It’s been another quarter of high losses for Auxly Cannabis Group Inc. (TSX.V: XLY; OTCMKTS: CBWTF) as the company prepares to launch cannabis 2.0 products to the Canadian market next month.

Auxly released third quarter 2019 financial data today, showing $1.61 million in revenue for the period ending Sept. 30, which is down from $2.76 million in the previous quarter.

The vast majority of that revenue came from third party research projects via subsidiary KGK Sciences, which are paid based on hitting performance milestones.

Only $0.1 million of that total revenue number came from the actual sale of dried flower, indicating a major shift towards derivative products that just received regulatory approval from Health Canada.

During the quarter, Auxly additionally signed a brokerage deal with Kindred Partners to act as sales agent for adult recreational sales in Canada.

Aside from decreased revenue, the company saw an increase in expenses resulting in a net loss of $17.3 million for the quarter, up from a $14.1 million loss back in Q2. The net loss per share for the three months ending in September was reported at $0.03.

During the quarter, Chuck Rifici stepped down from the Chief Executive Officer position to serve as board chairman, while Hugo Alves moved into the CEO role.

Discussing the company’s impending move away from dried flower to infused products, Alves commented:

We have been working diligently on the rollout of our cannabis 2.0 product portfolio and are counting down the days until our branded, science-backed cannabis products are in the hands of Canadian consumers at the end of this year. We are on track for executing our strategic business objectives and positioning Auxly to be a leader in the derivative products market.

Auxly is expected to update its financial guidance in Q1 2020 after determining the impact of value-added cannabis products hitting shelves next month.

While the company is set to launch products in most provinces on Dec. 16, a delay is expected to occur in products reaching Quebec.

Following the end of the quarter, Auxly additionally retired 97% of the remaining 6% unsecured convertible debentures through both repayment and conversion, significantly reducing the company’s long term debt.

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