Zenabis Global (TSX: ZENA) quietly filed their first quarter 2020 financial results late last night, reporting net revenues of $19.9 million for the period ended March 31, 2020, compared to $17.9 million for the previous quarter. Net loss for the period came in at $1.5 million, largely thanks to a large biological adjustment made by the firm.
Zenabis reported gross revenues of $22.4 million for the period before excise taxes, which netted revenues down to $19.9 million. Total cannabis revenues amounted to $12.6 million, a marked improvement from the previous quarters $10.6 million in cannabis revenues. Production costs associated with these sales amounted to $10.9 million, leaving $9.0 million in gross margin before biological adjustments.
Operating expenses during the quarter came in at $10.1 million, with the largest expense attributed to salaries and benefits at $4.2 million. Depreciation and amortization was the second largest expense, at $2.1 million, followed by general and administrative expenses at $1.5 million. Net loss for the quarter came in at $1.5 million, thanks in part to a $6.3 million interest expense.
While the income statement may have showed signs of hope for Zenabis, the balance sheet does the opposite. The three month period saw Zenabis’ cash position decline from $16.5 million to that of $8.3 million – leaving the firm with approximately one quarter’s worth of cash burn. Inventory increased from $39.3 million to that of $44.6 million. Total current assets improved from $90.0 million to $104.6 million.
The firms total current liabilities however is where the real concern lies. While current liabilities decreased marginally from $148.5 million to $148.1 million, this is really where any bright spot ends. The company currently has $27.2 million in accounts payable, which it currently has little means to cover. On top of that, is $59.0 million in loans and borrowings, $22.5 million in convertible debentures, and $38.8 million in customer deposits that Zenabis needs to manage.
In terms of the outstanding loans and borrowings, they dealt with a portion of this last month by pushing out $50 million in secured debt to 2025 through the issuance of 71.3 million common share purchase warrants, a tiered royalty structure on revenues, and and $3.8 million amendment fee. The company also saw $1.1 million in convertible debentures converted on May 4, however much concern remains – such as how the firm intends to pay its current payables that are piling up, with total 2020 commitments pegged at roughly $70 million.
Zenabis Global last traded at $0.075 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.
10 Responses
They have moved to reduce their burn rate substantially.
Nice job leaving out out the Accounts receivable $11,467,422 …….Debt was dealt with in April
https://www.zenabis.com/zenabis-announces-amendments-to-senior-secured-debenture-and-positive-operational-updates/
A CAP OF $25,000,000,…LOL ah you forget sale x ratios to price, this is a .50 stock today at 7c.! Still working for thhe shorts? Its called a BUY!
You tell em Craig!
And let’s not mention the debt and lack of appetite for anyone to clean it up.
And you would know what Lenders think 18 hours after Fins for a great Q1 were released….LOL All on the right path here and gonna do very well.
The Company produced an Adjusted EBITDA of $2,343,955during Q1 2020 as compared to an Adjusted EBITDA loss of $6,947,048 during Q4 2019. This increase to a positive Adjusted EBITDA is attributed to the Company’s substantial efforts to improve its short- and long-term profitability, which included a corporate restructuring that resulted in significant reductions in employee headcount at the corporate and facility levels. This alignment of the Company’s operations with its revised outlook have led to realized savings of roughly $2,000,000 per quarter in salary expense, while maintaining the Company’s current production levels at par with capacity. Furthermore, the Company terminated a number of significant consulting contracts, reduced the use of third-party professionals, and eliminated non-core projects, all of which will contribute to the Company’s goal obtaining cash flow positive operations and profitability during Fiscal 2020.
Hmm… Then how to we explain the negative -$11.6M CFO and another -$3M in CFI… They burned $14.6M cash last quarter.
Hard to take a $2.5M “Adjusted” EBITDA number seriously when they are burning that much cash.
Anyways, good luck on your investment, I sincerely hope they turn it around as it would be a great thing for the sector, but I don’t see it.
Debt was dealt with in April
How do you define “dealt with” – they just restructured it and have no path to paying it off.. Not sure if you have seen what the sector looks like, but its an unmitigated disaster.
cannabis is just getting started in Canada ON, QC etc have no shops, they have amortized it until 2025. Q2 propagation is strongest of yr with about 30 yrs under their belt with bevo, Delta is for sale and new products coming out or just out, exporting to EU and Israel just started. They aren’t newbs 5.2 million profit on operating while almost everyone is the sector is still losing big time on op expenses. They are growers and wholesalers for the past decades, look at their distribution network. zena is a new company that started after legalization not like the companies been round for past 7 yrs
Good luck guys.