Extracts-focused Canadian producer Nextleaf Solutions Ltd. (CSE: OILS) (OTCQB: OILFF) drove plenty of new revenue in fiscal 2021, but high cost of sales and other expenses chewed away at the firm’s war chest.
Earlier this week, the company published its earnings results for the fiscal year ended Sept. 30, 2021, with topline revenue rising almost 400 per cent to $3.4 million from $235,000 the year before.
The firm reports its annual bulk distillate sales up 1,300 per cent.
But cost of sales was $4.2 million, for a gross margin of negative $855,000.
Net loss totalled $5.4 million, softened slightly by $850,000 in government assistance. Net loss last year was nearly $6 million.
At the end of the fiscal year, Nextleaf had $915,000 in cash. Following the fiscal year, in December, the firm finished a public offering of common shares and purchase warrants for gross proceeds of $3.2 million.
A significant portion of the company’s cost of sales is related to existing excess capacity, and profits should increase as revenue scales up, CFO Charles Ackerman says in a statement.
“2021 was a significant year of graduating the business to increasingly focus on scaling commercial activity. We’ve added optionality to our revenue model with the addition of cannabis product sales to [business-to-business] bulk sales,” he said.
“Combining the [business-to-consumer] and B2B activity all drives further utilization and scale in our extraction economics which is the top of our value chain.”
Last year, Nextleaf acquired legacy concentrate brand Glacial Gold, which has been available to buy in B.C. and Saskatchewan. On Tuesday, the company said it received approval to list the brand in Ontario, and had completed its first shipment to Nova Soctia.
The firm has made a deal with medical cannabis seller Medicibis, doing business as Mendo Cannabis, for national distribution of Glacial Gold. Medical cannabis sellers Shelter Market and CannMart have recently announced full shutdowns, both with arrangements to transfer patients to Mendo.
Nextleaf says the U.S. Patent and Trademark Office has granted it a patent for a novel process for acetylating the cannabinoid CBG, and another patent for the design of its cannabis oil refinery.
The company is also waiting for Health Canada’s approval of its application for a dealer’s licence, which would allow it to carry out a number of activities related to psilocybin and psilocin.