Company Actively Pursuing Acquisition Strategy
DENVER, CO (May 14, 2020) — Redwood Green Corp. (OTC:RDGC) today announced its financial results for the quarter ended March 31, 2020, highlighted by $1.6 million sales at its Good Meds operating unit, pursuant to the transaction in which Redwood Green acquired certain assets of Critical Mass Industries in the third quarter of 2019 (see tables below). The Company also filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (SEC), which is available on the Company website and at sec.gov.
For a detailed discussion of all risk factors please refer to the various regulatory disclosures made by the Company in its filings with the Securities and Exchange Commission, including, without limitation, the most recent forms 10-Q and 10-K, also available on the Company website and at sec.gov.
First Quarter Financial Highlights
- Revenues on a consolidated basis were $1,593,790 with Gross Profit of $(217,970).
- Good Meds sales were $1,581,890, 67% of which consisted of sales to our medical retail customers with the remainder being sold through wholesale channels, both medical and recreational. Good Meds reported Gross Profit of $203,713. There were no revenues in the comparable quarter of 2019.
- The remaining revenues were initial sales of CBD isolate through our General Extract unit, which had negative Gross Profit as a result of a non-cash inventory adjustment relating to the carrying values of CBD isolate.
- Net loss from continuing operations of $3.6 million, which included cash used in operations of $1.6 million and significant non-cash items relating to stock compensation and the above-noted inventory adjustment.
Management Commentary – Overview
Mr. Michael Saxon, Chief Executive Officer, stated, “We accomplished a lot in the first quarter of 2020. After I was appointed CEO in late February, we focused on developing a significant revision to our corporate strategy with the help of a top-three global consulting firm and continued to develop our board and management team. I’m pleased with our progress on all of these fronts.” (See Executive Team Appointments and Board Appointment.)
Portfolio Company Commentary
Mr. Saxon continued, “Good Meds was able to maintain vigorous operations during the shelter-in-place restrictions resulting from COVID-19 by offering its medical customers curbside pickup along with limited in-store purchasing. While we think it is reasonable to conclude that COVID-19 was a net headwind as March progressed, the results for the quarter were slightly above the company’s experience last year. Since my arrival, we have also done a strategy review of Good Meds plans, which we shared during our Investor Day Webinar on April 21st. We have put new management in place and have begun to execute on seeing those plans through. We look forward to sharing our progress in the coming quarters.”
“We had minimal sales of these products in the first quarter, and we are now in the process of selling off this inventory. As mentioned in the Investor Day Webinar, this will not be a business we will continue to invest in for the reasons stated,” said Mr. Saxon.
Outlook for 2020
Mr. Saxon continued, “As we outlined on Investor Day, we believe our buy-and-build acquisition strategy is the fastest and most effective way to build a company with national scale. Our rigorous analysis identified three end markets on which we are initially focused – athletic recovery, women’s wellness and personal care. We believe those markets offer significant opportunity for growth.”
Information on Redwood Green’s April 21st Investor Day
For those unable to listen to the live presentation of Redwood Green’s Investor Day, an audio replay of the presentation along with investor materials are available via the “Corporate Presentations” section of the Company’s website at redwoodgreencorp.com/investors.
About Redwood Green
Redwood Green seeks to become the leading cannabinoid CPG company with national scale. Our mission is to provide consumers with high-quality, safe and effective cannabinoid products, initially focused on consumer needs in athletic recovery, women’s wellness and personal care. The Redwood Green family of companies started with the acquisition of Good Meds assets in 2019. Redwood Green maintains the highest of governance standards and is publicly traded on OTC Markets under the trading symbol RDGC. For additional information about Redwood Green Corp., visit https://redwoodgreencorp.com/.
This press release may contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, that involve known and unknown risks, uncertainties and other factors, including risk factors identified in the Company’s SEC filings, and which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Risks and uncertainties include, without limitation, changes in the regulatory environment affecting the sale and use of cannabis or hemp products, demand for the Company’s products, internal funding and the financial condition of the Company, product roll-out, competition, our dependence upon our commercial partners, and other commercial matters involving the Company, its products and the markets in which the Company operates as well as general economic conditions. The forward-looking statements in this press release are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Caution Regarding Cannabis Operations in the United States
Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Marijuana, as defined in the U.S. Controlled Substances Act, remains a Schedule I drug under the respective act, making it illegal under federal law in the U.S. to, among other things, cultivate, distribute or possess cannabis. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the U.S. may form the basis for prosecution under applicable U.S. federal money laundering legislation. Please carefully review the Company’s SEC filings with respect to related risk factors.