CordovaCann Corp. (CSE:CDVA) (OTCQB:LVRLF) rose in trading Tuesday after it published its financial statement for fiscal 2022, which showed improvements in revenue and cost control despite operating with a heavy deficit.
Cordova recorded $13.5 million in revenues, up 23% versus $10.3 million the year prior, primarily driven by the growth of the Star Buds Cannabis Co. retail footprint in Canada, the company said.
The company posted a net loss $4.2 million, according to regulatory filings, a slight improvement versus $4.7 million in the previous year. Net loss per share was four cents versus a loss of six cents in fiscal 2021.
“In fiscal 2023, our U.S. operations should contribute more meaningfully to our financial performance, along with growth in our retail store base in both Canada and the United States,” said Cordova CEO Taz Turner. “While we are operating profitable stores today, we believe this growth will allow the entire company to become profitable.”
The company said that its Canada-based Star Buds Cannabis Co. stores saw a strong month of sales in October “in spite of it being a seasonally weaker part of the year for the industry.”
The store chain generated revenues of $1.17 million with a gross margin of 25.7% in October. The company said that store performance has benefited from tight cost controls and rationalization in the cannabis retail market. Management said that it’s working on expanding the Star Buds Cannabis Co. footprint in Canada through both organic store growth and acquisitions.
Cordova’s U.S.-based extractor, Extraction Technologies, secured a tolling contract from the largest cultivation consortium in Washington to extract 5,000 pounds of biomass per month for the client.
The company continues to expand Cannabilt Farms in Oregon to create additional capacity in its indoor cultivation facility. We expect this additional capacity to be online in early 2023.
Tuner added, “We are happy with our financial results for the fiscal year and look forward to a strong 2023. Growth should accelerate in the coming year due to bigger contributions from our U.S. operations and from expansion initiatives in nearly all geographies in which we currently operate, which should also drive profitability for the company.”
Still, the company said that there is “substantial doubt” about its ability to continue.
Cordova saw $4.2 million in losses over the year and has a total accumulated deficit of $33.5 million. The company noted that its ability to continue as a going concern is dependent upon its ability to access sufficient capital until it is profitable.
It wrote in its regulatory filing, “To this point, all operational activities and overhead costs have been funded through equity issuances, debt issuances and related party advances.”
“The company believes that continued funding from equity and debt issuances will provide sufficient cash flow for it to continue as a going concern in its present form until its operations become profitable and cash flow positive, however, there can be no assurances that the company will achieve this.”