Making sense of IFRS items in Cost of Goods Sold – With an example: CannTrust Q3 to Q4F18

Just in case there are some new readers with us that want to understand Gain On Biologicals, I thought I would use a live example from CannTrust last Q. Cost of Goods Sold is an Expense item. Therefore, any positive figures are “Expenses” and negative figures are “Income”. The two items in COGS that I’ll explain Fair Value Increment on Goods Sold (FVI)NOTE: Canopy has a quirk in that in Q2F18 [last year] and subsequently they added to this line “…and other inventory charges”Unrealized Gain on Biological Assets (GoB) Under US GAAP you will not see these items. Tilray uses US GAAP. US GAAP…

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Inventory in the first Q of Rec- Booking Costs and IFRS VooDoo!! Chickens have come home to roost.

I started paying attention and writing about this industry because of my surprise of how you could sell $1 worth of cannabis and show a gross margin greater than the selling price. In my world, that was very new! Yes... IFRS voodoo! The practice of carrying inventory above the lesser of its actual cost or net realizable value. This is done by running an entry through the income statement that GROSSES UP Inventory to a management determined value of no greater than the Selling price less Selling Costs less the costs already incurred. The latter item is on the balance sheet. Then when you…

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Canntrust Q4F19 Rundown – Dec. 31, 2018

This is where I insert my grumbling about having to “back in” to 4Q $’s by taking Annual Audited Statements and backing out 9-month YTD to get a Q4 stand alone. This significantly impacted Gross Margin [$2 million] and Opex [$1.3 million].  I did cobble together from MDA… but it added + 1 hour to this spread. I have used their figures in the below.  I balance to Net Operating Profit and I am within spitting distance of their adj EBITDA.  Stuff like this could be why there is this note to the MDA [page 27-28]… "As of December 31, 2018, the Company had…

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Peer Comparisons: Tracking last Q Sales to Inventory on Hand to Start the Next Q

I have spent a lot of time in the Income Statement with the charts I have rolled out, and even a little on the Cash Flow side with EBITDA. I decided to start playing with some graphs that would help determine if an LP would have enough "gas in the tank" [eg. Finished Goods Inventory, WIP and then Bio Assets] to be able to achieve a sales increase in the following Q. With many LP's having had the ability to "stockpile" in advance of Adult Rec, will they have shot their load in the first Q? The Peer Comparison doesn't answer that, but I'll…

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Cronos Q4 F2018 Rundown – Dec. 31, 2018

Cronos, much like Tilray, didn’t give a lot of color in Fins and MDA about Medical versus Rec results nor QoQ changes. Open up the fins and MDA and follow along. Sales: Sales net of Excise tax was $5.6 million, a 49% increase from Q3 F2018. Dry cannabis evidenced a $1.6 million increase [61%], while oils nudged up $0.3 million or 25%.  Cronos stopped breaking down export sales in fins and MDA, so I cannot make a comment on same other than last Q that totaled $0.6 million. Revenue per gram was $5.39/gram down 26% from $7.32/gram last Q, as rec in the sales…

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