Zenabis Global Reports Q4 Revenues of $17.9 Million, Loss of $98.7 Million

Zenabis Global (TSX: ZENA) reported their fourth quarter 2019 and full fiscal 2019 earnings late last night, managing to file the required documents minutes before the deadline. The company followed it up with a 1:00 AM news release to the market, reporting fourth quarter revenues of $17.9 million compared to $12.0 million in the prior quarter.

Of those revenues, $10.6 million was attributed to the firms cannabis operations during the quarter, while the remainder was a result of the firms ongoing propagation operation. Gross margin amount to $3.4 million during the quarter, with operating expenses of $52.6 million, resulting in the company reporting a net loss of $98.7 million for the quarter.

As has become commonplace over the last few days, Zenabis also announced a series of impairments related to its earnings as a result of auditors combing through the books. Impairments to the firms operations include inventory impairments of $0.8 million, property, plant, and equipment to the tune of $27.8 million, as well as the impairment of all goodwill and intangible assets that were on the book for a cumulative $61.4 million. The company also incurred a “loss due to event” of $0.9 million during the quarter, although it is unclear what this pertains to specifically.

The company finished the year off with approximately $16.5 million in the bank, signifying a rough road ahead as the company has numerous debts to cover to the tune of over $80 million by the end of June 2020. The firms cash position decreased from $27.9 million in the prior quarter, despite raising proceeds of $20.8 million from a rights offering, $10 million from loans and borrowings, and $2.4 million from the issuance of share capital during the quarter, bringing into question just how much fuel is left in the tank as of the time of writing.

That question is likely verified by the company receiving additional funding from current debt providers to the tune of $7.0 million – with a maturity date just four months later on July 20, 2020. That debt contains an automatic extension on maturity of four months if certain undisclosed conditions are met. Little is known about the implied interest rate for the debt.

Inventory levels rose during the quarter, from $28.3 million to $39.3 million, a result of the company only selling 3,705 kilograms of the 10,237 kilograms of cannabis produced during the quarter. Total current assets rose marginally over the course of the quarter, from $89.9 million to $90.0 million.

Meanwhile, the firms liabilities continue to grow, with accounts payable increasing from $26.0 million to $28.6 million. Convertible debentures marked as current grew the most significantly, from $16.6 million to $28.0 million. Overall, the firms current liabilities increased from $131.0 million to $148.4 million, representing a significant working capital deficit that the company will be required to struggle its way out of.

Zenabis Global last traded at $0.10 on the TSX.

Information for this briefing was found via Sedar and Zenabis Global 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.