RavenQuest Biomed’s Financials Reveal Key Issues

RavenQuest Biomed (CSE: RQB) put out its latest financials after the close on Friday, recognizing $653,240 in revenues for the period, of which $216,495 came from the sale of cannabis with the remainder being provided via consulting services. RavenQuest posted a gross loss of $131,187 for the period, with an overall net loss of $3,204,917 for the quarter.

While the company actually managed to balance it’s balance sheet this quarter (the company failed to file a balanced sheet last quarter, with total amounts being out by $1 million), overall the balance sheet remains gloomy for RavenQuest Biomed. The firm had $1.3 million in cash on hand as of April 30, while payables amounted to $2.3 million.

While RavenQuest managed to close a $2.07 million raise on the day of filing, the firm will undoubtedly have to return to the trough again later this year to demand more funding from investors. While current liabilities are more than double that of current assets, the company has a major issue in that it has a convertible debenture coming due in February 2020. The roughly $14 million owed on the debenture has no means of being paid at the current point in time due to the poor performance of the equity.

The possibility of conversion is diminished significantly as a result of this performance, with conversion occurring at $1.45. The most recent raise occurred at a price of $0.50, with each share coming with a full warrant at $0.60, which is valid for a period of two years. The company has a history of scorning previous rounds of investors by conducting raises at lower and lower price points, reducing the likelihood of both debenture and warrant conversions.

In terms of potential investors, this list too is shortening by the day as the company continues to conduct a poor quality social media presence. The companies twitter account, @RQBGlobal, is known to insult those who question statements made by the company. A recent post by the CEO of the company, put up just before the long weekend, has seen plenty of pushback due to comments made by the company account which have since been deleted. Many commentators on the post were ridiculed for posting constructive criticism in regards to the company’s recent harvest.

While the above mentioned tweet identifies that a plant was grown to 55 grams of wet weight before being harvested, company filings reveal that the average plant yields only 29 grams of dried cannabis. This is largely due to RavenQuest’s growing method which consists of plants being grown in what amounts to a rotating drum with the grow light positioned in the center of the device.

The method, known as an Orbital Garden, requires the firm to harvest the cannabis plants after eight weeks of growth rather than the standard twelve to fourteen week timeframe. The shorter grow period allows less time for the plant to fully develop when compared to that of traditional methods. It’s unknown if special strains are being used to adjust for the shorter grow cycle.

Grow methods aside, the firm produced 50 KG of cannabis in the six month period ending April 30, 2019, which is far short of the expected annual yield of 2,000 KG per annum from the Markham facility. The company has since revised the expected yield of the Markham facility to 4,000 KG per annum, which it expects to reach upon implementing its orbital garden technology later this year.

RavenQuest’s Edmonton facility, which currently uses the Orbital Garden technology, was not licensed for cultivation until early April and thus no cannabis production from the facility was included in the production figure.

RavenQuest Biomed closed Friday’s session at $0.54, up $0.01, or 1.89%.

Information for this briefing was found via Sedar and RavenQuest Biomed. 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.