Cannabis News for Florda
 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... CANSORTIUM INC. REPORTS 2020 THIRD QUARTER FINANCIAL RESULTS

 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.

Cansortium Inc. Logo (CNW Group/Cansortium Inc)

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.
(1)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. Reconciliations from EBITDA and Adjusted EBITDA to Net Loss are included in the accompanying financial schedules.

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.
(1)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. Reconciliations from EBITDA and Adjusted EBITDA to Net Loss are included in the accompanying financial schedules.

Full Year 2020 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 during the second quarter of 2020 with minimum capital outlay, with operations anticipated to commence in the fourth quarter of 2020, and has opened five of the six dispensaries planned for 2020.  In Pennsylvania, the Company is actively pursuing two additional dispensary locations to augment the strong sales of its existing Hanover dispensary.  In Michigan, the Company enhanced the cultivation team on the ground with the engagement of Freedom Town. Finally, in Texas, the Company recently secured an extension of its convertible notes to allow the Company to continue to seek longer-term solutions there.  The Company reiterates its full year 2020 outlook for consolidated revenues in the range of $55 million to $60 million and Adjusted EBITDA of approximately $14 million. The forecast is based on projected revenues of at least $45 million for Cansortium’s Florida operations with additional revenue from the Michigan, Pennsylvania and Texas markets. 

ABOUT CANSORTIUM INC.

Headquartered in Miami, Florida, and operating under the Fluent™ 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.

Conference Call

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

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 30,  December 31, 
 20202019
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 Inc. shareholders 38,243 47,337
Non-controlling interests  (159)
Total shareholders’ equity  38,243 47,178
     
Total liabilities and shareholders’ equity$166,833$167,066
Cansortium Inc.        
Consolidated Statement of Operations        
For the three and nine months ended September 30, 2020 and 2019    
(USD ‘000)        
 For the three months
ended September 30,  
 For the nine months
ended September 30,  
  
  2020 2019  20202019
         
Revenue, net of discounts$14,313$7,387 $37,718$19,005
Cost of goods sold 4,784 2,722  13,0116,822
Gross profit before fair value adjustments 9,529 4,665  24,70712,183
         
Realized fair value of increments on inventory sold 6,051 3,341  18,5666,692
Unrealized change in fair value of biological assets (4,263) (1,109)  (23,945)(3,182)
Gross profit 7,741 2,433  30,0868,673
         
Expenses        
General and administrative 2,861 4,362  9,06419,384
Share-based compensation 1,689 258  4,9381,744
Sales and marketing 3,561 3,348  10,1628,972
Depreciation and amortization 1,561 2,549  4,6357,250
Total expenses 9,672 10,517  28,79937,350
         
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  11,4489,786
Change in fair market value of derivative 673 (2,631)  1,680(6,172)
Loss on investment in associate 166   381
Gain in fair market value of investment in associate    (3,388)
Loss on debt restructuring    8,065
Loss on disposal of assets 710 2,205  6562,205
Other expense 1 257  7285
Total other expense (income) 5,442 2,757  22,2372,716
         
Loss before taxes (7,609) (10,841)  (20,844)(31,393)
         
Income taxes 1,281 432  7,4221,708
         
Net loss (8,890) (11,273)  (28,266)(33,101)
         
Net income (loss) attributable to non-controlling interest  83  (204)
         
Net loss attributable to controlling interest$(8,890)$(11,356) $(28,266)$(32,897)
         
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,
 20202019
Operating activities  
Net loss$(28,266)$(33,101)
Adjustments to reconcile net loss to net cash used in operating activities:  
Unrealized gain on changes in fair value of biological assets(23,945)(3,182)
Share-based compensation4,9382,005
Depreciation and amortization6,1468,252
Discontinued operations(106)
Amortization of debt discount4,497
Accretion of convertible debentures5,974
Interest on lease liabilities3,324
Change in fair market value of derivative1,680(6,172)
Loss on investment in associate381
Gain in fair market value of investment in associate(3,388)
Loss on debt restructuring8,066
Loss on disposal of assets6562,205
Deferred tax expense1,700
Changes in operating assets and liabilities:  
Accounts receivable79(51)
Inventory(2,930)(3,715)
Biological assets21,6622,746
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 liabilities2,205(3,357)
Income taxes payable4,9091,838
Lease obligations1,772
Other current liabilities(251)398
Other liabilities(160)
Net cash provided by (used in) operating activities3,723(35,828)
   
Investing activities  
Purchases of property and equipment(3,136)(12,558)
Purchase of intangible assets(319)
Payment of notes receivable350
Notes receivable(1,375)
Proceeds from sale of subsidiary600
Net cash used in investing activities(3,561)(12,877)
   
Financing activities  
Proceeds from IPO56,178
Proceeds from issuance of shares and warrants4,351
Proceeds from issuance of notes payable6241,006
Payment of lease obligations(3,207)921
Interest repayments of notes payable
Principal repayments of notes payable(46,353)
Net cash provided by financing activities1,20651,752
Effect of foreign exchange on cash and cash equivalents188(59)
Net increase in cash and cash equivalents1,5562,988
Cash and cash equivalents, beginning of period2,5162,026
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 consolidated entity$$13,786
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.       
Financial Highlights       
For the three and nine months ended September 30, 2020 and 2019     
(USD ‘000)       
 Three months ended Nine months ended
Financial resultsSeptember
30, 2020
September
30, 2019
Variance September
30, 2020
September
30, 2019
Variance
        
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 margin54.1%32.9%21.1% 79.8%45.6%34.1%
        
Adjusted gross profit (1)$9,529$4,665$4,864 $24,707$12,183$12,524
Adjusted gross margin (1)66.6%63.2%3.4% 65.5%64.1%1.4%
        
Selling, general and administrative expenses$9,672$10,517$(845) $28,799$37,350$(8,552)
        
EBITDA (1)$(1,617)$(4,483)$2,867 $(3,243)$(11,854)$8,611
Adjusted EBITDA (1)$3,645$(2,095)$5,740 $6,990$(7,224)$14,215
        
Net loss$(8,890)$(11,273)$2,383 $(28,266)$(33,101)$4,835
Net loss per share (basic)$(0.04)$(0.06)$0.01 $(0.14)$(0.18)$0.04
Net loss per share (diluted)$(0.04)$(0.06)$0.01 $(0.14)$(0.18)$0.04
  
(1)Adjusted gross profit, adjusted gross margin, EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have any standardized meaning 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
30, 2020
September
30, 2019
Variance September
30, 2020
September
30, 2019
Variance
  
Net loss$(8,890)$(11,273)$2,383 $(28,266)$(33,101)$4,835
Interest expense3,8922,926966 11,4489,7861,662
Income taxes1,281432849 7,4221,7085,714
Depreciation and amortization2,1003,432(1,332) 6,1539,753(3,600)
EBITDA$(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
30, 2020
September
30, 2019
Variance September
30, 2020
September
30, 2019
Variance
EBITDA$(1,617)$(4,483)$2,866 $(3,243)$(11,854)$8,611
Change in fair value of biological assets1,7882,232(444) (5,379)3,510(8,889)
Change in fair market value of derivative673(2,631)3,304 1,680(6,172)7,852
Gain in fair value of investment in associate (3,388)3,388
Share-based compensation1,6892581,431 4,9381,7443,194
Discontinued operations236236 (106)(106)
Loss on debt restructuring 8,0658,065
Other non-recurring expense8762,530(1,654) 1,0358,935(7,900)
Adjusted EBITDA$3,645$(2,095)$5,740 $6,990$(7,224)$14,215

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