As TheCannalysts have been engaged by WeedMD to consult on preparation, format and content of Management Discussion and Analysis (although not for the previous two Q’s) we will not be providing any narrative to the Quarter in Pictures, and we will stand down from preparing “Structure & Current State” until such time as they are no longer a client OR until we believe we have put enough distance between engagement and analysis so as not to impact analysis.
The following is data pulled from Weed MD financials and those of their peers. (Math not analysis.)
Notes to Financials
2 f) Going Concern Note: The Company has insufficient cash to fund its planned capital investments and operations for the next twelve months.
From Earnings Release:
“Additionally, WeedMD completed a substantial sale of its inaugural outdoor-cultivated biomass earmarked for extraction and international markets,…”
Wholesale Revenue to Federal LP: Q1 F2020 $5.0 million (4,002 KGs at $1.25/gram)
Extract Inventory increase Q4 F2019 vs Q2 F2019 $5.3 million
Hallmarks are evident in company disclosure for Biomass Swap where extracts were delivered prior to biomass delivery. Similar scenario to Aleafia. I asked on the conference call if the Buyer of the Biomass and the supplier of the extracts were related. They said “no”.
Income Statement Drivers & Breakeven: Trend
Table 1: Revenue by Segment
They changed disclosure over the period so I could not back out excise from the base numbers this Q. Thus, Excise is embedded in the Q1 F2020 figures.
Income Statement Drivers & Breakeven: Peer
Gross Margin: Peer & Trend
Gross Margin: Larger Peer Base
SGA & SBC as % of Sales: Trend
SGA & SBC as % of Sales: Peer
+Net Operating Profit Sales Breakeven divided by Current Quarterly Sales: Peer
+EBITDA Sales Breakeven divided by Current Quarterly Sales: Peer
EBITDA Trend and Peer
“Gas in the Tank”- Trend
Cash vs Debt
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 WMD and will not start one in the next five days.
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