Cansortium Reports First Quarter 2021 Financial Results

Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) (“Cansortium” or the “Company”), a vertically-integrated cannabis company operating under the Fluent™ brand, today 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.

The Company’s unaudited consolidated financial statements and accompanying notes, along with the Management Discussion and Analysis (MD&A), are available under the Company’s profile on SEDAR at www.sedar.com and are also accessible through the Investor Relations section of the Company’s website at www.getfluent.com.

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 results and operational highlights.

Toll-free dial-in number: 1-800-319-4610
International dial-in number: (604) 638-5340
Conference ID: 10014932
Link: Cansortium Q1 2021 Webcast

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 (949) 200-4603.

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 FloridaPennsylvaniaMichigan 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 Miami, 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. 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.

For further information: www.getfluent.com

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

SOURCE Cansortium Inc

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