This Leef Could Get Ripped

I wrote about what a bad idea I thought Leef Brands (LEEEF) was on 8/6 for cannabis investors, and it is up. Two things have happened since then until today. First, they completed the private placement that I mentioned in that last article, raising C$2.09 million, which was announced yesterday in a press release. Of course, it was really announced as upsized earlier in a filing with SEDAR on 8/13. More importantly, and a bit earlier, the rescheduling news helped.

When I wrote the article two weeks ago,t he stock was at C$0.26, and it closed last night at C$0.325, up 25%. Of course, American cannabis stocks are up a lot more than that since then. The New Cannabis Ventures Global Cannabis Stock Index closed last night at 6.92 and has gained 24.5%. MSOs, though, have done a lot better. The MSOS ETF has gained 37.9% since 8/5. LEEEF is losing year-to-date:

The Global Cannabis Stock Index is up now 0.6% year-to-date, so LEEEF is doing better. I continue to be very cautious on LEEEF, which I do not cover closely.

Today, they released their Q2 financials by press release and on SEDAR:

LEEF Q2 Financials.pdf

Download PDF • 859KB

LEEF Q2 MDA.pdf

Download PDF • 376KB

Again, I don't cover this tiny stock, but here is my view:

• Cash fell to less than $1 million

• Total assets are down a bit year-to-date to $41.3 million

• Total Liabilities are also down slightly at $54.3 million

• Total Equity has declined from year-end by $650K to -$13.08 million.

• Tangible equity is worse, falling to -$15.5 million from -$14.7 million

• The total liabilities include $10.4 million in convertible debt

• They also include $14 million in tax payable, a current liability.

• The non-current liabilities include an additional $5.8 million in tax-related obligations

• Revenue in Q2 rose by 10% from a year earlier but fell sequentially by 8%

• Gross profit fell by 22% from 2024-Q2

• Operating expenses rose!

• The operating income plunged from -$316K a year earlier to -$2.4 million, which was worse than Q1

• Adjusted EBITDA in Q2 wa -$1.25 million compared to $0.3 million a year earlier and $2.1 million in Q1

• Cash flow from operations was -$2.0 million in H1

Conclusion: Avoid LEEEF

At $0.23 for LEEEF currently, this low-volume, debt-saddled money--burning company has a market cap of about $40 million just on the shares outstanding (excluding options, warrants and RSUs0. WAY TOO HIGH!!!