Supreme Cannabis Posts Revenues Of $11.9 Million In First Quarter Of Fiscal 2021
The Supreme Cannabis Company (TSX: FIRE) this evening announced its first quarter financial results for fiscal 2021, reporting revenues of $11.9 million on a net basis, as compared to $9.5 million in the prior quarter, a 24% increase. The company posted a net income of $29.8 million thanks largely due to a gain on the extinguishment of convertible debentures.
In terms of revenue breakdown, recreational cannabis accounted for $7.5 million in revenues, a 3% increase quarter over quarter. Wholesale revenues meanwhile grew 92% quarter over quarter to $4.4 million.
On a gross basis the company managed to post a loss of $2.2 million before fair value adjustments. The loss follows an inventory impairment of $8.4 million, while production costs amounted to $5.6 million.
Operating expenses meanwhile amounted to $6.5 million, lead by wages and benefits of $3.5 million. Amortization of property, plant, and equipment as well as intangible assets meanwhile accounted for $1.2 million, followed by facilities costs of $0.7 million and professional fees of $0.7 million. The company also recognized a gain on share based payments of $1.5 million, a result of the cancellation of 10.9 million stock options.
Other expenses include a $4.3 million financing expense. However, the company recognized a gain on settlement of contract of $6.8 million, along with a gain on extinguishment of convertible debentures of $42.5 million. The gains found in other expenses resulted in the company managing to post a net income of $26.2 million, despite posting negative gross margins.
Moving to the balance sheet, the company saw its cash position decline from $28.4 million to $20.4 million, while inventory tumbled from $40.2 million to $28.0 million, partially a result of the impairment. Restricted cash meanwhile went from $6.3 million to nil, while receivables climbed to $11.1 million from $9.0 million. Assets are notably now being held for sale as well, valued at $1.4 million. Total current assets overall fell from $90.6 million to $68.7 million.
On the other side of the balance sheet, Supreme saw its accounts payable decline marginally from $13.6 million to $12.5 million. Current portion of long term debt meanwhile grew from $2.8 million to $4.8 million. Other current liabilities meanwhile came in at nil, compared to $3.2 million in the fourth quarter. Total current liabilities as a whole fell to $18.5 million from $19.9 million. Notably, the company also saw its total liabilities decline substantially, from $179.5 million to $95.2 million.
Lastly, the company declined to define guidance for the oncoming quarters, instead electing to state that, “the Company remains confident in its ability to grow near-term revenue and reach sustainable profitability.”
The Supreme Cannabis Company last traded at $0.14 on the TSX.
Information for this analysis was found via Sedar and Supreme Cannabis. 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.
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.
