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Thursday, January 27, 2022

Why the Action Could Heat Up in Green Growth Brands Inc (OTCMKTS:GGBXF)

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The sideways action continues in Green Growth Brands Inc (OTCMKTS:GGBXF). The stock has been locked in an upward trend with a range in place now to consolidate those gains. The company is well-positioned if the cycle of ROI gains remains in place for the cannabis patch. Hence, this is something to have on the radar given the long-in-the-tooth process of rebalancing the trend, possibly making way for a fresh leg higher.

To make matters significantly more interesting, the company just announced that it has raised gross proceeds of US$45.5 million (C$61,233,100) pursuant to a private placement of convertible debt, in the form of 15% secured convertible debentures at a price of US$1,000 per Debenture and with a conversion price equivalent to C$7.00 per common share. According to the release, the net proceeds of the Debenture Financing will be used for general corporate and working capital purposes.

Green Growth Brands Inc (OTCMKTS:GGBXF) trumpets itself as a company that engages in the cultivation, processing, production, distribution, and retailing of cannabis and cannabis-infused products in the United States.

The company offers cannabis, tetrahydro cannabidol, cannabidiol, and cannabis-infused consumer products, as well as technology and consulting services for the cannabis industry. Xanthic Biopharma Inc. was founded in 1968 and is headquartered in Toronto, Canada.

The Company is a lifestyle oriented, consumer products company that celebrates health, wellness and happiness. We are in the business of cultivation, processing and retailing of cannabis, tetrahydrocannabidol, cannabidiol and cannabis-infused consumer products.

Over the next 12 months, the Company intends to expand its retail and wholesale cannabis businesses as well as its CBD consumer products business through a combination of strategic partnerships, merger and acquisition activity, and organic license capture. The Company’s objectives are to establish retail cannabis locations, or otherwise apply for such licenses, in various states within that timeframe, pursuant to state laws. Such activity will focus on those certain states where cannabis has been legalized for medical and/or recreational use at the state level.

According to company materials, “Green Growth brands expects to dominate the cannabis and CBD market with a portfolio of emotion-driven brands that people love. Led by Peter Horvath, the GGB team is full of retail and consumer packaged goods experts with decades of experience building successful brands.”

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As noted above, GGBXF just announced that it has raised gross proceeds of US$45.5 million (C$61,233,100) pursuant to a private placement of convertible debt, in the form of 15% secured convertible debentures at a price of US$1,000 per Debenture and with a conversion price equivalent to C$7.00 per common share.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action GGBXF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -14% on above-average trading volume.

All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Moreover, the stock has seen a growing influx of trading interest, with the stock’s recent average trading volume running 29% above its longer-run average levels.

“The capital raised through this offering will help us further drive our rapid expansion,” said Peter Horvath, CEO of Green Growth Brands. “We are a premier operator in two booming markets. In our CBD business, we are rolling out a line of exceptional consumer-focused products including topicals and balms, and working with America’s largest developers to increase our network of mall kiosks situated in prime locations. In our MSO business, we manage a premier cannabis retail business. In both businesses, we are actively reviewing partnerships and M&A opportunities to accelerate the build-out of our company.”

Now commanding a market cap of $559.39M, GGBXF has a troubled balance sheet, with about $1.5M in cash on the books, which stands against about $58M in total current liabilities. The company has pulled in about $332k in total trailing 12 month revenues. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $GGBXF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $GGBXF, either long or short, and we have not been compensated for this article.

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