What to say about Zenabis ($ZENA) that hasn’t already been said?

We’ve covered this outfit for quite some time, and they’ve been accommodating by giving me plenty to write about. I’m not certain who my ‘least favourite cannabis company leadership team’ is, but I do know that $ZENA’s solidly in the top 5. Leveraged to the nines, lacking a rudder for three quarters of 2019, performing equity manoeuvres that came from overhearing half a joke at a cocktail party…..hell….I ask myself…..why wouldn’t they have to refile?

$ZENA – upon completion of a financial statement review by their auditor (still KPMG as far as I know) – has amended and restated their 1st quarter of 2020. This, shortly after corrections were made to their year end back in early April – a week after being published.

So, what’s been amended and restated? The balance sheet for one. No, not one line, the entire balance sheet. As in, every single line. The net effect(s) washes out to about $200k, but. Net means nothing. The entries tell tale of someone in charge not having a clue about either the system or their job or both.

How about the income statement?

Not much more to say. Any finance professional would look at this in totality, and pause. I’d triage this by suggesting some sort of turmoil went on in their finance/accounting department during the quarter. That leadership was either absent, or preoccupied for a large part of it. This kind of thing doesn’t carry over month to month unless there’s no oversight, It’s not apparent why though, the previous CFO’s replacement started in early January. Maybe it’s because he’s from an energy background (we’ve seen similar financial statement ‘thingys’ over a quarter or two at YSS Corp, whose CFO also came out of energy).

Maybe the last CFO, while retiring just ‘checked out’, and didn’t do any handholding. Maybe he left the kids in accounting to try their darndest. You know: ‘Aim high kids! I know you can do it!‘. Either or, I will reiterate how complex these financials are – especially around capital structure and liabilities. The last thing one wants to hear anywhere near that is accounting’s on their 3rd Martini by 11AM.

On a Tuesday.

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 holds no position in $ZENA

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