Going concern warning clouds Peak Processing’s first positive EBITDA quarter

Positive EBITDA arrives before positive cash flow

Peak Processing Limited (ASX:PKP) has reached the operational milestone its year-long reset was designed to deliver, but not yet the financial security required to make it comfortable. The former Althea Group Holdings reported approximately $710,000 of unaudited Group EBITDA for the June quarter on revenue of about $4.4 million, its first positive EBITDA quarter.

That improvement sits alongside a much less forgiving full-year result. Revenue from continuing operations fell to $13.4 million, or $12.4 million after excise duties and regulatory fees, while the statutory loss after tax was $7.8 million. Continuing operations produced a $10.3 million loss, including a $4.4 million non-cash impairment against the Canadian plant and leased facility; a separate $2.5 million gain from compromising creditors of the former Australian subsidiary reduced the consolidated loss.

Production and service performance improved sharply

The operating reset did produce measurable changes at the Oldcastle, Ontario facility. Annual production reached 4.18 million beverage units, with June-quarter output rising to a record 1.61 million units, 61 per cent above the March quarter. On-time-in-full delivery improved from 53 per cent in June 2025 to 97 per cent through the busiest quarter of the year.

Peak says a restructuring and efficiency program removed approximately $2.25 million from the annualised cost base by March. Its Envision Emulsions platform was used across 62 per cent of active SKUs at year end and powered 34 per cent of beverage units produced in the June quarter. A three-year exclusive agreement with BTAB Solutions to manufacture Fryday Kush beverages across 13 US states adds potential, although the filing makes clear that revenue will depend on customer orders, market demand and distribution arrangements.

Funding dependence remains the central risk

The balance sheet explains why the company’s progress cannot yet be treated as a completed turnaround. Peak ended June with $1.4 million in cash, net liabilities of $525,000 and net current liabilities of $734,000. Net cash used in operating activities was $5.7 million, and the company did not achieve its target of positive operating cash flow in the June quarter because of the timing of receivable collections and legacy arrears repayments.

Peak raised approximately $7.6 million before costs during the year through two placements and convertible loan notes, taking shares on issue from 823 million to 1.33 billion. Its CAD1 million asset-based lending facility was fully drawn at year end and renewed to May 2027 on unchanged terms, including a 22 per cent interest rate. Both the directors and William Buck, which issued an unmodified audit opinion, identified a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern. The forecasts supporting that assessment assume further volume growth, continued lender support and access to additional equity if required.

The next test is therefore not simply whether Peak can repeat a profitable quarter. It is whether higher utilisation, customer programs and the Fryday Kush agreement can generate sustained operating cash before the balance sheet demands another financing round. The company also faces unsettled US hemp-derived THC regulation expected to affect most finished hemp-derived THC beverages from late 2026, adding another variable to a recovery that remains dependent on execution.