Kiaro Holdings (TSXV: KO) reported its second quarter financial results this morning, essentially revealing that it is nothing special in relation to the numerous other cannabis retail issuers currently publicly listed. The company posted revenues of $4.0 million for the period ended July 31, 2020, along with a net loss of $1.4 million.
While revenues grew approximately 50% quarter over quarter, this appears to be a function of new store openings and expansion of the firms wholesale business as per the news release issued by the company this morning. Revenues are said to have consisted of $2.8 million from its retail operations, along with $1.2 million from its wholesale operations. Cost of sales for the quarter came in at $2.8 million, providing the company with a gross profit of $1.2 million.
Expenses during the three month period totaled $2.1 million as compared to $1.9 million in the previous quarter, with the largest expense coming from salaries and employee benefits at $0.8 million. This was followed by depreciation and amortization of $0.5 million, along with share based compensation of $0.2 million and professional fees of $0.2 million. Combined with a finance expense of $0.5 million that appears to occur quarterly, and the company reported a net loss of $1.4 million, or ($0.01) per share.
Looking to the balance sheet, cash declined from $1.3 million to $1.0 million over the three month period, while receivables fell from $0.2 million to $0.1 million. Inventory climbed to $1.4 million from $0.7 million, while loan receivable came in at $0, compared to $0.3 million in the prior period. Current assets overall climbed marginally, from $2.7 million to $2.8 million.
Accounts payable meanwhile ballooned to $2.0 million over the course of the quarter, double the current cash on hand held by the company, as compared to $1.5 million in the previous quarter. Due to related parties fell to $1,246 from $0.4 million, while restricted deposits came in at $0 as compared to $0.2 million in the first quarter. Current portion of long term liabilities climbed to $0.2 million from $0.1 million as well. Overall, current liabilities fell modestly, from $3.3 million to $3.2 million.
Subsequent to the end of the quarter, the company completed its public listing where it should be noted that its cash position was bolstered by $2.0 million thanks in part to the shell in which it acquired. Further, $6.5 million in convertible debentures were converted to equity, which were classified as non-current liabilities in the current reporting period.
This bolstered cash position is what essentially will enable the company to meet its current obligations outlined as being a liquidity risk.
Kiaro Holdings last traded at $0.11 on the TSX Venture.
Information for this briefing was found via Sedar and Kiaro Holdings. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.