A Reminder from BioSteel That Cash is Still King
In the September 2023 Finance 'In-Action', BioSteel and Canopy Growth will demonstrate the importance of cash and the implications of management decision-making.
The owner of sports drink company BioSteel says it has filed for creditor protection in the U.S. and Canada and is trying to find a buyer for the business.
Ontario-based Canopy Growth, the largest cannabis company in North America, said in a news statement Thursday that it has ceased funding BioSteel Sports Nutrition Inc., and that BioSteel has commenced proceedings under the Companies Creditors Arrangement Act (CCAA).
”The company no longer has access to funding for the brand, which continued to generate negative operating cash flow”. ”Sales were growing, as BioSteel booked $24 million worth of sales revenue in the first three months of 2023 – more than twice as the same period the year before.
The costs for those sales (cost of goods sold) “…eclipsed $90 million, and other expenses (operating expenses) topped $114 million, including an increase of $12 million in advertising and promotional costs.
It’s not always about revenue or sales. Ultimately businesses need to pay their expenses with cash. The sources of that cash are either from its operating activities or financing activities (investors or lenders).
The ‘plot was already thickened’ based on a BNN article in May 2023 which stated that Canopy will have to re-file its financial statements…after a review of it’s BioSteel operations uncovered errors in the accounting of sales.” As of Sep-14, Canopy Growth is under investigation by the SEC
Canadian sports drink company BioSteel filing for creditor protection, seeking new buyer, CBC, September 14, 2024.
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