AGH althea group holdings limited

Trying to scale a loss making business exacerbates the loss

  1. 691 Posts.
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    Althea is a company which buys cannabis products from Canada and sells them in Australia.

    It is simply a buy, import and resell company. A very basic business model.

    It doesn't grow (yet), it doesn't manufacture (yet) and doesn't do clinical research or create value in other means.

    It Buys, imports, and sells.

    This business concept is fine if:

    Gross Revenue from sales in Australia is higher than

    (Raw Cost of goods) + (Cost of sales and marketing) + (Cost of distribution)

    Is GR should be > (COGS+COSM + COD)

    For Althea, their GR was substantially under the COGs + COSM+ COD:

    GR = $1.851M
    COGS = $0.787M
    COSM = $1.822M
    COD = $0.335M

    so before we even account for salaries, operational expenses with running a listed company, they have already lost close to $1.5M!

    Every $1 in revenue AGH makes costs them $1.30 in raw costs.

    Scaling a company like this is doomed.

    IMHO and GLTA.
    https://hotcopper.com.au/data/attachments/2012/2012395-50b69d21e9a99afe65885e60f54281d3.jpg
 
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