Ahh, yes, the controversial zero star review from last December. And since the stock finished second in two “Who should I review next?” polls in the Wolf Den discord last week, they get this special Labour Day weekend review before I jet (drive) away on vacation.
It is possible that I have forgotten a couple, but I believe Purebread is only the seventh company ever to receive a zero star review. I reserve the zero star reviews for whom I think will not survive another 12-18 months.
All previous six are either out of business, or went though very long cease trade order processes. SPO, AH, TBP and EPW have all been dead for sometime. VSBY was under a CTO for nearly two years, made a brief reappearance and is under a CTO once again. FOBI fell under a CTO for 21 months and just started trading again last month. I predict that will not last much longer.
While the list is relatively small for those whom receive that lowly distinction, there have been much more that have come extremely close with ratings of .5 or even .25 of one star.
Flow Beverage (FLOW.N) once traded on the TSX at $8, and now trades on the lowly NEO at 4.5 cents
Odd Burger (ODD.V) received a 1/4 star review in April of 2024 and ceased trading this February
Else Nutrition (ELSE.C) once traded on the TSX at the equivalent of $290. It has recently moved to the CSE and trades at 10.5 cents with a $650,000 market cap.
NorthStar Gaming ($BET.V) originally received a one star review at ten cents back in November of 2023 which was downgraded to 1/2 star in May of 2024. It ceased trading in May at a penny
American Aires ($WIFI.C) originally received a one star rating in June 2024 at 93 cents, was downgraded five months later to 3/4 star. They ceased trading in May at 3 cents
Verses AI ($VERS.N) with taking multiple reverse splits into consideration once traded at $100. It first received a 1 star rating in October of 2022. It was downgraded to 1/2 star in Feb 2023 and received multiple similar reviews thereafter. They ceased trading in June
Voxtur ($VXTR.V) received a 1/2 star review in December of 2022. It once traded at $1.35 on the TSXV. It now trades on the OTC at $0.000001 (that’s not a typo)
Origin Foods ($OG.V) received a one star review in May of 2022 and was later downgraded. It once traded at today’s equivalent of around 72 cents. They ceased trading on the TSX Venture in Jan of 2023, and now also on the OTC at $0.000001
Eguana Technologies (EGT.V) received a one star review in Jan of 2022 when it traded at $4.25. They are under a cease trade order since May of this year when they traded at 8.5 cents
Boosh Plant Based Brands ($VEGI.C) received a one star review in March of 2023 when it traded around $0.09. They stopped trading at a half cent eighteen months later in August of 2024.
The Hate:
While I have over 5300 followers on Substack, I often wonder if I would have an equal or greater amount of detractors if their was a dislike button. Bulls, particularly in the Canadian microcap space can be a sensitive bunch. I get it. Nobody likes to hear their baby is ugly.
Occasionally, when I give a stock a very poor rating there are those who wish to have a real debate on my reviews. But much more often that not, I receive an extreme amount of vitriol. I’d prefer the former, but I will not shy away if you choose the latter.
Here are some of the comments I’ve received over the years. Rather than screenshot to shield the the nameless, I’ll just quote what was said:
(note - these comments were directed at one of me or my reviews and they are ALL from stocks who went on to have a CTO or went bankrupt)
“I give your review a zero star” (easing into it)
“I think we can stop wasting oxygen on these people. They will anyway lose all their money in stock market. God give me the confidence of @wOLFofOakville to publish something like this without the fear of being judged. I have only one sincere advice for people like these: ‘It’s better to stay silent and be thought a fool rather than speak up and remove all doubt’”
(that one was on my birthday and might be my favourite). This particular user was last seen in August of 2023.
“Listen here you goofy prick, any accountant who has self appointed himself a wolf from Oakville is some soft pussy bitch boy.”
“Wolf, you're a poor representative of Canada”
“He huffs and he puffs and couldn't blow the house down. Poor ftard wolf missed the train.”
“Who are you going to listen to… the chief AI officer at Lockheed Martin or a person who takes a magnifying glass to a small cap’s financials when the company hasn’t even launched their product yet? You take a magnifying glass and miss the bigger picture. Get outta here.”
“The big bad Wolf is here Oh My. Take a flying leap and spare the world”
Wolf your evaluation is comical at best. Goodluck to you, your going to need it with insight like that.
Same user, two years later:
“No one could have foreseen this... expect maybe @WOLFofOakville”
“Who cares about your one star rating on this board Wolf ?”
“Hey little wolf, are you still short?”
“Wolf. Cannot wait to see you reluctantly give a one star , followed by a two star… and eventually a three….. gonna be worth while to see how neutral and objective your analysis actually is. I’ll see by the end of the year if we can’t get that star.”
“I have seen newbs like wolf come and go over the last 17 years, he is young and new to ceo full of piss & vinegar will be surprised if he is still around in a few years.”
I could go on (and on) and I probably missed some fantastic ones, but I think you get the idea.
If you missed last December’s zero star review, I’ve included it below.
Purebread Brands ($BRED.V) FINS Review
I have a sense that this review will have a bit of a different feel to it than many of my most recent reviews, but doing so partially because of a request out of the Wolf Den discord, and my own morb…
That “bagel” was not my first review of Purebread. That occurred back in March of 2024 when the company was known as Coho Collective Kitchens under the ticker COHO. They did a 5:1 reverse split since then so it traded at an equivalent of $0.82 at the time of the review. By October of 2025 the stock price had dropped by 96%.
It was up to $0.12 when I reviewed it back in December, and reached as high as $0.30 just after the announcement of new leadership and debt rearrangements were made (discussed later). My BRED haters, (the same ones who still hold $0.70-$0.80 pre split COHO shares) performed some touchdown celebrations before they even hit the red zone. It’s down 50% since, but in fairness, it is also up 25% since the zilch review from December. Perhaps more surprising, many of the BRED haters were invested in at least three of the above mentioned tickers too.
You can lead a horse to water, but…
So why have I decided to take this trip down memory lane?
Two reasons actually, and the first is relatively obvious. Yes, once again I’ve had some hate directed towards me for my last review on PureBread. The second is to point out the rationale I have when deciding whether or not to give a stock a zero, or perhaps a 1 star or something in between.
NorthStar Technologies, Verses AI, and Else Nutrition were all reviews that could have easily fell into the “Zero Star” category. The primary reason they did not was funding. There were several people willing to throw good money after bad in those cases. I eluded to this in one of my reviews on Verses.
Northstar Technologies had Playtech PLC as a strategic investor, and Else Nutrition had multiple ones over the years too.
How does all of this relate to Purebread? Back in March the company announced leadership changes including a group that assumed some of the company’s debt - a very important one with BMO as their was a risk the bank was going to force bankruptcy proceedings. The company also made several other arrangements with other parties in debt for share transactions.
BRED has introduced what some retail shareholders have referred to as new “smart” money. I can assure you retail shareholders said similar things about smart money funneling into VERS, BET and BABY also (oddly, some are the same people).
But does this introduction of new investors with deep pockets change the company in a significant enough way to avoid an inevitable collapse like the sixteen examples I provided above?
For starters I do believe it will most certainly lengthen their survival beyond the 12-18 month “death” that my zero star review predicted back in December of last year. Does that mean it’s upgrade worthy?
Let’s find out.
Balance Sheet:
When I last reviewed BRED, they had the worst ever current ratio that I have ever formally reviewed at a microscopic .02. That meant for ever one dollar in current assets they held, they had $50 in liabilities due over the next twelve months.
Nine months later that ratio has improved to .05 - making it now the second worst current ratio I’ve looked at in one of my reviews. As of June 30th the company had $550k in cash, $47k in receivables, $200k worth of inventory and $120k in prepaid expenses over top of $17.7M in liabilities due over the next twelve months. Daunting no matter how you look at it.
That liability number was over $23M nine months earlier. $2.13M of non cash burning convertible debt was converted into shares. Approximately a dozen “other loans” as classified on the balance sheet were extinguished in some fashion - many of which received stock at well above market prices.
Post financials the $5.2M term facility originally held by BMO was partially settled ($3M) through 20M new common shares at the current share price of $0.15 and 10M warrants at 30 cents with a two year expiry, along with some interest forgiven. This should leave about $2.2M.
Let’s assume for the $1.8M in “other loans” and the $2.2M remaining on the original term facility will also not result in funds leaving the company in the next twelve months - there is a good chance these could also be converted into shares or have the can kicked down the road. What would remain is the $1.1M in lease obligations and $8.5M in accounts payable (About $200k is due to previous employees for unpaid salaries). That leaves roughly $9.5M in cash needs over their next twelve months. Currently, they only have less than $600k in liquid assets to fulfill those obligations.
Have they made some progress? Surely, they have. But even after all of that debt settlement, Purebread still maintains one of, if not still the worst balance sheets I’ve ever looked at. Let’s also remember this includes a $1.9M private placement in mid April. Two thirds of that is already gone.
That $8.7M in payables is about $200k less than what it was nine months ago. What probably makes up that amount are typical vendors that a bakery or small business would have - ingredients and raw materials, beverage and complimentary suppliers, cleaning and kitchen essentials, etc. Those groups are not taking over market shares for what they are owed. Those who hold their leases are not taking over market shares for what they are owed.
So how can a company like Purebread make up that difference between the $600k in liquid assets they have and the roughly 15x that amount they have scheduled to go out the door in the next year?
The main two ways would be to raise capital through additional debt or dilutive means. The other would be by generating positive cash flow.
Cash Flow:
So much for the latter as BRED has burned through $233k of operational cash flow through their quarter of 2026. This compares to generating $542k in positive flow during the same period a year ago. Part of the reason for this variance is negative working capital adjustments for reducing their payables from the start of the year.
In actuality, they are probably very close to cash flow neutral via their operations. But even with that, neutral operational cash flow does not put a dent into the massive working capital shortage.
In the rest of the cash flow statement, they spent $47k for equipment, reduced their debt by a net $750k, and raised nearly $1.9M through their April PP.
They did end the quarter with 4x more cash than they started with. That still only amounts to $550k and it involved a $1.9M raise to accomplish.
Share Capital:
As of today, 63.8M shares outstanding - 175% dilution in the last five quarters when it was 23.2M shares
24.2M warrants outstanding, all out of the money. 17.3M at 30 cents are the cheapest
389k out of the money options and 311k RSUs
Prior to the $3M loan settlement, insider ownership was listed as high as 2.4% (SimplyWallSt). Post settlement including three new listed insiders it is way up to approximately 35%
No significant insider activity in the open market
Income Statement:
Purebread starts the year with a 7.7% decline in revenue from $3.63M to $3.35M. The decrease in revenue is primarily attributable to a store closure at the beginning of Q1. The company did not state comp sales for their remaining stores. In fact, they did not issue a press release accompanying these financials.
Gross margins declined by 110 basis points but is still a healthy 64.4%.
Total operating costs rose by 3.2%. If interest costs were removed, the rest of their operating expenses rose by 34% on down revenue and gross margin. A portion of that was audit fees which were recorded in a different quarter last year. But comparable operating costs like payroll was up 13%, and office and miscellaneous rose by 214%. Occupancy costs also rose by 26% and Subcontractor costs by 67%
That is easily a reverse Wolf Trifecta. Lower sales, lower margins and not only a lack of any operational leverage, but much higher operational spending.
The end result is a $323k operating loss, about 12x worse than the comparable quarter. Tack on another $152k for a loss resulting from extinguishing a portion of their debt, that loss grows to $476k, more than 17x worse than last year.
Summary:
Most readers of this and my previous reviews may think that I have some difficulty with the actual business model of their bakery’s. That actually isn’t true. Their stores are very well presented, merchandised, and they have excellent reviews from customers in the 4.5 - 4.7 star range on Google and TripAdvisor.
Even their financials provide a potential glimpse into what could be as they are relatively close to break even and appears they could be within striking distance of generating regular positive operational cash flow.
The problem is the giant anvil they have dangling around their necks in working capital deficiencies. That problem goes back to other segments of their business and previous leadership, which would require a whole other article to explain to point the proper blame on the proper people.
In almost all of the sixteen examples of companies who went tits up after I gave them a poor review, their overall business model was broken for one reason or another. They may have had a good product (ELSE/VEGI/OG), but something else was fundamentally broken such as their gross margin model (EGT/ELSE again).
Despite my bearishness, I cannot cite the same thing here. Unlike the other sixteen, this is a little unique. One thing BRED has in compared to the other sixteen at any time of one of my reviews is a balance sheet that is worse than ANY of them. That is even taking into account the recent shares for debt, and loan obligations changing into friendlier hands.
When I reviewed BRED last December it traded at a $3.2M market cap. Today, it’s triple that at $9.6M. The stock price is up 25% showing once again the negative power of dilution.
A month ago the company put out a news release stating:
“Purebread currently operates 7 corporate locations generating approximately $14 million in run-rate revenue, with a clear path to scale supported by a commissary production model built for growth. The Company’s long-term plan targets 30 locations and $75 million-plus in revenue within 3 to 5 years, and 100 locations with $250 million-plus in revenue within 10 years, positioning Purebread as Canada’s first national premium artisan bakery brand.”
Bold statement when you only have enough cash to pay six months of current lease costs and nothing else. Clear path? I’m not sure what dressing to put on that word salad.
Now, what shall I do about a rating here? We are halfway through the top end of my 12-18 month timeline where my zero star review typically projects the company will cease to trade or cease to exist all together. The developments since that review strongly suggest that is no longer very likely. I don’t understand their thinking either. The group that did step forward with cash could have allowed the bankruptcy to proceed and then picked up the brand and assets for much cheaper.
I feel that these new group of investors are throwing good money after bad, as was the case with NorthStar Gaming, Else Nutrition and Verses AI. Just as was the case with those three failed companies, I don’t think it’s worth a retail investment either. The risk/reward formula doesn’t exist here.
0.25 stars. An upgrade. May the hate ensue.
Disclaimer:
My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.
Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.
awesome keep it coming