| MIAMI–Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF), a vertically-integrated cannabis company operating under the Fluent™ brand, announced financial results for the first quarter ended March 31, 2021, as well as recent operational highlights. Unless otherwise indicated, all results are presented in U.S. dollars. “The momentum from last year has carried into 2021 as we generated another quarter of record revenue and adjusted EBITDA1,” said Chief Executive Officer Robert Beasley. “We have moved well past our turnaround phase and have returned to consistent growth and profitability. In fact, we followed up Q1 with another record month of sales in April, and we continue to expect a step function in growth in the back half of the year as new dispensaries and cultivation capacity come online. “Our expansion initiatives in both Florida and Pennsylvania have been fully funded by our recent debt and equity financings of nearly $90 million. By the end of 2021, we anticipate having a total of 30 dispensaries operational along with over 150,000 ft2 of cultivation capacity, positioning us well for an even stronger 2022.” Q1 2021 Financial Highlights (vs. Q1 2020) - Revenue increased 49% to $15.1 million compared to $10.2 million
- Florida revenue increased 41.4% to $13.1 million compared to $9.3 million
- Adjusted gross profit2 increased 49% to $9.7 million or 64.2% of revenue, compared to $6.5 million or 64.0% of revenue
- Net loss totaled $(5.1) million or $(0.03) per share, compared to a net loss of $(13.9) million or $(0.07) per share
- Adjusted EBITDA increased significantly to $4.4 million compared to $0.7 million
___________________________ | 1 Adjusted EBITDA 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 EBITDA from EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus (minus) certain one-time non-operating expenses, as determined by management. A reconciliation from adjusted EBITDA to net loss is included in the accompanying financial schedules. | | 2 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. |
Recent Operational Highlights - Generated record April sales Florida highlighted by record volumes on the 4/20 cannabis holiday
- Launched 21 new flower strains in Florida as well as several new products, including three new Moods flavors and Jane West pipes
- In April, the Company completed a $17 million private placement and $71 million secured term loan, which provides the resources and working capital needed to support Cansortium’s growth and expansion
- In May, the Company satisfied and cancelled approximately $43 million of legacy debt and redeemed $5 million of convertible notes
- As of May 28, 2021, the Company had approximately $30 million of cash and cash equivalents, $71 million of debt and a $5 million convertible note outstanding, as well as approximately 267 million fully diluted shares outstanding (based on treasury stock method and share price on May 27, 2021)
2021 Outlook The Company is reiterating its previously issued annual guidance of revenue between approximately $90 million to $100 million, as well as adjusted EBITDA of approximately $30 million to $35 million. In Florida, Cansortium continues to expect a total of 27 dispensaries to be operational by the end of 2021 (up from its current 24 locations in FL), with an additional four identified locations by year-end. The Company also continues to expect approximately $70-80 million of 2021 revenue to come from its operations in Florida. In Pennsylvania, the Company continues to expect opening an additional dispensary in Q3 2021, with a third dispensary opening in Q4 2021. In Michigan, the Company has approximately 2,600 lbs. of biomass in inventory and 900 lbs. of flower prepared for sale. The Company anticipates that all will be sold in the next 30-60 days and based on current market prices, will generate approximately $3 million of revenue. Certain information in this news release may constitute forward-looking information. 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 management’s expectations, estimates, and projections regarding future events. 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. CANSORTIUM INC. | CONSOLIDATED STATEMENT OF FINANCIAL POSITION | (USD ‘000) | | | | | | | | March 31, 2021 | December 31, 2020 | Assets | | | Current assets | | | Cash and cash equivalents | $ | 3,114 | $ | 3,392 | Accounts receivable | 115 | 148 | Inventory, net | 6,860 | 5,006 | Biological assets | 5,536 | 1,914 | Note receivable | 3,887 | 3,859 | Prepaid expenses and other current assets | 1,052 | 1,365 | Total current assets | 20,564 | 15,684 | | | | Investment held for sale | 200 | 200 | | | | Property and equipment, net | 20,880 | 19,517 | Intangible assets, net | 96,652 | 97,035 | Right-of-use assets | 18,427 | 19,094 | Deposit | 1,050 | 1,050 | Goodwill | 1,526 | 1,526 | Other assets | 481 | 425 | Total assets | $ | 159,780 | $ | 154,531 | | | | Liabilities | | | Current liabilities | | | Accounts payable | 7,281 | 4,808 | Accrued liabilities | 7,803 | 7,614 | Income taxes payable | 10,028 | 8,925 | Derivative liabilities | 7,004 | 7,412 | Current portion of notes payable | 39,658 | 38,583 | Lease obligations | 2,006 | 1,894 | Total current liabilities | 73,780 | 69,236 | | – | | Notes payable, net of current portion | 13,224 | 13,182 | Lease obligations, net of current portion | 20,265 | 20,811 | Deferred income taxes | 23,465 | 23,471 | Total liabilities | 130,734 | 126,700 | | | | Shareholders’ equity | | | Share capital | 141,176 | 137,835 | Share-based compensation reserve | 5,704 | 4,675 | Equity conversion feature | 11,044 | 11,044 | Warrants | 15,200 | 13,265 | Accumulated deficit | (143,705) | (138,609) | Accumulated other comprehensive loss | (374) | (379) | Total shareholders’ equity | 29,046 | 27,831 | | | | Total liabilities and shareholders’ equity | $ | 159,780 | $ | 154,531 |
CANSORTIUM INC. | STATEMENT OF OPERATIONS | (USD ‘000) | | | | | | | | For the three months ended March 31, | | 2021 | 2020 | | | | Revenue, net of discounts | $ | 15,116 | $ | 10,163 | Cost of goods sold | 5,407 | 3,660 | Gross profit before fair value adjustments | 9,709 | 6,503 | | | | Realized fair value of increments on inventory sold | (4,593) | (7,562) | Unrealized change in fair value of biological assets | 6,879 | 12,110 | Gross profit | 11,995 | 11,051 | | | | Expenses | | | General and administrative | 3,289 | 3,139 | Share-based compensation | 3,232 | 886 | Sales and marketing | 3,546 | 3,121 | Depreciation and amortization | 1,530 | 1,502 | Total expenses | 11,597 | 8,648 | | | | Loss from operations | 398 | 2,403 | | | | Other expense (income) | | | Interest expense, net | 3,130 | 3,759 | Change in fair market value of derivative liability | (408) | 1,835 | Equity loss on investment in associate | – | 183 | Loss on debt restructuring | – | 8,065 | Loss on disposal of assets | 48 | – | Other (income) expense | (113) | 16 | Total other expense (income) | 2,657 | 13,858 | | | | Loss before income taxes | (2,259) | (11,455) | | | | Income taxes | 2,838 | 2,833 | | | | Net loss | (5,097) | (14,288) | | | | (Gain)/Loss from discontinued operations | (2) | (376) | | | | Net loss after discontinued operations | $ | (5,095) | $ | (13,912) | | | | Other comprehensive loss: | | | Foreign exchange translation gain (loss) | 5 | (70) | | | | Comprehensive loss | $ | (5,090) | $ | (13,982) | | | | Net loss per share | | | Basic | $ | (0.03) | $ | (0.07) | Diluted | $ | (0.03) | $ | (0.07) |
CANSORTIUM INC. | STATEMENT OF CASH FLOWS | (USD ‘000) | | | | | | For the three months ended March 31, | | 2021 | 2020 | Operating activities | | | Net loss | $ | (5,095) | $ | (13,912) | Adjustments to reconcile net loss to net cash used in operating activities: | | | Unrealized gain on changes in fair value of biological assets | (6,879) | (12,110) | Realized gain on changes in fair value of biological assets | 4,593 | 7,562 | Share-based compensation | 2,151 | 806 | Depreciation and amortization | 2,231 | 1,990 | Discontinued operations | (2) | (370) | Accretion of convertible debentures | 1,123 | 1,822 | Interest on lease liabilities | 618 | 663 | Change in fair market value of derivative | (408) | 1,835 | Loss on investment in associate | – | 183 | Loss on debt restructuring | – | 8,065 | Loss on disposal of assets | 48 | – | Deferred tax expense | (6) | 1,108 | Changes in operating assets and liabilities: | | | Accounts receivable | 33 | 8 | Inventory | (1,854) | (1,627) | Biological assets | (1,336) | 1,715 | Prepaid expenses and other current assets | 417 | (592) | Other assets | (56) | 1 | Accounts payable | 2,473 | 998 | Accrued liabilities | 191 | 660 | Income taxes payable | 1,103 | 1,726 | Net cash provided by (used in) operating activities | (655) | 531 | | | | Investing activities | | | Purchases of property and equipment | (2,610) | (1,132) | Payment of notes receivable | 284 | – | Proceeds from sale of property and equipment | 17 | – | Notes receivable | (311) | (339) | Net cash used in investing activities | (2,620) | (1,471) | | | | Financing activities | | | Proceeds from issuance of shares and warrants | 1,891 | 4,351 | Proceeds from issuance of notes payable | – | 62 | Payment of lease obligations | (1,052) | (1,064) | Shares issued for interest repayments of notes payable | 884 | – | Exercise of warrants | 1,275 | – | Principal repayments of notes payable | (6) | (9) | Net cash provided by financing activities | 2,992 | 3,340 | Effect of foreign exchange on cash and cash equivalents | 5 | (70) | Net increase (decrease) in cash and cash equivalents | (278) | 2,330 | Cash and cash equivalents, beginning of period | 3,392 | 2,516 | Cash and cash equivalents, end of period | $ | 3,114 | $ | 4,846 |
CANSORTIUM INC. | ADJUSTED EBITDA RECONCILIATION | USD ‘000 | | | | | | | Three months ended | | March 31, 2021 | March 31, 2020 | Variance | Net loss | $ | (5,095) | $ | (13,912) | $ | 8,817 | Interest expense | 3,130 | 3,759 | (629) | Income taxes | 2,838 | 2,833 | 5 | Depreciation and amortization | 2,232 | 1,989 | 243 | EBITDA | $ | 3,105 | $ | (5,330) | $ | 8,435 | | | | | | | | | | | | | | Three months ended | | March 31, 2021 | March 31, 2020 | Variance | EBITDA | $ | 3,105 | $ | (5,330) | $ | 8,435 | Change in fair value of biological assets | (2,286) | (4,548) | 2,262 | Loss on debt restructuring | – | 8,065 | (8,065) | Change in fair market value of derivative | (408) | 1,835 | (2,243) | Share-based compensation | 3,232 | 886 | 2,346 | Discontinued operations | (2) | (376) | 374 | Loss on disposal of assets | 48 | – | 48 | Other non-recurring expense | 697 | 183 | 514 | Adjusted EBITDA | $ | 4,386 | $ | 715 | $ | 3,671 |
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