Cansortium Reports Fourth Quarter and Full Year 2023 Results

– Q4 Revenue up 9% YoY to a Record $25.5 Million

– 9^th Consecutive Quarter of Positive Cash Flow from Operations

TAMPA, Fla., April 29, 2024 (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 fourth quarter and full year ended December 31, 2023. Unless otherwise indicated, all financial results are presented in U.S. dollars.

“We delivered record revenue and positive cash flow generation during the fourth quarter as we continued to execute on our growth objectives,” said CEO Robert Beasley. “We are making the critical investments needed to lay the foundation for growth and support our future plans and remain excited about the opportunities ahead.”

“In Florida, we continue to ramp our new dispensaries while driving cultivation improvements, leading to production of more high quality, high THC products. These operating improvements drove higher retail prices and higher average basket size during the quarter.”

“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 by early 2025.”

Q4 2023 Financial Highlights (vs. Q4 2022)

• Revenue increased 9% to $25.5 million compared to $23.4 million.

• Florida revenue increased 11% to $21.6 million compared to $19.4 million.

• Adjusted gross profit¹ was $12.6 million or 49.4% of revenue, compared to $0.7 million or 3.1% of revenue.

• Adjusted EBITDA was $6.9 million compared to $7.9 million, with the decrease primarily driven by higher SG&A spend due to additional stores.

• Cash flow from operations for the three months ended December 31, 2023 was $1.4 million compared to $3.6 million in the prior year.

• At December 31, 2023 the Company had approximately $10.5 million of cash and cash equivalents and $61.2 million of total debt, with approximately 300 million shares outstanding.

Full Year 2023 Financial Highlights (vs. Full Year 2022)

• Revenue increased 11% to $97.3 million compared to $87.7 million.

• Florida revenue increased 11% to $81.2 million compared to $73.0 million.

• Adjusted gross profit¹ was $49.5 million or 50.9% of revenue, compared to $44.0 million or 50.1% of revenue.

• Adjusted EBITDA was $27.2 million compared to $25.1 million, with the increase primarily driven by higher revenue on higher customer transactions, slightly offset by higher SG&A due to new dispensary locations.

• Cash flow from operations for the full year ended December 31, 2023 was $18.5 million compared to $19.1 million in the prior year.
  

Restatement of 2023 Earnings

The Audit Committee of the Board of Directors of the Company, in consultation with the Company's management, concluded that the Company's previously issued consolidated financial statements for the quarterly periods ended March 31, 2023, June 30, 2023 and September 30, 2023 contained an error related to the accounting for the following items:

• Biological assets: Process errors related to beginning of period balances resulted in a $6.7 million mis-classification of expense between COGS and Realized FV of Inventory. There is no impact to Net Income from this mis-classification, but it does impact Adjusted EBITDA. The affected periods are the first three quarters of 2023.

• Depreciation: A misclassification led to $2.4 million of Depreciation being booked to SG&A instead of COGS. There is no impact to Net Income or Adjusted EBITDA. The affected periods are the second and third quarters of 2023.

• ERTC Claim: Due to uncertainties surrounding the ERTC program, the Company has removed income from the $3.4 million sale of its ERTC to a third party. This adjustment impacts Net Income for the third quarter of 2023 but does not impact Adjusted EBITDA.
  

Recent Operational Highlights

• In Florida, Cansortium opened four dispensaries during 2023.

• The Company has opened 2 new locations in Florida thus far in 2024 and currently operates 35 locations in the state.

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: Monday, April 29, 2024
Time: 4:30 p.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10023399
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.

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
Trailblaze
investors@cansortiuminc.com

Cansortium Inc.
Consolidated Statements of Financial Position
As of December 31, 2023 and 2022
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
		December 31,
		2023				2022
Assets
Current assets
Cash		$	10,521			$	8,359
Trade receivable			215				28
Inventory, net			9,244				8,973
Biological assets			331				996
Prepaid expenses and other current assets			1,882				883
Total current assets			22,193				19,239
Property and equipment, net			27,642				31,743
Intangible assets, net			93,593				94,291
Right-of-use assets, net			31,943				30,464
Goodwill			1,525				1,526
Other assets			907				768
Total assets		$	177,803			$	178,031
Liabilities
Current liabilities
Trade payable		$	5,525			$	6,931
Accrued liabilities			9,779				5,534
Income taxes payable			22,009				13,952
Derivative liabilities			9,109				8,676
Current portion of notes payable, net			213				741
Current portion of lease liabilities			2,872				2,123
Total current liabilities			49,507				37,957
Notes payable, net			61,189				56,969
Lease liabilities			37,242				33,922
Deferred tax liability			17,398				20,290
Other long-term liabilities			3,882				1,333
Total liabilities			169,218				150,471
Shareholders' equity
Share capital			183,690				180,954
Share-based compensation reserve			6,739				6,395
Equity conversion feature			6,677				6,677
Warrants			29,634				28,939
Accumulated deficit			(217,821	)			(195,071	)
Foreign currency translation reserve			(334	)			(334	)
Total shareholders' equity			8,585				27,560
Total liabilities and shareholders' equity		$	177,803			$	178,031
Cansortium Inc.
Statement of Operations
For the twelve months ending December 31, 2023 and 2022
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
		For the Years Ended December 31,
			2023				2022
Revenue, net of discounts		$	97,290			$	87,692
Cost of goods sold			47,814				43,731
Gross profit before fair value adjustments			49,476				43,961
Fair value adjustments on inventory sold			12,659				2,622
Unrealized loss on changes in fair value of biological assets			(14,602	)			(9,620	)
Gross profit			47,533				36,963
Expenses
General and administrative			10,022				8,288
Share-based compensation			638				545
Sales and marketing			20,193				17,510
Depreciation and amortization			7,414				6,765
Total expenses			38,267				33,108
Income from operations			9,266				3,855
Other expense (income)
Finance costs, net			17,941				16,087
Loss on change in fair value of derivative liability			433				4,716
Loss on debt settlement			-				1,136
Loss (gain) on disposal of assets			(26	)			672
Loss on lease modifications			67				-
Loss from termination of a contract			7				8,011
Other expense			-				3
Total other expense			18,422				30,625
Loss before income taxes			(9,156	)			(26,770	)
Income tax expense			13,594				10,376
Net loss from continuing operations			(22,750	)			(37,146	)
Net loss from discontinued operations			-				277
Net loss		$	(22,750	)		$	(37,423	)
Other comprehensive gain that may be reclassified to profit or loss in subsequent years
Exchange differences on translation of foreign operations and reporting currency			-				88
Comprehensive loss		$	(22,750	)		$	(37,335	)
Net loss per share
Basic and diluted - continuing operations		$	(0.08	)		$	(0.15	)
Weighted average number of shares
Basic number of shares			292,622,129				252,698,567
Diluted number of shares			349,037,476				308,498,834

Cansortium Inc.
Statement of Operations
For the three months ending December 31, 2023 and 2022
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
		Three months ended
		December 31, 2023				December 31, 2022				Variance
Revenue, net of discounts		$	25,544			$	23,464			$	2,080
Cost of goods sold			12,932				22,738				(9,806	)
Gross profit before fair value adjustments(1)			12,612				726				11,886
Gross margin before fair value adjustments(1)			49.4	%			3.1	%			46.3	%
Realized fair value of increments on inventory sold			3,615				27,645				(24,030	)
Unrealized change in fair value of biological assets			(2,883	)			(22,844	)			19,961
Gross profit			13,344				5,527				7,817
Gross profit margin			52.2	%			23.6	%			28.7	%
Expenses:
General and administrative			2,436				941				1,495
Share-based compensation			(6	)			391				(397	)
Sales and marketing			5,265				4,677				588
Depreciation and amortization			1,634				1,751				(117	)
Total expenses			9,329				7,760				1,569
Income (loss) from operations			4,015				(2,233	)			6,248
Other expense (income):
Finance costs, net			4,806				4,165				641
Change in fair market value of derivative			171				(306	)			477
Loss (gain) on termination of a contract			1				(584	)			585
Loss on debt settlement			116				-				116
(Gain) loss on disposal of assets			(96	)			695				(791	)
Other expense			-				1				(1	)
Total other expense			4,997				3,971				1,027
Loss before taxes			(983	)			(6,204	)			5,221
Income taxes			3,727				3,209				518
Loss from continuing operations			(4,710	)			(9,413	)			4,703
Loss from discontinued operations			-				277				(19	)
Net loss		$	(4,710	)		$	(9,689	)		$	4,979

Cansortium Inc.
Consolidated Statements of Cash Flow
For the years ended December 31, 2023 and 2022
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
		For the twelve months ended December 31,
		2023				2022
Operating activities
Net loss from continuing operations		$	(22,750	)		$	(37,146	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Unrealized loss (gain) on changes in fair value of biological assets		14,602				9,620
Realized gain on changes in fair value of biological assets		(12,659		)		(2,622		)
Share-based compensation		619				545
Depreciation and amortization		15,078				13,428
Accretion and interest of convertible debentures		536				362
Accretion and interest of term loan		12,873				12,232
Interest income on notes receivable		-				(71		)
Interest on insurance financing		48				-
Loss on disposal of assets		255				672
Loss on debt settlement		-				1,136
Loss on termination of contract		-				8,011
Change in fair market value of derivative		433				4,716
Interest on lease liabilities		4,473				3,612
Deferred tax expense		(2,892		)		(1,273		)
Changes in operating assets and liabilities:
Trade receivable		(187		)		(2		)
Inventory		15,596				11,927
Biological assets		(17,145		)		(16,355		)
Prepaid expenses and other current assets		(999		)		404
Right of Use Assets/Liabilities		(3,698		)		197
Other assets		661				(137		)
Trade payable		(1,404		)		(1,208		)
Accrued liabilities		4,409				(811		)
Other long-term liabilities		2,549				-
Income taxes payable		8,057				11,832
Net cash provided by operating activities		18,455				19,069
Investing activities
Purchases of property and equipment		(6,019		)		(6,799		)
Purchase of intangible assets		(319		)		-
Payment of notes receivable		-				119
Advances for notes receivable		-				(94		)
Net cash used in investing activities		(6,338		)		(6,774		)
Financing activities
Net proceeds from issuance of shares and warrants		2,992				-
Proceeds from issuance of convertible debenture and warrants		-				4,660
Net proceeds from insurance financing		-				-
Payment of lease obligations		(2,381		)		(5,771		)
Net proceeds from equipment loan		-				748
Exercise of options		-				135
Issuance of shares for note payable extension		-				162
Principal repayments of notes payable		(10,566		)		(12,982		)
Net cash used in financing activities		(9,955		)		(13,048		)
Effect of foreign exchange on cash and cash equivalents		-				88
Net increase (decrease) in cash		2,162				(665		)
Cash, beginning of year		8,359				9,024
Cash, end of year		$	10,521			$	8,359

 

Cansortium Inc.
Adjusted EBITDA Calculation
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
		Year ended
		December				December
			31, 2023				31, 2022			Variance
Net loss		$	(22,750	)		$	(37,423	)		$	14,673
Interest expense			17,941				16,087				1,854
Income taxes			13,594				10,376				3,218
Depreciation and amortization			15,078				13,666				1,412
EBITDA		$	23,863			$	2,706			$	21,157
		Year ended
		December				December
			31, 2023				31, 2022			Variance
EBITDA		$	23,863			$	2,706			$	21,157
Change in fair value of biological assets			1,943				6,998				(5,055	)
Change in fair market value of derivative			433				4,716				(4,283	)
Gain on debt settlement(1)			-				1,136				(1,136	)
Loss on termination of contract(1)			7				8,011				(8,004	)
Share-based compensation			638				545				93
Discontinued operations(1)			-				-				-
Loss (gain) on disposal of assets(1)			(26	)			673				(699	)
Income from ERTC tax credit(1)			-				-				-
Loss on sale of ERTC tax credit(1)			-				-				-
Other non-recurring expense (income)(2)			327				278				48
Adjusted EBITDA		$	27,183			$	25,063			$	2,121

_____________________________
^{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.}