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Cansortium Reports Third Quarter 2023 Results

- Q3 Revenue up 14% YoY to a Record $25.3 Million -

- Q3 Cash from Operations increased 32% to a Record $7.1 Million;
8th Consecutive Quarter of Positive Cash Flow -

TAMPA, Fla., Nov. 29, 2023 (GLOBE NEWSWIRE) -- Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) (“Cansortium” or the “Company”), a vertically-integrated, multi-state cannabis company operating under the FLUENT™ brand, today announced financial and operating results for the third quarter ended September 30, 2023. Unless otherwise indicated, all financial results are presented in U.S. dollars.

“We generated record revenue and cash flow generation during the third quarter as we continued to execute on our growth objectives despite a seasonally slow period in Florida,” said CEO Robert Beasley. “Adjusted EBITDA was offset by increased headcount to keep pace with new store openings, however these investments are critical in laying the foundation for growth and supporting our future plans.

“In Florida, we continue to ramp our four new stores opened this year while driving cultivation improvements, leading to production of more high quality, high THC products. Although the third quarter is generally the most challenging period of the year in Florida, these operating improvements have enabled us to command higher retail prices and partially offset lower volumes from the summer months in Florida.

“Looking ahead, we will continue to drive improvements across our footprint in Florida and Pennsylvania, while capitalizing on our first mover advantage in Texas as we plan to open our brick-and-mortar delivery center in Houston in early 2024.”

Q3 2023 Financial Highlights (vs. Q3 2022)

  • Revenue increased 14% to $25.3 million compared to $22.1 million.
  • Florida revenue increased 17% to $21.3 million compared to $18.2 million.
  • Adjusted gross profit1 was $16.1 million or 63.9% of revenue, compared to $16.7 million or 75.5% of revenue.
  • Adjusted EBITDA was $8.8 million compared to $11.7 million, with the decrease primarily driven by additional salaries and wages as well as lower average ticket per transaction. This was partially offset by the impact of increased customer transactions.
  • Cash flow from operations for the three months ended September 30, 2023 was $7.1 million compared to $5.4 million in the prior year.
  • At September 30, 2023 the Company had approximately $12.1 million of cash and cash equivalents and $60.3 million of total debt, with approximately 298 million shares outstanding.

Recent Operational Highlights

  • In Florida, Cansortium opened its Jacksonville – Cassat store. The Company currently operates 33 stores.
  • The Company anticipates opening 1 additional new store in Florida by the end of 2023.

__________________
1 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.

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 and operational results, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing investors@cansortiuminc.com.

Date: Wednesday, November 29, 2023
Time: 4:30 p.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10022610
Link: Cansortium Conference 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 (720) 330-2829.

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 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 Tampa, 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 within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. 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 the Company's expectations, estimates, and projections regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control.

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.

Company Contact
Robert Beasley, CEO
(850) 972-8077
investors.getFLUENT.com

Investor Relations Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
investors@cansortiuminc.com

           
           
CANSORTIUM INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of September 30, 2023 and December 31, 2022
(USD '000)          
           
      September 30, 2023   December 31, 2022
Assets          
Current assets          
Cash     $ 12,105     $ 8,359  
Trade receivable       48       28  
Inventory, net       8,471       8,973  
Biological assets       418       996  
Prepaid expenses and other current assets       1,380       883  
Total current assets       22,422       19,239  
           
Property and equipment, net       28,618       31,743  
Intangible assets, net       93,327       94,291  
Right-of-use assets, net       30,103       30,464  
Goodwill       1,525       1,526  
Other assets       4,889       768  
Total assets     $ 180,884     $ 178,031  
           
Liabilities          
Current liabilities          
Trade payable       3,675       6,931  
Accrued liabilities       5,329       5,534  
Income taxes payable       25,721       13,952  
Derivative liabilities       8,938       8,676  
Current portion of notes payable       606       741  
Current portion of lease obligations       4,984       2,123  
Total current liabilities       49,253       37,957  
           
Notes payable       60,024       56,969  
Lease obligations       32,164       33,922  
Deferred tax liability       19,287       20,290  
Other long-term liabilities       4,471       1,333  
Total liabilities       165,199       150,471  
           
Shareholders' equity          
Share capital       183,576       180,954  
Share-based compensation reserve       6,695       6,395  
Equity conversion feature       6,677       6,677  
Warrants       29,634       28,939  
Accumulated deficit       (210,563 )     (195,071 )
Foreign currency translation reserve       (334 )     (334 )
Total shareholders' equity       15,685       27,560  
           
Total liabilities and shareholders' equity     $ 180,884     $ 178,031  
           

 



                 
CANSORTIUM INC.
STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
                 
    For the three months ended
September 30,
  For the nine months ended
September 30,
      2023       2022       2023       2022  
Revenue, net of discounts   $ 25,260     $ 22,100     $ 71,746     $ 64,228  
Cost of goods sold     9,121       5,419       25,730       20,990  
Gross profit before fair value adjustments     16,139       16,681       46,016       43,238  
                 
Fair value adjustments on inventory sold     3,415       (9,605 )     2,336       (25,023 )
Unrealized (loss) gain on changes in fair value of biological assets     (3,627 )     2,558       (11,719 )     13,224  
Gross profit     15,927       9,634       36,633       31,439  
                 
Expenses                
General and administrative     2,705       2,188       7,586       7,348  
Share-based compensation     228       53       644       153  
Sales and marketing     5,354       4,556       14,929       12,833  
Depreciation and amortization     3,412       1,656       8,223       5,014  
Total expenses     11,699       8,453       31,382       25,348  
                 
Income (loss) from operations     4,228       1,181       5,251       6,091  
                 
Other expense (income)                
Finance costs, net     4,562       4,422       13,135       11,922  
Income from ERTC tax credit     (4,055 )     -       (4,055 )     -  
Loss on change in fair value of derivative liability     426       313       262       5,021  
Private Placement issuance expense     -       -       -       -  
Loss (gain) on debt settlement     (116 )     -       (116 )     1,136  
Loss (gain) on disposal of assets     -       (22 )     70       (22 )
Loss from termination of a contract     2       -       5       -  
Other expense (income)     -       (1 )     67       (373 )
Total other expense     1,427       4,712       9,976       17,684  
                 
Gain (loss) before income taxes     2,800       (3,531 )     (4,726 )     (11,593 )
                 
Income tax expense     5,561       2,026       10,766       7,542  
                 
Net loss from continuing operations     (2,761 )     (5,557 )     (15,492 )     (19,135 )
                 
Net loss from discontinued operations     -       19       -       8,594  
                 
Net loss   $ (2,761 )     $ (5,576 )   $ (15,492 )   $ (27,729 )
                 
Other comprehensive gain that may be reclassified to profit or loss in subsequent years                
               
Exchange differences on translation of foreign operations and reporting currency   -       62       -       87  
                 
Comprehensive loss   $ (2,761 )     $ (5,514 )   $ (15,492 )   $ (27,642 )
                 
Basic and diluted - continuing operations   $ (0.01 )   $ (0.02 )   $ (0.05 )   $ (0.11 )
Basic and diluted - discontinued operations   $ -     $ (0.00 )   $ -     $ (0.00 )
                 
Weighted average number of shares                
Basic number of shares     298,963,366       252,276,742       290,693,488       252,230,588  
Diluted number of shares     358,650,277       309,136,061       345,906,048       308,192,639  

 


       
CANSORTIUM INC.      
STATEMENTS OF CASH FLOWS
(USD '000)      
  For the nine months
ended September 30,
    2023       2022  
Operating activities      
Net loss from continuing operations $ (15,492 )   $ (27,729 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Unrealized gain (loss) on changes in fair value of biological assets   11,719       (13,224 )
Realized (loss) gain on changes in fair value of biological assets   (2,336 )     25,023  
Share-based compensation   644       153  
Depreciation and amortization   10,961       9,534  
Accretion and interest of convertible debentures   400       -  
Accretion and interest of term loan   9,534       9,359  
Interest income on notes receivable   -       (71 )
Interest of equipment loan   37       -  
Loss (gain) on disposal of assets   70       (22 )
Loss on debt settlement   -       1,136  
Discontinued operations   -       8,594  
Change in fair market value of derivative   262       5,021  
Interest on lease liabilities   3,041       2,546  
Deferred tax expense   (1,003 )     (703 )
Changes in operating assets and liabilities:      
Trade receivable   (20 )     (27 )
Inventory   4,632       1,185  
Biological assets   (12,609 )     (15,495 )
Prepaid expenses and other current assets   (497 )     (477 )
Right of Use Assets/Liabilities   455       236  
Other assets   (4,121 )     -  
Trade payable   (3,277 )     333  
Accrued liabilities   (205 )     2,060  
Other long-term liabilities   3,141       -  
Income taxes payable   11,769       8,053  
Net cash provided by operating activities   17,105       15,486  
       
Investing activities      
Purchases of property and equipment   (4,500 )     (5,439 )
Payment of notes receivable   -       119  
Advances for notes receivable   -       (94 )
Net cash used in investing activities   (4,500 )     (5,414 )
       
Financing activities      
Net proceeds from issuance of shares and warrants   2,993       -  
Proceeds from issuance of convertible debenture and warrants   -       4,710  
Net proceeds from insurance financing   800       -  
Exercise of Options   -       135  
Issuance of shares for note payable extension       -  
Net cash provided by (used in) financing activities   (8,859 )     (10,084 )
Net cash used in by financing activities   (8,859 )     (10,084 )
Effect of foreign exchange on cash and cash equivalents   -       87  
Net increase in cash   3,746       75  
Cash, beginning of period   8,359       9,024  
Cash, end of period $ 12,105     $ 9,099  

 


       
Cansortium Inc.      
Adjusted EBITDA Calculation      
(USD '000)      
  Three months ended
  September 30, 2023 September 30, 2022 Variance
Net loss $ (2,761 )   $ (5,576 )   $ 2,815  
Finance costs, net   4,562       4,422       140  
Income taxes   5,561       2,026       3,535  
Depreciation and amortization   3,830       3,464       366  
EBITDA $ 11,192     $ 4,336     $ 6,856  
       
       
  Three months ended
  September 30, 2023 September 30, 2022 Variance
EBITDA $ 11,192     $ 4,336     $ 6,856  
Change in fair value of biological assets   212       7,047       (6,835 )
Change in fair market value of derivative   426       313       113  
Gain on debt settlement(1)   (116 )     -       (116 )
Loss on termination of contract(1)   2       -       2  
Share-based compensation   228       53       175  
Discontinued operations(1)   -       19       (19 )
Income from ERTC tax credit(1)   (4,055 )     -       (4,055 )
Loss on sale of ERTC tax credit(1)   608       -       608  
Other non-recurring expense (income)(2)   261       (1 )     262  
Adjusted EBITDA $ 8,758     $ 11,745     $ (2,987 )