— Q3 Revenue improves 3.5% Year-over-Year to $26.1 million
— Delivers $7.5 million in Adjusted EBITDA, representing 29% margin
— Generates $9.6 million in Positive Cash Flow from Operations
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 its financial and operating results for the quarter ended September 30, 2024. Unless otherwise indicated, all financial results are presented in U.S. dollars.
“We completed the third quarter by delivering our 12th consecutive quarter of positive cash flow from operations as well as steady year over year revenue growth,” said CEO Robert Beasley. “Our focus on continuous improvement and gaining efficiencies has continued to be a positive contributor to our solid performance.”
Mr. Beasley added, “In Florida, we have increased our cultivation canopy to remain in balance with strong medical market demand and anticipate adding four new stores in 2025 while expanding our brand and product portfolio. Fortunately, our growth strategy did not depend on the outcome of Amendment 3 passing in Florida and wehave made no financial commitments which depended on the adult use measure. FLUENT remains committed to the mission of serving the medical cannabis patients of Florida.”
Mr. Beasley concluded, “Looking ahead, with our primary loan refinancing completed and our business combination with RIV Capital set to close by year end, our business is exceptionally well positioned heading into 2025. We have already commenced integration activities and are looking forward to leveraging the combined talent of both teams to scale our market share in the state of New York. Additionally, we also continue to seek out opportunities to drive revenue growth in both Pennsylvania and Texas.”
Q3 2024 Financial Highlights (vs. Q3 2023)
— Revenue increased 3.5% to $26.1 million compared to $25.3 million.
— Florida revenue increased 3.6% to $22.0 million compared to $21.3 million.
— Gross profit before fair value adjustments1 was $14.3 million or 54.6% of revenue, compared to $13.7 million or 54.0% of revenue.
— Adjusted EBITDA was $7.5 million compared to $7.7 million, with the decrease primarily driven by higher general and administrative expenses.
— Cash flow from operations for the three months ending September 30, 2024, was $9.6 million compared to $7.1 million in the prior year primarily.
— On September 30, 2024, the Company had approximately $8.9 million of cash and cash equivalents and $74.1 million of total debt outstanding, with approximately 303 million shares outstanding.
Recent Operational Highlights
— In Florida, Cansortium currently operates 35 stores and anticipates opening 4 new stores by the end of 2025.
— The Ruskin, FL Facility is now operational and Cansortium completed its first harvest in June 2024, adding approximately 14,000 sq ft of cultivation canopy.
— The Rosa, FL Facility is under construction, and the Company anticipates it will complete its first harvest by Q2 2025, adding another 7,000 sq ft of canopy to Cansortium’s Florida footprint.
— There was no major damage to the Company’s facilities or retail locations as a result of the hurricane’s which impacted Florida in 2024.
— Subsequent to quarter end, the Company completed a new senior secured credit agreement of up to $96,500,000 with Chicago Atlantic Admin, LLC, refinancing its existing $71,000,000 senior secured term loan that was set to mature May 29, 2025.
RIV Transaction Update and Conference call
The Company has continued its integration activities with RIV Capital Inc. (“RIV Capital”) and, with all required regulatory approval obtained, expects to complete the business combination in early December 2024. In connection with the closing, the Company expects to host a conference call to discuss the proforma business as well as its financial and operating results for the third quarter ended September 30, 2024. Details will be announced upon completion of the RIV Capital transaction.
___________________________ 1 Gross profit before fair value adjustments is anon-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 gross profit before fair value adjustments from gross profit plus (minus) the changes in fair value of biological assets, as presented in the consolidated statement of operations.
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 visitwww.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 investors@cansortiuminc.com
Cansortium Inc. Consolidated Statements of Financial Position (unaudited) As of September 30, 2024, and December 31, 2023 (Amounts expressed in thousands of United States Dollars unless otherwise stated)
September 30, December 31,
2024 2023
Assets
Current assets
Cash $ 8,932 $ 10,521
Trade receivable 51 215
Inventory, net Note 3 13,419 9,244
Biological assets Note 4 2,951 331
Prepaid expenses and other current assets Note 5 2,794 1,882
Total current assets 28,147 22,193
Property and equipment, net Note 6 31,476 27,642
Intangible assets, net Note 7 94,714 93,593
Right-of-use assets, net Note 12 32,692 31,943
Goodwill Note 8 1,525 1,525
Other assets 1,373 907
Total assets $ 189,927 $ 177,803
Liabilities
Current liabilities
Trade payable $ 8,035 $ 5,525
Accrued liabilities 5,425 9,779
Income taxes payable 3,337 22,009
Derivative liabilities Note 10 817 9,109
Current portion of notes payable, net Note 11 63,989 213
Current portion of lease liabilities Note 12 3,178 2,872
Total current liabilities 84,781 49,507
Notes payable, net Note 11 7,414 61,189
Lease liabilities Note 12 38,924 37,242
Deferred tax liability 22,303 17,398
Uncertain tax position 38,816 -
Other long-term liabilities Note 21 3,447 3,882
Total liabilities 195,685 169,218
Shareholders' equity
Share capital Note 13 183,690 183,690
Share-based compensation reserve 7,158 6,739
Equity conversion feature 6,914 6,677
Warrants Notes 13 29,634 29,634
Accumulated deficit (232,820) (217,821)
Foreign currency translation reserve (334) (334)
Total shareholders' equity (5,758) 8,585
Total liabilities and shareholders' equity $ 189,927 $ 177,803
Cansortium Inc. Statement of Operations (unaudited) For the three- and nine-months ending September 30, 2024 and 2023 (Amounts expressed in thousands of United States Dollars unless otherwise stated)
For the three months ended For the nine months ended
September 30, September 30, September 30, September 30,
2024 2023 2024 2023
Revenue, net of discounts $ 26,147 $ 25,260 $ 78,643 $ 71,746
Cost of goods sold 11,859 11,607 38,315 34,882
Gross profit before fair value adjustments 14,288 13,653 40,328 36,864
Fair value adjustments on inventory sold (2,099) 4,492 (2,259) 9,044
Unrealized gain (loss) on changes Note 4 (611) (3,627) 8,704 (11,719)
ccccin fair value of biological assets
Gross profit 11,578 14,518 46,773 34,189
Expenses
General and administrative Note 14 3,913 2,705 12,483 7,588
Sales and marketing Note 14 5,846 5,354 17,298 14,928
Depreciation and amortization 1,737 2,003 5,247 5,780
Share-based compensation 228 228 419 643
Total expenses 11,724 10,290 35,447 28,939
Income from operations (146) 4,228 11,326 5,250
Other expense (income)
Finance costs, net Note 19 5,154 4,562 14,700 13,135
Loss (gain) on change in fair value of ccccderivative liability Notes 10 (898) 426 (8,292) 262
Gain on debt settlement - (116) - (116)
Loss on disposal of assets - - 212 70
Loss from termination of a contract - 2 5 6
Other miscellaneous income - - - 67
Total other (income) expense 4,256 4,874 6,625 13,424
Income (loss) before income taxes (4,402) (646) 4,701 (8,174)
Income tax expense Note 9 7,379 4,662 19,700 9,867
Net comprehensive loss $ (11,781) $ (5,308) $ (14,999) $ (18,041)
Net loss per share
Basic and diluted - continuing operations $ (0.04) $ (0.02) $ (0.05) $ (0.06)
Weighted average number of shares
Basic number of shares 300,522,916 298,963,366 299,617,665 290,693,488
Diluted number of shares 341,807,051 358,650,277 341,616,139 345,906,048
Cansortium Inc. Consolidated Statements of Cash Flow (unaudited) For the nine months ended September 30, 2024 and 2023 (Amounts expressed in thousands of United States Dollars unless otherwise stated)
For the nine months ended
September 30, September 30,
2024 2023
Operating activities
Net loss from continuing operations $ (14,999) $ (18,041)
Adjustments to reconcile net loss to net cash provided by operating activities:
Unrealized loss (gain) on changes in fair value of biological assets (8,704) 11,719
Realized loss (gain) on changes in fair value of biological assets 2,259 (9,044)
Share-based compensation 419 644
Depreciation and amortization 11,366 10,961
Accretion and interest of convertible debentures 426 400
Accretion and interest of term loan 10,372 9,534
Interest of equipment loan - 37
Interest on cultivation facility loan 61 -
Interest on insurance financing 9 -
Interest on convertible promissory note 224 -
Loss on disposal of assets 212 70
Change in fair market value of derivative (8,292) 262
Interest on lease liabilities 3,588 3,041
Deferred tax expense 4,835 (1,003)
Uncertain tax position 38,816 -
Changes in operating assets and liabilities:
Trade receivable 164 (20)
Inventory 10,944 11,339
Biological assets (11,294) (12,609)
Prepaid expenses and other current assets 960 (497)
Right of Use Assets/Liabilities (3,520) 455
Other assets (466) (66)
Trade payable 2,510 (3,275)
Accrued liabilities (4,354) (205)
Other long-term liabilities (435) 2,531
Income taxes payable (18,672) 10,872
Net cash provided by operating activities 16,429 17,105
Investing activities
Purchases of property and equipment (10,543) (4,500)
Purchase of intangible assets (1,332) -
Net cash used in investing activities (11,875) (4,500)
Financing activities
Net proceeds from issuance of shares and warrants - 2,993
Net proceeds from insurance financing - 800
Net proceeds from convertible note 3,983 -
Payment of lease obligations (2,126) (4,800)
Net proceeds from auto and equipment loan 48 -
Principal repayments of notes payable (8,048) (7,852)
Net cash used in financing activities (6,143) (8,859)
Net increase (decrease) in cash (1,589) 3,746
Cash, beginning of period 10,521 8,359
Cash, end of period $ 8,932 $ 12,105
Cansortium Inc. Adjusted EBITDA Calculation (unaudited) (Amounts expressed in thousands of United States Dollars unless otherwise stated)
Three months ended
September 30, September 30, Variance
2024 2023
Net loss $ (11,781) $ (5,308) $ (6,473)
Finance costs, net 5,154 4,562 592
Income taxes 7,379 4,662 2,717
Depreciation and amortization 3,801 3,829 (28)
EBITDA $ 4,553 $ 7,745 $ (3,192)
Three months ended
September 30, September 30, Variance
2024 2023
EBITDA $ 4,553 $ 7,745 $ (3,192)
Change in fair value of biological assets 2,710 (865) 3,575
Change in fair market value of derivative (898) 426 (1,324)
Professional fees(1) 529 - 529
One-time employee costs(2) 162 - 162
Loss on debt settlement - (116) 116
Share-based compensation 228 228 -
Other non-recurring expense(3) 243 263 (20)
Adjusted EBITDA $ 7,527 $ 7,681 $ (154)
Nine months ended
September 30, September 30, Variance
2024 2023
Net loss $ (14,999) $ (18,041) $ 3,042
Finance costs, net 14,700 13,135 1,565
Income taxes 19,700 9,867 9,833
Depreciation and amortization 11,274 11,490 (216)
EBITDA $ 30,675 $ 16,451 $ 14,224
Nine months ended
September 30, September 30, Variance
2024 2023
EBITDA $ 30,675 $ 16,451 $ 14,224
Change in fair value of biological assets (6,445) 2,675 (9,120)
Change in fair market value of derivative (8,292) 262 (8,554)
Loss on termination of contract - 6 (6)
Loss on debt settlement - (116) 116
Professional fees(1) 4,170 - 4,170
One-time employee costs(2) 776 - 776
Share-based compensation 419 643 (224)
Loss on disposal of assets 212 70 142
Other non-recurring expense(3) 486 327 159
Adjusted EBITDA $ 22,001 $ 20,318 $ 1,683
(1)Legal and professional fees associated with potential transactions and professional fees associated with prior periods. (2)Severance and relocation costs. (3)One-time costs incurred during the period related.
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