Cannara Biotech Inc. Reports Q1 2023 Financial Results

MONTREAL, Jan. 23, 2023 /CNW/ – Cannara Biotech Inc. (“Cannara” or the “Company“) (TSXV: LOVE) (OTCQB: LOVFF) (FRA: 8CB), a vertically integrated producer of premium-grade cannabis and derivative product offerings at affordable prices  with two mega facilities based in Québec spanning over 1,650,000 sq. ft., today announced its fiscal first quarter 2023 financial and operating results for the three-month period ended November 30, 2022.

Fiscal First Quarter 2023 Financial Highlights

• Q1 2023 revenue of $10.3 million, an 57% increase compared to Q1 2022.
• Recorded Q1 2023 gross profit before fair value adjustments of $4 million, an increase of 34% compared to Q1 2022.
• Delivered the Company’s seventh straight quarter of positive Adjusted EBITDA of $1.7 million, a 72% increase compared to Q1 2022.
• Earned net income of $2,951 for Q1 2023.
• The Company has $27.1 million in working capital as of November 30, 2022, which includes $6.8 million of cash on hand.

Fiscal First Quarter 2023 Sales and Operational Highlights

• Cannara activated its 7th of 24 individual 25,000 square foot growing zones at its Valleyfield Facility, reaching a total of 175,000 square feet of active canopy. Combined with its Farnham Facility, the Company can currently produce approximately 23,500 kg of premium-grade cannabis per year and has a potential future capacity of 120,000 kg of premium-grade cannabis per year when both Facilities are fully built out.
• The Company has set an objective for fiscal 2023 of activating 9 growing zones, a 50% increase from the capacity the Valleyfield Facility was producing at its prior fiscal year end.
• Increased employee’s headcount from approximately 190 employees in Q1 2022 to 280 employees in Q1 2023; a 47% increase, to support the growth of the operations.
• Cannara entered the British Columbia market with 7 of its dried flower, pre-roll, and hash products.
• The Company was deemed eligible to hold a cannabis representative registration by the province of Alberta in November 2022, paving the way for it to sell cannabis into the Alberta retail market.
• During the quarter, Cannara released 14 new SKUs of its premium-grade cannabis in Ontario and Quebec under the Company’s flagship brands: Tribal, Nugz and Orchid CBD, bringing its total SKU count to 32 SKUs. Included in the launch was:
• The Company’s Nugz Fresh Frozen Hash Rosin and Old School Hash have become top 10 best-selling concentrates in Ontario¹.
• The Company estimates its current market share as of the first quarter of 2023 is approximately 7% in Quebec² and 2% in Ontario³.

Sales and Operational Highlights Subsequent to Fiscal First Quarter 2023

• In December 2022, the Company’s Farnham Facility received its CUMCS Equivalency IMC-G.A.P. certification (the “Certification”), a leading certification standard for medical cannabis cultivation, harvest, and primary processing. Obtaining the Certification provides documented evidence that Cannara has met strict standards for quality and consistency in the cultivation, harvest and primary processing of cannabis needed for export of cannabis inputs to certain international jurisdictions, including Israel, Europe, and Australia.
• As part of its marketing strategy, the Company designed and launched several lines of apparel and accessories to be sold online at https://cannaraswag.shop, including Cannara’s cannabis accessories: the Tribal UNI Pro Ark and the Nugz Häpple.
• In December 2022, the Company was awarded three awards at the KIND Awards gala in Ontario highlighting the Company’s focus on brands and high-quality flower: The awards for Brand of the Year and Terpene Profile of the Year were given to Tribal, and CBD Runtz by Orchid CBD was named CBD Product of the year.
• In December 2022, the Company signed a lease agreement with a new tenant for a building that is under construction at its Valleyfield site. The start of the lease term is set for January 2024 with a term of 11 years. This transaction will generate income and positive cash flow on an area of the Valleyfield Facility that would otherwise been unused as it is not licensed for cannabis production.

Capital Transactions

• During the quarter, Cannara invested $3.7 million in capital expenditures which was mainly attributable to the activation of the 7^th growing zone, the construction of a butane extraction lab, office and warehouse space, and initial costs related to the processing center build out at the Valleyfield Facility, in addition to capital expenditures incurred resulting from the expected increased post-harvest requirements.
• On November 30, 2022, Cannara filed with the TSX Venture Exchange, a Notice in respect of a normal course issuer bid (the “NCIB”) to be transacted through the facilities of the TSX-V. Pursuant to the NCIB, Cannara may purchase up to 15,000,000 of its common shares. The Company expects that the purchase of Shares will benefit remaining shareholders by increasing their equity interest in the Company’s assets.
• On January 12, 2023, The Company announced details of its proposal to consolidate all of the issued and outstanding common shares of the Company on the basis of ten (10) pre-consolidation common shares for every one (1) post-consolidation common shares, subject to the approval of shareholders at the upcoming meeting of shareholders to take place on January 25, 2023, as well as TSXV approval. Upon completion of the share consolidation, it is expected that there will be approximately 87,748,132 common shares issued and outstanding, subject to adjustment for fractional shares.
• On January 20, 2023, the Company granted a total of 378,000 stock options at an exercise price of $0.18, subject to certain vesting conditions in accordance with the employee share option plan.

“In Q1 2023, we continued to execute on Cannara’s growth plan, as evidenced by the activation of our 7th grow zone at our Valleyfield Facility, our entry into the BC market and the release of 14 new high-demand SKU’s,” stated Zohar Krivorot, President & Chief Executive Officer of Cannara. “We have maintained our market share in Quebec, which we expect to increase in future quarters as we continue to expand in Ontario, British Colombia, and Saskatchewan in addition to launching in Alberta. The release of 14 new SKU’s this quarter is a testament to the hard work of all Cannara staff here and we are confident that our premium products will continue to be a hit with our ever-expanding customer base,” concluded Mr. Krivorot.

Nicholas Sosiak, Chief Financial Officer of Cannara added, “When compared to the previous year’s Q1 results, the financials improved significantly across all metrics.  However, we did experience some temporary pre-roll manufacturing capacity challenges that impacted sales during the quarter. We are working diligently on increasing internal pre-roll manufacturing capacity, and we expect to resume our significant growth trend during Q2. We expect to achieve 9 active growing zones at Valleyfield this year, having just activated our 7th, allowing us to greater volumes of premium-grade cannabis. As the Company continues to scale, we expect revenues, margins, and profits to continue to improve, and shareholders to be rewarded for their investment in Cannara. I am proud to be able to report our seventh consecutive quarter of Adjusted EBITDA in addition to currently being on track to achieving record monthly sales in January 2023,” concluded Mr. Sosiak.

Selected Financial Information

Outstanding Shares

As at the date of this report, the Company had 877,481,321 common shares and 44,471,911 stock options issued and outstanding. For further information, the complete Consolidated Financial Statements and Management’s Discussion and Analysis, along with additional information about the Company and all of its public filings that are available at sedar.com and the Company’s investor website, investors.cannara.ca.

About Cannara Biotech Inc.

Cannara Biotech Inc. (TSXV: LOVE) (OTCQB: LOVFF) (FRA: 8CB) is a vertically integrated producer of affordable premium-grade cannabis and cannabis-derivative products for the Québec and Canadian markets. Cannara owns two mega facilities based in Québec spanning over 1,650,000 sq. ft., providing the Company with 120,000kg of potential annualized cultivation output. Leveraging Québec’s low electricity costs, Cannara’s facilities produce premium-grade cannabis products at an affordable price. For more information, please visit cannara.ca.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statement Regarding “Forward-Looking” Information

This information release contains certain forward-looking information. Such information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from those implied by statements herein, and therefore these statements should not be read as guarantees of future performance or results. All forward-looking statements are based on the Company’s current beliefs as well as assumptions made by and information currently available to it as well as other factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Due to risks and uncertainties, including the risks and uncertainties identified by the Company in its public securities filings, actual events may differ materially from current expectations. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

View original content to download multimedia:https://www.prnewswire.com/news-releases/cannara-biotech-inc-reports-q1-2023-financial-results-301727739.html

SOURCE Cannara Biotech Inc.

Company Relationship Disclosure

T420 is responsible for the T420 opinions provided in this disclosure except all sources or information provided by other parties were not verified or authenticated and T420 does not undertake to confirm or substantiate or be responsible for such information provided by other parties.

Any Content posted regarding a Profiled Issuer is not a solicitation or recommendation to buy, sell or hold securities. We cannot and do not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. All information should be independently verified. We are not responsible for errors or omissions in our publications, and any opinions expressed are subject to change, without notice. We do not, nor are we under any obligation to undertake due diligence or investigation or authenticate and verify whatsoever regarding Profiled Issuers or any Content posted in relation thereto and we do not receive any verification from the Profiled Issuer regarding the Content we disseminate. Similarly, while we endeavor to facilitate the provision of quality information, we are not responsible for any loss or damages caused or alleged to have been caused by its use nor verify or authenticate or update such information.

Pursuant to an agreement between Spotlight Media Corp and Cannara Biotech (LOVE) we have been hired for a period of 30 days beginning on January 1, 2023 to publicly disseminate information about Cannara Biotech including on the Website and other media including Facebook and Twitter. We are being paid $3,000 for one month by Cannara Biotech and were paid “ZERO” shares of unrestricted or restricted common shares. We plan to sell the “ZERO” shares of Cannara Biotech that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of Cannara Biotech in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

This article contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs regarding future performance are “forward-looking statements”. Forward-looking statements can be identified by the use of words such as “expects”, “does not expect”, “is expected”, “believes”, “intends”, “anticipates”, “does not anticipate”, “believes” or variations of these words, expressions or statements, that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, will occur or will be realized. Such forward-looking statements involve risks, uncertainties and other known and unknown factors that could cause actual results, events or developments to differ materially from the results, events or developments expected and expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, dependence on obtaining and maintaining regulatory approvals, including the acquisition and renewal of federal, provincial, state, municipal, local or other licenses, and any inability to obtain all necessary government authorizations, licenses and permits to operate and expand the Company’s facilities; regulatory or policy changes such as changes in applicable laws and regulations, including federal, state and provincial legalization, due to fluctuations in public opinion, industry perception of integrative mental health, including the use of psychedelic-assisted therapy, delays or inefficiencies or any other reason; any other factor or development likely to hamper the growth of the market; the Company’s limited operating and profitability track record; dependence on management; the Company’s need for additional financing and the effects of financial market conditions and other factors on the availability of capital; competition, including that of more established and better funded competitors; the impact of the Russia-Ukraine conflict on the global economy; the continued impact of the COVID-19 pandemic; and the need to build and maintain alliances and partnerships, including with research and development companies, customers and suppliers. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. Despite the Company’s efforts to identify the main risk factors that could cause actual measures, events or results to differ materially from those described in forward-looking statements, other risk factors may cause measures, events or developments to materially differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. The Company does not undertake to revise forward-looking statements, even if new information becomes available as a result of future events, new facts or any other reason, except as required by applicable laws

Share

Tags

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

Top Stories