Cansortium Reports Fourth Quarter and Full Year 2022 Results

05/01/2023

- Q4 Revenue up 28% YoY to $23.5 Million; FY 2022 Revenue up 34% YoY to $87.7 Million -

- FY 2022 Cash from Operations up Significantly to $19.1 Million, Compared to Cash Used of $5.0 Million in FY 2021 -

MIAMI, May 1, 2023 /CNW/ -  Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated, multi-state cannabis company operating under the Fluent™ brand, today announced financial and operating results for the fourth quarter and full year ended December 31, 2022. Unless otherwise indicated, all results are presented in U.S. dollars.

"We delivered strong revenue growth and material cash flow generation in 2022 despite a challenging backdrop for the broader cannabis industry, as well as the adverse impact we experienced in Florida from Hurricane Ian," said CEO Robert Beasley. "Within our home market of Florida, we captured meaningful market share driven in part by our cultivation improvements and new store openings over the course of 2022. In addition, our exit from Michigan last August enabled us to strategically reallocate capital and sharpen focus on our core operations.

"Looking ahead, we expect to continue expanding our Florida footprint through new store openings, while further improving our cultivation to increase both capacity and flower quality. In Texas, we are making progress on building out operations in the state as we aim to maximize our first mover advantage as one of only three license holders in the market. We look forward to delivering another year of strong growth and cash flow generation as we continue to execute on our strategy in 2023."

Q4 2022 Financial Highlights (vs. Q4 2021)

  • Revenue increased 28% to $23.5 million compared to $18.3 million.
  • Florida revenue increased 26% to $19.4 million compared to $15.4 million.
  • Adjusted gross profit1 was $0.7 million compared to $11.8 million, with the decrease driven by IAS 41 Addendum leading the Company to recognize income tax on biologicals that was not accounted for the first three quarters in 2022. Excluding this one-time impact, adjusted gross profit in Q4 2022 was $11.7 million.
  • Adjusted EBITDA increased 54% to $7.9 million compared to $5.1 million.

FY 2022 Financial Highlights (vs. FY 2021)

  • Revenue increased 34% to $87.7 million compared to $65.4 million.
  • Florida revenue increased 31% to $73.2 million compared to $55.7 million.
  • Adjusted gross profit1 was $44.0 million or 50.1% of revenue, compared to $41.9 million or 64.1% of revenue.
  • Adjusted EBITDA increased 28% to $25.1 million compared to $19.6 million.
  • Cash from operations improved significantly to $19.1 million compared to ($5.0) million.
  • At December 31, 2022, the Company had approximately $8.4 million of cash and cash equivalents and $57.7 million of total debt, with approximately 314 million fully diluted shares outstanding.

Operational Highlights

  • In Florida, Cansortium recently opened two new stores in Pensacola and one in Jacksonville Atlantic Beach, bringing its total Florida footprint to 31 stores. The Company anticipates opening an additional 3-5 new stores by the end of 2023. Three of these are already under contract and going through construction.
  • After the damage caused by Hurricane Ian in Q3 2022, the Company's Sweetwater facility is now fully operational with recent harvests reaching a record high 30%+ THC flower potency.
  • In Pennsylvania, Cansortium recently began the expansion of its Hanover dispensary to maximize the store's capacity for patients.
  • In Texas, the Company continued to make progress building out its operational footprint by hiring a President and dedicated team to run the state operations. More recently, Cansortium completed its first THC sale last week, implemented an advertising campaign to build awareness for new patients, and went under contract for a delivery center in Houston, TX.
  • Based on the Florida OMMU data over the last nine weeks, Cansortium has consistently held its position as #6 in the state in terms of THC sales and reached record levels for the week ended April 20, 2023.

 ________________________

1  Adjusted gross profit is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted gross profit from gross profit plus (minus) the changes in fair value of biological assets, as presented in the consolidated statement of operations.


Conference Call

The Company will host a conference call and live audio webcast today at 4:30 p.m. Eastern time to discuss its financial and operational results, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing investors@cansortiuminc.com.

Date: Monday, May 1, 2023
Time: 4:30 p.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10021840
Link: Cansortium Conference Call

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Elevate IR at (720) 330-2829.

The conference call will also be available for replay via the News & Events section of the Company's investor relations website at https://investors.getfluent.com/.

About Cansortium Inc.

Cansortium is a vertically-integrated cannabis company with licenses and operations in Florida, Pennsylvania and Texas. The Company operates under the Fluent™ brand and is dedicated to being one of the highest quality cannabis companies for the communities it serves. This is driven by Cansortium's unrelenting commitment to operational excellence in cultivation, production, distribution and retail. The Company is headquartered in Miami, Florida.

Cansortium Inc.'s common shares trade on the CSE under the symbol "TIUM.U" and on the OTCQX Best Market under the symbol "CNTMF". For more information about the Company, please visit www.getfluent.com.

Forward-Looking Information

Certain information in this news release may constitute forward-looking information within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent the Company's expectations, estimates, and projections regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control.

Forward-looking information is necessarily based on many opinions, assumptions, and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in the public documents of the Company available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

For further information: www.getfluent.com.

Company Contact
Robert Beasley, CEO
(850) 972-8077
investors.getfluent.com

Investor Relations Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
investors@cansortiuminc.com

Media Contact
Patrick Maddox
(501) 680-5220
Fluent@mattio.com 

CANSORTIUM INC.






CONSOLIDATED STATEMENTS OF FINANCIAL POSITION





As of December 31, 2022 and December 31, 2021






(USD '000)





















December 31,
2022


December 31,
2021

Assets






Current assets






Cash



$                   8,359


$                  9,024

Trade receivable



28


26

Inventory, net



8,973


8,981

Biological assets



996


3,297

Investment held for sale



-


200

Prepaid expenses and other current assets



883


2,007

Total current assets



19,239


23,535







Property and equipment, net



31,743


34,160

Intangible assets, net



94,291


95,822

Right-of-use assets, net



30,464


19,169

Investment in associate



-


-

Note receivable



-


4,886

Deposit



-


2,727

Goodwill



1,526


1,526

Other assets



768


632

Total assets



$              178,031


$              182,457







Liabilities






Current liabilities






Trade payable



6,931


8,518

Accrued liabilities



5,534


5,846

Income taxes payable



13,952


2,120

Derivative liabilities



8,676


3,960

Current portion of notes payable



741


619

Current portion of lease obligations



2,123


2,500

Total current liabilities



37,957


23,563







Liabilities held for sale



-






-



Notes payable



56,969


53,674

Lease obligations



33,922


21,091

Deferred tax liability



20,290


21,563

Other long-term liabilities



1,333


-

Total liabilities



150,471


119,891







Shareholders' equity






Share capital



180,954


180,657

Share-based compensation reserve



6,395


6,176

Equity conversion feature



6,677


4,933

Warrants



28,939


28,869

Accumulated deficit



(195,071)


(157,648)

Foreign currency translation reserve



(334)


(421)

Total shareholders' equity attributable to Cansortium Inc. shareholders


38,313


57,453

Non-controlling interests



-


-

Total shareholders' equity 



27,560


62,566







Total liabilities and shareholders' equity



$              178,031


$              182,457

 

Cansortium Inc.






Statement of operations






For the three and twelve months ended December 30, 2022 and 2021






(USD '000)







Three months ended
December 31,


Year ended
December 31,


2022

2021


2022

2021







Revenue, net of discounts

$              23,464

$           18,284


$               87,692

$             65,437

Cost of goods sold

22,738

6,519


43,731

23,488

Adjusted gross profit (1)

726

11,765


43,961

41,949

Adjusted gross margin (1)

3.1 %

64.3 %


50.1 %

64.1 %







Realized fair value of increments on inventory sold

27,645

(6,582)


2,622

(21,015)

Unrealized change in fair value of biological assets

(22,844)

3,085


(9,620)

14,853

Gross profit

5,527

8,268


36,963

35,787

Gross margin

23.6 %

45.2 %


42.2 %

54.7 %







Expenses:






General and administrative

941

2,085


8,288

10,326

Share-based compensation

391

56


545

4,304

Sales and marketing

4,677

4,322


17,510

15,416

Depreciation and amortization

1,751

1,658


6,765

6,384

 Total expenses 

7,760

8,121


33,108

36,430







Income (Loss) from operations

(2,233)

147


3,855

(643)







Discontinued operations

277

1


277

35







Other expense (income):






Finance costs, net

$                4,165

$             4,527


16,087

15,760

Change in fair market value of derivative

(306)

(1,901)


4,716

(3,452)

Loss on termination of a contract

(584)

-


8,011

-

Private placement issuance expense

-

(7,530)


-

-

Loss on debt settlement

-

(1,458)


1,136

(1,501)

Loss on disposal of assets

695

2


672

31

Other expense

1

1


3

(123)

Total other (income) expense

$                3,971

$           (6,359)


30,625

10,715







Income  (Loss) before taxes

(6,480)

6,505


(27,048)

(11,393)







Income taxes

3,209

2,777


10,376

7,646







Net income (loss)

(9,689)

3,728


(37,423)

(19,039)







Other comprehensive gain (loss) that may be reclassified 






to profit or loss in subsequent years






Exchange differences on translation of foreign operations and reporting currency

1

(9)


88

(42)







Comprehensive loss

$          (9,690)

$         3,737


$         (37,335)

$       (19,081)







Net loss per share






Basic and diluted - continuing operations






Basic and diluted - discontinued operations

$                 (0.03)

$               0.02


$                  (0.15)

$                (0.08)







Weighted average  number of shares






Basic number of shares

254,087,245

228,628,703


252,698,567

228,628,703

Diluted number of shares

309,407,433

275,231,404


308,498,834

275,231,404

 

CANSORTIUM INC.



STATEMENTS OF CASH FLOWS



(USD '000)







 For the years ended December 31


2022

2021

Operating activities



Net loss from continuing operations

$       (37,146)

$       (19,004)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:



Unrealized gain (loss) on changes in fair value of biological assets

9,620

(14,853)

Realized (loss) gain on changes in fair value of biological assets

(2,622)

21,015

Share-based compensation

545

4,304

Depreciation and amortization

13,428

9,808

Accretion and interest of convertible debentures

362

8,901

Accretion and interest of term loan

12,232

2,700

Interest income on notes receivable

(71)

(266)

Loss on disposal of assets

672

(4)

Loss on debt settlement

1,136

-

Loss from termination of a contract

8,011

-

Change in fair market value of derivative

4,716

(3,452)

Interest on lease liabilities

3,612

2,554

Deferred tax expense

(1,273)

(836)

Changes in operating assets and liabilities:



Trade receivable

(2)

122

Inventory

11,927

3,490

Biological assets

(16,355)

(14,127)

Prepaid expenses and other current assets

404

(641)

Right of Use Assets/Liabilities

197

-

Other assets

(137)

(207)

Trade payable

(1,208)

3,710

Accrued liabilities

(811)

(1,435)

Income taxes payable

11,832

(6,805)

Net cash provided by (used in) continuing operating activities

19,069

(5,026)

Net cash used in discontinued activities



Net cash provided by (used in) operating activities

19,069

(5,026)




Investing activities



Purchases of property and equipment

(6,799)

(21,060)

Purchase of intangible assets

-

(319)

Payment of notes receivable

119

1,419

Advances for notes receivable 

(94)

(2,180)

Net cash used in continuing investing activities

(6,774)

(22,140)

Net cash provided by discontinued investing activities

-

29

Net cash used in investing activities

(6,774)

(22,111)




Financing activities



Net proceeds from issuance of shares and warrants

-

17,228

Issuance of warrants for term loan 

-

-

Issuance of warrants from term loan

-

9,018

Issuance of shares for note payable interest and extention expenses

-

1,049

Net proceeds from issuance of convertible debenture and warrants

4,660

-

Net proceeds from issuance of secure term loan

-

52,659

Payment of lease obligations

(5,771)

(4,544)

Return of shares

-

-

Shared issued for interest repayments of notes payable

-


Net proceeds from equipment loan

748

-

Exercise of Options

135

-

Exercise of warrants

-

1,365

Issuance of shares for note payable extension 

162

-

Principal repayments of notes payable

(12,982)

(43,964)

Net cash (used in) provided by continuing financing activities

(13,048)

32,811

Net cash provided by discountinued financing activities

-

Net cash provided by (used in) financing activities

(13,048)

32,811

Net cash (used in) provided by financing activities

(13,048)

32,811

Effect of foreign exchange on cash

88

(42)

Net (decrease) increase in cash

(665)

5,632

Cash, beginning of period

9,024

3,392

Cash, end of period

8,359

9,024

 

Cansortium Inc.




Adjusted EBITDA Calculation




(USD '000)





Year Ended


December 31,

December 31,



2022

2021

Variance

Net loss

$            (37,423)

$            (19,039)

$  (18,384)

Interest expense

16,087

15,760

327

Income taxes

10,376

7,646

2,730

Depreciation and amortization

13,666

10,685

2,981

EBITDA

$               2,706

$             15,052

$  (12,346)










Year Ended


December 31,

December 31,



2022

2021

Variance

EBITDA

$               2,706

$             15,052

$  (12,346)

Change in fair market value of derivative

4,716

(3,452)

8,168

Loss on debt settlement

1,136

(1,501)

2,637

Private placement issuance expense

8,011

-

8,011

Share-based compensation

545

4,304

(3,759)

Change in fair value of biological assets

6,998

6,162

836

Discontinued operations

277

35

242

Other non-recurring expense

675

(1,007)

1,682

Adjusted EBITDA

$             25,063

$             19,593

$      5,470

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SOURCE Cansortium Inc