Charlotte’s Web Holdings (TSX: CWEB) this morning reported its third quarter financial results, posting revenues of $25.2 million, along with a net loss of $6.5 million for the three month period. Revenues were up 17% on a quarter over quarter basis, and up 0.4% on a year over year basis.
Gross profit before biological adjustments came in at $15.3 million, compared to $11.5 million in the prior quarter. Operating expenses overall came in at $28.3 million, nearly double gross profits during the quarter, proving that the company is a long ways away from achieving profitability and free cash flow.
Expenses were largely comprised of general administrative, which amounted to $17.8 million in the third quarter, as compared to $21.1 million in the second quarter. Sales and marketing however was up significantly quarter over quarter, from $6.8 million go $8.5 million, while research and development amounted to $2.0 million.
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The company however was able to recognize additional income of $7.4 million, thanks in part to a falling share price that enabled the company to recognize a positive impact on derivative liabilities. The performance overall resulted in a net loss of $6.5 million for the three month period ended September 30, 2020.
Moving to the balance sheet, Charlotte’s Web saw its cash position fall quite dramatically from $99.8 million to $65.9 million. The drop appears to be the result of both operating expenses in the form of bills finally being paid, as well as a $12.2 million expenditure on the purchase of property and equipment and intangible assets.
Trade and other receivables also fell during the quarter, from $12.5 million to $6.5 million, while inventories declined from $67.1 million to $64.7 million. Prepaids expenses meanwhile climbed to $13.5 million from $7.7 million. Current assets overall declined from $200.9 million to $163.9 million.
Accounts payable fell dramatically during the quarter, a result of evidently paying some bills, with the company recording $5.3 million in payables as of September 30, compared to $15.5 million in the prior period. Current cultivation liabilities grew marginally, from $11.5 million to $12.7 million, while current notes payable fell from $1.3 million to $0.9 million. Overall, current liabilities fell from $45.9 million to $35.3 million.
Charlotte’s Web Holdings last traded at $4.95 on the TSX.
Information for this briefing was found via Sedar and Charlotte’s Web Holdings Inc. The author has no securities or 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.
