Replies to post #115 on Wildflower Brands (SUN)

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Wildflower Reports 400% Revenue Increase
December 19, 2019

VANCOUVER, British Columbia, Dec. 18, 2019 (GLOBE NEWSWIRE) — via NetworkWire: Wildflower Brands Inc. (CSE: SUN, OTC:WLDFF) (the “Company”) is pleased to announce revenue for the fiscal year ending June 30, 2019 of $7.1M – a 400% increase over revenues of $1.4M in 2018. The Company began aggressively marketing its CBD Wellness products during the fiscal year, culminating with the launch of its products in June 2019 at Dillard’s, an American department retail chain with over 290 stores in 29 states.

Highlights for the year ending June 30, 2019 (with comparisons to the prior year except as otherwise noted) include the following:

* Sales of $7,085,223 (2018: $1,408,114), including licensing fees from sales through our partner in the Washington State I-502 market, US nationwide e-commerce sales, nationwide US wholesale sales and from the sales in California State’s regulated market through the licenses held there;

* Cost of goods sold of $3,927,086 (2018: $915,997) related to the cost of the products and packaging sold during the year;

* Wages and benefits of $1,515,177 (2018: $175,669) related to wages and related benefits paid to employees;

* Consulting fees and management fees of $978,018 (2018: $473,735) related to fees paid to the Company’s CEO, CFO, COO and board of directors, as well as individuals providing business consulting services;

* Advertising and marketing costs of $384,616 (2018: $313,068) related to advertising and marketing campaigns for the Company’s cannabis products, as well as funds expended toward the branding of the retail locations in Manhattan under its Retail Worx agreement;

* Investor relations and shareholder communications of $691,532 (2018: $393,420) related to fees paid to investor relations personnel and costs associated with public relations;

* Legal fees of $626,213 (2018: $59,015) related to general corporate matters and acquisitions, including the acquisition of City Cannabis Corp.;

* Bad debt expense of $1,198,808 (2018: $Nil) to recognize an allowance for doubtful accounts related to trade receivables;

* General office and miscellaneous expenses of $430,393 (2018: $166,621) related to office supplies and incidental expenditures for the Company’s Vancouver-based office, Washington State subsidiary office, and Californian subsidiary office;

* Share-based payment expense of $331,222 (2018: $1,924,750) related to the fair value of incentive stock options granted during the year;

* Rent of $331,269 (2018: $101,191) related to office space in Vancouver and Washington State;

* Travel and accommodation of $182,336 (2018: $117,342) related to travel for business activities;

* Write off of loan receivable of $179,867 (2018: $173,236) as the Company deemed the amounts to be unrecoverable;

* Interest expense of $901,406 (2018: $129,770) related to the interest accrued on the loans payable, promissory notes and convertible debentures issued during the period;

* Gain on agreement revision of $810,262 (2018: $Nil) representing the difference in book value of the property and equipment deemed to have been disposed of under an industrial lease agreement and the present value of the lease obligations for the same property; and

* Exchange difference of $321,616 (2018: $454,657) related to translating the transactions of the Company’s foreign subsidiaries with a functional currency other than the Canadian dollar.
ABOUT WILDFLOWER BRANDS

The Company is a Vancouver-based pioneer in the cannabis industry that develops, designs and operates brands throughout North America. Our brands work together to make Wildflower a leader in cannabis innovation throughout the globe. The Company operates British Columbia’s largest retail cannabis chain under the brand City Cannabis Co.

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3 Canadian Cannabis Stocks Leading The Retail Charge In 2020 (see blue)

EDITORIAL
Jan 6, 2020
7:49 AM EST

Although the legalization of recreational cannabis in Canada represented an unprecedented growth opportunity, the industry has faced significant headwinds following a less-than-smooth rollout.

From the number of legal dispensaries to the types of products that can be sold to consumers, a number of factors have contributed to the slow rollout of Canada’s recreational cannabis market and this has put pressure on companies that are levered to this burgeoning opportunity.

We expect 2020 to be a banner year for the Canadian adult use market due to the increasing number of dispensaries and the legalization of cannabis derivative products (i.e. vape pens, cannabis infused products, cannabis concentrates, topicals, and more). We are bullish on the growth prospects associated with Canada’s recreational cannabis market and have highlighted 3 companies that are levered to this vertical of the industry.

Fire & Flower: A Canadian Cannabis Retail Execution Story

Fire & Flower Holdings Corp. (FAF.TO) (FFLWF) has been highly focused on the retail side of the Canadian cannabis industry and this is an opportunity that caught our attention in 2019. During the last year, the company has significantly expanded its reach across Canada, and we are bullish on the growth prospects associated with its footprint.

A few weeks ago, Fire & Flower reported a major milestone and announced that it has started to sell cannabis 2.0 products in its retail stores in Saskatchewan. Cannabis 2.0 refers to the new types of cannabis products that can be sold to recreational consumers and we are bullish on the upside associated with this opportunity.

When looking at the types of products that can be sold to consumers from Fire & Flower retail stores, there is a lot to be excited about. These products include gummies, mints and chocolates; and concentrate vaporizers in both all-in-one and cartridge formats. Fire & Flower works with a majority of the leading Canadian cannabis producers and we expect these relationships to support demand on the consumer level.

During the last quarter, Fire & Flower has been under considerable pressure and we continue to follow this trend. We are impressed by the way the management team has been able to execute and expect the opening of new stores to be a catalyst for the business. Last month, the company reported more than $13 million of quarterly revenue and this is an opportunity that we will continue to monitor.

Canopy Growth: Growing Through Acquisitions

Through a series of acquisitions, Canopy Growth Corporation (WEED.TO) (CGC) has become highly levered to the Canadian cannabis retail market and this is an opportunity that we continue to closely follow. A few years ago, the Canadian cannabis producer reported a major acquisition of Hiku Brands and we continue to monitor how this asset will benefit the entire business.

Although we believe that Canopy Growth paid a huge premium for an unproven retail operator, we are bullish on the long-term growth prospects associated with the cannabis retail market in Canada and will keep an eye on how the company advances this aspect of the story. The last year has been a tough year for the business and we expect 2020 to be a period of substantial growth for the operation.

Canopy Growth recently announced the appointment of a new CEO and this removed a major headwind from this business. During the last quarter, the Canadian cannabis producer has been under considerable pressure and the shares have fallen more than 50% from its all-time highs. We believe that Canopy Growth has substantial potential catalysts for growth and will continue to monitor how the retail side of the business supports growth on a going forward basis.

*As of this morning Tokyo Smoke announced plans to open 10 retail outlets in Ontario in early 2020.

Wildflower Brands: A Vancouver Cannabis Retail Opportunity

When it comes to the Canadian retail market, Wildflower Brands Inc. (SUN.CN) (WLDFF) is an opportunity that is flying under the radar. Last month, the company reported to have generated more than $6 million of revenue in the first quarter and this represents massive growth when compared to the same period last year.

Last year, Wildflower completed the acquisition of City Cannabis Co., a cannabis retailer holding two of the three City of Vancouver licenses to sell cannabis and the only company with multiple licenses in British Columbia. This asset has proven to be the greatest growth driver for the business, and we are favorable on the opportunity for City Cannabis in 2020 and beyond.

One of the reasons we are favorable on this opportunity is due to where the cannabis dispensaries are located. City Cannabis has been profitably operating various dispensaries in Vancouver since the city started licensing cannabis retailers. City Cannabis has multiple cannabis retail license applications that have been submitted in British Columbia and Ontario.

2019 was a tough year for the cannabis sector and Wildflower was impacted by the decline. Although the fundamental story has significantly improved, the recent trend has been to the downside and this is an opportunity that we will continue to follow. Going forward, we expect the opening of new dispensaries to be the biggest catalyst for the story and expect to see several new locations opened this year.

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Is Wildflower Brands (CSE:SUN) A Risky Investment?

Simply Wall St
January 31, 2020


Warren Buffett famously said, ‘Volatility is far from synonymous with risk.’ So it seems the smart money knows that debt – which is usually involved in bankruptcies – is a very important factor, when you assess how risky a company is. We note that Wildflower Brands Inc. (CSE:SUN) does have debt on its balance sheet. But the real question is whether this debt is making the company risky.

What Risk Does Debt Bring?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Part and parcel of capitalism is the process of ‘creative destruction’ where failed businesses are mercilessly liquidated by their bankers. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

How Much Debt Does Wildflower Brands Carry?

The image below, which you can click on for greater detail, shows that Wildflower Brands had debt of CA$6.46m at the end of September 2019, a reduction from CA$8.73m over a year. However, because it has a cash reserve of CA$968.4k, its net debt is less, at about CA$5.49m.

How Strong Is Wildflower Brands’s Balance Sheet?

We can see from the most recent balance sheet that Wildflower Brands had liabilities of CA$7.61m falling due within a year, and liabilities of CA$12.5m due beyond that. Offsetting these obligations, it had cash of CA$968.4k as well as receivables valued at CA$414.2k due within 12 months. So it has liabilities totalling CA$18.7m more than its cash and near-term receivables, combined.

This deficit isn’t so bad because Wildflower Brands is worth CA$32.9m, and thus could probably raise enough capital to shore up its balance sheet, if the need arose. But it’s clear that we should definitely closely examine whether it can manage its debt without dilution. The balance sheet is clearly the area to focus on when you are analysing debt. But you can’t view debt in total isolation; since Wildflower Brands will need earnings to service that debt. So when considering debt, it’s definitely worth looking at the earnings trend. Click here for an interactive snapshot.

Over 12 months, Wildflower Brands reported revenue of CA$12m, which is a gain of 439%, although it did not report any earnings before interest and tax. When it comes to revenue growth, that’s like nailing the game winning 3-pointer!

Caveat Emptor

While we can certainly savour Wildflower Brands’s tasty revenue growth, its negative earnings before interest and tax (EBIT) leaves a bitter aftertaste. Its EBIT loss was a whopping CA$5.2m. Considering that alongside the liabilities mentioned above does not give us much confidence that company should be using so much debt. So we think its balance sheet is a little strained, though not beyond repair. Another cause for caution is that is bled CA$3.5m in negative free cash flow over the last twelve months. So in short it’s a really risky stock. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet.

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Wildflower Reports Revenues of $5.5 Million and an Operating Gain of $262,579

Tue March 3, 2020 12:12 AM
GlobeNewswire
About: WLDFF

VANCOUVER, British Columbia, March 03, 2020 (GLOBE NEWSWIRE) -- via NetworkWire – Wildflower Brands Inc. (WLDFF) (CSE: SUN, OTC:WLDFF) (the “Company”) announces more than $5.5M in revenues in its second quarter, compared to $1.4M in the previous year’s second quarter and $6.3M in the first quarter. Revenues were expected to be down due to the Robson store having to close in order to move to its newly renovated, licensed 2,800 square foot facility at Robson and Granville. This was the first cannabis retail license the regulators moved in British Columba.

Further, revenues were expected down due to a steep drop in vape sales due to the vapegate crisis.

Highlights for the quarter ending December 31, 2019 (with comparisons to the prior quarter except as otherwise noted) include the following:

* Revenues of $5,514,502 (Q2 2018: $1,410,135), including sales in British Columbia’s provincially regulated cannabis market, US nationwide e- commerce sales, nationwide US wholesale sales and from the sales in California’s State’s regulated market through the licenses held there;

* Cost of goods sold of $2,705,797 (Q1 2018: $810,698) related to the cost of the products and packaging sold during the period;

* Wages and benefits of $889,613(Q2 2018: $296,889) related to wages and related benefits paid to employees;

* Consulting fees and management fees of $192,543 (Q2 2018: $211,656) related to fees paid to the Company’s CEO, CFO, COO and board of directors, as well as individuals providing business consulting services;

* Advertising and marketing costs of $107,808 (Q2 2018: $8,557) related to advertising and marketing campaigns for the Company’s cannabis products;

* Investor relations and shareholder communications of $115,688 (Q2 2018: $12,824) related to fees paid to investor relations personnel and costs associated with public relations;

* Professional fees of $134,802 (Q2 2018: $27,410) related to general corporate matters;

* General office and miscellaneous expenses of $291,199 (Q2 2018: $73,841) related to office supplies and incidental expenditures for the Company’s Vancouver-based offices, Washington State subsidiary office, and Californian subsidiary office;

* Interest expense of $626,488 (Q2 2018: $184,097) related to the interest accrued on the loans payable, lease obligations, promissory notes and convertible debentures issued during the period;

* Foreign exchange gain (loss) of ($274,597) (Q2 2018: $627,339) related to translating the transactions of the Company’s foreign subsidiaries with a functional currency other than the Canadian dollar.

* Net gain (loss) before other items of $265,579 (Q2 2018: (299,812) related to the business operations.

ABOUT WILDFLOWER BRANDS

The Company is a Vancouver-based pioneer in the cannabis industry that develops, designs and operates brands throughout North America. Our brands work together to make Wildflower a leader in cannabis innovation throughout the globe. The Company operates British Columbia’s largest retail cannabis chain under the brand City Cannabis Co.

On Behalf of the Board of Directors

“William MacLean”
____________________________
William MacLean
Director and CEO

The Canadian Securities Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this press release.

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