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Cansortium Reports Third Quarter 2024 Results

11/29/2024
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  • Q3 Revenue improves 3.5% Year-over-Year to $26.1 million
  • Delivers $7.5 million in Adjusted EBITDA, representing 29% margin
  • Generates $9.6 million in Positive Cash Flow from Operations

TAMPA, fLA., Nov. 29, 2024 /PRNewswire/ - 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 its financial and operating results for the  quarter ended September 30, 2024. Unless otherwise indicated, all financial results are presented in U.S. dollars.

"We completed the third quarter by delivering our 12th consecutive quarter of positive cash flow from operations as well as steady year over year revenue growth," said CEO Robert Beasley. "Our focus on continuous improvement and gaining efficiencies has continued to be a positive contributor to our solid performance."

Mr. Beasley added, "In Florida, we have increased our cultivation canopy to remain in balance with strong medical market demand and anticipate adding four new stores in 2025 while expanding our brand and product portfolio. Fortunately, our growth strategy did not depend on the outcome of Amendment 3 passing in Florida and we have made no financial commitments which depended on the adult use measure. FLUENT remains committed to the mission of serving the medical cannabis patients of Florida."

Mr. Beasley concluded, "Looking ahead, with our primary loan refinancing completed and our business combination with RIV Capital set to close by year end, our business is exceptionally well positioned heading into 2025. We have already commenced integration activities and are looking forward to leveraging the combined talent of both teams to scale our market share in the state of New York. Additionally, we also continue to seek out opportunities to drive revenue growth in both Pennsylvania and Texas."

Q3 2024 Financial Highlights (vs. Q3 2023)

  • Revenue increased 3.5% to $26.1 million compared to $25.3 million.
  • Florida revenue increased 3.6% to $22.0 million compared to $21.3 million.
  • Gross profit before fair value adjustments1 was $14.3 million or 54.6% of revenue, compared to $13.7 million or 54.0% of revenue.
  • Adjusted EBITDA was $7.5 million compared to $7.7 million, with the decrease primarily driven by higher general and administrative expenses.
  • Cash flow from operations for the three months ending September 30, 2024, was $9.6 million compared to $7.1 million in the prior year primarily.
  • On September 30, 2024, the Company had approximately $8.9 million of cash and cash equivalents and $74.1 million of total debt outstanding, with approximately 303 million shares outstanding.

Recent Operational Highlights

  • In Florida, Cansortium currently operates 35 stores and anticipates opening 4 new stores by the end of 2025.
  • The Ruskin, FL Facility is now operational and Cansortium completed its first harvest in June 2024, adding approximately 14,000 sq ft of cultivation canopy.
  • The Rosa, FL Facility is under construction, and the Company anticipates it will complete its first harvest by Q2 2025, adding another 7,000 sq ft of canopy to Cansortium's Florida footprint.
  • There was no major damage to the Company's facilities or retail locations as a result of the hurricane's which impacted Florida in 2024.
  • Subsequent to quarter end, the Company completed a new senior secured credit agreement of up to $96,500,000 with Chicago Atlantic Admin, LLC, refinancing its existing $71,000,000 senior secured term loan that was set to mature May 29, 2025.

RIV Transaction Update and Conference call

The Company has continued its integration activities with RIV Capital Inc. ("RIV Capital") and, with all required regulatory approval obtained, expects to complete the business combination in early December 2024. In connection with the closing, the Company expects to host a conference call to discuss the proforma business as well as its financial and operating results for the third quarter ended September 30, 2024. Details will be announced upon completion of the RIV Capital transaction.

___________________________

1 Gross profit before fair value adjustments 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 gross profit before fair value adjustments from gross profit plus (minus) the changes in fair value of biological assets, as presented in the consolidated statement of operations.

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.

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 (unaudited)
As of September 30, 2024, and December 31, 2023
 (Amounts expressed in thousands of United States Dollars unless otherwise stated)

    

 September 30, 

 

 December 31, 

    

2024

 

2023

Assets

      

Current assets

      

Cash

   

$                               8,932

 

$                     10,521

Trade receivable

   

51

 

215

Inventory, net

 

Note 3

 

13,419

 

9,244

Biological assets

 

Note 4

 

2,951

 

331

Prepaid expenses and other current assets

 

Note 5

 

2,794

 

1,882

Total current assets

   

28,147

 

22,193

       

Property and equipment, net

 

Note 6

 

31,476

 

27,642

Intangible assets, net

 

Note 7

 

94,714

 

93,593

Right-of-use assets, net

 

Note 12

 

32,692

 

31,943

Goodwill

 

Note 8

 

1,525

 

1,525

Other assets

   

1,373

 

907

Total assets

   

$                           189,927

 

$                   177,803

       

Liabilities

      

Current liabilities

      

Trade payable

   

$                               8,035

 

$                       5,525

Accrued liabilities

   

5,425

 

9,779

Income taxes payable

   

3,337

 

22,009

Derivative liabilities

 

Note 10

 

817

 

9,109

Current portion of notes payable, net

 

Note 11

 

63,989

 

213

Current portion of lease liabilities

 

Note 12

 

3,178

 

2,872

Total current liabilities

   

84,781

 

49,507

       

Notes payable, net

 

Note 11

 

7,414

 

61,189

Lease liabilities

 

Note 12

 

38,924

 

37,242

Deferred tax liability

   

22,303

 

17,398

Uncertain tax position

   

38,816

 

-

Other long-term liabilities

 

Note 21

 

3,447

 

3,882

Total liabilities

   

195,685

 

169,218

       

Shareholders' equity

      

Share capital

 

Note 13

 

183,690

 

183,690

Share-based compensation reserve

   

7,158

 

6,739

Equity conversion feature

   

6,914

 

6,677

Warrants

 

Notes 13

 

29,634

 

29,634

Accumulated deficit

   

(232,820)

 

(217,821)

Foreign currency translation reserve

   

(334)

 

(334)

Total shareholders' equity 

   

(5,758)

 

8,585

       

Total liabilities and shareholders' equity

   

$                         189,927

 

$                  177,803

 

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

    

 For the three months ended
 

 

 For the nine months ended  

    

September 30,
2024

 

September 30,
2023

 

September 30,
2024

 

September 30,
2023

Revenue, net of discounts

   

$                       26,147

 

$                        25,260

 

$                       78,643

 

$                     71,746

Cost of goods sold

   

11,859

 

11,607

 

38,315

 

34,882

Gross profit before fair value adjustments

   

14,288

 

13,653

 

40,328

 

36,864

           

Fair value adjustments on inventory sold

   

(2,099)

 

4,492

 

(2,259)

 

9,044

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

 

Note 4

 

(611)

 

(3,627)

 

8,704

 

(11,719)

Gross profit

   

11,578

 

14,518

 

46,773

 

34,189

           

Expenses

          

General and administrative

 

Note 14

 

3,913

 

2,705

 

12,483

 

7,588

Sales and marketing

 

Note 14

 

5,846

 

5,354

 

17,298

 

14,928

Depreciation and amortization

   

1,737

 

2,003

 

5,247

 

5,780

Share-based compensation

   

228

 

228

 

419

 

643

Total expenses

   

11,724

 

10,290

 

35,447

 

28,939

           

Income from operations

   

(146)

 

4,228

 

11,326

 

5,250

           

Other expense (income)

          

Finance costs, net

 

Note 19

 

5,154

 

4,562

 

14,700

 

13,135

Loss (gain) on change in fair value of ccccderivative liability

 

Notes 10

 

(898)

 

426

 

(8,292)

 

262

Gain on debt settlement

   

-

 

(116)

 

-

 

(116)

Loss on disposal of assets

   

-

 

-

 

212

 

70

Loss from termination of a contract

   

-

 

2

 

5

 

6

Other miscellaneous income

   

-

 

-

 

-

 

67

Total other (income) expense

   

4,256

 

4,874

 

6,625

 

13,424

           

Income (loss) before income taxes

   

(4,402)

 

(646)

 

4,701

 

(8,174)

           

Income tax expense

 

Note 9

 

7,379

 

4,662

 

19,700

 

9,867

           

Net comprehensive loss

   

$                    (11,781)

 

$                         (5,308)

 

$                       (14,999)

 

$                     (18,041)

           

Net loss per share

          

Basic and diluted - continuing operations

   

$                        (0.04)

 

$                           (0.02)

 

$                           (0.05)

 

$                         (0.06)

           

Weighted average  number of shares

          

Basic number of shares

   

300,522,916

 

298,963,366

 

299,617,665

 

290,693,488

Diluted number of shares

   

341,807,051

 

358,650,277

 

341,616,139

 

345,906,048

 

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

 

 For the nine months ended 

 

September 30,
2024

September 30,
2023

Operating activities

  

Net loss from continuing operations

$                       (14,999)

$                       (18,041)

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

  

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

(8,704)

11,719

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

2,259

(9,044)

Share-based compensation

419

644

Depreciation and amortization

11,366

10,961

Accretion and interest of convertible debentures

426

400

Accretion and interest of term loan

10,372

9,534

Interest of equipment loan

-

37

Interest on cultivation facility loan

61

-

Interest on insurance financing

9

-

Interest on convertible promissory note

224

-

Loss on disposal of assets

212

70

Change in fair market value of derivative

(8,292)

262

Interest on lease liabilities

3,588

3,041

Deferred tax expense

4,835

(1,003)

Uncertain tax position

38,816

-

Changes in operating assets and liabilities:

  

Trade receivable

164

(20)

Inventory

10,944

11,339

Biological assets

(11,294)

(12,609)

Prepaid expenses and other current assets

960

(497)

Right of Use Assets/Liabilities

(3,520)

455

Other assets

(466)

(66)

Trade payable

2,510

(3,275)

Accrued liabilities

(4,354)

(205)

Other long-term liabilities

(435)

2,531

Income taxes payable

(18,672)

10,872

Net cash provided by operating activities

16,429

17,105

   

Investing activities

  

Purchases of property and equipment

(10,543)

(4,500)

Purchase of intangible assets

(1,332)

-

Net cash used in investing activities

(11,875)

(4,500)

   

Financing activities

  

Net proceeds from issuance of shares and warrants

-

2,993

Net proceeds from insurance financing

-

800

Net proceeds from convertible note

3,983

-

Payment of lease obligations

(2,126)

(4,800)

Net proceeds from auto and equipment loan

48

-

Principal repayments of notes payable

(8,048)

(7,852)

Net cash used in financing activities

(6,143)

(8,859)

Net increase (decrease) in cash

(1,589)

3,746

Cash, beginning of period

10,521

8,359

Cash, end of period

$                             8,932

$                          12,105

 

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

 

Three months ended

 

September 30,
2024

September 30, 
2023

Variance

Net loss

$                  (11,781)

$                    (5,308)

$                    (6,473)

Finance costs, net

5,154

4,562

592

Income taxes

7,379

4,662

2,717

Depreciation and amortization

3,801

3,829

(28)

EBITDA

$                       4,553

$                       7,745

$                    (3,192)

    
    
 

Three months ended

 

September 30,
2024

September 30, 
2023

Variance

EBITDA

$                       4,553

$                       7,745

$                    (3,192)

Change in fair value of biological assets

2,710

(865)

3,575

Change in fair market value of derivative

(898)

426

(1,324)

Professional fees(1)

529

-

529

One-time employee costs(2)

162

-

162

Loss on debt settlement

-

(116)

116

Share-based compensation

228

228

-

Other non-recurring expense(3)

243

263

(20)

Adjusted EBITDA

$                       7,527

$                       7,681

$                         (154)

    
    
 

Nine months ended

 

September 30,
2024

September 30, 
2023

Variance

Net loss

$                  (14,999)

$                  (18,041)

$                       3,042

Finance costs, net

14,700

13,135

1,565

Income taxes

19,700

9,867

9,833

Depreciation and amortization

11,274

11,490

(216)

EBITDA

$                    30,675

$                    16,451

$                    14,224

    
    
 

Nine months ended

 

September 30,
2024

September 30, 
2023

Variance

EBITDA

$                    30,675

$                    16,451

$                    14,224

Change in fair value of biological assets

(6,445)

2,675

(9,120)

Change in fair market value of derivative

(8,292)

262

(8,554)

Loss on termination of contract

-

6

(6)

Loss on debt settlement

-

(116)

116

Professional fees(1)

4,170

-

4,170

One-time employee costs(2)

776

-

776

Share-based compensation

419

643

(224)

Loss on disposal of assets

212

70

142

Other non-recurring expense(3)

486

327

159

Adjusted EBITDA

$                    22,001

$                    20,318

$                       1,683

(1) Legal and professional fees associated with potential transactions and professional fees associated with prior periods.

(2) Severance and relocation costs.

(3) One-time costs incurred during the period related.

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SOURCE Cansortium Inc.