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  — 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.

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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.

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 )
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