Auxly Cannabis (TSXV: XLY) this morning posted their third quarter financial results, posting revenues of $13.4 million along with a net loss of $17.9 million. On a quarter over quarter basis, the company saw revenues grow a notable 57.0%, while the recorded net losses were reduced substantially.
Revenues from the sale of cannabis products on a gross basis climbed during the quarter to $15.2 million, as compared to $8.3 million in the prior quarter. Revenue from research contracts however declined, falling from $1.8 million to $0.9 million. After the deduction of excise taxes, net revenues amounted to $13.4 million.
The company spent $9.5 million in hard costs related to those cannabis revenues however, and $0.5 million on generating research revenues. Combined with a $0.3 million gain on inventory, Auxly posted a gross profit before fair value adjustments of $3.7 million.
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Unfortunately for shareholders however, expenses in connection with the growing revenues still remain out of line, with the company spending more than its gross revenue figure in related expenses. Operating expenses for the quarter amounted to $17.3 million, with selling, general and administrative expenses amounting for the largest portion at $11.4 million. Interest expense amounted to $3.7 million, while depreciation and amortization accounted for the remainder at $2.3 million.
The company then recorded a further $4.5 million in other expenses, including a $3.3 million loss on settlement of assets and liabilities and other expenses. Also notable is a $1.2 million loss from its share in a joint venture. Overall, the company lost $17.9 million over the three month period.
Looking to the balance sheet, the company saw its cash position decline from $20.7 million to $13.6 million. This is attributable to negative $6.7 million in operating cash flow, and a further $4.9 million used in investing activities, which was offset by $4.4 million generated from financing activities.
Accounts receivable meanwhile rose from $4.3 million to $10.4 million, while inventory ballooned from $32.4 million to $41.3 million. Most other line items were relatively unchanged, with total current assets climbing from $75.4 million to $82.5 million.
Total current liabilities however also climbed, with accounts payable climbing to $29.0 million from $17.0 million, representing more than double the firms current cash position. Interest payable also increased, hitting $5,1 million, up from $3.7 million. Deferred revenue meanwhile increased marginally, from $5.2 million to $5.5 million. Lease liability was the only line item that declined here, dropped from $3.3 million to $2.4 million. Total current assets overall climbed from $29.4 million to $46.0 million.
In terms of outlook, the company issued a fairly generic statement indicating that it remains focused on Canadian operations, and “continued leadership” in the cannabis 2.0 segment. The company also identified that it will continue to manage SG&A to the scale of operations while focusing on improving cash flows. Finally, the firm intends to finish the remaining construction and commissioning of the Dosecann facility.
Auxly Cannabis last traded at $0.32 on the TSX Venture.
Information for this briefing was found via Sedar and Auxly Cannabis Group Inc. The author has no affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
