BZAM Ltd. (OTC: BZAMF) reported its financial results ending June 30, showing rises in revenue but much higher losses.
The company saw an 89% increase in gross revenues versus the second quarter last year, totaling $30 million. The company’s net revenues climbed to $19.3 million, marking a 66% growth from the same period the previous year.
The growth is attributable in part to BZAM’s merger with The Green Organic Dutchman. BZAM managed to capture a 4.4% share of the Canadian cannabis market during the period, ranking it as the country’s seventh largest producer.
The company announced the divestment of two facilities in British Columbia — Midway and Maple Ridge — which are expected to bring in an aggregate of approximately $7 million in gross proceeds. Additionally, BZAM’s Ancaster Facility was awarded an EU-EMP certification, broadening the scope for international product distribution.
Still, the company reported a substantial net loss of $65.5 million. The loss is primarily attributed to a $61.8 million non-cash impairment charge, which includes a write-off of goodwill and an industry-wide decline in cannabis property values.
In a statement, CEO Matt Milich commented on the company’s results and future direction.
“Through the second quarter we continued to focus on the execution of our 2023 objectives to improve cash flows, strengthen our balance sheet, and streamline our operations,” said Milich.
“We have a set of initiatives underway, focusing on cost reduction and revenue expansion, and we expect to see the financial impacts of these initiatives reflected in our results over the coming quarters.”
Despite the rosy comments, BZAM also noted that after the quarter closed, it anticipates a possible breach of the covenant requiring positive EBITDA for the month of July 2023. The company said it has requested a waiver on the covenant from its lender. The company remains a going concern.
By the end of the period, BZAM reported a working capital of $9.6 million. After the quarter’s close, it said an additional $1.325 million was added to the company’s coffers. BZAM reported an operating loss of $12 million during the quarter.
The financials indicate a 20% increase in sales from the Ontario Cannabis Store, which is BZAM’s primary market. The company also reported a 23% year-on-year increase in direct gross profit for the second quarter. At the same time, the firm’s financial statements reflected a 5% reduction in second-quarter 2023 SG&A expenses when compared sequentially.
BZAM’s plans include introducing over 30 new products by the first quarter of 2024, it said. The firm will look to concentrate on high-margin products and streamline operations. The decision to close their Edmonton facility is highlighted as a move towards that vision for efficiency.
The EU-GMP certification for the Ancaster Facility has also positioned BZAM for potential expansion into international markets, with some distribution agreements already outlined.