Adam Jackson
Alberta-based cannabis extract maker Radient Technologies Inc. (TSXV: RTI) posted second-quarter results showing it either needs more cash flow or financing to keep the ship sailing.
Revenue for the second quarter ended Sept. 30 came out to $1.35 million, slightly up from $1.09 million in the same period last year. However, the company reported net losses worth $2.3 million, up from $1.6 million in the second quarter in 2021.
Radient holds a deficit of around $156 million. The company’s current liabilities exceed its assets by more than $37 million.
In regulatory filings, the company said that it currently owes money to trade creditors and has overdue liabilities concerning rent, wages, long-term debt, and leases.
“Some trade creditors are pursuing legal recourse for the amounts outstanding,” it wrote in the filings. “The company has been able thus far to negotiate settlements with the trade creditors on a case-by-case basis. On May 16, 2022, the company received a demand letter from the CRA requesting payment of all outstanding excise tax owing. The company was permitted to renew their cannabis license for an additional six months, from July 6, 2022 to Jan. 5, 2023. On Aug. 26, 2022, the company received a demand notice from a creditor for payment of their loan. These balances and the changes year over year indicate that there are material uncertainties that may cast significant doubt about the company’s ability to continue as a going concern.”
The Aug. 25 demand was for a loan of $10.5 million plus accrued costs and interest. The facility is secured by a first priority mortgage on the land and buildings, as well as all of the company’s present and after acquired personal property.
Radient said that it is focusing on moving its hydrocarbon concentrate product lines and hinted that it would stop making cannabis pre-roll products in the near future, both of which have made the company $1.6 million since the end of June. The company said it currently has product purchase orders for approximately $800,000.
“Sales of hydrocarbon concentrates continue to improve, and the company is receiving repeat-customer orders and positive product reviews,” Radient said in a statement.
The company noted that it does not have enough working capital to fulfill orders. It said that it is “pursuing avenues to raise working capital and restructure its debt to allow the company to continue to operate as a going concern but cannot assure it will be able to do so.”
Gross profit for the quarter totaled $66,973 versus $223,029 in the same time last year. Operating expenses came out to $2.25 million, up from $1.7 million last year.
Among the restructuring being undertaken, the company announced in October that former CTO Steven Splinter would replace Harry Kaura as interim CEO.
At the same time, Dimitris Tzanis was appointed to the board of directors as an independent, nonexecutive director. Tzanis previously served as a director of the company from July 2016 until February 2020 and owns group of Switzerland-based communication companies these days.
