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Cansortium Reports Second Quarter 2024 Results

08/22/2024
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- Q2 Revenue up 12% YoY to a record $27.3 Million

- 11th Consecutive Quarter of Positive Cash Flow from Operations

TAMPA, Fla., Aug. 22, 2024 /CNW/ - Cansortium Inc. (CSE: TIUM.U) (OTCQB: 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  quarter ended June 30, 2024. Unless otherwise indicated, all financial results are presented in U.S. dollars.

"We delivered another quarter of year-over-year revenue growth and positive cash flow generation during the second quarter as we continued to execute on our growth objectives," said CEO Robert Beasley. "We continue to lay the foundation for growth and scalability while remaining excited about the opportunities ahead."

"In Florida, we have focused on enhancing manufacturing efficiencies and cultivation yields, which has resulted in both an improvement of product quality and cost of goods sold. This has allowed us to retain high profit margins while price competition continues to heat up."

"Looking ahead, we are excited about our upcoming business combination with RIV Capital and have already begun key integration steps. Our shared focus remains on driving growth and profitability by leveraging our core strengths in cultivation, operating expertise and inventory optimization to drive results for shareholders. We remain laser focused on our existing portfolio in Florida, Pennsylvania and Texas and look forward to closing the RIV Capital agreement in the fourth quarter."

Q2 2024 Financial Highlights (vs. Q2 2023)

  • Revenue increased 12% to $27.3 million compared to $24.4 million.
  • Florida revenue increased 15% to $23.1 million compared to $20.1 million.
  • Adjusted gross profit1 was $12.3 million or 48.6% of revenue, compared to $10.2 million or 46.4% of revenue.
  • Adjusted EBITDA was $7.7 million compared to $6.8 million, with the increase primarily driven by higher revenues due to additional production and stores. 
  • Cash flow from operations for the three months ended June 30, 2024 was $2.8 million compared to $4.8 million in the prior year primarily due to settlement of tax payments that had been carried over from previous periods.
  • On June 30, 2024, the Company had approximately $8.5 million of cash and cash equivalents and $67.5 million of total debt, with approximately 300 million shares outstanding.

Recent Operational Highlights

  • In Florida, Cansortium currently operates 35 stores and anticipates opening 4 new stores by Q2 2025.
  • In Pennsylvania, Cansortium completed renovations and expanded its Hanover store, refreshing its look and doubling its size. The store remained operational for the entirety of renovations.
  • The company has begun integration activities with RIV Capital sharing best operational practices and driving efficiencies in advance of the business combination expected to close in Q4 2024.

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 Tampa, Florida.

Cansortium Inc.'s Common Shares trade on the CSE under the symbol "TIUM.U" and on the OTCQB Venture Market under the symbol "CNTMF". For more information about the Company, please visit www.getFLUENT.com.

________________________________________

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.

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
investors@cansortiuminc.com 

Cansortium Inc.
Consolidated Statements of Financial Position
As of June 30, 2024, and December 31, 2023
 (Amounts expressed in thousands of United States Dollars unless otherwise stated)

         

 June 30, 

  

 December 31, 
         

2024

  

2023
 

Assets

            
 

Current assets

            
 

Cash

      

$                  8,483

  

$                 10,521
 

Trade receivable

      

83

  

215
 

Inventory, net

  

Note 3

  

13,400

  

9,244
 

Biological assets

  

Note 4

  

4,279

  

331
 

Prepaid expenses and other current assets

  

Note 5

  

2,705

  

1,882
 

Total current assets

      

28,950

  

22,193
               
 

Property and equipment, net

  

Note 6

  

26,138

  

27,642
 

Intangible assets, net

  

Note 7

  

94,845

  

93,593
 

Right-of-use assets, net

  

Note 12

  

32,187

  

31,943
 

Goodwill

  

Note 8

  

1,525

  

1,525
 

Other assets

      

997

  

907
 

Total assets

      

$           184,642

  

$              177,803
               
 

Liabilities

            
 

Current liabilities

            
 

Trade payable

      

$                  5,676

  

$                     5,525
 

Accrued liabilities

      

10,445

  

9,779
 

Income taxes payable

      

28,666

  

22,009
 

Derivative liabilities

  

Note 10

  

1,715

  

9,109
 

Current portion of notes payable, net

  

Note 11

  

62,063

  

213
 

Current portion of lease liabilities

  

Note 12

  

3,081

  

2,872
 

Total current liabilities

      

111,646

  

49,507
               
 

Notes payable, net

  

Note 11

  

5,489

  

61,189
 

Lease liabilities

  

Note 12

  

37,944

  

37,242
 

Deferred tax liability

      

20,365

  

17,398
 

Other long-term liabilities

  

Note 20

  

3,447

  

3,882
 

Total liabilities

      

178,891

  

169,218
               
 

Shareholders' equity

            
 

Share capital

  

Note 13

  

183,690

  

183,690
 

Share-based compensation reserve

      

6,931

  

6,739
 

Equity conversion feature

      

6,867

  

6,677
 

Warrants

  

Notes 13

  

29,634

  

29,634
 

Accumulated deficit

      

(221,037)

  

(217,821)
 

Foreign currency translation reserve

      

(334)

  

(334)
 

Total shareholders' equity 

      

5,751

  

8,585
               
 

Total liabilities and shareholders' equity

      

$           184,642

  

$              177,803

Cansortium Inc.
Statement of Operations
For the three- and six-months ending June 30, 2024 and 2023 
 (Amounts expressed in thousands of United States Dollars unless otherwise stated)

       

 For the three months ended

  

 For the six months ended
       

June 30,
2024

  

June 30,
2023

  

June 30,
2024

  

June 30,
2023

Revenue, net of discounts

      

$              27,269

  

$                 24,430

  

$              52,496

  

$                  46,486

Cost of goods sold

      

13,490

  

11,448

  

26,456

  

23,275

Gross profit before fair value adjustments

      

13,779

  

12,982

  

26,040

  

23,211
                     

Fair value adjustments on inventory sold

      

(1,788)

  

2,211

  

(160)

  

4,552

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

  

Note 4

  

8,268

  

(3,035)

  

9,315

  

(8,092)

Gross profit

      

20,259

  

12,158

  

35,195

  

19,671
                     

Expenses

                    

General and administrative

  

Note 14

  

4,607

  

2,571

  

8,570

  

4,883

Sales and marketing

  

Note 14

  

6,018

  

5,576

  

11,452

  

9,574

Depreciation and amortization

  

Notes 6,7

  

1,780

  

1,929

  

3,510

  

3,777

Share-based compensation

      

142

  

177

  

191

  

415

Total expenses

      

12,547

  

10,253

  

23,723

  

18,649
                     

Income from operations

      

7,712

  

1,905

  

11,472

  

1,022
                     

Other expense (income)

                    

Finance costs, net

  

Note 19

  

4,835

  

4,324

  

9,546

  

8,573

Gain on change in fair value of derivative liability

  

Notes 10

  

(5,707)

  

(442)

  

(7,394)

  

(164)

Loss on disposal of assets

      

-

  

-

  

212

  

70

Loss from termination of a contract

      

3

  

82

  

3

  

3

Other miscellaneous income

      

(2)

  

-

  

-

  

67

Total other (income) expense

      

(871)

  

3,964

  

2,367

  

8,549
                     

Income (loss) before income taxes

      

8,583

  

(2,059)

  

9,105

  

(7,527)
                     

Income tax expense

  

Note 9

  

7,636

  

3,291

  

12,321

  

5,205
                     

Net comprehensive income (loss)

      

$                       947

  

$                  (5,350)

  

$               (3,216)

  

$               (12,732)
                     

Net loss per share

                    

Basic and diluted - continuing operations

      

$                     0.00

  

$                     (0.02)

  

$                  (0.01)

  

$                      (0.05)
                     

Weighted average  number of shares

                    

Basic number of shares

      

299,573,039

  

296,938,910

  

299,551,203

  

286,804,241

Diluted number of shares

      

341,443,706

  

352,230,174

  

341,763,315

  

339,972,379

Cansortium Inc.
Consolidated Statements of Cash Flow
For the six months ended June 30, 2024 and 2023 
 (Amounts expressed in thousands of United States Dollars unless otherwise stated)

       
   

 For the six months ended 
   

June 30,
2024

June 30,
2023
 

Operating activities

    
 

Net loss from continuing operations

$                              (3,216)

$                          (12,732)
 

Adjustments to reconcile net loss to net cash provided by operating activities:

    
 

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

(9,315)

8,092
 

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

160

(4,552)
 

Share-based compensation

191

415
 

Depreciation and amortization

7,473

8,042
 

Accretion and interest of convertible debentures

284

266
 

Accretion and interest of term loan

6,802

6,262
 

Interest of equipment loan

-

13
 

Interest on insurance financing

30

-
 

Interest on convertible promissory note

49

-
 

Loss on disposal of assets

212

70
 

Change in fair market value of derivative

(7,394)

(164)
 

Interest on lease liabilities

2,405

2,037
 

Deferred tax expense

2,898

(1,517)
 

Changes in operating assets and liabilities:

    
 

Trade receivable

132

1
 

Inventory

8,132

7,402
 

Biological assets

(7,081)

(8,886)
 

Prepaid expenses and other current assets

687

11
 

Right of Use Assets/Liabilities

(2,525)

67
 

Other assets

(90)

(40)
 

Trade payable

152

(135)
 

Accrued liabilities

666

(623)
 

Other long-term liabilities

(435)

(791)
 

Income taxes payable

6,657

6,722
 

Net cash provided by operating activities

6,874

9,960
       
 

Investing activities

    
 

Purchases of property and equipment

(3,902)

(4,339)
 

Purchase of intangible assets

(1,332)

-
 

Net cash used in investing activities

(5,234)

(4,339)
       
 

Financing activities

    
 

Net proceeds from issuance of shares and warrants

-

2,993
 

Net proceeds from convertible note

3,000

-
 

Payment of lease obligations

(1,412)

(3,188)
 

Net proceeds from auto and equipment loan

48

-
 

Principal repayments of notes payable

(5,314)

(4,988)
 

Net cash used in financing activities

(3,678)

(5,183)
 

Net increase (decrease) in cash

(2,038)

438
 

Cash, beginning of period

10,521

8,359
 

Cash, end of period

$                                 8,483

$                                 8,797

Cansortium Inc.
Adjusted EBITDA Calculation
(Amounts expressed in thousands of United States Dollars unless otherwise stated)

 

Three months ended
 

June 30,

June 30,

  
 

2024

2023

Variance

Net loss

$                                947

$                        (5,350)

$                  6,297

Finance costs, net

4,835

4,324

511

Income taxes

7,636

3,291

4,345

Depreciation and amortization

3,771

3,887

(116)

EBITDA

$                        17,189

$                           6,152

$              11,037
       
 

Three months ended
 

June 30,

June 30,

  
 

2024

2023

Variance

EBITDA

$                        17,189

$                           6,152

$              11,037

Change in fair value of biological assets

(6,480)

824

(7,304)

Change in fair market value of derivative

(5,707)

(442)

(5,265)

Professional Fees

1,852

-

1,852

One-time employee costs

454

-

454

Loss on termination of contract

-

82

(82)

Share-based compensation

142

177

(35)

Other non-recurring expense/(income)

240

-

240

Adjusted EBITDA

$                           7,690

$                           6,793

$                       897
       
 

Six months ended
 

June 30, 

June 30,

  
 

2024

2023

Variance

Net loss

$                        (3,216)

$                     (12,732)

$                  9,516

Finance costs, net

9,546

8,573

973

Income taxes

12,321

5,205

7,116

Depreciation and amortization

7,473

7,662

(189)

EBITDA

$                        26,124

$                           8,708

$              17,416
       
 

Six months ended
 

June 30,

June 30,

  
 

2024

2023

Variance

EBITDA

$                        26,124

$                           8,708

$              17,416

Change in fair value of biological assets

(9,155)

3,540

(12,695)

Change in fair market value of derivative

(7,394)

(164)

(7,230)

Professional Fees

3,641

-

3,641

One-time employee costs

614

-

614

Loss on termination of contract

-

3

(3)

Share-based compensation

191

415

(224)

Loss on diposal of assets

212

-

212

Other non-recurring expense/(income)

241

137

104

Adjusted EBITDA

$                        14,474

$                        12,639

$                  1,835

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SOURCE Cansortium Inc.