| “We are excited to have posted two consecutive quarters of record revenues,” said Norton Singhavon, Founder and CEO of Avant. “The Company has achieved positive momentum across three distinct channels: recreational, medical and export. In addition, the recent licensing of our 3PL Ventures facility in Vernon, British Columbia enables us to build on this growth trajectory.” 
(Avant CEO Norton Singhavon and in main picture) Key Financial Highlights (for the period ended August 31, 2021) All figures are compared to the Company’s most recent fiscal quarter (Q2 2021); all financial information in this press release is reported in Canadian dollars. - Maintained a strong capital position with approximately $16.3 million of cash, $26.7 million of working capital and no debt on its balance sheet.
- Achieved record gross revenue of $3.1 million, and net revenue of $2.7 million, representing the second consecutive quarter of record revenue.
- Sold 525 kilograms of cannabis, compared to 394 KG, an increase of 33%.
- Gross margin(A) increased to 40% from 39%.
- Recreational cannabis sales in Canada accounted for 71% of total sales, compared to 92%, as the Company commenced its initial global export shipment to Israel.
- Overall weighted average selling price decreased by 20% or $1.43 to $5.78 per gram as the Company’s export shipments received a lower average selling price than its Canadian recreational sales.
- Recreational weighted average selling price decreased 5% to $6.97 per gram, as sales for Avant’s Tenzo™ brand increased with the launch of new cultivars and packaging. The Tenzo™ brand has a lower weighted average selling price compared to the Company’s BLK MKT™ brand.
- Operating expenses(B) of $1.5 million increased by $311,000 or 25%, as the Company had various one-time non-reoccurring expenses related to its TSX graduation and other professional fees.
- Net loss from operations of $2.97 million, compared to a loss of $124,000, as the Company recorded a non-cash loss of $2.3 million on fair value changes of biological assets.
- Positive cash flow from operations (before changes in non-cash working capital items) of $831,000, compared to negative $512,000, indicating significant growth within the operations.
- Adjusted EBITDA(C) loss of $267,000 compared to a loss of $28,000.
Key Corporate Highlights - Completed a full corporate rebrand to Avant Brands Inc. to better align with our high-quality cannabis products, emphasize the strength of our capabilities and raise our profile and visibility with our customers and the investment community.
- Graduated to the Toronto Stock Exchange and strengthened the Company’s Board of Directors with the appointment of Jurgen Schreiber as Chairman of the Board, Duane Lo as Chair of the Audit Committee and Ruairi Twomey as Independent Director.
- 3PL Ventures Inc., a purpose-built 60,000 sq. ft. facility received its Standard Cultivation, Standard Processing and Medical Sales Licences, in accordance with Health Canada’s Cannabis Act and Regulations.
- Filed preliminary base shelf prospectus for up to an aggregate offering of $50 million to provide the Company with the flexibility to capitalize on financing opportunities in favourable market conditions during the 25-month period that it remains active.
- Added to NASDAQ-listed Global X Cannabis ETF (NASDAQ: POTX), which currently holds approximately 4.4 million shares of Avant.
Key Sales and Market Highlights - Successfully initiated global cannabis exports, with a first shipment of over 200 KG of dried cannabis to Focus Medical Herbs Ltd., a wholly owned subsidiary of IM Cannabis Corp. (NASDAQ: IMCC).
- Continued to expand international client portfolio by signing three additional export agreements with customers in Israel and Australia.
- BLK MKT™ continued to be a top selling premium brand in all Canadian Provinces.
- BLK MKT™ 1G pre-rolls rapidly emerged as the top seller in British Columbia, and experienced an increase in market share within Ontario.
- Achieved a steady increase in B2C medical clients while expanding the product offering in terms of cultivars (currently 11) and package formats-sizes (currently 5).
Subsequent Events - Enhanced the Company’s portfolio of rare and unique cultivars, with the addition of over 80 genetics, most of which are not currently available within Canada’s legal supply. The products are expected to launch under Avant’s recreational brands BLK MKT™, Cognoscente™ and Tenzo™, during the first quarter of fiscal 2022.
- Executed manufacturing agreements with multiple extraction companies, leveraging the Company’s cultivation expertise and brand equity, to execute its strategy within in the concentrate segment.
- Entered into concentrates category with the debut of Tenzo™ vapes which have received strong initial feedback from the market.
- Divested of its last non-core asset, Zenalytic Laboratories Ltd. for a combination of cash and stock, with an aggregate value of $300,000.
Strategic Acquisitions and Partnerships With the recent licensing of 3PL, new roster of cultivars, and multiple global export deals signed, the Company believes it is well-positioned for growth over the coming quarters. Management anticipates the Company may require further expansion or production in order to fulfill the demands of its domestic recreational sales, and its global exports in the near to mid-term. The Company is actively pursuing opportunities to expand its production output, through the acquisition of existing licensed facilities, or contract growing of Avant’s cultivars. For parties with existing purpose-built indoor cultivation facilities who may be interested in discussing a partnership or acquisition, please contact the company at [email protected] Three-months ended | Q3 2021 | Q2 2021 | Q2’21-Q3’21 % Change | Q3 2020 | Q3’20-Q3-21 % Change | Total Gross Revenue | $3,101 | $2,904 | 7% | $2,400 | 29% | Total Net Revenue | $2,730 | $2,458 | 11% | $2,071 | 32% | Rec Sales | $1,844 | $2,390 | -23% | $1,975 | -7% | B2B Sales | $886 | $67 | 1220% | $96 | 823% | Gross Margin(A) ($) | $1,095 | $961 | 14% | $1,444 | -24% | Gross Margin(A) (%) | 40% | 39% | 3% | 70% | -43% | SG&A | $1,765 | $1,453 | 21% | $1,161 | 52% | Net income (loss) from ops | -$2,971 | -$124 | -2296% | $19 | -15737% | Adjusted EBITDA | -$267 | -$28 | -854% | $560 | -148% | Adjusted EBITDA margin | -9% | -1% | -793% | 23% | -137% | Sales (KG) | 525 | 394 | 33% | 279 | 88% | Average Selling Price $ | $5.78 | $7.21 | -20% | $8.84 | -35% |
Upcoming Conference Call Management will host a conference call to discuss the Q3 2021 results on October 14, 2021, at 5:00PM Eastern Time / 2:00PM Pacific Time. Dial-in Information: Canada/USA TF: 1-800-319-4610 International Toll: 1-604-638-5340 A transcript of the call will be posted on the Company’s website at www.avantbrands.ca within 48 hours of the call. A copy of the Management Discussion & Analysis and Financial Statements for Q3 2021 can be downloaded from the Company’s SEDAR profile, or on its website at www.avantbrands.ca. Note (A) Gross margin before fair value adjustments. Please refer to the Company’s Q3 2021 Financial Statements and MD&A for definitions and a reconciliation to IFRS. | | Note (B) Operating expenses exclude non-cash items, such as depreciation and amortization and share based payments. Please refer to the Company’s Q3 2021 Financial Statements and MD&A for definitions and a reconciliation to IFRS. | | Note (C) Adjusted EBITDA is a non-IFRS measure and the Company calculates adjusted EBITDA from continuing operations as net income (loss) before interest expense, income taxes, depreciation and amortization, unrealized gain (loss) on changes in fair value of biological assets, equity loss on investment in associate, loss on sale of assets, investment loss and share based payments. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. The most directly comparable measure to adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. Please refer to the Company’s Q3 2021 MD&A for definitions and a reconciliation of Adjusted EBITDA to net income (loss) from continuing operations. |
About Avant Brands Inc. Avant is an innovative, market-leading premium cannabis company. Avant has multiple licenced and operational production facilities across Canada, which produce high-quality, handcrafted cannabis products for our highly desired, and award-winning consumer brands, sold across both recreational and medical channels. Avant’s recreational consumer brands includes BLK MKT™, Tenzo™, Cognōscente™ and Treehugger™, all produced from rare and exceptional cultivars, and sold in British Columbia, Ontario, Saskatchewan, Manitoba, New Brunswick, and Yukon. The Company’s medical cannabis brand, GreenTec™, is distributed nationwide, directly to qualified patients through its GreenTec Medical portal, and through various medical cannabis partners. Avant is a publicly traded corporation listed on the Toronto Stock Exchange (TSX: AVNT), and trades on the OTCQX Best Market (OTCQX: AVTBF) and Frankfurt Stock Exchange (FRA: 1BUP). The Company is headquartered in Kelowna, British Columbia and has operations in British Columbia, Alberta and Ontario. To learn more about Avant, to access the investor presentation, or learn more about its consumer brands, please visit www.avantbrands.ca. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking information” as defined under applicable Canadian securities legislation, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding: the pursuit of opportunities to expand its production output; and expectations for other economic, business, and/or competitive factors. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Examples include statements that the Company will operate in a fiscally disciplined manner; build long-term shareholder value; reduce operational expenses; or increase its revenue and gross margins. Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; the impact of COVID-19; and the risk factors set out in the Company’s annual information form dated March 16, 2021, filed with Canadian securities regulators and available on the Company’s profile on SEDAR at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. This news release refers to certain financial performance measures that are not defined by and do not have a standardized meaning under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. These non-IFRS financial performance measures are defined in the MD&A. Non-IFRS financial measures are used by management to assess the financial and operational performance of the Company. The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and prospects in a similar manner to the Company’s management. As there are no standardized methods of calculating these non-IFRS measures, the Company’s approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. | 
