Green Growth Brands Reports Third Quarter Fiscal 2019 Financial Results

¹

eMarketer Retail, "Ecommerce trends and store sales for top retailers"

Interim Consolidated Statements of Financial Positions

As at June 30, 2018 and March 31, 2019

(Expressed in United States dollars)

Note

March 31, 2019

June 30, 2018

(unaudited)

(unaudited)

Assets

Current Assets

Cash and cash equivalents

$

5,466,451

$

4,688,311

Short term investments

6

28,108,916

-

Receivables

461,495

-

Prepaid expenses

4,043,829

-

Inventories

7

6,207,027

-

Biological assets

8

500,521

-

Notes receivable

9

46,370

-

Other receivables

1,044,911

18,269

Deferred lease charges

10

727,518

-

Due from related parties

21

30,366

-

46,637,404

4,706,580

Property and equipment, net

11

3,931,168

-

Deposits and other assets

12

3,184,233

-

Deferred lease charges

10

2,788,819

-

Notes receivable

9

21,109,553

-

Intangible assets

14

39,477,074

-

Goodwill

15

26,332,480

-

 Total assets 

$

143,460,731

$

4,706,580

Liabilities

Current Liabilities

Accounts payable and accrued liabilities

16

7,238,703

316,768

Taxes payable

22

287,978

-

Due to related parties

21

-

-

Notes payable

17

15,553,728

-

23,080,409

316,768

Shareholders' Equity 

Share capital

18

137,135,288

7,016,421

Reserve for warrants

19

16,830,281

-

Reserve for share based compensation

20

1,702,983

-

Reserve for changes in equity of subsidiary

(2,837,500)

-

Accumulated deficit

(35,409,880)

(2,626,609)

Accumulated other comprehensive income

148,286

-

Total equity attributable to shareholders of Green Growth Brands Inc.

117,569,458

4,389,812

Non-controlling interest

2,810,864

-

Total equity

120,380,322

4,389,812

 Total liabilities and equity 

$

143,460,731

$

4,706,580

Interim Consolidated Statements of Loss and Comprehensive Loss

For the three and nine months ended March 31, 2019 and for the period from February 14, 2018 to March 31, 2018

(unaudited)

(Expressed in United States dollars)

Three months ended March 31,

Nine months ended March 31,

Note

2019

2018

2019

2018

Sales

Revenue

$

5,554,684

$

-

$

8,555,129

$

-

Cost of goods sold

5,475,201

-

8,495,909

-

Gross profit before fair value adjustments

79,483

-

59,220

-

Fair value change in biological assets included in inventory sold and other charges

932,191

-

1,525,861

-

Unrealized gain on changes in fair value of biological assets

(961,185)

-

(1,718,749)

-

Gross profit

108,477

-

252,108

-

Operating Expenses

General and administrative

8,183,025

218,245

15,215,085

218,245

Legal and professional fees

6,167,722

375,094

10,224,614

375,094

Sales and marketing

1,909,345

-

3,092,399

-

Stock based compensation

20

1,515,343

-

1,702,983

-

Depreciation and amortization

11,14

379,356

-

581,917

-

Other income

9

(1,058,785)

-

(1,067,021)

-

17,096,006

593,339

29,749,977

593,339

(16,987,529)

(593,339)

(29,497,869)

(593,339)

Non-operating expenses

Loss on equity investments

13

-

-

671,578

-

Interest expense

355,230

-

2,242,825

-

Foreign exchange (gain) loss 

(393,077)

-

348,337

-

Unrealized gain on short term investments

6

(10,464,853)

-

(10,964,926)

-

Transaction costs

12

8,651,438

-

9,651,438

-

Net loss before listing fees and income taxes

(15,136,267)

(593,339)

(31,447,121)

(593,339)

Listing fees

4

-

-

699,190

-

Net loss after listing fees

(15,136,267)

(593,339)

(32,146,311)

(593,339)

Income taxes 

22

287,978

-

663,596

-

Net loss after income taxes

$

(15,424,245)

$

(593,339)

$

(32,809,907)

$

(593,339)

Less: Non-controlling interest

(14,194)

-

(26,636)

-

Net Loss attributable to owners of the parent

$

(15,410,051)

$

(593,339)

$

(32,783,271)

$

(593,339)

Net loss per Common Share attributable to the parent

Basic and Diluted

23

$

(0.07)

 n/a 

$

(0.22)

 n/a 

Weighted average common shares

205,498,545

2

147,855,104

2

Other comprehensive loss

Exchange gain on translating foreign operations

-

-

148,286

-

Comprehensive loss

$

(15,410,051)

$

(593,339)

$

(32,634,985)

$

(593,339)

Consolidated Statement of Cashflow

For the nine months ended March 31, 2019, and for the period from February 14, 2018 to March 31, 2018 

(unaudited)

(Expressed in United States dollars)

Note

March 31, 2019

March 31, 2018

Cashflow from Operating Activities

Net loss for the period

$           (32,809,907)

$                (593,339)

Adjustments for:

Stock based compensation

20

1,702,983

-

Shares issued for services

18

4,632,177

-

Depreciation and amortization

(61,720)

-

Deferred lease charges

10

121,253

Loss on equity investment

13

671,578

-

Unrealized gain on short term investment

6

(10,964,926)

-

Transaction costs

12,18

6,617,110

-

Fair value adjustment on growth of biological assets

(192,888)

-

Foreign exchange on translation

331,808

-

Changes in non-cash working capital balances

Receivables

(185,046)

-

Prepaid expenses

(4,043,829)

-

Other receivables

(900,084)

-

Inventories

(4,495,267)

-

Biological assets

(307,633)

-

Accounts payable and accrued liabilities

5,144,299

593,338

Income taxes payable

287,978

-

(34,452,114)

(1)

Cashflow from Investing Activities

Purchase of property and equipment

11

(3,602,815)

-

Acquisition of businesses, net of cash acquired

4

(31,094,988)

-

Purchase of short term investment

6

(16,945,040)

-

Proceeds from sale of equity investment

13

62,671

-

Advance on Henderson Organic Remedies LLC acquisition

9

(15,485,000)

-

Advances on acquisitions

12

(4,134,233)

-

Equity investment

13

(300,000)

-

(71,499,405)

-

Cashflow from Financing Activities

Shares issued on warrants and options exercised

19,20

27,111,532

-

Repayment of notes

5,16

(6,535,030)

Proceeds from convertible debentures, net of issuance costs

18

81,808,945

-

Proceeds from private placement share capital issued

18

25,747,713

1

Purchase of convertible debentures

18

(21,004,500)

-

107,128,660

1

Effect of exchange rates on cash

(399,001)

-

Increase in cash and cash equivalents

778,140

-

Cash and cash equivalents, beginning of period

4,688,311

-

Cash and cash equivalents, end of period

$            5,466,451

$                           -

Segmented statement of operations for the three months ended March 31, 2019

(unaudited)

(Expressed in United States dollars)

Cannabis

CBD

Head office

Allocations

Total

Note

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

Sales

Revenue

$

5,092,567

$

-

$

462,117

$

-

$

-

$

-

$

-

$

-

$

5,554,684

$

-

Cost of goods sold

3,022,089

-

969,922

-

-

-

1,483,190

-

5,475,201

-

Gross profit before fair value adjustments

2,070,478

-

(507,805)

-

-

-

(1,483,190)

-

79,483

-

Fair value change in biological assets included in inventory sold and other charges

932,191

-

-

-

-

-

-

-

932,191

-

Unrealized gain on changes in fair value of biological assets

(961,185)

-

-

-

-

-

-

-

(961,185)

-

Gross profit

2,099,472

-

(507,805)

-

-

-

(1,483,190)

-

108,477

-

Operating Expenses

General and administration

-

-

-

-

9,184,512

218,245

(1,001,487)

-

8,183,025

218,245

Legal and professional fees

-

-

-

-

6,645,499

375,094

(477,777)

-

6,167,722

375,094

Sales and marketing

887,848

-

628,138

-

394,693

-

(1,334)

-

1,909,345

-

Stock based compensation

18

-

-

-

-

1,515,343

-

-

-

1,515,343

-

Depreciation and amortization

9,12

68,500

-

22,983

-

290,465

-

(2,592)

-

379,356

-

Other income

(14,892)

-

-

-

(1,043,893)

-

-

-

(1,058,785)

-

941,456

-

651,121

-

16,986,619

593,339

(1,483,190)

-

17,096,006

593,339

1,158,016

-

(1,158,926)

-

(16,986,619)

(593,339)

-

-

(16,987,529)

(593,339)

Non-operating expenses

Loss on equity investment in Xanthic Beverages USA, LLC

13

-

-

-

-

-

-

-

-

-

-

Interest expense

-

-

-

-

355,230

-

-

-

355,230

-

Foreign exchange loss (income)

-

-

-

-

(393,077)

-

-

-

(393,077)

-

Unrealized gain on marketable securities

6

-

-

-

-

(10,464,853)

-

-

-

(10,464,853)

-

Transaction costs

12

-

-

-

-

8,651,438

-

-

-

8,651,438

-

Net income (loss) before listing fees and income taxes

1,158,016

-

(1,158,926)

-

(15,135,357)

(593,339)

-

-

(15,136,267)

(593,339)

Listing fees

-

-

-

-

-

-

-

-

-

-

Net income (loss) after listing fees

1,158,016

-

(1,158,926)

-

(15,135,357)

(593,339)

-

-

(15,136,267)

(593,339)

 Income taxes 

20

287,978

-

-

-

-

-

-

-

287,978

-

Net Income (loss) after income taxes

$

870,038

$

-

$

(1,158,926)

$

-

$

(15,135,357)

$

(593,339)

$

-

$

-

$

(15,424,245)

$

(593,339)

Net loss and comprehensive loss attributable to:

Owners of the parent

884,232

-

(1,158,926)

-

(15,135,357)

(593,339)

-

-

(15,410,051)

(593,339)

Non-controlling interest

(14,194)

-

-

-

-

-

-

-

(14,194)

-

870,038

-

(1,158,926)

-

(15,135,357)

(593,339)

-

-

(15,424,245)

(593,339)

Adjusted EBITDA

(Expressed in United States dollars)

Three months ended March 31,

Nine months ended March 31,

2019

2018

2019

2018

Net loss after listing fees before income taxes

$ (15,136,267)

$       (593,339)

$ (32,146,311)

$       (593,339)

Fair value adjustment on sale of inventory

932,191

-

1,525,861

-

Fair value adjustment on biological assets

(961,185)

-

(1,718,749)

-

Stock based compensation

1,515,343

-

1,702,983

-

Depreciation and amortization

378,856

-

581,917

-

Shares issued for services

3,064,293

-

4,632,177

-

Lease termination charges

692,542

-

692,542

-

Non-operating expenses

(1,851,262)

-

1,949,252

-

Listing fees

-

-

699,190

-

3,770,778

-

10,065,173

-

Adjusted EBITDA

$ (11,365,489)

$       (593,339)

$ (22,081,138)

$       (593,339)