GGB reports total revenue of $15.7 million in its first partial year of operations

COLUMBUS, OH, Oct. 23, 2019 /PRNewswire/ - Green Growth Brands Inc. (GGB or the Company) (CSE: GGB) (OTCQB: GGBXF) today reported its results for the fourth quarter and full year ended June 30, 2019. The Company reported total revenue for fiscal 2019 of $15.7 million. For the three month period ended June 30, 2019, the Company reported a 29% quarter-over-quarter increase in revenue to $7.2 million.

"In a short-time we have built a pathway to open up to 47 dispensaries in three key states and established the first, best and only vertical CBD distribution network in the country," said Peter Horvath, CEO of Green Growth Brands. "This foundation leverages our strengths of creating brands consumers love, building innovative product assortments and operating and growing retail at scale, quarter after quarter.

"As we look ahead to fiscal 2020, our focus will shift from foundation building to operating and executing, which we expect to result in a steep sequential growth in both our CBD and MSO businesses."

To read more of Horvath's thoughts on the growth and trajectory of the business, please read the Letter to Shareholders.

GGB will host a conference call and audio webcast with Chief Executive Officer, Peter Horvath, and Chief Financial Officer, Brian Logan, at 8:30 AM EDT on Thursday, October 24, 2019.

Fourth Quarter & Full Year Fiscal 2019 Highlights

Total revenue for fiscal 2019 was $15.7 million , which reflects seven and a half months of MSO revenue since the reverse takeover in November 2018 and the launch of the CBD business in February 2019 .





, which reflects seven and a half months of MSO revenue since the reverse takeover in and the launch of the CBD business in . Total revenue for the quarter, including both MSO and CBD operations, was $7.2 million , a sequential increase of 29% over the prior quarter.





, a sequential increase of 29% over the prior quarter. MSO revenue for the quarter, which primarily consists of one dispensary in Las Vegas , The+Source, was $5.5 million , a sequential increase of 7% over the prior quarter.





, The+Source, was , a sequential increase of 7% over the prior quarter. The+Source continues to generate annualized revenue of nearly $15,000 per selling square foot, one of the highest reported figures in the industry and in retail overall. 1





per selling square foot, one of the highest reported figures in the industry and in retail overall. CBD revenue for the quarter was $1.7 million , a sequential increase of 271% over the prior quarter. Q1 fiscal 2020 CBD revenue is expected to grow by approximately 200%.





, a sequential increase of 271% over the prior quarter. Q1 fiscal 2020 CBD revenue is expected to grow by approximately 200%. As of the June 30, 2019 , the Company operated 58 CBD shops, including 52 that opened during the quarter.





, the Company operated 58 CBD shops, including 52 that opened during the quarter. The Executive team was expanded during the quarter with the addition of Jann Parish as Chief Marketing Officer. Parish brings significant branding, marketing and consumer expertise to the Company.





as Chief Marketing Officer. Parish brings significant branding, marketing and consumer expertise to the Company. During the full year, the Company entered into CBD wholesale partnerships with Abercrombie & Fitch for 161 stores, DSW for a total of 155 stores and white labeling American Eagle's MOOD for 500 of their stores.

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

Subsequent Events

In August, the Company completed a C$50 million bought deal and the founders posted a backstop commitment of up to C$102 million .





bought deal and the founders posted a backstop commitment of up to . In August, the Company announced the completion of the acquisition of Florida -based Spring Oaks , granting The Company the ability to open and operate up to 35 licenses in Florida .





-based , granting The Company the ability to open and operate up to 35 licenses in . In August, the Company completed the acquisition of Henderson Organic Remedies, LLC (The+Source Henderson), the sister location of The+Source Las Vegas.





The Company is currently operating over 160 CBD shops and expects to reach over 200 by the holiday shopping season this year.

Fourth Quarter & Full Year Fiscal 2019 Financial Statements

The following tables contain financial information for the periods indicated. For full financial information, notes, and management commentary please refer to the MD&A and Financial Statements posted on Green Growth Brands' Investor Relations site and SEDAR. All financial information is provided in United States dollars, unless otherwise indicated. "Adjusted EBITDA" is equal to 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, loss (gain) on short-term investments, transaction costs, listing fees and certain one-time non-operating expenses, as determined by management. Management 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.

Consolidated Statements of Financial Position As at June 30, 2019 and June 30, 2018 (Expressed in United States dollars)







June 30, 2019 June 30, 2018







Assets



Current Assets





Cash $ 10,256,008 $ 4,688,311

Short term investments - -

Receivables 580,529 -

Prepaid expenses 5,142,618 -

Inventories 10,244,804 -

Biological assets 1,352,097 -

Notes receivable 47,739 -

Other receivables 3,006,760 18,269

Deferred lease charges 727,518 -



31,358,073 4,706,580









Property and equipment, net 18,761,723 -

Deposits and other assets 2,880,186 -

Deferred lease charges 2,606,940 -

Notes receivable 17,999,224 -

Intangible assets 39,925,984 -

Goodwill 36,253,417 - Total assets $ 149,785,547 $ 4,706,580







Liabilities



Current Liabilities





Accounts payable and accrued liabilities 16,328,784 316,768

Taxes payable 282,593 -

Due to related parties 317,535 -

Notes payable 45,762,540 -

Embedded derivative liability 1,496,214 -

Convertible Debenture 41,623,041 -



105,810,707 316,768









Deferred tax liability 1,437,324 -







Shareholders' Equity





Share capital 119,881,374 7,016,421

Reserve for warrants 9,054,624 -

Reserve for share based compensation 3,147,110 -

Accumulated deficit (92,453,943) (2,626,609)

Accumulated other comprehensive income 148,286 - Total equity attributable to shareholders of Green Growth Brands Inc. 39,777,451 4,389,812 Non-controlling interest 2,760,065 - Total equity 42,537,516 4,389,812 Total liabilities and equity $ 149,785,547 $ 4,706,580

Consolidated Statements of Loss and Comprehensive Loss For the three months ended June 30 2019 and June 30, 2018

(Expressed in United States dollars)

June 30, 2019 June 30, 2018 Sales



Revenue 7,174,674 - Cost of goods sold 7,908,224 - Gross profit before fair value adjustments (733,550) - Fair value change in biological assets included in inventory sold and other charges (863,649) - Unrealized gain on changes in fair value of biological assets 706,200 -





Gross profit (576,101) -





Operating Expenses



General and administrative 5,536,395 1,146,474 Legal and professional fees 5,198,484 788,716 Sales and marketing 5,540,252 - Stock based compensation 2,136,271 - Depreciation and amortization 609,765 - Other income 1,027,440 -

20,048,607 1,935,190





Other expenses (income)



Loss on equity investments - - Gain in fair value of derivative liability (2,739,549) - Interest expense 1,266,595 1,113 Accretion on convertible debenture 466,264 - Foreign exchange loss 1,070,883 96,967 Realized gain on short term investments 6,617,587 - Transaction costs 3,608,655 - Net loss before listing fees and income taxes (30,915,143) (2,033,270) Listing fees 68,055 - Net loss after listing fees (30,983,198) (2,033,270) Income taxes 538,704 - Net loss after income taxes (31,521,902) (2,033,270) Less: Non-controlling interest 50,799 - Net Loss attributable to owners of the parent (31,471,103) (2,033,270)





Net loss per Common Share attributable to the parent



Basic and Diluted (0.19) (0.04)





Weighted average common shares 165,637,384 48,772,788





Other comprehensive loss



Exchange gain on translating foreign operations - - Comprehensive loss $ (31,471,103) $ (2,033,270)

Adjusted EBITDA



(Expressed in United States dollars)







June 30, 2019 June 30, 2018









Net loss after listing fees before income taxes $ (30,983,198) $ (2,033,270)









Fair value adjustment on sale of inventory (863,649) -

Fair value adjustment on biological assets 706,200 -

Stock based compensation 2,136,271 -

Depreciation and amortization 609,765 -

Shares issued for services 1,573,079 -

Pre-opening expenses 812,957 -

Non-operating expenses 10,290,435 98,080

Listing fees 68,055 -



15,333,113 98,080

Adjusted EBITDA $ (15,650,085) $ (1,935,190)

Consolidated Statements of Loss and Comprehensive Loss For the year ended June 30 2019 and for the period from February 14, 2018 to June 30, 2018

(Expressed in United States dollars)



June 30, 2019 June 30, 2018





Sales



Revenue $ 15,729,803 $ - Cost of goods sold 16,404,133 - Gross profit before fair value adjustments (674,330) - Fair value change in biological assets included in inventory sold and other charges 662,212 - Unrealized gain on changes in fair value of biological assets (1,012,549) - Gross profit (323,993) -





Operating Expenses



General and administrative 20,751,480 1,364,719 Legal and professional fees 15,423,098 1,163,810 Sales and marketing 8,632,651 - Stock based compensation 3,839,254 - Depreciation and amortization 1,191,682 - Other income (39,581) -

49,798,584 2,528,529

(50,122,577) (2,528,529) Other expenses (income)



Loss on equity investments 671,579 - Gain in fair value of derivative liability (2,739,549) - Interest expense 3,509,419 1,113 Accretion on convertible debenture 466,264 - Foreign exchange loss 1,419,220 96,967 Realized gain on short term investments (4,347,339) - Transaction costs 13,260,093 - Net loss before listing fees and income taxes (62,362,264) (2,626,609) Listing fees 767,245 - Net loss after listing fees (63,129,509) (2,626,609) Income taxes 1,202,300 - Net loss after income taxes $ (64,331,809) $ (2,626,609) Less: Non-controlling interest 77,435 - Net Loss attributable to owners of the parent $ (64,254,374) $ (2,626,609)





Net loss per Common Share attributable to the parent



Basic and Diluted $ (0.40) $ (0.05)





Weighted average common shares 161,188,156 54,794,120





Other comprehensive loss



Exchange gain on translating foreign operations 148,286 - Comprehensive loss $ (64,106,088) $ (2,626,609)

Consolidated Statement of Cashflow For the year ended June 30, 2019, and for the period from February 14, 2018 to June 30, 2018 (Expressed in United States dollars)







June 30, 2019 June 30, 2018 Cashflow from Operating Activities





Net loss for the period $ (64,331,809) $ (2,626,609) Adjustments for:





Stock based compensation 3,839,254 -

Shares and warrants issued for services 6,701,445 -

Depreciation and amortization 1,191,683 -

Deferred lease charges 303,132 -

Deferred tax expense 473,244 -

Accretion expense 466,264 -

Loss on equity investment 671,579 -

Realized gain on short term investment (4,347,339) -

Transaction costs 6,617,110 -

Fair value of embedded derivative liability (2,739,549) -

Net fair value adjustment on growth of biological assets (350,337) -

Foreign exchange on translation 1,402,691 - Changes in non-cash working capital balances





Receivables (243,764) -

Prepaid expenses (5,142,618) -

Other receivables (761,169) (18,269)

Inventories (8,179,761) -

Biological assets (143,082) -

Accounts payable and accrued liabilities 8,809,632 316,768

Income taxes payable 282,593 -



(55,480,801) (2,328,110) Cashflow from Investing Activities





Purchase of property and equipment (9,802,924) -

Purchase of software (1,037,729) -

Acquisition of businesses, net of cash acquired (44,437,592) -

Purchase of short term investments (16,945,040) -

Net proceeds from sale of short term investments 21,347,468 -

Proceeds from sale of equity investment 73,381 -

Advance on Henderson Organic Remedies LLC acquisition (15,485,000) -

Advances on acquisitions (3,650,000) -

Purchase of equity investment (300,000) -



(70,237,436) - Cashflow from Financing Activities





Shares issued on warrants and options exercised 43,514,989 -

Repayment of notes (6,485,030) -

Proceeds from convertible debentures, net of issuance costs 106,196,985 -

Proceeds from private placement share capital issued 25,747,713 7,016,421

Redemption of common shares (37,170,000) -



131,804,657 7,016,421 Effect of exchange rates on cash (518,723) - Increase in cash 5,567,697 4,688,311







Cash, beginning of period 4,688,311 -







Cash, end of period $ 10,256,008 $ 4,688,311







Supplemental disclosure of cash flow information





Interest paid 2,061,511 -

Income taxes paid 446,462 - Other non-cash investing and financing activities





Capital assets not yet paid for 5,773,117



Redemption of common shares by issuance of promissory note 28,992,600 -

Segmented statement of operations for the three months ended June 30, 2019 and June 30, 2018

(Expressed in United States dollars)



MSO CBD Head office Allocations Total



2019 2018 2019 2018 2019 2018 2019 2018 2019 2018























Sales





















Revenue $ 5,461,941 $ - $ 1,712,733 $ - $ - $ - $ - $ - $ 7,174,674 $ -

Cost of goods sold 3,976,025 - 2,513,376 - - - 1,418,823 - 7,908,224 - Gross profit before fair value adjustments 1,485,916 - (800,643) - - - (1,418,823) - (733,550) -

Fair value change in biological assets included in inventory

sold and other charges (863,649) - - - - - - - (863,649) -

Unrealized gain on changes in fair value of biological assets 706,200 - - - - - - - 706,200 - Gross profit 1,643,365 - (800,643) - - - (1,418,823) - (576,101) -























Operating Expenses





















General and administration - - - - 6,521,008 1,146,474 (984,613) - 5,536,395 1,146,474

Legal and professional fees - - - - 5,640,914 788,716 (442,430) - 5,198,484 788,716

Sales and marketing 394,488 - 4,986,676 - 148,277 - 10,811 - 5,540,252 -

Stock based compensation - - - - 2,136,271 - - - 2,136,271 -

Depreciation and amortization - - 155,955 - 456,401 - (2,591) - 609,765 -

Other income (15,932) - - - 1,043,372 - - - 1,027,440 -



378,556 - 5,142,631 - 15,946,243 1,935,190 (1,418,823) - 20,048,607 1,935,190



1,264,809 - (5,943,274) - (15,946,243) (1,935,190) - - (20,624,708) (1,935,190) Non-operating expenses





















Loss on equity investment in Xanthic Beverages USA, LLC - - - - - - - - -

Gain in fair value of derivative liability - - - - (2,739,549) - - - (2,739,549) -

Interest expense - - - - 1,266,595 1,113 - - 1,266,595 1,113

Accretion expense - - - - 466,264 - - - 466,264 -

Foreign exchange loss (income) - - - - 1,070,883 96,967 - - 1,070,883 96,967

Unrealized gain on marketable securities - - - - 6,617,587 - - - 6,617,587 -

Transaction costs - - - - 3,608,655 - - - 3,608,655 - Net income (loss) before listing fees and income taxes 1,264,809 - (5,943,274) - (26,236,678) (2,033,270) - - (30,915,143) (2,033,270)

Listing fees - - - - 68,055 - - - 68,055 - Net income (loss) after listing fees 1,264,809 - (5,943,274) - (26,304,733) (2,033,270) - - (30,983,198) (2,033,270)

Income taxes 538,704 - - - - - - - 538,704 - Net Income (loss) after income taxes $ 726,105 $ - $ (5,943,274) $ - $ (26,304,733) $ (2,033,270) $ - $ - $ (31,521,902) $ 2,033,270)























Net income (loss) and comprehensive loss attributable to:





















Owners of the parent 776,904 - (5,943,274) - (26,304,733) (2,033,270) - - (31,471,103) (2,033,270)

Non-controlling interest 50,799 - - - - - - - 50,799 -



726,105 - (5,943,274) - (26,304,733) (2,033,270) - - (31,521,902) (2,033,270)

Segmented statement of operations for the year ended June 30, 2019

(Expressed in United States dollars)



MSO CBD Head office Allocations Total



2019 2018 2019 2018 2019 2018 2019 2018 2019 2018























Sales





















Revenue $ 13,490,190 $ - $ 2,239,613 $ - $ - $ - $ - $ - $ 15,729,803 $ -

Cost of goods sold 8,844,293 - 3,599,882 - - - 3,959,958 - 16,404,133 - Gross profit before fair value adjustments 4,645,897 - (1,360,269) - - - (3,959,958) - (674,330) -

Fair value change in biological assets included in inventory

sold and other charges 662,212 - - - - - - - 662,212 -

Unrealized gain on changes in fair value of biological assets (1,012,549) - - - - - - - (1,012,549) - Gross profit 4,996,234 - (1,360,269) - - - (3,959,958) - (323,993) -























Operating Expenses





















General and administration - - - - 22,791,162 1,364,719 (2,039,682) - 20,751,480 1,364,719

Legal and professional fees - - - - 17,337,691 1,163,810 (1,914,593) - 15,423,098 1,163,810

Consulting fees -

-

-





- -

Sales and marketing 2,104,497 - 5,624,291 - 903,863 - - - 8,632,651 -

Stock based compensation - - - - 3,839,254 - - - 3,839,254 -

Depreciation and amortization 68,500 - 178,938 - 949,927 - (5,683) - 1,191,682 -

Other income (39,060) - - - (521) - - - (39,581) -



2,133,937 - 5,803,229 - 45,821,376 2,528,529 (3,959,958) - 49,798,584 2,528,529



2,862,297 - (7,163,498) - (45,821,376) (2,528,529) - - (50,122,577) (2,528,529) Non-operating expenses





















Loss on equity investment in Xanthic Beverages USA, LLC - - - - 671,579 - - - 671,579 -

Gain in fair value of derivative liability - - - - (2,739,549) - - - (2,739,549) -

Interest expense - - - - 3,509,419 1,113 - - 3,509,419 1,113

Accretion expense - - - - 466,264 - - - 466,264 -

Foreign exchange loss (income) - - - - 1,419,220 96,967 - - 1,419,220 96,967

Unrealized gain on marketable securities - - - - (4,347,339) - - - (4,347,339) -

Transaction costs - - - - 13,260,093 - - - 13,260,093 - Net income (loss) before listing fees and income taxes 2,862,297 - (7,163,498) - (58,061,063) (2,626,609) - - (62,362,264) (2,626,609)

Listing fees - - - - 767,245 - - - 767,245 - Net income (loss) after listing fees 2,862,297 - (7,163,498) - (58,828,308) (2,626,609) - - (63,129,509) (2,626,609)

Income taxes 1,202,300 - - - - - - - 1,202,300 - Net income (loss) after income taxes $ 1,659,997 $ - $ (7,163,498) $ - $ (58,828,308) $ (2,626,609) $ - $ - $ (64,331,809) $ (2,626,609)























Net income (loss) and comprehensive loss attributable to:





















Owners of the parent 1,737,432 - (7,163,498) - (58,828,308) (2,626,609) - - (64,254,374) (2,626,609)

Non-controlling interest 77,435 - - - - - - - 77,435 -



1,659,997 - (7,163,498) - (58,828,308) (2,626,609) - - (64,331,809) (2,626,609)























Supplemental segmented information





















Assets 107,923,000 - 29,556,255 - 12,306,292 4,706,580 - - 149,785,547 4,706,580

Liabilities 18,449,277 - 7,307,803 - 81,490,951 316,768 - - 107,248,031 316,768

Conference Call Information:

Conference ID: 66844833

Local Toronto Dial-in Number: (+1) 416 764 8609

Local Vancouver Dial-in Number: (+1) 778 383 7417

North American Toll-Free Number:(+1) 888 390 0605

The call and replay archive will be accessible on Green Growth Brands' Investor Relations website.

About Green Growth Brands Inc.

Green Growth Brands creates remarkable experiences in cannabis and CBD. Led by CEO Peter Horvath and a leadership team of consumer-focused retail experts, the company's brands include CAMP, Seventh Sense Botanical Therapy, The+Source, Green Lily, and Meri + Jayne. The Company also has a licensing agreement with the Greg Norman™ Brand to develop a line of CBD-infused personal care products designed for active wellness. Already driving the strongest sales per square feet in the cannabis industry, GGB is expanding its cannabis operations throughout the U.S its CBD presence at ShopSeventhSense.com, in malls across the country, at DSW and Abercrombie & Fitch stores—and that's just the beginning. Learn more about the vision at GreenGrowthBrands.com.

Cautionary Statements:

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 the United States, income tax and regulatory matters; the ability of the Company to implement its business strategies; competition; currency and interest rate fluctuations and other risks, including those factors described under the heading "Risks Factors" in the Company's Annual Information Form dated November 26, 2018 which is available on the Company's issuer profile on SEDAR.

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, but not limited to, the Company's ability to execute on its growth strategy, the Company's plan to open new dispensaries in the remainder of the calendar year, the Company's vision to become a multi-state operator with retail stores exceeding certain financial thresholds 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.

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 United States, or in any other jurisdiction in which such an offer would be illegal.

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 the United States and may not be offered or sold, directly or indirectly, within the United States, unless the securities have been registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available.

SOURCE Green Growth Brands

Related Links

https://www.greengrowthbrands.com/

