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Vext Science, Inc. (CSE: VEXT) (OTCQX: VEXTF) reported its revenue slipped slightly for the first quarter ending March 31, 2024. Vext told investors that revenue was $8.3 million in the first quarter down sequentially from $8.4 million and was also lower than last year’s first-quarter revenue of $9.1 million.

The company attributed the decrease in annual sales declines in Arizona revenue offset by the inclusion of Ohio cultivation & processing revenue and one month of revenue from the second Ohio retail location. Despite sales dipping in the first quarter, the cost of goods sold rose from $4.4 million in the 2023 first quarter to $6.4 million in 2024.

The net losses jumped to $6.3 million versus a net income of $73,059 in the 2023 first quarter. Cash fell from $8.7 million at the end of 2023 to $4.4 million at the end of the first quarter.

“The first quarter of 2024 continued to present consumer-related challenges to all operators, with the Arizona market overall experiencing another decline in quarterly revenue,” said Eric Offenberger, CEO of Vext. “At Vext, we utilized our expertise as seasoned operators to drive traffic by offering bundled products at the retail level, and outperforming state averages despite impacts on revenue and gross margins. With the transition to an adult-use framework occurring this year, we believe the expansion of the addressable consumer base will more than offset any continued consumer weakness, making Ohio a promising market for the foreseeable future. With relatively modest maintenance capital requirements, all significant growth capital expenditures completed, and an imminent sea change in the Ohio market, we expect to begin growing cash flow meaningfully, while driving returns for shareholders.”

Ohio

Vext has had its sights set on the Ohio market for the past couple of years. The company established its medical operations but lately has seen medical cannabis sales dip as consumers prepare for adult-use products. Sales of adult-use products could begin next month. In the meantime, Vext said that the dip in medical sales has created a wholesale opportunity for its products.

The company’s MD&A stated, “The additional dispensaries and the anticipation of adult-use beginning have increased demand at the dispensary level. We anticipate that trend continues for the foreseeable future as end sales in the state continue to accelerate with the implantation of the adult use program.”

On February 29, 2024, Vext completed the acquisition of CannAscend Ohio Columbus which included a cannabis dispensary in Columbus, Ohio, as part of the previously disclosed acquisition of Appalachian Pharm Processing, LLC. As part of the closing, Vext paid a cash consideration of $2,880,317 and also agreed to pay the seller $125,938 for the pre-closing tax liability of the Columbus Dispensary.

As of March 31, 2024, $5,638,179 was paid as a deposit on the Ohio dispensaries, Big Perm, to be renamed Herbal Wellness Center Jeffersonville and Herbal Wellness Center Athens in Ohio awaiting the transfer of the licenses by the State of Ohio projected end of 2024.
Under the terms of the Ohio expansion, the company told investors it would pay cash consideration equal to $9.4 million for construction costs, and inventory adjustments. Subject to regulatory approval by the Ohio Board of Pharmacy, Vext said it would fund approximately $3.4 million of construction costs related to the dispensaries.

In addition, the Company will provide after regulatory approval certain administrative, operational, and support services to Big Perm, in compliance with the State of Ohio rules and regulations with respect to medical marijuana, and has agreed to loan up to $3.0 million to Big Perm for capital expenditures and working capital needs associated with the dispensaries.

Mr. Offenberger added, “Ohio presents a significant, multi-year growth opportunity for Vext, and the standby credit line we announced today will offer us additional flexibility to address any short-term funding needs as the adult-use program gains momentum and our own cash flow returns to growth following the build-out of our significant presence in the state.”

The post Vext Science pins hopes on Ohio market appeared first on Green Market Report.

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Debra Borchardt, KahliBuds, 420GrowLife