The company took a $17.4 million non-cash goodwill impairment from the acquisition of Leef Holdings.
California-based Leef Brands Inc. (CSE: LEEF) (OTC: LEEEF) – formerly known as Icanic Brands – announced its financial results for the second quarter ending June 30, showing notable growth in sales and profit.
The company reported net sales of $9.3 million, a rise of 14.6% versus the previous year. Profit figures also rose, with a gross profit of $2.9 million, a year-over-year growth rate of 8.2% for the quarter.
Gross profit margins were 31.2% for the quarter, and adjusted EBITDA came in at $293,000.
“Despite the continued difficult environment in the California cannabis industry, I am extremely pleased to report strong financial performance for the first six months of 2023,” CEO Micah Anderson said in a statement.
The company is also progressing on a $7 million deal that involves selling a 60% stake in its cultivation and real estate assets in Santa Barbara. The primary goal of the financing is to “develop one of the largest biomass cultivation sites in the state.”
“By bringing supply of biomass material in-house, Leef Labs can focus its efforts on its goal to produce the best and most consistent concentrates at scale,” Anderson said.
CFO Kevin Wilson emphasized the company’s year-over-year revenue growth and the consistent positive cash flow for two consecutive quarters. However, he noted a $17.4 million non-cash goodwill impairment from the acquisition of Leef Holdings Inc., “reflective of the current challenges in the California cannabis market that we continue to navigate.”
The company also saw some management changes, with Andrew Glashow set to join the board of directors, bringing experience from Nevada’s cannabis sector. Emily Heitman, a long-standing member of the LEEF team, has been promoted to chief revenue officer from her prior role as COO.
LEEF issued more than 2 million shares for the acquisition of The Leaf, a luxury boutique dispensary located in Palm Desert, California, and anticipates issuing around 18.6 million more shares tied to the acquisition.
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