Neptune(US:NEPT)2023-08-17 21:26Financial Position - As of August 17, 2023, the company had approximately $1.9 million in cash and cash equivalents, sufficient to operate for about 2 months under the current business plan[165]. - The company secured inventory financing through a partnership with Alterna Capital Solutions LLC, increasing the maximum available amount to $7.5 million[171]. - The company is actively managing liquidity and expenses, recognizing substantial doubt about its ability to continue as a going concern[165]. - As of June 30, 2023, total assets were $30.538 million, down from $30.928 million as of March 31, 2023[181]. - Working capital as of June 30, 2023, was $(21.627) million, compared to $(17.484) million as of March 31, 2023[182]. - The company has been notified by Nasdaq that it does not meet the minimum stockholders' equity requirement of $2.5 million, with a plan to regain compliance due by September 5, 2023[178]. - Total equity deficiency attributable to equity holders of the company was $14.998 million as of June 30, 2023, compared to $11.940 million as of March 31, 2023[233]. - The company is required to actively manage its liquidity as trade and other payables exceed total current assets[219]. - The company does not currently have funds available to repay lenders if certain obligations become due on demand[237]. Revenue and Profitability - Total revenues for the three-month period ended June 30, 2023, were $10.628 million, a decrease of 34.5% compared to $16.272 million for the same period in 2022[181]. - Total consolidated revenues for the three-month period ended June 30, 2023, were $10.6 million, a decrease of $5.6 million or 34.7% compared to $16.3 million for the same period in 2022[195]. - Net loss for the three-month period ended June 30, 2023, was $(6.400) million, slightly improved from $(6.504) million in the same period of 2022[181]. - The company reported a basic and diluted loss per share of $(0.30) for the three-month period ended June 30, 2023, compared to $(0.72) for the same period in 2022[181]. - Gross profit for the quarter ended June 30, 2023, was $2.8 million, an improvement of $7.3 million or 162.7% from a gross loss of $4.5 million in the same quarter of 2022[199]. - The gross margin percentage increased from -27.5% in 2022 to 26.4% in 2023, reflecting a 54.0 percentage point improvement[201]. - The divestiture of the Cannabis business significantly impacted revenue, with a 100% decrease in Cannabis revenues contributing to the overall decline in total revenues[196]. Expenses and Cost Management - Adjusted EBITDA for the three-month period ended June 30, 2023, was $(7.267) million, an improvement from $(11.351) million in the prior year[188]. - Selling, general and administrative expenses rose to $10.0 million, an increase of $1.1 million or 12% compared to $9.0 million in the same period last year[203]. - Research and development expenses decreased to $0.0 million, down by $0.2 million or 90% compared to $0.2 million in the prior year, primarily due to the divestiture of the Cannabis business[202]. - Operating activities used cash of $5.3 million for the three-month period ended June 30, 2023, compared to $6.4 million for the same period in 2022[221]. Financing Activities - The company closed a registered direct offering on May 15, 2023, raising approximately $4.0 million through the sale of 12,121,212 common shares at a price of $0.33 per share[168]. - The company raised $4.0 million from a direct offering, which was primarily used for operating activities, including inventory procurement and professional fees[211]. - The company has secured $4.0 million in senior secured notes financing with an interest rate of 16.5% per annum, which was later increased to 24% under certain conditions[229]. - The company issued 7,706,050 pre-funded warrants and 4,415,162 common shares on May 15, 2023, raising gross proceeds of $4,000,000[270]. - The company has been successful in obtaining financing through public issuances, private placements, and debts, including a registered direct offering of $4.0 million on May 15, 2023[223]. Strategic Initiatives - The company has initiated Phase II of a strategic review to explore options for maximizing shareholder value, including potential asset monetization and strategic partnerships[153]. - The company’s dual B2B and B2C strategy aims to expand global distribution and create long-term revenue opportunities[151]. - The company is focused on expanding its brand portfolio in the health and wellness sector, particularly in Nutraceuticals and Organic Foods & Beverages[152]. - The company’s brand portfolio includes Sprout®, Neptune Wellness™, Forest Remedies®, and MaxSimil®, with a focus on sustainable and innovative consumer products[152]. - The company’s MaxSimil technology has shown superior absorption compared to standard fish oil supplements, enhancing its product differentiation[158]. Management and Governance - The company appointed Lisa Gainsborg as Interim Chief Financial Officer effective August 4, 2023, following the resignation of Raymond Silcock[174]. - The company engaged Berkowitz Pollack Brant Advisors + CPAs as its independent auditors for the year ending March 31, 2024, replacing KPMG[175]. Compliance and Regulatory Matters - The company received a notification from Nasdaq regarding non-compliance with the minimum bid price requirement, with a deadline to regain compliance by December 26, 2023[177]. - As of June 30, 2023, total contractual obligations amount to $71.6 million, with $36.8 million due within one year[234]. - The company has recorded a provision of $1.0 million for royalty payments due to the former CEO, which is included in the contractual obligations[239]. - The expected credit loss for trade receivables as of June 30, 2023, was $0.0 million, with 85% of trade receivables past due[250]. - The company provided for 72% of past due receivables as of June 30, 2023, compared to 66% as of March 31, 2023[250]. Impairments and Write-downs - An impairment charge of $18.0 million was allocated to the Sprout tradename and $19.5 million to goodwill in 2023 due to fair value being lower than carrying amount[262]. - The fair value of the Sprout reporting unit was determined using a discounted cash flow model with a post-tax discount rate of 11.0%[257]. - The write-down of inventories for the three-month period ended June 30, 2022, was $3.1 million, primarily related to legacy Health and Wellness products[253].