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Cannabis Summary for May 26, 2020

2020-05-26 19:55 ET - Market Summary

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by Stockwatch Business Reporter

The S&P/TSX Cannabis Index fell 7.43 points to 172.92 Tuesday, while the Canadian Securities Exchange Composite Index lost 4.04 points to 384.6. Peter Miller's United States cannabis producer Slang Worldwide Inc. (SLNG) lost two cents to 25 cents on 3.27 million shares after releasing its fourth quarter and full-year 2019 results. The company's revenue slipped to $8.7-million in Q4, down from $9.3-million in Q3. More significantly, a $128-million impairment charge contributed to a $202-million loss in Q4. (The impairment charge represents a reduction in management's growth expectations.) Even before the charge, Slang had an operating loss of $26.7-million in Q4, worse than its $10.7-million operating loss in Q3.

The company said in today's news release that its cash position is expected to be sufficient to finance operations through to profitability. It is a surprising claim; at 2019 year-end, Slang had working capital of $4.6-million, with cash and cash equivalents of $18.9-million. Against that, the company burnt through $18-million of cash in the fourth quarter alone. Slang has plans to cuts its expenses to save $7-million annually (or $1.75-million per quarter), but some simple math shows that Mr. Miller will need those profits much sooner than later.

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