Auxly Cannabis Sees Q2 Revenues Fall to $8.6 Million, Net Loss Hits $29.2 Million
Auxly Cannabis (TSXV: XLY) announced its second quarter financial results this morning, reporting declining net revenues of $8.6 million, along with a net loss of $29.2 million for the period ended June 30, 2020. Revenues consists of $6.8 million in cannabis net revenue, along with $1.8 million in research revenues.
The company blamed the decline in revenue on essentially whatever would stick, pointing to Ontario’s new competitor value brand offerings, temporary store closures, the shift to online sales through the OCS, and the impact of downward pricing adjustments. The results compare to net revenues of $9.9 million and a net loss of $13.2 million in the first quarter of 2020.
Total cost of sales during the quarter amounted to $5.3 million, which when combined with inventory impairments of $0.7 million resulted in a gross profit excluding fair value items of $2.5 million.
The company has yet to reign in expenses as well, with the firm seeing total expenses of $19.4 million during the three month period, more than double the revenue generated within the same time frame. Selling, general and administrative expenses alone came in far higher than revenues, hitting $13.6 million. Combined with interest expenses of $3.4 million and depreciation and amortization of $2.4 million, it makes Auxly’s current operation look unfeasible.
When operating expenses are combined with a multitude of other losses, including a $4.5 million impairment on assets, and a $2.4 million on settlement of assets and liabilities and other expenses, it results in a net loss for the quarter of $29.2 million.
Looking to the balance sheet, the company saw its cash position fall only slight, from $21.4 million to $20.7 million, the result of issuing $8.6 million in convertible debentures during the quarter. Accounts receivable meanwhile fell from $8.7 million to $4.3 million, while inventory climbed from $28.7 million to $32.4 million. Total current assets overall fell from $79.1 million to $75.4 million.
While Auxly’s assets fell, its liabilities climbed. The company saw accounts payable grow to $17.0 million from $14.3 million, while interest payable grew to $3.7 million from $2.5 million. Deferred revenue meanwhile fell, from $5.5 million to $5.2 million. Current liabilities overall climbed from $23.5 million to $29.4 million.
Auxly Cannabis last traded at $0.20 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.
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Do you see a bankruptcy here ?