Alcanna Inc. Reports Fourth Quarter 2018 Results

Yikes, that impairment charge on Alberta CGUs....$145M impairment charge. The below is condensed from the NR.

"145.5 million impairment charge to the goodwill allocated to the Canadian cash generating unit (“CGU”). The recoverable amounts of the CGU declined in 2018 primarily due to downward adjustments to management’s forecasted sales and profitability and increase in cost of capital... The profits in the Canadian CGU are expected to grow over the next five years, however these profits are anticipated to be lower than the expectations used for the goodwill impairment test in the prior and past years"

In addition, they took $4.5M in onerous lease charges...basically because of the moratorium they are unable to use these leases...but they've already signed them. What will happen is they will continue to pay the lease and the onerous lease charge = the total cost over the life of those leases. I think there are a few other Cannabis retailers that will be in the same situation. I think Choom and another operator in AB will be in the same situation.

The reason why we are seeing this now is because this coincided with their year-end. Can almost guarantee the auditors pushed them to recognize this impairment charge and the onerous lease charges.

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