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.

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