High Tide (CNSX: HITI) has posted their results for Q1 2020. Revenue came in at $13.65M which beat analysts' estimates of $12.75M, this is up almost 20% from last quarter. Adjusted EBITDA came in -$550K which beat estimates of -$3.538M The company posted some other highlights for the quarter ended Jan 31 2020: \tThe Company generated a loss from operations of $1.9M (1Q19: $4.86M loss). \t\u00a0Canna Cabana locations processed over 537,000 transactions, evidencing the Company\u2019s loyal customer base and attracting new customers to its top-rated retail experience. \tAs of the date of this news release, approximately 46,900 members have joined Cabana Club, with the majority subscribing in-store upon completing purchase transactions. \tThe Company launched its proprietary data analytics service named Cabanalytics and started generating subscription-based revenue. The Company continues to realize significant interest in its data analytics service, which is expected to result in a growing subscriber base. The company has posted another impressive quarter with their revenues up 173% since the same period last year. However, we have previously reported on High Tide's habit of running a razor thin cash balance and favoring growth at all costs, and this report appears to show that that has not changed. The company posted a working capital deficit of $11.09M as of January 31st, 2020, compared to surplus of $1.9M on October 31, 2019. The company has reassured investors that this is not a issue by reminding investors of the $10M loan from Windsor Capital that the company will use to fulfill any near term expansion plans or debt payments. It is also interesting that High Tide has entered into an agreement to sell the assets of KushBar in consideration for a deemed value of $12M in common shares of Halo Labs. Clearly, the company is betting big on the success of Halo Labs, which is manufacturer of cannabis oil and concentrates in Oregon. Although the company has posted massive growth for revenue and gross profit, their gross margin still hovers around 35% and has not improved in any significant way as evidenced by this report. This demonstrates that it is hard for retailers to break the 40% gross margin barrier the way that cultivators like Canopy and Aurora do. Bottom Line Betting on High Tide stocks still seems risky at the moment. The fact that the company is posting negative numbers in their working capital is not too reassuring. It is easy for High Tide to post massive growth since they are currently rather small, but it remains to be seen whether they can keep up this rate of growth as they get bigger. However, with that being said, if the company can consistently beat earnings estimates and grow their revenues the way that they've been doing recently, it may become an intriguing buy further in the future. Potential investors interested in High Tide should sit and wait until the company either builds a much higher cash position or gets closer to break even, which may now actually be within sight soon if the company continues to outperform. This is definitely a stock to watch closely in the coming months.