PR Newswire | Nov 23, 2020 10:10AM EST

11/23 09:09 CST

Cansortium Inc. Reports 2020 Third Quarter Financial Results MIAMI, Nov. 23, 2020

Another strong quarter highlighted by $3.6M of Adjusted EBITDA on $14.3M of revenue

MIAMI, Nov. 23, 2020 /PRNewswire/ - Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated provider of premium-quality medical cannabis, today announced financial results for its third quarter and nine months ended September 30, 2020. The Company's unaudited condensed interim 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 a link on the Investor Relations section of the Company's website at www.cansortium.com.

The Company will host a conference call and live audio webcast on, November 24, 2020 at 5:00 P.M. Eastern time, to discuss its third quarter 2020 financial results. All interested parties can join the conference call by dialing 1-800-319-4610 (Canada/USA) or +1-604-638-5340 (international). Callers should dial in 5 to 10 minutes prior to the scheduled start time and ask to join the call. A live audio webcast of the conference call will be available at: http://services.choruscall.ca/links/cansortium20201123.html

Selected Third Quarter 2020 Financial Highlights

* Consolidated revenue of $14.3 million, an increase of 94 percent or $6.9 million compared with consolidated revenue of $7.4 million in the third quarter of 2019. * Consolidated loss from operations of $(1.9) million, compared to loss from operations of $(8.1) million in the third quarter of 2019. * Consolidated Adjusted EBITDA(1) of $3.6 million, compared to Adjusted EBITDA(1) loss of $(2.1) million in the third quarter of 2019. * Consolidated net loss of $(8.9) million, or $(0.04) per diluted share, compared to consolidated net loss of $(11.3) million, or $(0.06) per diluted share for the same period last year. * During the third quarter of 2020, the Company opened its 21st medical marijuana dispensary in Coral Springs, FL. It operated 16 dispensaries during the comparable period in 2019. In October and November of 2020, the Company opened its 22nd and 23rd Florida dispensary in Coral Gables, FL and Kendall, FL, respectively.

Selected Year-to-Date 2020 Financial Highlights

* Consolidated revenue of $37.7 million, an increase of 50 percent or $18.7 million compared with consolidated revenue of $19.0 million during the nine months ended September 30, 2019. * Consolidated income from operations of $1.3 million, compared to loss from operations of $(28.7) million during the nine months ended September 30, 2019. * Consolidated Adjusted EBITDA(1) of $7.0 million, compared to Adjusted EBITDA(1) loss of $(7.2) million during the nine months ended September 30, 2019. * Consolidated net loss of $(28.3) million, or $(0.14) per diluted share, compared to consolidated net loss of $(33.1) million, or $(0.18) per diluted share for the same period last year.

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(1) adjusted EBITDA from EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus (minus) certain one-time non-operating expenses, as determined by management. Reconciliations from EBITDA and Adjusted EBITDA to Net Loss are included in the accompanying financial schedules.

Full Year 2020 Outlook

The Company reiterates its full year 2020 outlook for consolidated revenue of $55 million to $60 million with anticipated Adjusted EBITDA of approximately $14 million. The forecast is based on projected revenue of at least $45 million for Cansortium's Florida operations with additional revenue from the Michigan, Pennsylvania and Texas markets.

Initial 2021 and 2022 Outlook

The Company has continued to make progress on its targeted initiatives focused on growth and long-term shareholder value creation. In its home state of Florida, the Company secured an additional cultivation and production facility with operations anticipated to commence in December 2020 and further expansion expected during 2021 and 2022 and will continue to grow its retail footprint with a total of 33 dispensaries anticipated to be operational by the end of 2022. In Pennsylvania, the Company has secured an additional dispensary location that is expected to open in early 2021 in order to augment the strong sales of its existing Hanover dispensary. A third location is expected to come online in the first half of 2021. In Michigan, the Company enhanced the cultivation team on the ground and is pursuing expansion opportunities. Finally, in Texas, the Company has rights to expand the cultivation facility up to 400,000 additional sq. ft. as demand requires.

The Company is projecting revenue of $95 million to $100 million and $140 to $145 million for 2021 and 2022, respectively, and Adjusted EBITDA of $30 million to $35 million and $60 to $65 million for 2021 and 2022, respectively.

About Cansortium Inc.

Headquartered in Miami, Florida, and operating under the Fluent(tm) brand, Cansortium is focused on being the highest quality cannabis company in the State of Florida driven by unrelenting commitment to operational excellence from seed to sale. Cansortium has developed strong proficiencies in each of cultivation, processing, retail, and distribution activities, the result of successfully operating in the highly regulated cannabis industry. In addition to Florida, Cansortium is seeking to create significant shareholder value in the attractive markets of Texas, Michigan and Pennsylvania.

Cansortium Inc.'s common shares and warrants trade on the CSE under the symbol "TIUM.U" and "TIUM.WT.U", respectively, and on the OTCQB Venture Market under the symbol (OTCQB: CNTMF). Investors can find current financial disclosure and Real-Time Level 2 quotes for the Company on www.otcmarkets.com.

Forward-Looking Information

All projections related to anticipated future results are forward-looking in nature and are subject to risks and uncertainties that may cause actual results to differ, perhaps materially. Projections are predicated on the Company's ability to continue successfully implementing the strategic growth and cost-saving initiatives identified by the Special Committee of the Board. In addition, projections are based on the Company's ability to secure and effectively deploy its capital resources toward those initiatives.

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 a number of 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.

Financial Tables Follow

Cansortium Inc.

Consolidated Statements of Financial Position

As of September 30, 2020 and December 31, 2019

(USD '000)

September December 30, 31,

2020 2019

Assets

Current assets

Cash and cash equivalents $ 4,072 $ 2,516

Accounts receivable 65 144

Inventory 9,574 6,709

Biological assets 6,128 3,845

Note receivable 4,895 3,870

Prepaid expenses and other current assets 1,311 556

Total current assets 26,045 17,640

Investment held for sale 324 -

Assets held for sale - 6,301

Property and equipment, net 18,677 19,128

Intangible assets, net 97,418 98,566

Right-of-use assets 19,410 20,190

Investment in associate 3,043 3,424

Goodwill 1,526 1,526

Other assets 390 291

Total assets $ 166,833 $ 167,066

Liabilities

Current liabilities

Accounts payable 4,558 7,860

Accrued liabilities 4,107 5,135

Income taxes payable 6,401 1,492

Derivative liabilities 13,436 13,198

Current portion of notes payable 37,211 9,350

Lease obligations 1,979 1,761

Other current liabilities 350 -

Total current liabilities 68,042 38,796

Liabilities held for sale - 3,240

Notes payable, net of current portion 12,695 31,053

Lease obligations, net of current portion 20,728 21,166

Deferred income taxes 26,657 24,957

Other long-term liabilities 468 676

Total liabilities 128,590 119,888

Shareholders' equity

Share capital 147,846 149,322

Share-based compensation reserve 4,148 2,977

Equity conversion feature 12,250 7,613

Warrants 13,265 11,773

Accumulated deficit (138,891) (123,785)

Accumulated other comprehensive loss (375) (563)

Total shareholders' equity attributable to Cansortium 38,243 47,337Inc. shareholders

Non-controlling interests - (159)

Total shareholders' equity 38,243 47,178

Total liabilities and shareholders' equity $ 166,833 $ 167,066

Cansortium Inc.

Consolidated Statement ofOperations

For the three and nine months ended September 30, 2020and 2019

(USD '000)

For the three months For the nine months ended September ended September 30, 30,

2020 2019 2020 2019

Revenue, net of discounts $ 14,313 $ 7,387 $ 37,718 $ 19,005

Cost of goods sold 4,784 2,722 13,011 6,822

Gross profit before fair value 9,529 4,665 24,707 12,183adjustments

Realized fair value of increments 6,051 3,341 18,566 6,692on inventory sold

Unrealized change in fair value of (4,263) (1,109) (23,945) (3,182)biological assets

Gross profit 7,741 2,433 30,086 8,673

Expenses

General and administrative 2,861 4,362 9,064 19,384

Share-based compensation 1,689 258 4,938 1,744

Sales and marketing 3,561 3,348 10,162 8,972

Depreciation and amortization 1,561 2,549 4,635 7,250

Total expenses 9,672 10,517 28,799 37,350

Income (loss) from operations (1,931) (8,084) 1,287 (28,677)

Discontinued operations 236 - (106) -

Other expense (income)

Interest expense, net 3,892 2,926 11,448 9,786

Change in fair market value of 673 (2,631) 1,680 (6,172)derivative

Loss on investment in associate 166 - 381 -

Gain in fair market value of - - - (3,388)investment in associate

Loss on debt restructuring - - 8,065 -

Loss on disposal of assets 710 2,205 656 2,205

Other expense 1 257 7 285

Total other expense (income) 5,442 2,757 22,237 2,716

Loss before taxes (7,609) (10,841) (20,844) (31,393)

Income taxes 1,281 432 7,422 1,708

Net loss (8,890) (11,273) (28,266) (33,101)

Net income (loss) attributable to - 83 - (204)non-controlling interest

Net loss attributable to $ (8,890) $ (11,356) $ (28,266) $ (32,897)controlling interest

Net loss per share

Basic $ (0.04) $ (0.06) $ (0.14) $ (0.18)

Diluted $ (0.04) $ (0.06) $ (0.14) $ (0.18)

Cansortium Inc.

Consolidated Statement of Cash Flows

For the nine months ended September 30, 2020 and 2019

(USD '000)

For the nine months ended September 30,

2020 2019

Operating activities

Net loss $ (28,266) $ (33,101)

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

Unrealized gain on changes in fair value of biological (23,945) (3,182)assets

Share-based compensation 4,938 2,005

Depreciation and amortization 6,146 8,252

Discontinued operations (106) -

Amortization of debt discount - 4,497

Accretion of convertible debentures 5,974 -

Interest on lease liabilities 3,324 -

Change in fair market value of derivative 1,680 (6,172)

Loss on investment in associate 381 -

Gain in fair market value of investment in associate - (3,388)

Loss on debt restructuring 8,066 -

Loss on disposal of assets 656 2,205

Deferred tax expense 1,700 -

Changes in operating assets and liabilities:

Accounts receivable 79 (51)

Inventory (2,930) (3,715)

Biological assets 21,662 2,746

Prepaid expenses and other current assets (492) (5,561)

Right-of-use assets (1,439) -

Other assets (99) (1,116)

Accounts payable (309) 102

Accrued liabilities 2,205 (3,357)

Income taxes payable 4,909 1,838

Lease obligations - 1,772

Other current liabilities (251) 398

Other liabilities (160) -

Net cash provided by (used in) operating activities 3,723 (35,828)

Investing activities

Purchases of property and equipment (3,136) (12,558)

Purchase of intangible assets - (319)

Payment of notes receivable 350 -

Notes receivable (1,375) -

Proceeds from sale of subsidiary 600 -

Net cash used in investing activities (3,561) (12,877)

Financing activities

Proceeds from IPO - 56,178

Proceeds from issuance of shares and warrants 4,351 -

Proceeds from issuance of notes payable 62 41,006

Payment of lease obligations (3,207) 921

Interest repayments of notes payable - -

Principal repayments of notes payable - (46,353)

Net cash provided by financing activities 1,206 51,752

Effect of foreign exchange on cash and cash equivalents 188 (59)

Net increase in cash and cash equivalents 1,556 2,988

Cash and cash equivalents, beginning of period 2,516 2,026

Cash and cash equivalents, end of period $ 4,072 $ 5,014

Cash paid during the period for interest $ 2,457 $ 585

Non-cash transactions:

Issuance of shares to acquire additional interest in $ - $ 13,786consolidated entity

Shares returns for sale of interest in subsidiaries $ (4,374) $ -

Founders shares return $ (10,970) $ -

Note payable amendment $ 10,380 $ -

Issuance of share for convertible debentures amendment $ 2,082 $ -

Cansortium Inc.

FinancialHighlights

For the three and ninemonths ended September 30,2020 and 2019

(USD '000)

Three months ended Nine months ended

Financial September September Variance September September Varianceresults 30, 2020 30, 2019 30, 2020 30, 2019

Revenue $ 14,313 $ 7,387 $ 6,926 $ 37,718 $ 19,005 $ 18,713

Gross profit $ 7,741 $ 2,433 $ 5,308 $ 30,086 $ 8,673 $ 21,413

Gross margin 54.1% 32.9% 21.1% 79.8% 45.6% 34.1%

Adjusted gross $ 9,529 $ 4,665 $ 4,864 $ 24,707 $ 12,183 $ 12,524profit ^(1)

Adjusted gross 66.6% 63.2% 3.4% 65.5% 64.1% 1.4%margin ^(1)

Selling, generaland $ 9,672 $ 10,517 $ (845) $ 28,799 $ 37,350 $ (8,552)administrativeexpenses

EBITDA ^(1) $ (1,617) $ (4,483) $ 2,867 $ (3,243) $ (11,854) $ 8,611

Adjusted EBITDA $ 3,645 $ (2,095) $ 5,740 $ 6,990 $ (7,224) $ 14,215^(1)

Net loss $ (8,890) $ (11,273) $ 2,383 $ (28,266) $ (33,101) $ 4,835

Net loss per $ (0.04) $ (0.06) $ 0.01 $ (0.14) $ (0.18) $ 0.04share (basic)

Net loss per $ (0.04) $ (0.06) $ 0.01 $ (0.14) $ (0.18) $ 0.04share (diluted)

Adjusted gross profit, adjusted gross margin, EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have any standardized meaning(1) prescribed by IFRS and may not be comparable to similar measures presented by other companies. Refer to the reconciliation to IFRS and quarterly results of operations sections at the Company's Management Discussion and Analysis document for reconciliation to IFRS.

Cansortium Inc. Reconciliation of non-IFRS financial measures For the three and nine months ended September 30, 2020 and 2019 (USD '000)

EBITDA

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 EBITDA from net income (loss), plus (minus) interest expense (income), plus income taxes, plus depreciation and amortization, as follows:

Three months ended Nine months ended

September September September September 30, 2020 30, 2019 Variance 30, 2020 30, 2019 Variance

Net loss $ (8,890) $ (11,273) $ 2,383 $ (28,266) $ (33,101) $ 4,835

Interest expense 3,892 2,926 966 11,448 9,786 1,662

Income taxes 1,281 432 849 7,422 1,708 5,714

Depreciation and 2,100 3,432 (1,332) 6,153 9,753 (3,600)amortization

EBITDA $ (1,617) $ (4,483) $ 2,866 $ (3,243) $ (11,854) $ 8,611

Adjusted EBITDA

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. The reconciliation from EBITDA to Adjusted EBITDA is as follows:

Three months ended Nine months ended

September September Variance September September Variance 30, 2020 30, 2019 30, 2020 30, 2019

EBITDA $ (1,617) $ (4,483) $ 2,866 $ (3,243) $ (11,854) $ 8,611

Change in fairvalue of biological 1,788 2,232 (444) (5,379) 3,510 (8,889)assets

Change in fairmarket value of 673 (2,631) 3,304 1,680 (6,172) 7,852derivative

Gain in fair valueof investment in - - - - (3,388) 3,388associate

Share-based 1,689 258 1,431 4,938 1,744 3,194compensation

Discontinued 236 - 236 (106) - (106)operations

Loss on debt - - - 8,065 - 8,065restructuring

Other non-recurring 876 2,530 (1,654) 1,035 8,935 (7,900)expense

Adjusted EBITDA $ 3,645 $ (2,095) $ 5,740 $ 6,990 $ (7,224) $ 14,215

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SOURCE Cansortium Inc