Harvest One Cannabis released their June 30, 2020 earnings for the year end.

I have in the past tried to piece together a Q4 by backing out 9-month YTD from Q3 against the audited exhibits…. But this one is impossible. 

They discontinued operations, which moves sales around.  Sold their cultivation assets which moves gross margin around. Their MDA does not give Q4 sales breakdown or GM breakdown but gives OPEX for the three month period. It also shows Net Income for the Q at -$1.8 million, but I have no way of reconstructing the Q4.

I will not be able to unravel these statements.  And I can imagine the company did not want you to see the sausage being made.

What I can tell you is reported sales of $2.3 million (a -34% decrease QoQ) is well below the SGA of $3.3 million.  Cash and A/R total $3 million while A/P and accrued liabilities are $15 million.  They report EBITDA at -$11 million for the year, but given their 9 month EBITDA was -$12 million and there is no way it was +EBITDA for the Q4, their reported number nets out the discontinued operation drag.

I acknowledge they received proceeds from the garage sale they are having, but the net amount of cash post is still below A/P.

Oh yeah, from MDA…

“Outlook: Management anticipates sales volumes, net revenues, and adjusted EBITDA to improve throughout the next fiscal year due to a full year of new cannabis 2.0 derivative products sold to the Canadian market, improvements in gross margin, and a continued focus on reducing overhead costs.”

Given management could not even be bothered to give Q4 results in any meaningful way, they appear to be going through the motions.

Last Q I said

This company is a transfer of wealth.  Executives hanging on to get paid.  Last Q they paid themselves $1.6 million, $1.1 million in SBC. Given they trade $25,000/day… it will take a long tome to move any shares.  The departing CEO and CFO collected $750K and $120K on the way out in severance.

This is a Zombie company.

This Q:

Someone should take this company behind the shed and shoot it and put it out of its misery.  I have removed them from the Tier 2 peer group.

The preceding is the opinion of the author and is in no way intended to be a recommendation to buy or sell any security or derivative. The author does not have a position in HVT and will not start one in the next five days.