Zenabis Global (TSX: ZENA) reported their second quarter 2020 financials results this morning, with mixed success. While revenues grew on a quarter over quarter basis to $27.4 million, the company posted declining quarterly cannabis revenues, while its propagation segment was down on a year over year basis. The company posted a net loss of $15.8 million for the three months ended June 30, 2020.
The company saw a total of $11.8 million in cannabis revenues on a net basis for the period, down from $12.6 million in the prior quarter. The decline came from consumer net revenue, which came in at $8.5 million compared to $9.8 million in the first quarter. Wholesale bulk actually rose, from $2.8 million to $3.2 million, while medical and other revenue amounted to $81 thousand, compared to $47 thousand in the prior quarter.
Total gross margin before fair value adjustments amounted to $8.8 million, while total operating expenses totaled out at $9.1 million. The largest expense over the quarter was salaries and benefits at $3.8 million, followed by depreciation and amortization at $1.5 million.
Other income and expenses is primarily what did Zenabis in for the quarter, with interest expenses amounting to $8.0 million, loss on early conversion of debt coming in at $4.3 million, and the loss on modification and extinguishment of debt amounting to $10.7 million. This resulted in a net loss of $15.7 million, which was positively impacted by unrealized gains on changes is fair value of biological assets.
Cash fell over the course of the quarter from $8.4 million to $6.7 million, despite the company conducting a $21.7 million financing during the quarter. Receivables fell from $10.6 million to $8.8 million, while inventories ballooned to $56.0 million from $44.6 million. Total current liabilities increased modestly from $103.0 million to $107.9 million over the course of the quarter.
Payables meanwhile declined from $28.3 million to $23.6 million, while customer deposits stayed essentially flat, dropping from $37.9 million to $37.2 million. The big change however came from loans and borrowings, which fell from $59.9 million to $16.2 million, a function of certain debts being pushed out for extended terms. Convertible loans also declined, from $22.5 million to $11.4 million. Total current liabilities overall fell from $149.2 million to $88.5 million.
Lastly, the company provided guidance for the third quarter of 2020, with revenues expected to be in the range of $22 to $26 million, of which $17 to $21 million is anticipated for the cannabis segment, and $5 to $6 million for the propagation segment.
Zenabis Global last traded at $0.14 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.
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.