Leef Brands posts mixed third quarter results amid transition away from cannabis CPG | How to buy Skittles Moonrock online

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California-based Leef Brands Inc. (CSE: LEEF), formerly Icanic Brands, posted higher revenue but wider losses for its third quarter as the company continues to shift its focus to bulk concentrate manufacturing.

Net sales rose 19% year-over-year to $6.8 million for the quarter ending Sept. 30, according to Leef’s news release. However, gross margins contracted to 22% in the quarter versus 33% a year ago. In filings, the company attributed this decline to “pricing compressions within the market and an inventory impairment of approximately $425,000.”

So far, net sales this fiscal year have declined 8% to $22.6 million versus the same nine-month period in 2023. And despite the quarterly gross margin decline, margins for the nine-month period remained steady at 33% year-over-year.

Operating losses widened 118% to $2.4 million in the third quarter from the prior year period, as operating expenses jumped 32%. Leef’s net loss for the quarter rose 60% to $3.2 million from the third quarter last year. However, for the latest nine months, operating losses narrowed 83% to $3.4 million from the same period in 2023, with net loss falling 64% to $8.6 million during that time.

“I’m proud of our team for driving positive momentum this quarter, making substantial progress on key initiatives, innovations and infrastructure upgrades,” CEO Micah Anderson said in a statement. These included completing Phase 1 construction at Leef’s 1,900-acre Salisbury Canyon Ranch cultivation site and expanding extraction capacity by 32%.

CFO Kevin Wilson noted that the company acquired bitcoin in a business-to-business transaction in the third quarter, marking “the beginning of a larger strategy of integrating Leef Brands into the bitcoin ecosystem.”

Leef has been trying to break away from the consumer-packaged goods game to focus on bulk concentrate manufacturing, according to filings. While that’s led to declining overall revenues this year, the company said it is concentrating on higher-margin verticals.

At the end of September, Leef had $2.2 million in cash and total assets of $45.1 million, with $6.1 million in accounts payable. The company’s accumulated deficit reached $104 million. Leef secured a $7 million note payable in May 2023 and $4.2 million in September 2023 to finance the ranch property.