earnings - on sedar The Company’s focus during the first quarter was raising funds for, and carrying out, the conversion or expansion of its cannabis growing facilities. During the quarter, the Company completed debt and equity financings totaling $93,062,485 and spent $22,438,562 on its facilities program: completing phase one construction at Zenabis Stellarton (for which it has received a cultivation license and placed the new space into production); continuing the expansion of the production space at Zenabis Atholville, the completion of which remains on time and on budget; and commenced conversion of Zenabis Langley Site A.
In terms of cannabis cultivation, the continued information and knowledge transfer achieved via the successful combination of Sun Pharm’s Cannabis operations and Bevo Farms’ experience with its commercial-scale greenhouse Propagation business has led to excellent cultivation results during the quarter, primarily due to the strong leadership of Zenabis’ Chief Growing Officer, Leo Benne, and the diligent efforts of the cultivation team. The Cannabis operations’ increase in harvest yields were highlighted by Zenabis outperforming the design capacity of its licensed production facilities by an average of 11% during the three months ended March 31, 2019. The grow teams continue to further improve and refine their processes through the use of an alternative growing approach with the aim of maximizing yield per day. The first harvest using this approach was completed in late March 2019 and yielded 225 kg of cannabis, as compared to the room’s design capacity harvest weight of 153 kg, reflecting an outperformance of 47%.
During the three months ended March 31, 2019, Zenabis’ total net revenue was $11,557,217. The Company saw cannabis revenue increase during the three months ended March 31, 2019 to $4,098,973 compared to $3,841,445 for the three months ended December 31, 2018. This increase is the result of ongoing improvements to harvest yields, increases in production capacity and increased shipments to customers. Gross margin before fair value adjustment increased to $3,876,874 during the three months ended March 31, 2019 from $1,710,273 during the three months ended December 31, 2018.
Zenabis also benefited from the positive results of its Propagation business, highlighted by the realization of net revenues of $7,206,389 and a gross margin before fair value adjustment of $1,588,791. Results from this business segment continue to be positive, with no interruption to existing customers and operations during the conversion of its greenhouses from vegetable and flower propagation to cannabis cultivation.