PR Newswire | Aug 24, 2021 04:06PM EDT

08/24 15:05 CDT

Cansortium Reports Second Quarter 2021 Financial Results MIAMI, Aug. 24, 2021

Q2 Revenue up 24% YoY to $16.5 Million; Adjusted EBITDA up ~2x to $5.2 Million

Management to Host Conference Call Tomorrow at 8:30 A.M. Eastern Time

MIAMI, Aug. 24, 2021 /PRNewswire/ - Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated cannabis company operating under the Fluent(tm) brand, today announced financial results for the second quarter ended June 30, 2021, as well as recent operational highlights. Unless otherwise indicated, all results are presented in U.S. dollars.

"We continued to drive growth and profitability in our key markets during the second quarter, as reflected by another month of record sales in May," said CEO Robert Beasley. "Our continued focus on providing differentiated, high-quality flower and wellness products has been well received by our patients. Additionally, we are now offering several boutique strains that have never been sold in the Florida market."

Cansortium significantly improved its balance sheet during the quarter with debt and equity financings of nearly $90 million, which enabled the Company to cancel legacy debt and extend maturities to 2025, as well as redeem all outstanding convertible notes. Cansortium now has both the capital and flexibility needed to execute its expansion plans.

Mr. Beasley continued, "Our core operations in Florida are performing well and our expansion plans are fully-funded. There have been minor supply chain and construction delays for several projects in Florida, which will delay the expected timing of our production ramp and push our schedule back by approximately two months. In addition, we have experienced delays in the Michigan market which, albeit a small market for us, will also impact our guidance for 2021 as we continue to hold product for sale to hedge against volatile pricing.

"Overall, we continue to expect significant growth in 2021. Our revised outlook for 2021 calls for $70-80 million of revenue with $18-26 million of adjusted EBITDA1, reflecting year-over-year growth of approximately 43% and 114%, respectively. We see upside to these numbers if the construction market opens up earlier than our current projections.

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^1 Adjusted EBITDA is a non-IFRS financial measure that does not have anystandardized meaning prescribed by IFRS and may not be comparable to similarmeasures presented by other companies. The Company calculates adjusted EBITDAfrom EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus(minus) certain one-time non-operating expenses, as determined by management. Areconciliation from adjusted EBITDA to net loss is included in the accompanyingfinancial schedules.

"Other progress on various initiatives includes last week's opening of a new dispensary in Mechanicsburg, Pennsylvania, and securing our third Pennsylvania location in Annville, which we expect to open by the end of the year. In addition, we expect to open our 27th dispensary in Florida by the end of the third quarter and have identified four additional sites for continued growth in the first half of 2022."

Q2 2021 Financial Highlights (vs. Q2 2020)

* Revenue increased 24% to $16.5 million compared to $13.2 million. * Florida revenue increased 22% to $14.6 million compared to $12.0 million. * Adjusted gross profit2 increased 24% to $10.7 million or 65.1% of revenue, compared to $8.7 million or 65.5% of revenue. * Adjusted EBITDA approximately doubled to $5.2 million or 31.8% of revenue, compared to $2.6 million or 19.7% of revenue. * At June 30, 2021, the Company had approximately $26 million of cash and cash equivalents and $71 million of total debt, with approximately 264 million fully diluted shares outstanding (based on treasury stock method and share price on June 30, 2021).

Recent Operational Highlights

* Launched Sweetwater, a new line of premium cannabis whole flower. * Hired a new Head of Cultivation. * Appointed multiple new board members, including Mark Eckenrode, Alex Spiro, and the Company's new Executive Chairman of the Board, William Smith. * In July, the Company opened its 26th Florida dispensary in Deerfield Beach. * All convertible notes from the Company's capital structure were converted to shares during the second quarter. A total of approximately $18.0 million of debt was converted into common shares of the Company. * The Company sold approximately 2,600 lbs. of biomass from Michigan inventory in July.

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^2 Adjusted gross profit is a non-IFRS financial measure that does not have anystandardized meaning prescribed by IFRS and may not be comparable to similarmeasures presented by other companies. The Company calculates adjusted grossprofit from gross profit plus (minus) the changes in fair value of biologicalassets, as presented in the consolidated statement of operations.

2021 OutlookThe Company is revising its 2021 outlook for revenue to range between $70-$80 million, with adjusted EBITDA ranging between $18-$26 million. This compares to approximately $52 million of revenue and $10 million of adjusted EBITDA in 2020.

In Florida, Cansortium continues to expect a total of 27 dispensaries to be operational by the end of 2021 and has identified four additional locations to be opened in 2022. In Michigan, the Company is holding 900 lbs. of flower prepared for sale. However, due to the pricing volatility, the Company is timing the sales cycle to realize optimal value.

The Company's unaudited consolidated financial statements and accompanying notes, along with the Management Discussion and Analysis (MD&A), will be 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 CallThe Company will host a conference call and live audio webcast tomorrow at 8:30 a.m. Eastern time to discuss its financial results and operational highlights.

Toll-free dial-in number: (800) 319-4610International dial-in number: (604) 638-5340Conference ID: 10016120Link: Cansortium Q2 2021 Earnings 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 (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 Florida, Pennsylvania, Michigan and Texas. The Company operates under the Fluent(tm) 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 OTCQX Best Market under the symbol "CNTMF." For more information about the Company, please visit www.getfluent.com.

Forward-Looking InformationCertain 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)

June 30, December 2021 31, 2020

Assets

Current assets

Cash and cash equivalents $ 26,004 $ 3,392

Accounts receivable 122 148

Inventory, net 5,560 5,006

Biological assets 2,495 1,914

Note receivable 4,462 3,859

Prepaid income taxes 1,598 -

Prepaid expenses and other current assets 1,267 1,365

Total current assets 41,508 15,684

Investment held for sale 200 200

Property and equipment, net 25,309 19,517

Intangible assets, net 96,269 97,035

Right-of-use assets 19,008 19,094

Deposit 2,727 1,050

Goodwill 1,526 1,526

Other assets 486 425

Total assets $ 187,033 $ 154,531

Liabilities

Current liabilities

Accounts payable 4,530 4,808

Accrued liabilities 6,834 7,614

Income taxes payable - 8,925

Derivative liabilities - 7,412

Current portion of notes payable 375 38,583

Lease obligations 2,181 1,894

Total current liabilities 13,920 69,236

-

Notes payable, net of current portion and loan 53,410 13,182issuance costs

Lease obligations, net of current portion 20,889 20,811

Deferred income taxes 24,430 23,471

Total liabilities 112,649 126,700

Shareholders' equity

Share capital 196,588 137,835

Share-based compensation reserve 5,717 4,675

Equity conversion feature 11,044 11,044

Warrants 30,148 13,265

Accumulated deficit (168,723) (138,609)

Accumulated other comprehensive loss (390) (379)

Total shareholders' equity 74,384 27,831

Total liabilities and shareholders' equity $ 187,033 $ 154,531

CANSORTIUM INC.

STATEMENT OF OPERATIONS

USD ('000)

For the three months For the six months ended June 30, ended June 30,

2021 2020 2021 2020

Revenue, net of discounts $ 16,469 $ 13,241 $ 31,584 $ 23,404

Cost of goods sold 5,745 4,567 11,152 8,227

Gross profit before fair value 10,724 8,674 20,432 15,177adjustments

Realized fair value of (4,727) (4,953) (9,320) (12,515)increments on inventory sold

Unrealized change in fair (1,224) 7,572 5,655 19,682value of biological assets

Gross profit 4,773 11,293 16,767 22,344

Expenses

General and administrative 2,868 3,064 6,156 6,202

Share-based compensation 285 2,362 3,517 3,249

Sales and marketing 3,515 3,481 7,061 6,602

Depreciation and amortization 1,547 1,572 3,078 3,074

Total expenses 8,215 10,479 19,812 19,127

Loss from operations (3,442) 814 (3,045) 3,217

Other expense (income)

Interest expense, net 4,719 3,798 7,849 7,557

Change in fair market value of (1,143) (828) (1,551) 1,007derivative liability

Loss on debt settlement 10,751 - 10,751 -

Private placement issuance 6,640 - 6,640 -expense

Equity loss on investment in - 31 - 215associate

Loss on debt restructuring - - - 8,065

(Gain)/Loss on disposal of 1 (54) 50 (54)assets

Other (income) expense (18) (8) (131) 7

Total other expense (income) 20,950 2,939 23,609 16,797

Loss before income taxes (24,392) (2,125) (26,654) (13,580)

Income taxes 594 3,308 3,431 6,141

Net loss (24,986) (5,433) (30,085) (19,721)

(Gain)/Loss from discontinued 33 34 31 (342)operations

Net loss after discontinued $ (25,019) $ (5,467) $ (30,115) $ (19,379)operations

Other comprehensive loss:

Foreign exchange translation (16) 254 (11) 184gain (loss)

Comprehensive loss $ (25,035) $ (5,213) $ (30,126) $ (19,195)

Net loss per share

Basic $ (0.11) $ (0.03) $ (0.14) $ (0.10)

Diluted $ (0.11) $ (0.03) $ (0.14) $ (0.10)

CANSORTIUM INC.

STATEMENTS OF CASH FLOWS

(USD '000)

For the six months ended June 30,

2021 2020

Operating activities

Net loss $ (30,115) $ (19,379)

Adjustments to reconcile net loss to net cash used inoperating activities:

Unrealized gain on changes in fair value of (5,655) (19,682)biological assets

Realized gain on changes in fair value of biological 9,320 12,515assets

Share-based compensation 3,517 3,249

Depreciation and amortization 4,675 4,059

Discontinued operations 31 (342)

Accretion of convertible debentures 2,242 3,834

Interest on lease liabilities 1,257 1,987

Change in fair market value of derivative (1,551) 1,007

Loss on investment in associate - 215

Loss on debt restructuring - 8,065

Loss on debt settlement 10,751 -

(Gain)/Loss on disposal of assets 50 (54)

Deferred tax expense 959 1,862

Changes in operating assets and liabilities:

Accounts receivable 26 11

Inventory (554) (5,401)

Biological assets (4,246) 5,265

Prepaid expenses and other current assets 1,875 (646)

Right-of-use assets (1,280) (728)

Right-of-use liabilties 1,262 -

Other assets (61) (84)

Accounts payable (278) 968

Accrued liabilities (651) 1,083

Income taxes (10,523) 4,410

Other liabilities - 115

Net cash provided by (used in) operating activities (18,949) 2,329

Investing activities

Purchases of property and equipment (8,408) (2,126)

Payment of notes receivable 284 150

Proceeds from sale of property and equipment 24 -

Notes receivable (1,020) (696)

Proceeds from sale of subsidiary - 600

Net cash used in investing activities (9,120) (2,072)

Financing activities

Proceeds from issuance of shares and warrants 23,730 4,351

Proceeds from issuance of debt, net of loan issuance 63,133 62costs

Payment of lease obligations (2,154) (2,133)

Exercise of warrants 1,365 -

Principal repayments of notes payable (35,382) (35)

Net cash provided by financing activities 50,692 2,245

Effect of foreign exchange on cash and cash (11) 184equivalents

Net increase (decrease) in cash and cash equivalents 22,612 2,686

Cash and cash equivalents, beginning of period 3,392 2,516

Cash and cash equivalents, end of period $ 26,004 $ 5,202

CANSORTIUM INC.

ADJUSTED EBITDA RECONCILIATION

USD ('000)

Three months ended

June 30, June 30,

2021 2020 Variance

Net loss $ (25,019) $ (5,467) $ (19,552)

Interest expense 4,719 3,798 921

Income taxes 594 3,308 (2,714)

Depreciation and amortization 2,429 2,064 365

EBITDA $ (17,277) $ 3,702 $ (20,979)

Three months ended

June 30, June 30,

2021 2020 Variance

EBITDA $ (17,277) $ 3,702 $ (20,979)

Change in fair value of biological 5,951 (2,619) 8,570assets

Change in fair market value of (1,143) (828) (315)derivative

Loss on debt settlement 10,751 - 10,751

Private placement issuance expense 6,640 - 6,640

Share-based compensation 285 2,362 (2,077)

Discontinued operations 33 34 (1)

Loss on disposal of assets 1 $ (54) 55

Other non-recurring expense/(income) (18) 31 (49)

Adjusted EBITDA $ 5,223 $ 2,628 $ 2,595

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SOURCE Cansortium Inc