– Company expects to be EBITDA positive in 2023 –

SAN DIEGO and TORONTO, Aug. 25, 2022 /CNW/ – StateHouse Holdings Inc. (“StateHouse” or the “Company”) (CSE: STHZ) (OTCQX: STHZF), a California-focused, vertically integrated cannabis enterprise, today announced its financial results for the three and six months ended June 30, 2022 (“Q2 2022” and “YTD 2022”, respectively), and provided additional business updates. The unaudited condensed interim consolidated financial statements for Q2 2022 and corresponding management’s discussion and analysis are available for download from the Company’s investor website, statehouseholdings.com, and on the Company’s SEDAR profile. Unless otherwise indicated, all dollar amounts in this press release are denominated in U.S. currency.

“The second quarter was a landmark period for StateHouse, as we completed the acquisition of Loudpack to create a leading, fully integrated California cannabis company,” said Ed Schmults, Chief Executive Officer. “We then launched the first phase of a major integration initiative, which was completed before the end of the quarter and resulted in significant annual cost savings. One-time costs related to closing the Loudpack acquisition impacted profitability in Q2 2022, but with the integration activities underway, we exited the quarter in a much stronger competitive position. While California cannabis market conditions are currently challenging, particularly in wholesale, we are continuing to aggressively reduce costs and optimize operations, developing new consumer packaged cannabis products and expecting to generate material positive EBITDA⁽¹⁾ in 2023″.

Q2 2022 Highlights

• Total net revenues were $34.6 million, a 125% increase over the $15.4 million realized in the three months ended June 30, 2021 (“Q2 2021”). The increase reflected the acquisitions of UL Holdings Inc. (“Urbn Leaf”) and LPF JV Corporation (“Loudpack”), which were completed in March and April of 2022, respectively;
• Gross profit before adjustments for biological assets, was $14.7 million, a 110% increase as compared to $7.0 million in gross profit realized during Q2 2021. Consolidated gross margins during Q2 2022 were 42.6% of revenues, compared to 45.6% of revenues in Q2 2021, with the gross margin reduction primarily due to the year over year selling price declines on bulk cannabis in the California market and the addition of manufacturing revenues which typically operate on lower margins, partially offset by greater sell through of in-house manufactured products at Company owned retail stores;
• On April 4, 2022, the Company completed the acquisition of Loudpack to form one of the largest vertically integrated cannabis enterprises in California;
• On May 11, 2022, the Company announced new retail store openings in San Francisco and Grossmont, California;
• On May 19, 2022, the Company acquired a further 50% interest in its retail store in Seaside, California, bringing its interest in the store to 100%; and,
• On May 31, 2022, the Company announced initial integration measures that are expected to generate approximately $10.3 million of annualized cost savings.^{(2) (3)}

Subsequent Events

• On July 25, 2022, the Company officially changed its name from Harborside Inc. (“Harborside”) to StateHouse Holdings Inc. to honor its pioneering history and reflect its future direction in California’s cannabis sector. The Company’s subordinate voting shares were also reclassified as common shares on this date;
• On July 28, 2022, the Company announced that it reached a Partial Payment Installment Agreement with the Internal Revenue Service (“IRS”) to resolve and reduce legacy federal tax obligations related to the Internal Revenue Code Section 280E, resulting in a one-time non-cash gain of approximately $16.1 million. The Company continues to negotiate with the IRS over additional tax repayments; and,
• On August 15, 2022, StateHouse completed the transition to a common technology platform for its California retail stores, e-commerce and home delivery.

Operations Update

StateHouse has established a leading integrated cannabis platform that, when fully optimized, will minimize exposure to the volatile bulk cannabis market and allow the Company to operate as a focused, integrated CPG business with proprietary production, processing, brands and retail stores. In conjunction with the continuing reduction of costs, the Company expects to emerge with a scalable, controlled, profitable and more predictable cannabis business⁽²⁾.

By the end of Q2 2022, StateHouse was well underway with initial integration measures that are expected to generate approximately $10.3 million of annualized cost savings. ^{(2) (3)} As a result of this first phase of integration, StateHouse is now operating with a greatly reduced cost base. Following the initial integration measures, the Company has initiated additional cost reductions which are expected to result in a further $8-10 million in annualized savings. ^{(2) (3)}

Improvements were also completed across the Company’s operations. In cultivation, the Company has converted to a perpetual harvest program, with crop yields at the Salinas facility up 78% from last year through the first half of 2022, while also winning seven awards for quality, including three awards at the Emerald Cup and four medals at the California State Fair, including two golds and two silvers. At the Greenfield Campus, the adoption of best practices has led to enhanced efficiencies and improved gross profits. At retail, despite competitive pressures related to sales discounting, gross margins have held steady as the Company moves further towards its goal of in-house branded products representing 40% of total retail sales. On the administrative side, the Company is introducing a new ERP system for cultivation, rationalizing external relationships and suppliers and progressing on the consolidation of its finance and accounting systems into one common platform. With new management and a highly motivated team, StateHouse is revitalizing existing customer accounts and aggressively pursuing new ones.

As a result of the significant synergies and cost savings either achieved to date and financial forecasts of the Company, management expects StateHouse to generate materially positive Adjusted EBITDA⁽¹⁾ in 2023.

Management is also exploring the potential sale of various non-core assets, which is expected to generate approximately $5-8 million of non-dilutive capital,⁽³⁾ to strengthen its balance sheet and fund its growth objectives.⁽²⁾

Management Departure

Ahmer Iqbal, Chief Operating Officer, is leaving the Company effective September 30, 2022 to pursue other opportunities. StateHouse’s management team and Board of Directors thank Mr. Iqbal for his contributions to the Company and wish him the best in his future endeavours. Mr. Iqbal’s duties will be assumed by other members of the management team upon his departure.

Notes:

(1) This is a non-IFRS reporting measure. For a reconciliation of this to the nearest IFRS measure, see “Use of Non-IFRS Measures” and “Non-IFRS Measures” in the Company’s management discussion and analysis for the period ended June 30, 2022. See “Non-IFRS Measures, Reconciliation and Discussion”.
(2) This is forward-looking information and based on a number of assumptions. See “Cautionary Note Regarding Forward-Looking Information” below.
(3) These targets, and the related assumptions, involve known and unknown risks and uncertainties that may cause actual results to differ materially. While StateHouse believes there is a reasonable basis for these targets, such targets may not be met. These targets represent forward-looking information. Actual results may vary and differ materially from the targets. See “Cautionary Note Regarding Forward-Looking Information” and “Assumptions” below.

About StateHouse

StateHouse, a vertically integrated enterprise with cannabis licenses covering retail, major brands, distribution, cultivation, nursery and manufacturing, is one of the oldest and most respected cannabis companies in California. Founded in 2006, its predecessor company Harborside was awarded one of the first six medical cannabis licenses granted in the United States. Today, the Company operates 13 dispensaries covering Northern and Southern California and one in Oregon, distribution facilities in San Jose and Los Angeles, California and integrated cultivation/production facilities in Salinas and Greenfield, California. StateHouse is a publicly listed company, currently trading on the Canadian Securities Exchange (“CSE”) under the ticker symbol “STHZ” and the OTCQX under the ticker symbol “STHZF”. The Company continues to play an instrumental role in making cannabis safe and accessible to a broad and diverse community of California and Oregon consumers.

Non-IFRS Measures, Reconciliation and Discussion

This press release may contain references to “Adjusted EBITDA” and “Adjusted Gross Profit” which are non-IFRS financial measures. Management believes that these measures provide useful information as they represent the value of incremental sales.

Adjusted EBITDA is a measure of the Company’s overall financial performance and is used as an alternative to earnings or net income in some circumstances. Adjusted EBITDA is essentially net income (loss) with interest, taxes, depreciation and amortization, non-cash adjustments and other unusual items added back. This measure can be used to analyze and compare profitability among companies and industries, as it eliminates the effects of financing and capital expenditures. It is often used in valuation ratios and can be compared to enterprise value and revenue. This measure does not have any standardized meaning according to IFRS and therefore may not be comparable to similar measures presented by other companies.

Adjusted Gross Profit exclude the changes in fair value less costs to sell of the Company’s biological assets. Management believes this measure provides useful information as they represent the gross profit based on the Company’s cost to produce inventories sold while removing fair value measurements which are tied to changing inventory components and levels, as required by IFRS.

There are no comparable IFRS financial measures presented in StateHouse’s financial statements. Reconciliations of the supplemental non-IFRS measures are presented in the Company’s management’s discussion and analysis for the period ended June 30, 2022. The Company provides the non-IFRS financial measures as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. These supplemental non-IFRS financial measures are presented because management believes such measures provide information which is useful to shareholders and investors in understanding its performance and which may assist in the evaluation of the Company’s business relative to that of its peers. However, such measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the most comparable IFRS financial measure. For more information, please see “Use of Non-IFRS Measures” and “Non-IFRS Measures” in the Company’s management’s discussion and analysis for the period ended June 30, 2022, which is available under the Company’s profile on www.sedar.com.

Cautionary Note Regarding Forward-Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian and United States securities legislation. To the extent any forward-looking information in this news release constitutes “financial outlooks” or “future-oriented financial information” within the meaning of applicable Canadian securities laws, the reader is cautioned not to place undue reliance on such information. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements include, among other things, statements relating to generating positive EBITDA by 2023, total amounts of annualized cost savings, the successes resulting from the Company’s integrated cannabis platform, amounts of in-house branded products sold, the implications of the sale of non-core assets, and the Company’s future profitability, potential cost reductions, and potential asset sales.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: implications of the COVID-19 pandemic on the Company’s operations; fluctuations in general macroeconomic conditions; fluctuations in securities markets; expectations regarding the size of the cannabis markets where the Company operates; changing consumer habits; the ability of the Company to successfully achieve its business objectives; plans for expansion and acquisitions; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; employee relations; the presence of laws and regulations that may impose restrictions on cultivation, production, distribution, and sale of cannabis and cannabis-related products in the markets where the Company operates; and the risk factors set out in the Company’s management’s discussion and analysis for the period ended June 30, 2022 and the Company’s listing statement dated May 30, 2019, which are available under the Company’s profile on www.sedar.com. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

The Company, through several of its subsidiaries, is directly involved in the manufacture, possession, use, sale, and distribution of cannabis in the recreational and medicinal cannabis marketplace in the United States. Local state laws where the Company operates permit such activities however, investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the United States Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable United States federal money laundering legislation.

While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with recreational and medicinal cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve the Company of liability under United States federal law, nor will it provide a defense to any federal proceeding which may be brought against the Company. The enforcement of federal laws in the United States is a significant risk to the business of the Company and any proceedings brought against the Company thereunder may adversely affect the Company’s operations and financial performance.

This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The Company’s securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Assumptions

In developing the financial guidance set forth above, StateHouse made the following assumptions and relied on the following factors and considerations:

• The targets are based on StateHouse’s historical results including its year-to-date consolidated results of operations.
• The targets are subject to continued cultivation improvement.
• Targeted revenue at our retail dispensaries through the end of the year is based on our YTD results.
• Both retail and wholesale revenue sustainability and growth depend on a variety of factors, including among other things, location, competition, legal and regulatory requirements. Prices are projected forward at recently realized wholesale and retail prices.
• Cost of goods sold, before taking into account the impact of value changes in biological assets (which are non- cash in nature, and, accordingly, are excluded from calculations of Adjusted EBITDA, have been projected based on estimated costs of production and capacity available from a vertically integrated supply chain. Cost of goods sold relating to inventory purchased from third parties have been projected in line with historical levels.
• Selling, general and administrative expenses in future periods are assumed to decrease as a percentage of revenues due to inherent scalability of selling, general and administrative expenses and our cost cutting initiatives outlined above. Additionally, total selling, general and administrative expenses include an allocation for corporate overhead and public company costs.

The CSE has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

SOURCE StateHouse Holdings Inc.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

SANTA ANA, Calif., Aug. 19, 2022 (GLOBE NEWSWIRE) — Unrivaled Brands, Inc. (OTCQX: UNRV) (“Unrivaled” or the “Company”), a multi-state vertically integrated company focused on the cannabis sector with operations in California and Oregon, yesterday reported its second quarter 2022 financial results for the quarter ended June 30, 2022.

Financial Update

• During the three months ended June 30, 2022, the Company generated total revenue of $17.56 million composed of retail revenue of $10.95 million and cultivation/distribution revenue of $6.61 million. This compared to total revenue of $2.87 million for the quarter ended June 30, 2021, which included retail revenue of $2.32 million and cultivation/distribution revenue of $0.55 million. This was an increase of 511.0% in total revenue.
• The Company’s gross profit for the three months ended June 30, 2022 was $8.27 million, compared to a gross profit of $2.72 million for the three months ended June 30, 2021, an increase of $5.55 million or 204.0%.
• The merger with UMBRLA and the acquisitions of People’s First Choice and SilverStreak Solutions in 2021 led to more operations with additional facilities, employees, and costs to support them. Selling, general and administrative expenses for the three months ended June 30, 2022 were $19.07 million, compared to $4.70 million for the three months ended June 30, 2021, an increase of $14.37 million or 305.9%. For the three months ended June 30, 2022, amortization and depreciation expenses increased by $2.56 million over the three months ended June 30, 2021, facilities related expenses, such as rent, utilities, repairs and maintenance, security, and insurance, increased by $2.89 million over second quarter of 2021. Taxes, licensing and permitting increased by $1.17 million. Advertising increased by $0.73 million. Employee related expenses increased by $3.93 million or 382%.
• The Company realized an operating loss of $67.07 million for the three months ended June 30, 2022 compared to an operating loss of $1.97 million for the three months ended June 30, 2021, an increase of $65.09 million or 3,298.5%. This increase was attributed primarily to a $55.73 million charge for impairment of intangible assets and goodwill related to the UMBRLA and People’s acquisitions.

About Unrivaled Brands

Unrivaled Brands is a multi-state vertically integrated company focused on the cannabis sector with operations in California and Oregon. In California, Unrivaled Brands operates dispensaries, direct to consumer delivery, a state-wide distribution network, company-owned brands, and two cultivation facilities. In Oregon, we operate a state-wide distribution network, company-owned brands and outdoor and greenhouse cultivation. Unrivaled Brands is home to Korova, the market leader in high potency products across multiple product categories, currently available in California, Oregon, Arizona, and Oklahoma, as well as Sticks and Cabana.

For more info, please visit: https://unrivaledbrands.com.

Cautionary Language Concerning Forward-Looking Statements

Certain statements contained in this communication regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These include statements regarding management’s intentions, plans, beliefs, expectations, or forecasts for the future, and, therefore, you are cautioned not to place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on our expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors.

New factors emerge from time-to-time and it is not possible for us to predict all such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. These risks, as well as other risks associated with the combination, will be more fully discussed in our reports with the SEC. Additional risks and uncertainties are identified and discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC. Forward-looking statements included in this release are based on information available to Company as of the date of this release. The Company undertakes no obligation to update such forward-looking statements to reflect events or circumstances after the date of this release.

Contact
Jason Assad
LR Advisors LLC.
[email protected]
678-570-6791

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

CALGARY, AB, Aug. 18, 2022 /PRNewswire/ – Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSX-V: DB) (OTCQB: DBCCF), a premium cannabis producer, is pleased to announce its second quarter financial results for the three and six month periods ending June 30, 2022.

“Our second quarter results continue to demonstrate that Decibel is on the path we projected in our 2022 operational outlook”, said Paul Wilson, Chief Executive Officer of Decibel. “Our New Unique and Innovative product development and revenue generating initiatives have once again produced quarter-over-quarter record performance. This progress has been compounded by our productivity initiatives and record gross profit, now resulting in positive cash flow, putting us on track for another projected milestone.”

“With more highlights scheduled for the back half of 2022, Decibel is delivering exactly what we’ve planned and forecasted to the market, ourselves, and our shareholders.”

Financial Highlights

• Record Net Revenue: $18.6 million of total net revenue in Q2, with strong sequential growth of 11% over Q1 2022 and 49% over Q2 2021. Net revenue growth was driven by expanded distribution particularly in the Ontario market, the continued launch of new General Admission and Qwest infused products in various provinces and continued growth in demand for derivative products. During the second quarter, net revenue would have been $18.9 million, however $320 of discounts were provided related to discontinued products.
• Record Gross Margin Before Fair Value Adjustments: Significant sequential improvement to 41% in Q2, compared to 35% in Q1 2022 and 41% in Q2 2021. The increase was driven by initiatives realized midway through the second quarter, including operational efficiencies, automation equipment commissioned, and sourcing of more cost-effective components related to the manufacturing of cannabis products. The cost engineering initiatives and capital investments impacted the later part of the second quarter, with additional equipment landed early August expected to drive continued sequential margin expansion. The Company achieved its previously stated target of 40 – 45% gross margin ahead of the second half of 2022.
• Record Adjusted EBITDA: Record $3.2 million of adjusted EBITDA in Q2, with strong growth of 31% over Q1 2022 and 49% over Q2 2021. This marks Decibel’s eighth quarter of consecutive quarterly positive adjusted EBITDA.
• Derivative Sales: $13.0 million of net sales in Q2, with strong sequential growth of 25% over Q1 2022 and 128% over Q2 2021. The increase in sale of wholesale extracts is primarily attributable to expanded distribution, the launch of a new infused product line, and continued growth in demand for vapes and concentrates. This demand growth trend is continuing into Q3 2022 with record level demand and distribution for Decibel derivative products.
• Flower Sales: $3.4 million of net sales in Q2, a sequential decline of 19% over Q1 2022 and 10% over Q2 2021. During the period, sale of flower products was driven by reduced volumes during planned infrastructure optimization at the Thunderchild Facility.
• Record National Market Share³: Achieved 4.5% market share in July 2022, growth of 70% year over year.
• Cash Flow from Operations: $1.8 million of cash flow from operations in Q2, a sequential decrease of $1.2 million over Q1 2022 and an improvement of $4.8 million over Q2 2021. This marks Decibel’s second consecutive quarter of positive cash flow from operations.
• Repayment Convertible Debentures: On May 11, 2022, the Company repaid its 9.5% convertible debentures with the draw-down of a fixed 4.75% $12 million term loan. This extends the maturity date of $12 million of debt by 4 years, avoids approximately 6% of potential shareholder dilution, and results in $0.6 million of annual interest expense savings.

Operating Highlights

New Unique and Innovative

The Company launched or expanded distribution of the following products in the quarter:

• Total of 26 products launched in various provinces over the course of Q2 2022
• 6 General Admission flower and pre-roll products
• 6 General Admission vape flavours in distillate and live resin formats
• 9 General Admission and Qwest infused pre-rolls
• 5 Qwest flower and pre-roll products

Capital Projects

The Company made the following progress on its operational initiatives:

• The Plant: Received its Health Canada license May 2, 2022 for Phase 1 of its processing hub expansion. In August 2022, the majority of the automation and other critical equipment was received, which is expected to drive further margin enhancement on Decibel products in the second half of 2022.
• Thunderchild: Completed its staged infrastructure optimization to better meet growing demand for Decibel products and enhance product quality and yields. Production volumes are expected to resume full run-rate production by the first half of 2023.

Summary Highlights

Link to Decibel’s Investor Presentation

Decibel’s financial statements for the three and six month periods ending June 30, 2022 (“Financial Statements”) and related Management’s Discussion & Analysis (“MD&A”), are available under the Company’s profile at www.sedar.com. As of June 30, 2022, Decibel was in compliance with all of its financial covenants and expects to remain in compliance for the remainder of its twelve-month forecast period.

About Decibel

Decibel is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Decibel has three operating production houses along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is a licensed and operating 26,000 square foot cultivation space which produces the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve, which are sold in six provinces across Canada. Thunderchild Cultivation, is a licensed and operating 80,000 square foot indoor cultivation facility in Battleford, SK. The Plant, Decibel’s extraction facility, in Calgary, AB has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, Blendcraft, and General Admission, into new and innovative product formats like concentrates, vapes, edibles and beyond.

www.decibelcc.com

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

Cautionary Statement Regarding Certain Non-GAAP Measures

This press release contains certain financial performance measures that are not recognized or defined under IFRS (termed “Non-GAAP Measures”). As a result, this data may not be comparable to data presented by other licenced producers and cannabis companies. For an explanation of these measures to related comparable financial information presented in the Consolidated Financial Statements prepared in accordance with IFRS, refer to the discussion below. The Company believes that these Non-GAAP Measures are useful indicators of operating performance and are specifically used by management to assess the financial and operational performance of the Company. Accordingly, these Non-GAAP Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Non-GAAP Financial Measures

Adjusted EBITDA: Adjusted EBITDA is a non-GAAP financial measure that is intended to provide a proxy for the Company’s operating cash flow and is widely used by industry analysts to compare Decibel to its competitors and derive expectations of future financial performance of the Company. Adjusted EBITDA increases comparability between comparative companies by eliminating variability resulting from differences in capital structures, management decisions related to resource allocation, and the impact of fair value adjustments on biological assets, inventory, and financial instruments, which may be volatile on a period to period basis. The composition of adjusted EBITDA is as follows:

Supplementary Financial Measures

Retail Sales: Retail Sales is a measure intended to provide a more accurate depiction of the revenue earned by the Company’s retail operations. Inventory transferred directly from the Company’s wholesale operations to the Company’s retail operations is removed from Retail Revenue as presented in the Company’s Consolidated Financial Statements.

Gross Sales of Flower: Gross Sales of Flower is a measure intended to provide a more accurate depiction of gross revenue earned by the Company’s wholesale flower operations. Inventory transferred directly from the Company’s wholesale flower operations to the Company’s retail operations is added to Gross Wholesale Revenue of Flower as found in the Company’s Consolidated Financial Statements to arrive at Gross Sales of Flower.

Net Sales of Flower: Net Sales of Flower is a measure intended to provide a more accurate depiction of net revenue earned by the Company’s wholesale flower operations. Excise taxes associated with flower sales are subtracted from Gross Sales of Flower to arrive at Net Sales of Flower.

Gross Sales of Extracts: Gross Sales of Extracts is a measure intended to provide a more accurate depiction of gross revenue earned by the Company’s wholesale extracts operations. Inventory transferred directly from the Company’s wholesale extracts operations to the Company’s retail operations is added to Gross Wholesale Revenue of Extracts as found in the Company’s Consolidated Financial Statements to arrive at Gross Sales of Extracts.

Net Sales of Extracts: Net Sales of Extracts is a measure intended to provide a more accurate depiction of net revenue earned by the Company’s wholesale extracts operations. Excise taxes associated with extracts sales are subtracted from Gross Sales of Extracts to arrive at Net Sales of Extracts.

Forward Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.

In this news release, forward-looking statements relate to, among other things, the Company’s expectations that it is on track with another projected milestone and that more highlights are planned for the back half of 2023; that additional equipment landed early August will drive continued sequential margin expansion; that the Company is ahead of its previously stated target to achieve 40-45% gross margin by the second half of 2022; that the growth in demand for vapes and concentrates will continue into Q3 2022 with record level of demand and distribution for Decibel derivative products; the anticipated benefits to be derived from the staged infrastructure optimization at the Thunderchild Facility; Decibel’s expectations that production volumes at the Thunderchild Facility will resume full run-rate production by the first half of 2023; the Company’s expectations that it will remain in compliance with all of its financial covenants for the remainder of its twelve-month forecast period; the Company’s ability to grow Qwest, Qwest Reserve and Blendcraft brands into new and innovative product formats, variations; and its other business plans and expectations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

Forward-looking statements and FOFI (as defined herein) are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays; regulatory changes and impacts; capital requirements; construction impacts; displacement requirements and unforeseen requirements resulting from the COVID-19 pandemic; the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; timing and completion of construction and expansion of the Company’s production facilities and retail locations; the risk that additional equipment landed early August may not drive continued sequential margin expansion; the risk that the Company may not remain in compliance with all of its financial covenants for the remainder of its twelve-month forecast period; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable. Many of these risks and uncertainties and additional risk factors are described in the Corporation’s Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2021, which are available at www.sedar.com.

With respect to forward-looking statements and FOFI contained in this press release, Decibel has made assumptions regarding, but not limited to: Decibel’s ability to enter new markets and industry verticals; Decibel’s ability to attract, develop and retain key personnel; Decibel’s ability to raise additional capital and to execute on its expansion plans; the timelines for new product launches, Decibel’s ability to continue investing in infrastructure and implement scalable controls, systems and processes to support its growth; the impact of competition; the changes and trends in Decibel’s industry or the global economy; the Company’s ability to generate sufficient cash flow from operations and obtain financing, if needed, on acceptable terms or at all; the general economic, financial market, regulatory and political conditions in which the Company operates; the ability of the Company to ship its products and maintain supply chain stability; consumer interest in the Company’s products; anticipated and unanticipated costs; government regulation of the Company’s activities and products; the timely receipt of any required regulatory approvals; the Company’s ability to conduct operations in a safe, efficient and effective manner; the Company’s construction plans and timeframe for completion of such plans; and the changes in laws, rules, regulations, and global standards.

Any financial outlook or future oriented financial information (in each case “FOFI”) contained in this news release regarding prospective financial position, including, but not limited to: that additional equipment landed in early August will drive continued sequential margin expansion; and that the Company is ahead of its previously stated target to achieve 40-45% gross margin by the second half of 2022, is based on reasonable assumptions about future events, including those described above, based on an assessment by management of the relevant information that is currently available. The actual results will likely vary from the amounts set forth herein and such variations may be material.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking statements and FOFI contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and FOFI included in this news release are made as of the date hereof and Decibel does not undertake any obligation to publicly update such forward-looking statements and FOFI to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

• Full year 2021 revenue increased 193% to CDN $37.3 million, vs CDN $19.3 million in 2020¹
• Record quarterly revenue for Q1 2022 of CDN $28 million with Gross Margin excluding biological assets of $11.3 million¹
• Gross Margin of CDN $23.2 million in fiscal 2021 vs Gross Margin of CDN $12.9 million in fiscal 2021¹
• Adjusted EBITDA loss of $10.3 million for Full Year 2021 and Adjusted EBIDTA gain of 360 Thousand for First Quarter 2021¹

TORONTO, Aug. 02, 2022 (GLOBE NEWSWIRE) — Red White & Bloom Brands Inc. (CSE: RWB and OTC: RWBYF) (“RWB” or the “Company”) is pleased to report it has filed its 2021 audited financial statements, its 2022 first quarter financial statements and related 2021 and 2022 first quarter Management’s Discussion and Analysis and is providing certain full year 2021 and Q1, 2022 financial results and select subsequent events:

Management Commentary:

Brad Rogers, CEO and Chairman, stated, “After many significant sector challenges over 2020 & 2021, we are pleased to report that by the close of Q1 2022 we were able to complete all of the acquisitions we had discussed over the previous two fiscal years, including Florida and Michigan and we are now able to focus on our original strategy which we feel is the most adaptable and will offer the best return for the Company and stakeholders. With full operational control and a clear road map, Florida closed and certainty of our ability to complete the closing of the Michigan acquisition, we turned our attention to completing a multi-stage restructuring and “right-sizing” of the business to leverage our strategy long term. This included exiting Illinois and the sale of our assets in that state, which enabled the Company to pay off over $55 million of liabilities in Q2 of 2022 and reduce our operational and interest expenses by over $20 million per year. These reductions of liabilities and expenses will positively impact our results for fiscal 2022 commencing in late Q2 of this year.

“Florida has been a significant beneficiary of these moves with our ability to redeploy focus and resources to high ROI opportunities where we have expanded our grow capacity and extended our SKU’s and product lines to easily supply up to 10 stores, and growing into that supply with 3 retail locations operating with 2 more very high potential locations in process; of note, Q1 results only included sales from one location during the quarter.

“Although expected, Michigan has seen significant price compression in the wholesale industry and (as such) we have responded with significant operational improvements and have reduced our average cost per unit while increasing unit sales with our Platinum Vape (“PV”) branded product line. We have expanded our PV offering in Michigan to include Live Resin and Gummies and we are further expanding the product line into new categories throughout this year. We have also licensed PV into two additional states and expect to see those states launch later this year.”

Rogers continued, “On the finance front, we have made significant changes to reduce our overall operational costs and reduce debt servicing payments. Some of the savings are a result of exiting the state of Illinois, but we have also seen a reduction of operational expenses and as a result we are no longer incurring the start-up costs associated with scaling initial operations in Florida, one-time expenses associated with the M&A and divestitures we have completed over the last two years and overall greater attention to reduced spend across the organization. With the first half of 2022 now behind us, we are committed to driving profitable growth throughout the organization as we set our eyes to achieving positive EBITDA by the end of this fiscal year.”

Certain highlights for 2021 and subsequent to the year end for the Company include:

• On April 28, 2021, the Company completed the acquisition of Acreage Florida, Inc., through its wholly owned subsidiary of RWB Florida LLC. Acreage Florida Inc. subsequently changed its name to RWB Florida Inc. (“RWB Florida”).
• On May 27, 2021, RWB announced that it has completed the more comprehensive portion of Michigan’s two-step application process for marijuana licensing through a wholly owned operating subsidiary, RWB Michigan, LLC (“RWB Michigan”). During Fiscal 2021, the Company completed the necessary licensing required to begin operation in early 2022 in the State of Michigan and to close its previously announced acquisition of PharmaCo, Inc. (“PharmaCo”).
• On June 4, 2021, RWB’s wholly-owned subsidiary, RWB Florida entered into agreements for an aggregate capital raise of US $30.2 million. The raise included an investment of US $11.3 million from certain strategic investors directly into RWB Florida
• On August 4, 2021, RWB announced it acquired an operational 45,000 square foot greenhouse situated on 4.7 acres of land in Apopka, Florida.
• On September 27, 2021, RWB announced that it has completed a refinancing of an aggregate principal amount of US $18,620,000 debentures (plus accrued interest to September 1, 2021) previously issued to an arm’s-length investor.
• On December 30, 2021, RWB issued 6,784,812 shares to settle a CAD$5.1 million (US$4.0 million) debt. The weighted average conversion price was approximately CAD$0.75 per share (US $0.56).
• On January 18, 2022, the Company through its wholly owned subsidiary, RWB Michigan, closed on a lease assignment for a 15,000 sq. ft. manufacturing/processing and distribution facility in Warren, Michigan and was issued both Medical and Adult Use (aka “recreational”) licenses to begin manufacturing medical and adult use cannabis products with all necessary equipment already installed and inspections completed.
• On February 8, 2022, RWB received all regulatory approvals and closed its acquisition of PharmaCo via RWB Michigan in an all-stock transaction. The transaction was originally announced on July 27, 2020.
• In April 2022, the Company closed on the sale of its Granville, Illinois greenhouse, associated real estate and certain greenhouse equipment to New Branches LLC of California, an arm’s length purchaser, for a total cash purchase price of $56.1 million (US$ 44.5 million). In connection with the closing, the Company repaid its secured lender $51.7 million from the proceeds and certain other accrued liabilities totaling approximately $3.8 million. The repayment represented approximately 80% of the outstanding balance due to its secured lender and eliminates $6.2 million of annual interest expense for the Company. In addition, the Company decided to pivot to an asset-light, brand rich, model in the State of Illinois and will no longer pursue its own THC license through its previously announced definitive agreement to acquire a cultivation license in Shelbyville, Ill. It is anticipated that all Illinois operations for the Company shall be reduced to a sales and marketing initiative focusing on distribution of its PV branded product portfolio going forward, which will provide the Company with significant annualized operating cost reductions.
• On June 15, 2022, RWB entered in an agreement with C3 Industries to license the PV brand in Missouri and Massachusetts.

Select Financial Highlights for the Full Year 2022:

The Company recorded its operations in Illinois, Mid-American Growers, Inc, (“MAG”) as discontinued operations, accordingly the results of operations for 2020 and 2021 exclude the operations from MAG.

Revenue from continuing operations for the year end December 31, 2021 of $37.3 million increased significantly compared to the revenue for the year end December 31, 2020. The increase of $17.9 million in sales, from $19.3 million in 2020 to $37.3 million in 2021 is related to Cannabis vape product sales generated by PV California, packaging revenue generated by PV Michigan and Cannabis product sales generated by RWB Florida operations.

Gross profit increase of $10.3 million to $23.2 million from $12.9 million due to the increased profitable product sales and the biological assets being grown in Florida. Included in gross profit is the fair value adjustment on biological assets. The gain on biological assets resulted in income of $3.7 million in 2021 compared to nil for the prior year. The fair value is as a result of biological product being grown in Florida during the latter part of 2021.

Increase of $11.4 million in cost of sales from $6.4 million in 2020 to $17.8 million in 2021. The increase corresponds with the increase in sales, generated by PV California and RWB Florida operation.

Increase of $11.2 million in operating expenses from $36.1 million in 2020 to $47.3 million in 2021. Operating expenses increased to scale revenue generating activities and is in line with management expectations. Operating expenses include non-cash items of depreciation and share-based compensation, which increased year over year by $10.0 million and $0.9 million respectively. Excluding non-cash items operating expenses for 2021 were $21.4 million. Subsequent to year end, management completed a number of restructuring initiatives to reduce operating expenses expected to be implemented throughout fiscal 2022.

Select Financial Highlights for the First Quarter of 2022

The Company recorded its operations in Illinois, Mid-American Growers, Inc., (“MAG”) as discontinued operations, accordingly the results of operations for first quarter 2022 exclude the operations from MAG.

Record revenue from continuing operations of $28 million is related to Cannabis vape product sales generated by PV California, revenue generated by PV Michigan, a partial quarter recognizing revenue from the closing of the PharmaCo transaction in February of 2022, and Cannabis product sales generated by RWB Florida operations

Gross profit of $9.2 million is inclusive of the loss of $2.45 million on biological assets and a gain of $0.27 million on realized fair value on inventory sold. Gross profit, excluding these items of $11.3 million.

Operating expenses of $11.4 million for the period. Operating expenses include non-cash items of depreciation and share-based compensation in the amounts of $1.48 and $0.275 million respectively.

Net loss of $11.3 million for the period with an adjusted EBITDA gain of $0.360 million.

For additional details on the Company’s financial results please access the Company’s filings at: www.SEDAR.com

¹Operations in Illinois, Mid-American Growers, Inc, (“MAG”) have been recorded as discontinued operations, accordingly the results of operations for 2020 and 2021 exclude the operations from MAG.

About Red White & Bloom Brands Inc.

Red White & Bloom is a multi-state cannabis operator and house of premium brands in the U.S. legal cannabis sector. RWB is predominantly focusing its investments on the major U.S. markets, including Arizona, California, Florida, Massachusetts, and Michigan.

For more information about Red White & Bloom Brands Inc., please contact:

Brad Rogers, CEO and Chairman
604-687-2038

[email protected]

Visit us on the web: https://www.redwhitebloom.com/

Follow us on social media:
Twitter: @rwbbrands
Facebook: @redwhitebloombrands
Instagram: @redwhitebloombrands

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

FORWARD LOOKING INFORMATION

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company’s current expectations.  When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.  There is no assurance that these transactions will yield results in line with management expectations. Such statements and information reflect the current view of the Company with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following risks: risks associated with the implementation of the Company’s business plan and matters relating thereto, risks associated with the cannabis industry, competition, regulatory change, the need for additional financing, reliance on key personnel, market size, and the volatility of the Company’s common share price and volume.  Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date that statements are made, and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Investors are cautioned against attributing undue certainty to forward-looking statements.

There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated or implied by forward-looking statements and information.  Such factors include, among others, risks related to the Company’s proposed business, such as failure of the business strategy and government regulation; risks related to the Company’s operations, such as additional financing requirements and access to capital, reliance on key and qualified personnel, insurance, competition, intellectual property and reliable supply chains; risks related to the Company and its business generally; risks related to regulatory approvals. The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized.  It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. While the Company may elect to, it does not undertake to update this information at any particular time.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE.  READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.