non-operating expenses of$11.3 million , compared to a net loss before taxes for the prior quarter of$29.9 million , including non-operating expenses of$6.3 million - Adjusted EBITDA loss for the quarter was
$13.9 million , compared to a loss of$15.2 million for the prior quarter endedSeptember 28, 2019
Adjusted EBITA loss is a non-IFRS financial measure. A description of and a schedule reconciling net loss before taxes, an IFRS financial measure, to Adjusted EBITDA loss, a non-IFRS financial measure, accompanies this release
Second Quarter Fiscal 2020 Financial Statements
Unaudited Condensed Interim Consolidated Statements of Financial Position | |||||||
As at | |||||||
(Expressed in | |||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 3,597,173 | $ | 10,256,008 | |||
Receivables | 1,032,141 | 580,529 | |||||
Prepaid expenses | 2,046,461 | 5,142,618 | |||||
Inventories | 8,167,294 | 10,244,804 | |||||
Biological assets | 685,744 | 1,352,097 | |||||
Notes receivable | 48,467 | 47,739 | |||||
Other receivables | 2,845,744 | 3,006,760 | |||||
Deferred lease charges | - | 727,518 | |||||
18,423,024 | 31,358,073 | ||||||
Non-current assets | |||||||
Deposits and other assets | 716,672 | 2,880,186 | |||||
Deferred lease charges | - | 2,606,940 | |||||
Notes receivable | 154,478 | 17,999,224 | |||||
Property and equipment, net | 29,708,259 | 18,761,723 | |||||
Right-of-use assets | 86,619,872 | - | |||||
Intangible assets | 101,667,071 | 39,925,984 | |||||
58,416,949 | 36,253,417 | ||||||
Total assets | $ | 295,706,325 | $ | 149,785,547 | |||
Liabilities | |||||||
Current Liabilities | |||||||
Accounts payable and accrued liabilities | 32,009,434 | 16,028,807 | |||||
Taxes payable | 1,113,360 | 282,593 | |||||
Due to related parties | 4,491,862 | 317,535 | |||||
Notes payable | 35,060,970 | 45,762,540 | |||||
Lease liabilities | 11,846,119 | - | |||||
Embedded derivative liabilities | 274,531 | 1,496,214 | |||||
Convertible debentures | 67,105,410 | 41,623,041 | |||||
151,901,686 | 105,510,730 | ||||||
Non-current liabilities | |||||||
Long term accrued liabilities | 1,672,672 | 299,977 | |||||
Lease liabilities | 77,796,680 | - | |||||
Embedded derivative liabilities | 226,797 | - | |||||
Convertible debentures | 9,033,123 | - | |||||
Deferred tax liability | 6,985,048 | 1,437,324 | |||||
95,714,320 | 1,737,301 | ||||||
Shareholders' Equity | |||||||
Share capital | 182,954,729 | 119,881,374 | |||||
Reserve for warrants | 16,538,786 | 9,054,624 | |||||
Reserve for share-based compensation | 4,239,914 | 3,147,110 | |||||
Accumulated deficit | (158,425,838) | (92,453,943) | |||||
Accumulated other comprehensive income | 148,286 | 148,286 | |||||
Total equity attributable to shareholders of | 45,455,877 | 39,777,451 | |||||
Non-controlling interest | 2,634,442 | 2,760,065 | |||||
Total equity | 48,090,319 | 42,537,516 | |||||
Total liabilities and equity | $ | 295,706,325 | $ | 149,785,547 |
Adjusted EBITDA loss is a non-IFRS financial measure, which is calculated as net income (loss) before interest, taxes and depreciation and amortization, plus fair value adjustments on sale of inventory and on growth of biological assets, share-based compensation and payments, loss (gain) on equity investments, loss (gain) on foreign exchange, transaction costs, and certain other non-operating expenses, as determined by the Company. The Company believes this measure provides useful information as it is a commonly used measure in the capital markets and as it is a close proxy for repeatable cash generated by (used for) operations.
Adjusted EBITDA | |||||||||
(Expressed in | |||||||||
13 weeks | Three Months | 26 weeks | Six months | ||||||
2019 | 2018 | 2019 | 2018 | ||||||
Net loss after listing fees before income taxes | $ | (34,799,689) | $ | (14,163,507) | $ | (64,686,365) | $ | (17,010,044) | |
Fair value adjustment on sale of inventory | 335,681 | 593,670 | 1,242,600 | 593,670 | |||||
Fair value adjustment on biological assets | 527,234 | (757,564) | 19,950 | (757,564) | |||||
Stock based compensation | 1,649,401 | 187,640 | 3,282,323 | 187,640 | |||||
Depreciation and amortization | 5,661,206 | 202,561 | 9,287,735 | 202,561 | |||||
Shares issued for services | 101,804 | 1,000,000 | 101,804 | 1,567,884 | |||||
Pre-opening expenses | 1,235,974 | - | 2,201,717 | - | |||||
Non-operating expenses | 11,322,409 | 3,644,412 | 17,586,574 | 3,800,514 | |||||
Termination and severance | 199,292 | - | 620,688 | - | |||||
Writedown of developed technology | - | - | 573,662 | - | |||||
Other non-operating expenses | (155,050) | - | 623,879 | - | |||||
Listing fees | - | 459,715 | - | 699,190 | |||||
20,877,951 | 5,330,434 | 35,540,932 | 6,293,895 | ||||||
Adjusted EBITDA loss | $ | (13,921,738) | $ | (8,833,073) | $ | (29,145,433) | $ | (10,716,149) | |
Unaudited Condensed Interim Consolidated Statements of Loss | |||||||||
For the 13 and 26 weeks ended | |||||||||
(Expressed in | |||||||||
13 weeks
| Three months
| 26 weeks
| Six months
| ||||||
Sales | |||||||||
Revenue | $ | 21,090,653 | $ | 3,000,445 | $ | 33,792,611 | $ | 3,000,445 | |
Cost of goods sold | 13,796,645 | 3,020,708 | 24,707,645 | 3,020,708 | |||||
Gross profit before fair value adjustments | 7,294,008 | (20,263) | 9,084,966 | (20,263) | |||||
Fair value change in biological assets included in inventory sold and other charges | 335,681 | 593,670 | 1,242,600 | 593,670 | |||||
Unrealized loss (gain) on changes in fair value of biological assets | 527,234 | (757,564) | 19,950 | (757,564) | |||||
Gross profit | 6,431,093 | 143,631 | 7,822,416 | 143,631 | |||||
Operating expenses | |||||||||
General and administrative | 8,139,725 | 8,629,756 | 17,823,392 | 11,080,716 | |||||
Sales and marketing | 14,458,041 | 1,183,054 | 24,528,757 | 1,183,054 | |||||
Share-based compensation | 1,649,401 | 187,640 | 3,282,323 | 187,640 | |||||
Depreciation and amortization | 5,661,206 | 202,561 | 9,287,735 | 202,561 | |||||
29,908,373 | 10,203,011 | 54,922,207 | 12,653,971 | ||||||
(23,477,280) | (10,059,380) | (47,099,791) | (12,510,340) | ||||||
Other expenses (income) | |||||||||
Loss on equity investments | - | 671,578 | - | 671,578 | |||||
Gain in fair value of derivative liabilities | (3,938,846) | - | (8,179,556) | - | |||||
Interest expense, net | 5,693,009 | 1,887,378 | 9,454,486 | 1,887,595 | |||||
Accretion on convertible debentures | 2,153,706 | - | 3,563,289 | - | |||||
Foreign exchange loss | 518,057 | 585,529 | 29,670 | 741,414 | |||||
Realized gain on short term investments | - | (500,073) | - | (500,073) | |||||
Transaction costs | 6,896,483 | 1,000,000 | 12,718,685 | 1,000,000 | |||||
Net loss before listing fees and income taxes | (34,799,689) | (13,703,792) | (64,686,365) | (16,310,854) | |||||
Listing fees | - | 459,715 | - | 699,190 | |||||
Net loss after listing fees | (34,799,689) | (14,163,507) | (64,686,365) | (17,010,044) | |||||
Income taxes | 1,142,216 | 375,618 | 1,498,825 | 375,618 | |||||
Net loss after income taxes | $ | (35,941,905) | $ | (14,539,125) | $ | (66,185,190) | $ | (17,385,662) | |
Less: Non-controlling interest | 82,462 | 12,442 | 125,623 | 12,442 | |||||
Net loss attributable to owners of the parent | $ | (35,859,443) | $ | (14,526,683) | $ | (66,059,567) | $ | (17,373,220) | |
Net loss per Common Share attributable to owners of the parent | |||||||||
Basic and Diluted | $ | (0.15) | $ | (0.09) | $ | (0.32) | $ | (0.15) | |
Weighted average common shares | 238,307,273 | 164,090,148 | 204,887,700 | 114,258,347 | |||||
Other comprehensive loss | |||||||||
Exchange gain on translating foreign operations | - | 148,286 | - | 148,286 | |||||
Comprehensive loss | $ | (35,859,443) | $ | (14,378,397) | $ (66,059,567) | $ | (17,224,934) |
Unaudited Condensed Interim Consolidated Statement of Cashflow | |||||
For the 26 weeks ended | |||||
(Expressed in | |||||
Cashflow from Operating Activities | |||||
Net loss after income taxes for the period | $ | (66,185,190) | $ | (17,385,662) | |
Adjustments for: | |||||
Stock based compensation | 3,282,323 | 187,640 | |||
Shares and warrants issued for services and fees | 3,615,733 | 1,673,328 | |||
Depreciation and amortization | 9,289,938 | 209,195 | |||
Lease incentives | 4,560,000 | - | |||
Loss on equity investment | - | 671,578 | |||
Unrealized gain on short term investment | - | (500,073) | |||
Loss on acquisitions | - | 1,000,000 | |||
Writedown of developed software | 409,022 | - | |||
Deferred tax expense | (225,333) | - | |||
Accretion expense | 3,563,290 | - | |||
Gain in fair value of embedded derivative liabilities | (8,179,556) | - | |||
Net fair value adjustment on biological assets | 1,262,550 | (163,894) | |||
Foreign exchange on translation | 29,670 | 741,414 | |||
Changes in working capital balances | |||||
Receivables | (438,563) | 111,027 | |||
Prepaid expenses | 3,096,157 | (2,701,515) | |||
Other receivables | 867,463 | (1,339,326) | |||
Inventories | 2,749,316 | 272,793 | |||
Biological assets | (596,197) | (267,917) | |||
Accounts payable and accrued liabilities | 16,485,190 | 3,976,455 | |||
Income taxes payable | 830,767 | 375,618 | |||
(25,583,420) | (13,139,339) | ||||
Cashflow from Investing Activities | |||||
Purchase of property and equipment | (12,538,980) | (1,044,378) | |||
Purchase of software | (802,876) | - | |||
Purchase of short term investment | - | (16,945,040) | |||
Acquisition of businesses, net of cash acquired | (12,703,263) | (31,185,080) | |||
Proceeds from sale of equity investment | 23,674 | 50,000 | |||
Purchase of equity investment | - | (300,000) | |||
Advances on acquisitions | - | (19,485,000) | |||
(26,021,445) | (68,909,498) | ||||
Cashflow from Financing Activities | |||||
Proceeds from warrants and options exercised | 298,420 | 23,055,019 | |||
Proceeds from equity financings | 36,500,915 | 25,578,714 | |||
Repayment of notes | (15,485,000) | - | |||
Principal payments of lease liabilities | (4,007,059) | - | |||
Proceeds from promissory notes | 6,688,680 | - | |||
Proceeds from convertible debentures, net of issuance costs | 20,936,845 | 60,618,156 | |||
44,932,801 | 109,251,889 | ||||
Effect of exchange rates on cash | 13,229 | (408,079) | |||
(Decrease) Increase in cash | (6,658,835) | 26,794,973 | |||
Cash, beginning of period | 10,256,008 | 4,688,311 | |||
Cash, end of period | $ | 3,597,173 | $ | 31,483,284 | |
Supplemental disclosure of cash flow information | |||||
Interest paid | 2,245,602 | - | |||
Income taxes paid | 750,000 | - | |||
Other non-cash investing and financing activities | |||||
Change in accrual for construction in progress | 440,662 | - | |||
Acquisition of business for non-cash | 47,107,913 | - | |||
Issuance of shares for underwriter fees on bought deal financing | 2,080,494 | - |
Segmented statement of operations for the 13 weeks ended | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
(Expressed in | |||||||||||||||||||||
MSO | CBD | Head office | Allocations | Total | |||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Sales | |||||||||||||||||||||
Revenue | $ | 10,112,627 | $ | 2,935,682 | $ | 10,978,026 | $ | 64,763 | $ | - | $ | - | $ | - | $ | - | $ | 21,090,653 | $ | 3,000,445 | |
Cost of goods sold | 5,953,122 | 1,846,179 | 6,565,210 | 116,584 | - | - | 1,278,313 | 1,057,945 | 13,796,645 | 3,020,708 | |||||||||||
Gross profit before fair value adjustments | 4,159,505 | 1,089,503 | 4,412,816 | (51,821) | - | - | (1,278,313) | (1,057,945) | 7,294,008 | (20,263) | |||||||||||
Fair value change in biological assets included in inventory | 335,681 | 593,670 | - | - | - | - | - | - | 335,681 | 593,670 | |||||||||||
Unrealized loss (gain) on changes in fair value of biological | 527,234 | (757,564) | - | - | - | - | - | - | 527,234 | (757,564) | |||||||||||
Gross profit | 3,296,590 | 1,253,397 | 4,412,816 | (51,821) | - | - | (1,278,313) | (1,057,945) | 6,431,093 | 143,631 | |||||||||||
Operating Expenses | |||||||||||||||||||||
General and administration | - | - | - | - | 8,929,459 | 8,629,756 | (789,734) | - | 8,139,725 | 8,629,756 | |||||||||||
Sales and marketing | 2,783,110 | 822,161 | 11,937,442 | 9,477 | - | 1,183,054 | (262,511) | (831,638) | 14,458,041 | 1,183,054 | |||||||||||
Stock based compensation | - | - | - | - | 1,649,401 | 187,640 | - | - | 1,649,401 | 187,640 | |||||||||||
Depreciation and amortization | 528,083 | - | 4,509,254 | - | 849,937 | 202,561 | (226,068) | - | 5,661,206 | 202,561 | |||||||||||
3,311,193 | 822,161 | 16,446,696 | 9,477 | 11,428,797 | 10,203,011 | (1,278,313) | (831,638) | 29,908,373 | 10,203,011 | ||||||||||||
(14,603) | 431,236 | (12,033,880) | (61,298) | (11,428,797) | (10,203,011) | - | (226,307) | (23,477,280) | (10,059,380) | ||||||||||||
Non-operating expenses | |||||||||||||||||||||
Loss on equity investment in | - | - | - | - | - | 671,578 | - | - | - | 671,578 | |||||||||||
Gain in fair value of derivative liabilities | - | - | - | - | (3,938,846) | - | - | - | (3,938,846) | - | |||||||||||
Interest expense, net | 582,759 | - | 1,697,431 | - | 3,412,819 | 1,887,378 | - | - | 5,693,009 | 1,887,378 | |||||||||||
Accretion expense | - | - | - | - | 2,153,706 | - | - | - | 2,153,706 | - | |||||||||||
Foreign exchange loss | - | - | - | - | 518,057 | 585,529 | - | - | 518,057 | 585,529 | |||||||||||
Unrealized gain on marketable securities | - | - | - | - | - | (500,073) | - | - | - | (500,073) | |||||||||||
Transaction costs | - | - | - | - | 6,896,483 | 1,000,000 | - | - | 6,896,483 | 1,000,000 | |||||||||||
Net income (loss) before listing fees and income taxes | (597,362) | 431,236 | (13,731,311) | (61,298) | (20,471,016) | (13,847,423) | - | (226,307) | (34,799,689) | (13,703,792) | |||||||||||
Listing fees | - | - | - | - | - | 459,715 | - | - | - | 459,715 | |||||||||||
Net income (loss) after listing fees | (597,362) | 431,236 | (13,731,311) | (61,298) | (20,471,016) | (14,307,138) | - | (226,307) | (34,799,689) | (14,163,507) | |||||||||||
Income taxes | 1,142,216 | 375,618 | - | - | - | - | - | - | 1,142,216 | 375,618 | |||||||||||
Net income (loss) after income taxes | $ | (1,739,578) | $ | 55,618 | $ | (13,731,311) | $ | (61,298) | $ | (20,471,016) | $ | (14,307,138) | $ | - | $ | (226,307) | $ | (35,941,905) | $ | (14,539,125) | |
Net income (loss) and comprehensive loss attributable to: | |||||||||||||||||||||
Owners of the parent | (1,739,578) | 55,618 | (13,731,311) | (61,298) | (20,471,016) | (14,307,138) | - | (226,307) | (35,941,905) | (14,539,125) | |||||||||||
Non-controlling interest | - | - | - | - | - | - | - | - | - | - | |||||||||||
(1,739,578) | 55,618 | (13,731,311) | (61,298) | (20,471,016) | (14,307,138) | - | (226,307) | (35,941,905) | (14,539,125) |
Conference Call Information
Conference ID: 03558055
Local
Local
North American Toll-Free Number:(+1) 888 390 0605
Or access via webcast.
The call and replay archive will be accessible on
About
Cautionary Statements
Forward Looking Information
Certain information in this news release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "intend", "forecast" and similar expressions. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving medical and recreational marijuana; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the marijuana industry in
Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. The forward-looking statements contained in this release, including without limitation, the results of any strategic review process, including the potential sale or other disposition of all or a portion of the CBD Business; the application of proceeds of such sale or disposition of the CBD Business; the ability of the Company to secure short term and alternative financing; the expected expansion of the MSO Segment, including the opening of 45 dispensaries, is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Going Concern Risk
As previously disclosed, the continuing operations of the Company remain dependent upon its ability to continue to raise adequate financing, to commence profitable operations in the future, and repay its liabilities arising from normal business operations as they become due. As at and for the 13 week period ending
As previously disclosed, the continuing operations of the Company remain dependent upon its ability to continue to raise adequate financing, to commence profitable operations in the future, and repay its liabilities arising from normal business operations as they become due. Notwithstanding the CBD Transaction, CBD Sales Process and the strategic review of the CBD Business there remains a significant risk that the Company will be unable to realize sufficient cost savings, find sufficient sources of financing for on-going working capital requirements and other material obligations that are due or maturing in the short term or to negotiate extensions or alternate payment terms in respect of such debt. These material uncertainties cast significant doubt upon the Company's ability to meet its obligations as they come due and to continue as a going concern. The Company and its subsidiaries have material obligations that are due or that are coming due in the near term. The Company has drawn all amounts available to it under the previously announced working capital backstop commitment provided by
US Securities Law Disclaimer
This announcement does not constitute an offer, invitation or recommendation to subscribe for or purchase any securities and neither this announcement nor anything contained in it shall form the basis of any contract or commitment. In particular, this announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in
The securities referred to herein have not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of
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