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Cansortium Reports Third Quarter 2023 Results

November 29, 2023 4:05 PM EST

- Q3 Revenue up 14% YoY to a Record $25.3 Million -

- Q3 Cash from Operations increased 32% to a Record $7.1 Million; 8th Consecutive Quarter of Positive Cash Flow -

TAMPA, Fla., Nov. 29, 2023 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2023. Unless otherwise indicated, all financial results are presented in U.S. dollars.

“We generated record revenue and cash flow generation during the third quarter as we continued to execute on our growth objectives despite a seasonally slow period in Florida,” said CEO Robert Beasley. “Adjusted EBITDA was offset by increased headcount to keep pace with new store openings, however these investments are critical in laying the foundation for growth and supporting our future plans.

“In Florida, we continue to ramp our four new stores opened this year while driving cultivation improvements, leading to production of more high quality, high THC products. Although the third quarter is generally the most challenging period of the year in Florida, these operating improvements have enabled us to command higher retail prices and partially offset lower volumes from the summer months in Florida.

“Looking ahead, we will continue to drive improvements across our footprint in Florida and Pennsylvania, while capitalizing on our first mover advantage in Texas as we plan to open our brick-and-mortar delivery center in Houston in early 2024.”

Q3 2023 Financial Highlights (vs. Q3 2022)

  • Revenue increased 14% to $25.3 million compared to $22.1 million.
  • Florida revenue increased 17% to $21.3 million compared to $18.2 million.
  • Adjusted gross profit1 was $16.1 million or 63.9% of revenue, compared to $16.7 million or 75.5% of revenue.
  • Adjusted EBITDA was $8.8 million compared to $11.7 million, with the decrease primarily driven by additional salaries and wages as well as lower average ticket per transaction. This was partially offset by the impact of increased customer transactions.
  • Cash flow from operations for the three months ended September 30, 2023 was $7.1 million compared to $5.4 million in the prior year.
  • At September 30, 2023 the Company had approximately $12.1 million of cash and cash equivalents and $60.3 million of total debt, with approximately 298 million shares outstanding.

Recent Operational Highlights

  • In Florida, Cansortium opened its Jacksonville – Cassat store. The Company currently operates 33 stores.
  • The Company anticipates opening 1 additional new store in Florida by the end of 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 [email protected].

Date: Wednesday, November 29, 2023Time: 4:30 p.m. Eastern time Toll-free dial-in number: (800) 319-4610International dial-in number: (604) 638-5340Conference ID: 10022610Link: 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 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 ContactRobert Beasley, CEO(850) 972-8077investors.getFLUENT.com

Investor Relations ContactSean Mansouri, CFAElevate IR(720) 330-2829[email protected]

      
      
CANSORTIUM INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of September 30, 2023 and December 31, 2022
(USD '000)     
      
   September 30, 2023 December 31, 2022
Assets     
Current assets     
Cash  $12,105  $8,359 
Trade receivable   48   28 
Inventory, net   8,471   8,973 
Biological assets   418   996 
Prepaid expenses and other current assets   1,380   883 
Total current assets   22,422   19,239 
      
Property and equipment, net   28,618   31,743 
Intangible assets, net   93,327   94,291 
Right-of-use assets, net   30,103   30,464 
Goodwill   1,525   1,526 
Other assets   4,889   768 
Total assets  $ 180,884  $ 178,031 
      
Liabilities     
Current liabilities     
Trade payable   3,675   6,931 
Accrued liabilities   5,329   5,534 
Income taxes payable   25,721   13,952 
Derivative liabilities   8,938   8,676 
Current portion of notes payable   606   741 
Current portion of lease obligations   4,984   2,123 
Total current liabilities   49,253   37,957 
      
Notes payable   60,024   56,969 
Lease obligations   32,164   33,922 
Deferred tax liability   19,287   20,290 
Other long-term liabilities   4,471   1,333 
Total liabilities   165,199   150,471 
      
Shareholders' equity     
Share capital   183,576   180,954 
Share-based compensation reserve   6,695   6,395 
Equity conversion feature   6,677   6,677 
Warrants   29,634   28,939 
Accumulated deficit   (210,563)  (195,071)
Foreign currency translation reserve   (334)  (334)
Total shareholders' equity   15,685   27,560 
      
Total liabilities and shareholders' equity  $ 180,884  $ 178,031 
      

 

         
CANSORTIUM INC.
STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
         
  For the three months endedSeptember 30, For the nine months endedSeptember 30,
   2023   2022   2023   2022 
Revenue, net of discounts $25,260  $22,100  $71,746  $64,228 
Cost of goods sold  9,121   5,419   25,730   20,990 
Gross profit before fair value adjustments  16,139   16,681   46,016   43,238 
         
Fair value adjustments on inventory sold  3,415   (9,605)  2,336   (25,023)
Unrealized (loss) gain on changes in fair value of biological assets  (3,627)  2,558   (11,719)  13,224 
Gross profit  15,927   9,634   36,633   31,439 
         
Expenses        
General and administrative  2,705   2,188   7,586   7,348 
Share-based compensation  228   53   644   153 
Sales and marketing  5,354   4,556   14,929   12,833 
Depreciation and amortization  3,412   1,656   8,223   5,014 
Total expenses  11,699   8,453   31,382   25,348 
         
Income (loss) from operations  4,228   1,181   5,251   6,091 
         
Other expense (income)        
Finance costs, net  4,562   4,422   13,135   11,922 
Income from ERTC tax credit  (4,055)  -   (4,055)  - 
Loss on change in fair value of derivative liability  426   313   262   5,021 
Private Placement issuance expense  -   -   -   - 
Loss (gain) on debt settlement  (116)  -   (116)  1,136 
Loss (gain) on disposal of assets  -   (22)  70   (22)
Loss from termination of a contract  2   -   5   - 
Other expense (income)  -   (1)  67   (373)
Total other expense  1,427   4,712   9,976   17,684 
         
Gain (loss) before income taxes  2,800   (3,531)  (4,726)  (11,593)
         
Income tax expense  5,561   2,026   10,766   7,542 
         
Net loss from continuing operations  (2,761)  (5,557)  (15,492)  (19,135)
         
Net loss from discontinued operations  -   19   -   8,594 
         
Net loss $(2,761)  $(5,576) $(15,492) $(27,729)
         
Other comprehensive gain that may be reclassified to profit or loss in subsequent years        
        
Exchange differences on translation of foreign operations and reporting currency -   62   -   87 
         
Comprehensive loss $(2,761)  $(5,514) $(15,492) $(27,642)
         
Basic and diluted - continuing operations $(0.01) $(0.02) $(0.05) $(0.11)
Basic and diluted - discontinued operations $-  $(0.00) $-  $(0.00)
         
Weighted average number of shares        
Basic number of shares  298,963,366   252,276,742   290,693,488   252,230,588 
Diluted number of shares  358,650,277   309,136,061   345,906,048   308,192,639 

 

    
CANSORTIUM INC.   
STATEMENTS OF CASH FLOWS
(USD '000)   
 For the nine monthsended September 30,
  2023   2022 
Operating activities   
Net loss from continuing operations$(15,492) $(27,729)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Unrealized gain (loss) on changes in fair value of biological assets 11,719   (13,224)
Realized (loss) gain on changes in fair value of biological assets (2,336)  25,023 
Share-based compensation 644   153 
Depreciation and amortization 10,961   9,534 
Accretion and interest of convertible debentures 400   - 
Accretion and interest of term loan 9,534   9,359 
Interest income on notes receivable -   (71)
Interest of equipment loan 37   - 
Loss (gain) on disposal of assets 70   (22)
Loss on debt settlement -   1,136 
Discontinued operations -   8,594 
Change in fair market value of derivative 262   5,021 
Interest on lease liabilities 3,041   2,546 
Deferred tax expense (1,003)  (703)
Changes in operating assets and liabilities:   
Trade receivable (20)  (27)
Inventory 4,632   1,185 
Biological assets (12,609)  (15,495)
Prepaid expenses and other current assets (497)  (477)
Right of Use Assets/Liabilities 455   236 
Other assets (4,121)  - 
Trade payable (3,277)  333 
Accrued liabilities (205)  2,060 
Other long-term liabilities 3,141   - 
Income taxes payable 11,769   8,053 
Net cash provided by operating activities 17,105   15,486 
    
Investing activities   
Purchases of property and equipment (4,500)  (5,439)
Payment of notes receivable -   119 
Advances for notes receivable -   (94)
Net cash used in investing activities (4,500)  (5,414)
    
Financing activities   
Net proceeds from issuance of shares and warrants 2,993   - 
Proceeds from issuance of convertible debenture and warrants -   4,710 
Net proceeds from insurance financing 800   - 
Exercise of Options -   135 
Issuance of shares for note payable extension   - 
Net cash provided by (used in) financing activities (8,859)  (10,084)
Net cash used in by financing activities (8,859)  (10,084)
Effect of foreign exchange on cash and cash equivalents -   87 
Net increase in cash 3,746   75 
Cash, beginning of period 8,359   9,024 
Cash, end of period$12,105  $9,099 

 

    
Cansortium Inc.   
Adjusted EBITDA Calculation   
(USD '000)   
 Three months ended
 September 30, 2023September 30, 2022Variance
Net loss$(2,761) $(5,576) $2,815 
Finance costs, net 4,562   4,422   140 
Income taxes 5,561   2,026   3,535 
Depreciation and amortization 3,830   3,464   366 
EBITDA$11,192  $4,336  $6,856 
    
    
 Three months ended
 September 30, 2023September 30, 2022Variance
EBITDA$11,192  $4,336  $6,856 
Change in fair value of biological assets 212   7,047   (6,835)
Change in fair market value of derivative 426   313   113 
Gain on debt settlement(1) (116)  -   (116)
Loss on termination of contract(1) 2   -   2 
Share-based compensation 228   53   175 
Discontinued operations(1) -   19   (19)
Income from ERTC tax credit(1) (4,055)  -   (4,055)
Loss on sale of ERTC tax credit(1) 608   -   608 
Other non-recurring expense (income)(2) 261   (1)  262 
Adjusted EBITDA$8,758  $11,745  $(2,987)
Source: Cansortium Inc


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