During the fourth quarter of the 2023 fiscal year, ending March 31, 2023, there was a total revenue increase of 9% to $11.7 million from $10.7 in the quarter ending March 31, 2022 while net revenue in Q4 FY2023 increased by 33%, to $9.4 million from $7.0 million in the comparable quarter last year.

Canadian Adult-Use Performance
In the 12 months ended March 31, 2023, adult-use revenue increased 24% to $36.0 million, as compared to $29.1 million in the 12 months ended March 31, 2022. And adult-use net revenue increased 13% to $22.4 million, as compared to $19.8 million in the 12 months ended March 31, 2022. This performance was anchored around Divvy, the everyday brand, and complemented by product launches under the Company’s Sunday Market House of Brands. The Company reached a peak #12 market share ranking in its core markets in Q1 FY2023.[4] Within the 2023 fiscal year the Company’s pre-rolls, operating in the fastest growing market segment, peaked at #2 in Ontario market share rankings, while milled flower products gained a #4 Ontario market share ranking.[5] Divvy’s new rotating SKU, Divvy Buyer’s Club, entered the Alberta and Ontario markets, capturing a #7 flower SKU ranking in Ontario’s flow-through sales model in Q4 FY 2023.[6] Based on Divvy’s strong acceptance in Ontario, the Company anticipates many opportunities for expanding Divvy’s brand portfolio, along with strategic growth in new adult-use markets.

In the three months ended March 31, 2023, adult-use net revenue of $3.7 million represented a decline of 32% as compared to the three months ended March 31, 2022, primarily due to overall seasonality in the marketplace, the Company’s liquidity constraints, challenges in making timely payments to high priority vendors, and the Company’s product mix, focused on pre-rolls, which tend to experience higher sales velocity in the spring and summer seasons.

Continued Strong Canadian Medical Performance
Aleafia’s Q4 FY2023 medical results were strong, showing 19% net revenue growth to $3.0 million from $2.5 million in the period ended March 31, 2022. The medical market continues to show steady improvements for the Company, by consistently driving growth in new high value patient groups and entering new geographic regions. Growth in the product portfolio and outreach for patient groups offset medical industry tailwinds as the Company experienced 7% growth year-over-year in net revenue to $12.1 million in the year ended March 31, 2023 compared with $11.3 million in the 12 month period ended March 31, 2022.

International Market Growth
Aleafia posted another quarter of international sales with $0.4 million in Q4 FY2023 net revenue, contributing to a total of $2.1 million in the year ended March 31, 2023, representing 318% growth over $0.5 million in the 12 months ended March 31, 2022. In international markets, Aleafia continues to build a pipeline of opportunities in medical cannabis regions that have the potential to legalize recreational use in the near-term. International net revenue diversifies sales mix, enhances margins, and unlocks new, growing sales channels.

Other Fiscal Year 2023 Highlights included:

• To facilitate growth of sales in international markets, agreed to a total of an estimated $5.6 million^[7] in sales commitments with two European partnerships
• Aleafia’s whole flower product is selling through at European based pharmacies
• Completed 20% indoor grow expansion at the Company’s Paris, Ontario cultivation and processing facility
• Entered a partnership with RWB to serve as the manufacturing and distribution partner for Platinum Vapes’ first international brand expansion.
• Executed a Binding Letter Agreement with RWB to enter into a proposed transaction, whereby the combined company would generate $138 million in net revenue[8]

“The Aleafia team is thrilled about the proposed business transaction with RWB,” said Aleafia CEO, Tricia Symmes. “The Canadian cannabis market is a rapidly changing industry, and we believe we will be well positioned with our new partner RWB to capitalize on value-added synergies.  RWB has award-winning brands and IP and with Aleafia’s Divvy brand and proven cultivation, manufacturing, and distribution capabilities, we expect to create one of the most dynamic cross border companies in the industry.”

“This last fiscal year was a year of focused execution to drive profitable top-line growth, expand our margin profile by tightening up our supply chain, and cost rationalization to right size our fixed cost profile to fit our size and scale,” said Aleafia CFO, Matt Sale. “We are very proud to have achieved this while continuing to allocate capital expenditures prudently and achieving Adjusted EBITDA profitability for three consecutive quarters. The improved financial flexibility and capacity of the Combined Company will enhance the ability to execute on organic and acquisitive growth strategies.”

Adjusted EBITDA Profitability
For the year ended March 31, 2023, the Company generated a loss of $0.2 million Adjusted EBITDA, representing a $18.7 million improvement over 12 months ended March 31, 2022. This increase was primarily driven by the Company’s strategic shift to a branded product portfolio anchored in the adult-use, medical and international sales channels; gross profit margin before fair value margin expansion; and aggressive cost containment and rationalization across all the Company’s facilities, operations and functions.

• Branded cannabis net revenue[9] increased 16% to $36.6 million in the twelve months ended March 31, 2023, as compared to $31.6 million in the 12 months ended March 31, 2022;
• Gross profit before fair value adjustments[10] expanded to $14.2 million in the 12 months ended March 31, 2023, as compared to $4.3 million in the 12 months ended March 31, 2022; this represented an increase in gross profit before fair value adjustments margin from 12% to 33%; and
• 46% decline in Adjusted SG&A[11] to $17.6 million for FY2023 versus $32.3 million in the 12 months ended March 31, 2022.

In the three months ended March 31, 2023, the Company generated Adjusted EBITDA of $0.2 million, representing the third consecutive quarter of Adjusted EBITDA profitability, as compared to an Adjusted EBITDA loss of -$4.4 million in the three months ended March 31, 2022. The profitability in Q4 FY2023 was primarily due to the $1.3 million bulk wholesale[12] gross profit before fair value adjustments which represents two bulk wholesale customers. These input materials exceeded the Company’s near-term supply requirements for its own branded cannabis products and accordingly had previously taken a $1.1 million inventory provision.

 Operational and Financial Highlights

Cautionary Statement Regarding Non-IFRS Measures
Total Cannabis Sales, Adjusted EBITDA, Adjusted SG&A, International Net Revenue, Wholesale Net Revenue, Branded Cannabis profit, Bulk Wholesale, Bulk wholesale profit, Adjusted EBITDA margin, Gross Profit before Fair Value Adjustments, Adult-Use Cannabis Net Revenue, Branded Cannabis Net Revenue, Cannabis Net Revenue and Medical Cannabis Net Revenue are non-IFRS measures that do not have a standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Definitions of each measure and a reconciliation of Adjusted EBITDA and Adjusted SG&A against the comparable IFRS measure can be found below.  For additional information including the purpose of the non-IFRS measure, see “Cautionary Statement Regarding Non-IFRS Measures” in the Company’s Management’s Discussion and Analysis for the period ended March 31, 2023 found on SEDAR at www.sedar.com.

Adjusted SG&A
Adjusted selling, general and administrative (“Adjusted SG&A”) is defined as SG&A expenses adjusted to exclude non-recurring costs.  These non-recurring items may relate to certain transaction costs, one time subsidies, and severances. Adjusted SG&A is not recognized or defined under IFRS, and as a result, it may not be comparable to the data presented by competitors.

Adjusted EBITDA
The Company considers Adjusted EBITDA a key metric for measuring operating performance and cash flow, to manage working capital, debt repayments and capital expenditures.  Adjusted EBITDA is calculated as net income (loss), excluding (i) amortization and depreciation, (ii) fair value changes in biological assets and changes in inventory sold, (iii) share-based payments, (iv) bad debt expense, (v) business transaction costs, (vi) non-operating expenses (income), (vii) taxes, (viii) interest expenses, (ix) one-time sale of assets, and (x) unrealized gain (loss) on marketable securities and (xi) other non-recurring expenses (income).  Adjusted EBITDA is not recognized or defined under IFRS, and as a result, it may not be comparable to the data presented by competitors.

• Cannabis net revenue is sale of cannabis revenue less excise duties
  • Adult-use cannabis net revenue is net cannabis revenue for Canadian adult-use sales.
  • Medical cannabis net revenue is net cannabis revenue for Canadian medical sales and clinic revenue.
  • International cannabis net revenue is net cannabis revenue for international medical sales.
  • Bulk Wholesale cannabis net revenue is net cannabis revenue in sales to other LPs.

• Branded Cannabis Net Revenue is calculated as Adult-use cannabis net revenue, Medical cannabis net revenue and International cannabis net revenue. It excludes bulk wholesale net revenue.
• Total Branded Cannabis Revenue is calculated as Adult-use cannabis revenue, Medical cannabis revenue and International cannabis revenue.  It excludes bulk wholesale cannabis revenue.
• Gross profit margin before fair value adjustments on branded cannabis net revenue represents gross profit margin on branded cannabis net revenue. It is calculated by subtracting costs of sales relating to bulk wholesale and dividing by branded cannabis net revenue.
• Gross profit before fair value adjustments on bulk wholesale represents gross profit on bulk wholesale. It is calculated by subtracting costs of sales relating to bulk wholesale net revenue.
• Gross profit margin before fair value adjustments on bulk wholesale represents gross profit margin on bulk wholesale. It is calculated by subtracting costs of sales relating to cannabis net revenue and dividing by bulk wholesale net revenue.
• Gross profit before fair value adjustments margin is the gross profit before fair value adjustments and inventory provision divided by total net revenue. Management believes that this is a useful metric to assess the profitability of cannabis sales, as it eliminates the effects of non-cash fair value changes in inventory and biological assets.
• Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total net revenue.

For Investor & Media Relations
Matthew Sale, CFO
IR@AleafiaHealth.com
LEARN MORE: www.AleafiaHealth.com

About Aleafia Health
The Company is a federally licensed Canadian cannabis company offering cannabis products in Canada and destined for international markets, including Australia and Germany. The Company operates a virtual medical cannabis clinic staffed by physicians and nurse practitioners which provide health and wellness services across Canada.

The Company operates three licensed cannabis production facilities all in the province of Ontario, including the largest, outdoor cannabis cultivation facility in Canada.   The Company produces a diverse portfolio of cannabis and cannabis derivative products including pre-roll, milled, dried flower, vapes, oils, capsules, edibles, sublingual strips, and topicals, for sale in Canada in the medical and adult-use markets, and in select international jurisdictions.

Forward Looking Information
Certain statements herein relating to the Company constitute “forward looking information”, within the meaning of applicable securities laws, including without limitation, statements regarding future estimates, business plans and/or objectives, sales programs, forecasts and projections, assumptions, expectations, and/or beliefs of future performance, are “forward-looking information”. Such forward-looking statements involve unknown risks and uncertainties that could cause actual and future events to differ materially from those anticipated in such statements. Forward looking statements include, but are not limited to, statements with respect to our long term profitability, product strategy, brand performance, market share, revenue, margins, net revenue, international net revenue, adult-use revenue, strategic growth in new adult-use markets, growth in medical market and new high value patient groups, the estimated value of contracts, new market entries, Adjusted EBITDA, and other financial outlook projections for fiscal year 2024, our commercial operations, including production and / or sales of cannabis, potential for legalization of cannabis in international markets, quantities of future cannabis production, anticipated revenue in connection with such sales, potential benefits and synergies arising from the proposed transaction with RWB, cultivation, manufacturing, and distribution capabilities of a potential business combination with RWB, and other Information that is based on forecasts of future results, estimates of production yet determinable, and other key management assumptions. The following material factors or assumptions were used to develop the forward looking information: stable currency exchange, parties will perform contracts in accordance with their terms, parties to contracts will purchase the minimum quantities required to retain any exclusivity rights under the contract, ability to obtain listing agreements in new markets, market size and growth of the Canadian adult-use and medical cannabis markets, retail store penetration, script trends, cultivation and processing capacity, costs of production, gross and net revenue per gram. Actual results may differ materially from those expressed or implied by such forward looking statements and involve risk and uncertainties relating to: currency conversion, ability to source flower and supplies of sufficient quantity, quality and price point, performance of competitors, laws and government policies, future cultivation yield and quality, actual operating performance of facilities, product launches, facility licenses and amendments, average selling prices, cost of goods sold, operating expenses, Adjusted EBITDA, regulatory changes in the Canadian and international markets, and other uninsured risks. The forward looking information was approved by Management as of June 13, 2023. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law. The forward looking information is provided for information purposes only and readers are cautioned that it may not be appropriate for other purposes. This presentation is provided for general information purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security in any jurisdiction.

VANCOUVER, BC and TORONTO, April 28, 2023 /PRNewswire/ – BZAM Ltd. (the “Company” or “BZAM”) (CSE: BZAM) (US-OTC: BZAMF), a leading Canadian cannabis producer, is pleased to announce its financial and operating results for the three months ended (“Q4 2022”) and year ended December 31, 2022 (“Fiscal Year 2022”). These filings are available for review on the Company’s SEDAR profile at www.sedar.com. All financial information is provided in Canadian dollars except where otherwise indicated.

BZAM Ltd. Logo (CNW Group/BZAM LTD.)
BZAM Ltd. Logo (CNW Group/BZAM LTD.)
Q4 2022 vs Q4 2021 Highlights:

Completed the acquisition of BZAM Holdings Inc. (the “BZAM Transaction”) on November 3, 2022, approximately doubling the Company’s revenue and asset base;

Achieved record quarterly gross revenues of $24.8 million, including $15.9 million from TGOD brands ($12.4 million in Q4 2021) and $8.9 million from the addition of BZAM brands and products since November 3, for a total 100% increase;

Achieved record quarterly net revenues of $17.2 million including $11.5 million from TGOD brands ($9.5 million in Q4 2021) and $5.7 million from the addition of BZAM brands and products since November 3, for a total 82% increase;

Recreational market share climbed to 4.7% in December 2022, from 1.4% in December 2021 according to Hifyre;

Expanded cultivation and processing footprint across Canada, while right-sizing operations in certain markets;

Incorporated the assets acquired as part of the BZAM Transaction into the Cortland security collateral, allowing the Company to maximize loan advances under its existing revolving credit facility.

Fiscal Year 2022 vs Fiscal Year 2021 Highlights:

Achieved gross annual revenues of $68.8 million, a 76% year-over-year increase;

Achieved net revenues of $49.4 million, a 63% year-over-year increase;

Maintained Adjusted Gross Margin of 39%

Achieved an Adjusted Sales, General & Administrative Expenses (“SG&A”) of 57% of sales of 2022, down from 80% in 2021;

Management Commentary:

“In November 2022, the Company completed a transformational merger and established BZAM as a top player in Canada. This enhanced scale gives us a solid platform for sustained growth on the revenue side, both in Canada and abroad, while allowing us to take advantage of synergies and eliminate duplicative costs across the newly combined entity” commented Matt Milich, CEO. “The integration has been going smoothly and with approximately $24 million in net revenue booked in the first quarter of 2023, representing quarterly growth of nearly 40%, we continue to pursue our goals of positive adjusted EBITDA and free cashflow in 2023.”

Q4 2022 & Fiscal Year 2022 Financial Highlights

( $000s unless otherwise indicated)

Select Key Financial Metrics

Q4 2022

Q4 2021

%
Change

Fiscal
2022

Fiscal
2021

%
Change

Gross Revenue

24,789

12,372

100 %

68,802

39,185

76 %

Net Revenue

17,227

9,466

82 %

49,351

30,241

63 %

Total Cost of Sales

24,380

4,599

430 %

42,599

18,508

130 %

Gross Profit/(Loss)

(7,153)

4,867

(247 %)

6,752

11,733

(42 %)

Adjusted SG&A (1)

10,084

5,734

76 %

28,088

24,141

16 %

Adjusted SG&A as a % of Net Revenue(1)

59 %

61 %

(3 %)

57 %

80 %

(29 %)

Adjusted EBITDA (1)

(6,828)

(3,631)

88 %

(18,049)

(22,598)

(20 %)

Adjusted EBITDA as a % of Net Revenue(1)

(40 %)

(38 %)

3 %

(37 %)

(75 %)

(51 %)

1 Adjusted SG&A and Adjusted EBITDA are non-IFRS financial measures not defined by and do not have any standardized meaning under IFRS; please refer to “Non-IFRS Financial Measures” in this press release for more information.

Q4 Commentary

Gross and Net Revenue: Increase in revenue was driven by the introduction of new products to the market, as well as increased distribution and demand for existing SKUs, with the BZAM Transaction contributing $8.9 million in gross revenue and $5.7 million in net revenue since the closing of the BZAM Transaction.

Gross Profit/Loss: There is a Gross Loss in Q4 2022 as a result of (i) inventory provisions, (ii) increase in depreciation and (iii) changes in fair value of biological assets and inventory, which was a net gain in Q4 2021 but a net loss in Q4 2022, in addition to the impacts of price compression in the market.

SG&A Expenses: SG&A expenses increased due to the BZAM Transaction as well as additional sales efforts undertaken to provide direct store support and additional third-party marketing expenses commensurate with the increased revenue achieved. SG&A expenses also increased as a result of $4.6 million in one-time restructuring costs incurred during the period.

Operational Highlights and Outlook

The BZAM Transaction enabled the Company to increase its brand portfolio and approximately double its product offerings across conventional and organic flower, pre-rolls, infused pre-rolls, vapes and other concentrate products.

The Company exited its third party sales agency relationship and consolidated all sales activities under its in-house sales force.

The Company completed all necessary steps to obtain EU GMP certification with final approval now pending, which would enable revenue generation from the German market.

The Company completely exited its Valleyfield, QC, facility and has committed to monetize its redundant facilities in Maple Ridge, BC and Puslinch, ON.

Following a comprehensive review and integration of the Company’s operations, the Company has identified the following impacts and opportunities which have the potential to drive continued financial performance and margin improvements in 2023, including:

Investor Conference Call to Discuss Q4 2022 and Fiscal Year 2022 Results:

Management will host a conference call with analysts on May 1, 2023, at 10:00 a.m. Eastern Time to discuss the results. To instantly join the conference call, please use the following URL to easily register yourself and have your phone connected into the conference call automatically: https://emportal.ink/3z6WlYj. Alternatively, participants may access the call by dialing 1-416-764-8688 (Toronto) or 1-888-390-0546 (North America); Conference ID 90926059.

For those unable to participate on the live call, a replay of the call will also be available through May 4, 2023, by dialing 1-416-764-8677 or 1-888-390-0541 (Passcode: 926059#).

Board of Director Appointments

The Company is also pleased to announce that Mmes. Wendy Kaufman and Sherry Tross have been appointed to the board of directors of the Company (the “Board”), effective as at April 28, 2023 (the “Board Appointments”).

Ms. Kaufman is a CPA bringing over 25 years’ of financial executive experience in the public markets with expertise in financial management, capital structuring, mergers and acquisitions and integration. Ms. Kaufman currently serves as CFO of Canada Nickel Company Inc. (TSXV: CNC).

Ms. Tross is an experienced public policy advisor and corporate consultant. She has developed an expertise in international relations from her position of Ambassador (High Commissioner) of St. Kitts and Nevis to Canada, Mexico, and Panama since 2018. Ms. Tross has over 20 years’ of leadership experience in the public and private sector, participating in bilateral and multilateral negotiations and managing multi-country teams of trade and development specialists focused on business development and community impact.

In connection with these Board Appointments, Messrs. Jacques Desserault and Louis Sterling have stepped down as directors of the Board. The Company thanks Mr. Desserault and Mr. Sterling for their contributions to the Company over recent years and wishes them success in their future endeavours.

About BZAM Ltd.

BZAM Ltd. (CSE: BZAM) (OTC: BZAMF) is a leading Canadian cannabis producer with a focus on branded consumer goods, innovation, quality, consistency, integrity, sustainability and transparency. The BZAM family includes core brands BZAM, TGOD, ness, Highly Dutch Organic, TABLE TOP, and partner brands Dunn Cannabis, FRESH and Wyld. BZAM operates facilities in BC, Alberta, Ontario and Quebec, as well as retail stores in Winnipeg, Manitoba and Regina, Saskatchewan.

BZAM’s Common Shares and certain warrants issued under the indentures dated June 12, 2020, October 23, 2020, and December 10, 2020, currently trade on the Canadian Securities Exchange (the “CSE”) under the symbol “BZAM”. BZAM’s Common Shares trade in the U.S. on the OTCQX under the symbol “BZAMF”. For more information, please visit www.bzam.com

Non-IFRS Financial Measures

This Press Release contains certain financial and operational performance measures that are not recognized or defined under IFRS (the “Non-IFRS Measures”). As there are no standardized methods of calculating these Non-IFRS Measures, the Company’s approaches may differ from those used by others, and this data may not be comparable to similar data presented by other licensed producers of cannabis and cannabis companies. As such, users are cautioned that these measures should not be construed as alternatives to measures determined in accordance with IFRS, including net income (loss) and gross profit, as measures of profitability or as alternatives to the Company’s IFRS-based Consolidated Financial Statements. 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-IFRS Measures are useful indicators of operating performance and are specifically used by management to assess the financial and operating performance of the Company. These Non-IFRS Measures include, but are not limited, to the following:

“Adjusted Gross Margin” refers to gross margin excluding the adjustments for write down of inventory, provisions for returns and under absorption of overheads. Adjusted Gross Margin is a useful measure as it represents gross margin for management purposes based on costs to manufacture, package and ship inventory sold, exclusive of any impairments due to changes in internal or external influences.

“Adjusted SG&A” refers to sales (including marketing), general and administrative expenses excluding severance costs, any write downs and one-off restructuring costs. Adjusted SG&A is a useful measure as it removes expenses that are not expected to recur in the following year.

“Adjusted EBITDA” has been identified by the Company as a relevant industry performance indicator. Adjusted EBITDA is a Non-IFRS Measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management defines Adjusted EBITDA as loss for the period, as reported, excluding foreign exchange gains and losses, finance costs, accretion expenses, finance income, revaluation loss (gain) of contingent consideration, loss (gain) on disposal of assets, impairment (reversal of impairment) charge for non-financial assets, loss on derecognition of investment in joint venture, expenditures incurred in connection with research and development activities, debt modification, impairment loss on remeasurement of disposal group, gain on disposal of subsidiary, realized fair value adjustment on sale of inventories, unrealized gain on changes in fair value of biological assets, provisions and impairment of inventories and biological assets, share based compensation, depreciation, amortization, legal provisions, ERP implementation costs, restructuring costs and transaction costs. Management believes Adjusted EBITDA provides useful information as it is a commonly used measure in capital markets to approximate operating earnings. The Company provides the Non-IFRS Measure as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. The Non-IFRS Measure is also 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. Management believes the Non-IFRS Measure is a useful financial metric to assess the Company’s operating performance on a cash basis before the impact of non-cash items, and on an adjusted basis as described above. However, such Non-IFRS Measure 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 Non-IFRS Measure.

Non-IFRS Measures should be considered together with other data prepared in accordance with IFRS to enable investors to evaluate the Company’s operating results, underlying performance and prospects in a manner similar to the Company’s management. Accordingly, these Non-IFRS 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.

Cautionary Statements

This news release includes statements containing certain “forward–looking information” within the meaning of applicable securities law (“forward–looking statements”). Forward looking statements in this release include, but are not limited to, statements about future net revenue and gross margin, statements about future EBITDA, statements about future production quantity and timing, statements about the offering of any particular products by the Company and statements regarding the future performance of the Company, statements about funding availability, statements about growth and delivery of products, and statements about the level of demand for BZAM’s products, statements relating to obtaining final EU GMP certification and generating any revenue in Germany, statements relating to the Company’s sale of facilities in Maple Ridge, BC and Puslinch, Ontario, statements relating to the facility capacity utilization and absorption of fixed overheads, statements relating to expected improvements in cultivation and their impacts on cash cost price per gram and statements relating to the Company being able to efficiently scale to higher volumes in the future. Forward–looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “should”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward–looking statements throughout this news release, such as assumptions that the Company’s financial trajectory will continue, the Company not having any issues with regulators, cultivation patterns at the Company’s facilities continuing and there not being signifcant disruptions in cultivation such as disease or shortages in resources, the Company being insulated from supply chain issues and inflation affecting the global economy, the Company being able to access the capital markets and existing lenders for necessary funding, when necessary, demand for the Company’s products continuing as expected and based on past trends, there being no material issues or delays in the Company receiving EU GMP certification, the Company being able to sell its facilities in Maple Ridge, BC and Puslinch, Ontario. Forward–looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties (including market conditions) and other factors that could cause actual events or results to differ materially from those projected in the forward–looking statements, including those risk factors described in Management’s Discussion and Analysis and the Company’s most recent Annual Information Form filed with Canadian securities regulators and available on the Company’s issuer profile on SEDAR at www.sedar.com. Although the Company believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward–looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

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

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.

Company Reports Net Income and Positive EBITDA in Q4 2022

SANTA ANA, Calif., April 10, 2023 (GLOBE NEWSWIRE) — Unrivaled Brands, Inc. (OTCQB: UNRV) (“Unrivaled” or the “Company”), a cannabis company with operations throughout California, today reported financial results for the fourth quarter and year ended December 31, 2022.

Fourth Quarter 2022 Highlights

• Unrivaled posted income from operations of $8.8 million for the quarter ended December 31, 2022 compared to a loss from operations of $13.3 million in the prior year, an increase of $22.1 million.

• Net income from continuing operations was $3.9 million for the fourth quarter of 2022 versus a net loss of $16.2 million in the same period last year.

• EBITDA income from continuing operations was $9.7 million for the fourth quarter of 2022 compared to an EBITDA loss of $10.4 million for the prior year’s fourth quarter.

• During the quarter ended December 31, 2022, the Company reduced total liabilities by $48.3 million to $77.0 million as of December 31, 2022, down from $125.3 million at the end of the prior year, a reduction of 39%. This decrease was the result of successful efforts to renegotiate debt, pay down creditors, dispose of non-performing assets, and improve working capital.

• During the fourth quarter of 2022, the Company commenced a $2.0 million capital raise from a Series V Preferred Share offering, which was subsequently closed in the first quarter of 2023.

Director of Marketing at Unrivaled, Danielle Sebastian stated, “The strategic thinking brought to the table from both the Unrivaled Brands and Adnant teams has been a gamechanger. It feels like we’ve moved mountains over the past several months together. We’re working with a group of people who care about the cannabis industry in a real way and whose work ethic is extremely strong. When I look around, I’m proud to see leaders from all walks of life that each have a unique point of view. Combined, we have the opportunity to develop a new meaning of cannabis culture and build something that no one else has ever created.”

Blake Powers, Vice President of Korova at Unrivaled, added, “I am excited to be part of a team leading the charge with our team’s interest at heart. Their focus on company culture and doing right by the people on our front lines has been as refreshing as it is motivating. In a sea of uncertainty that is the cannabis landscape in California, it’s nice to know you’re on a boat with people that know how to row.”

Full Year 2022 Highlights

• Fiscal 2022 revenues increased $9.9 million, or 23%, from fiscal 2021, to $52.0 million. Revenue growth was driven primarily by a 63% increase in revenue from retail operations.

• Gross profit for the year ended December 31, 2022 increased to $17.0 million, a 53% increase from the prior year.

• For the year ended December 31, 2022, loss from continuing operations was $193.8 million, which was primarily attributable to an impairment loss of $163.7 million, the majority of which was related to the acquisitions of UMBRLA, People’s, and SilverStreak, compared to loss from continuing operations of $38.3 million for the year ended December 31, 2021.

• As part of the Company’s strategic restructuring in fiscal year 2022, the Company terminated its third-party distribution operations in California and its retail and delivery operations at SilverStreak Sacramento. In November 2022, the Company received confirmation for the legal dissolution of SilverStreak and the entities related to its distribution operations in the state of California. As a result, all liabilities and existing obligations of the dissolved entities were extinguished and the Company recorded a gain of disposal of assets for $7.2 million during the year ended December 31, 2022.

Patty Chan, Unrivaled’s Interim Chief Financial Officer concluded, “Today, I am proud to say that we have overcome obstacles that seemed insurmountable, and we have emerged stronger than ever before. Our resilience and determination have paved the way for opportunities for a brighter future for Unrivaled. I am excited about the opportunities that lie ahead. But let me tell you, we’re not done yet. We can’t celebrate just yet, because there’s still much work to be done.”

Non-GAAP Financial Information:

This press release includes certain non-GAAP financial measures as defined by the U.S. Securities and Exchange Commission (the “SEC”). Management believes that these non-GAAP financial measures assess the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. These non-GAAP financial measures exclude certain material non-cash items and certain other adjustments the Company believes are not reflective of its ongoing operations and performance. Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand operational decision-making, for planning and forecasting purposes, and to evaluate the Company’s financial performance. Management believes that these non-GAAP financial measures enhance investors’ understanding of the Company’s financial and operating performance and enable investors to evaluate the Company’s operating results and future prospects in the same manner as management. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are included in the financial schedules attached to this press release. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP.

About Unrivaled Brands

Unrivaled is a cannabis company focused on the cannabis sector with operations in California. Unrivaled operates four dispensaries and direct-to-consumer delivery, a cultivation facility, and several leading company-owned brands. Unrivaled is home to Korova, known for its high potency products across multiple product categories, currently available in California, Oregon, Arizona, and Oklahoma.

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. The Company uses 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 the Company’s 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 the Company to predict all such factors, nor can the Company 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 the Company’s 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 the 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.
jassad@unrivaledbrands.com
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.

• Achieved Adjusted EBITDA¹ of $1.9 million for the year ended December 31, 2022
• 57% net revenue growth to $35.5 million in 2022 compared to 2021
• Achieved operating cash flow of $2.0 million for the year ended December 31, 2022
• 6.3%² national market share of premium flower and pre-rolls in 2022

VANCOUVER, British Columbia, April 03, 2023 (GLOBE NEWSWIRE) — Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF) (“Rubicon Organics”, “Rubicon”, or the “Company”), a licensed producer focused on cultivating and selling organic certified, premium cannabis, today reported its financial results for the fourth quarter and year ended December 31, 2022 (“Q4 2022”). All amounts are expressed in Canadian dollars.

“Rubicon Organics has achieved significant financial milestones in a fiercely competitive environment, delivering Adjusted EBITDA profitability and positive cash flow from operating activities for the 2022 year. These results are a testament to the unwavering commitment of our team to quality, which is now being acknowledged by our customers. Rubicon is at an inflection point, poised for continued growth and anticipating further financial strength in 2023 as we seek to meet the market’s demand for our products. Despite negative investor sentiment in the cannabis sector, I believe that the winners of the Canadian cannabis sector will emerge in 2023, and Rubicon is well-positioned to be among them,” said Margaret Brodie, Interim Chief Executive Officer and Chief Financial Officer.

Q4 2022 Highlights:

• Net revenue of $11.0 million was an increase of 61% from the same period in 2021
• Achieved Adjusted EBITDA¹ of $1.3 million
• Achieved positive operating cash flow of $2.8 million
• Achieved positive Free Cash Flow³ of $1.9 million
• 2.4%⁴ national market share of flower and pre-rolls¹
• 5.4%⁵ national market share of premium flower and pre-rolls

In the fourth quarter of 2022, the Company earned $11.0 million of net revenue, an increase of $0.5 million or 5% when compared to the third quarter of 2022 (September 30, 2022: $10.5 million). The fourth quarter net revenue was relatively flat from the third quarter as Rubicon had certain facility maintenance and downtime which impacted our crop yields and availability of supply in the autumn. This was offset by the positive momentum for Rubicon in the pre-roll category following the launch of infused pre-rolls under both Simply Bare Organic and 1964 Supply Co. During Q4 we also began selling through the OCS’s flow through program, which has proven useful for products where we do not yet have consistent supply or demand and in Quebec, we benefitted from additional flower and pre-roll listings.

Production costs in the fourth quarter 2022 decreased by $0.3 million or 10% when compared to the third quarter of 2022 (three months ended December 31, 2022: $2.6 million as compared to three months ended September 30, 2022: $2.9 million). We can see the efficiencies gained through process improvements in our cultivation system and cost savings as a result of completion of the BC Hydro project from September 2022 onwards.

Inventory expensed to cost of sales amounted to $3.7 million in the fourth quarter of 2022, which is an increase of $0.3 million or 9% when compared to the third quarter of 2022 (September 30, 2021: $3.4 million). This ratio was marginally ahead of the net revenue growth due to product mix, with a higher proportion of sales derived from concentrate products in the fourth quarter, most notably infused pre-rolls.

The Company incurred operating expenses of $4.8 million in the fourth quarter of 2022 which is an increase of $1.0 million or 26% when compared to the third quarter of 2022 (September 30, 2022: $3.8 million). The increase is mainly due to non-cash share-based compensation from the issuance of deferred share units and restricted share units compared to the prior quarter. The Company has also incurred additional corporate expenses relating to the professional fees such as for the search for new board nominees and a year-to-date true up of the bonus accrual to account for performance under the Company bonus plan.

Net loss during the fourth quarter of 2022 was $3.1 million, compared to net profit in the third quarter of 2022 of $2.0 million. The movement was driven primarily by a quarter over quarter decrease to fair value adjustments to cannabis plants of $4.3 million. There has been a change in growing approach over the past year in order to increase plant density and uniformity. This has resulted in a higher number of plants, therefore decreasing the number of grams per plant, which has been reflected in the Company’s fair value of its cannabis inventory.

2022 Highlights:

• Record net revenue of $35.5 million (57% increase) for the year ended December 31, 2022
• Achieved Adjusted EBITDA¹ of $1.9 million for the year ended December 31, 2022
• Achieved operating cash flow of $2.0 million for the year ended December 31, 2022
• Achieved positive Free Cash Flow³ of $2.2 million in the second half of 2022
• Extended existing Debenture for 18 months to December 31, 2024
• 2.4%⁵ national market share of flower and pre-rolls
• 6.3%² national market share of premium flower and pre-rolls

For the year ended December 31, 2022, the Company reported net revenue of $35.5 million, a 57% increase compared to the prior year. For the year ended 31 December 2022, Adjusted EBITDA was a profit of $1.9 million, compared to a loss of $8.0 million in the twelve months ended December 31, 2022.

2022 Annual Results of Operations

Net revenue

The Company delivered record net revenue of $35.5 million for the year ended December 31, 2022. This represents significant net revenue growth of 57%, compared to the prior year. Across the year, the Company doubled the number of SKUs for sale with the launch of several new strains, and product formats compared to the prior year. The sales growth was underpinned by an increase in product yield, THC and quality from our Delta Facility.

Revenue growth in 2022 versus the prior year was primarily driven by the expansion of 1964 Supply Co, having a full year of sales in all key markets, continued range expansion, and a new hero strain with Comatose.

Simply Bare Organic delivered flat net revenue compared to prior year. The brand was particularly affected by the overall market decrease in flower pre-rolls with the market shifting to infused pre-rolls, increased quality competition and price compression. In the second half of the year, performance improved with the launch of new strains, larger formats, and an infused pre-roll offering.

The strike in BC, the cyber attack impacting the distribution center in Ontario and rotating strikes in SQDC stores in August 2022 had an impact on the net revenue achieved in the third quarter of 2022 given that the orders were either halted for weeks or significantly slowed down in both BC and Ontario, but we are unable to quantify the impact of these events.

Throughout 2022, revenue growth continued across all our key markets (Alberta, BC, Ontario, and Quebec) which together make up 97% of our sales in the year December 31, 2022 (December 31, 2021: 94%).

Production costs

For the year ended December 31, 2022, production costs increased by $1.3 million (14%) compared to the prior year.

Under the Company’s accounting policy, production costs are expensed as incurred. Production costs consist of the direct and indirect costs incurred to grow cannabis plants to the point of harvest. They include labour related costs, cultivation materials and consumables, utilities, facility costs, certain overheads, and production related depreciation. This methodology means that unless product is produced and sold during the period, the production costs associated with inventory held at period end are expensed prior to revenue being derived.

The increase in production costs is related to an increase in plant density, plant handling techniques applied and increased overall yield of cannabis crops meaning additional labour is required during the cultivation cycle and at harvest. In addition, there has been a notable increase in the costs of fertilizer and other input materials due to inflation as well as the need to use additional inputs due to larger crop sizes and an increased number of plants on hand. The additional cultivation labour, plant density and plant handling techniques have directly related to increased quality and yield from the Delta Facility.

From September 2022, the Company has started to recognize savings with the completion of the BC Hydro project.

Inventory expensed to cost of sales

For the year ended December 31, 2022, inventory expensed to cost of sales increased by $2.5 million (26%) compared to the prior year.

After cannabis is harvested, the remaining costs incurred in drying, processing, and packaging are capitalized to inventory and expensed once the finished good is sold. The ratio of inventory expensed to cost of sales was 34% of net revenue for the year ended December 31, 2022 (December 31, 2021: 42%). This ratio is directly impacted by throughput from the facility meaning that overheads are spread over a larger number of units and given the increase in production this has positively impacted the ratio. In 2022, the Company has also benefitted from an improved brand and product mix with a larger share of our sales coming from our premium brands, Simply Bare Organic and 1964 Supply Co., and less of the brand, Homestead Cannabis Supply, relative to 2021.

Given the high inflationary environment in which the Company is operating in 2022, Management continues to monitor these costs closely and identify cost savings initiatives.

Gross profit and loss from operations

For the year ended December 31, 2022, growing net revenue and production efficiencies combined for an increase to gross profit of $12.3 million compared to the prior year. Despite a significant increase in net revenues of 57%, operating expenses remained relatively stable with an increase of $1.5 million (10%) for the year ended December 31, 2022 as the Company began to see the results of operating leverage.

For the year ended December 31, 2022, the Company’s loss from operations has significantly decreased to $2.6 million from $13.3 million in the prior year.

Rubicon Organics achieved Adjusted EBITDA¹ profitability of $1.9 million and positive operating cash flow of $2.0 million for the year ended December 31, 2022. The Company also achieved a Free Cash Flow³ of $2.2 million in the second half of 2022.

Reviewing 2022’s Key Priorities

Rubicon Organics defined a three-pillar strategy for 2022 focused on yield and quality, improving product mix to optimize margin, and investigating the international market.

Optimize Yield & Quality — In 2022, the Company completed facility upgrades, invested in process improvements, and continued to identify opportunities for cost and quality efficiencies. Two significant facility upgrades occurred with the installation of new dehumidification units and completion of the BC Hydro grid connection. From January until August we saw an increase in both quality and yield of cannabis produced, but in the autumn with certain facility maintenance and seasonal growing conditions we had a relative plateau in production. In 2022, the Company has now achieved repeated crops over our nameplate capacity of 11,000 kg’s and seen an increase in our average THC per crop, with certain strains as high as 29% THC. We believe that our quality step change was experienced by the consumers beginning in April 2022 leading to the improved rate of sale of our products and increased demand.

Premiumization — The second pillar was to implement our commercial strategies within the Canadian domestic market to maximize the gross profit for each unit produced from our Delta Facility. With our approach, the provincial distributors and our consumers have access to a greater range of product formats and strain varieties. During 2022, our strategy has proven successful as evidenced by Rubicon achieving 6.3%² market share of the premium flower and pre-roll market. In 2022, there was noticeable increase in competition with the rise of the craft producers and we believe that this competition led to the super-premium brand Simply Bare Organic experiencing a relatively flat year on revenues, despite increase in units sold. In contrast 1964 Supply Co. had a tremendous positive groundswell in the market, in particular from summer 2022 and with the success of the Comatose strain.

We continue to expect the premium market to outpace the growth of the total market in Canada in line with the performance in established markets such as Colorado and California. While the premium market has grown, there have been many new entrants from the smaller craft and micro-cultivator licensed producers who have been successful in gaining share overall. Despite this increase in competition we believe that Rubicon is well positioned to take advantage of the rise of craft momentum as consumer preferences shift from a focus on THC to the importance of terpenes to their experience.

International — At the beginning of 2022 we set our third pillar to open the routes to market for our products internationally. However, there has been significant price compression in the international markets and Rubicon Organics currently has domestic demand in excess of the volume available from our Delta Facility, thus we are prioritizing the domestic sale of our cannabis to continue to develop our Canadian brands which should deliver more consistent profitability. While we believe that there will be opportunities in the international markets, we have decided to continue to focus on the Canadian market in the short-term and thus for the time being, the Company will not continue to pursue its EU-GMP certificate or maintain other certifications required solely for international export. Rubicon expects to continue to evaluate and investigate international markets for future opportunities.

Company Outlook

Rubicon Organics has set out four key priorities for 2023:

1. Optimize Yield and Cultivation at the Delta Facility

Our priority is delivering super-premium quality cannabis flower products in the Canadian market. Producing at scale in a greenhouse environment is subject to seasonal impacts and commercializing new strains to meet the demand in market and our brand standards can present challenges. We remain focused on ongoing refinement and optimization in our cultivation systems. In 2022 the Company achieved several crops exceeding our nameplate 11,000 kg’s capacity, and we expect 2023 to be a year of steady and consistent quality production. Additional tables will be installed in the facility to improve air circulation and increase capacity in the second half of 2023, with standard maintenance scheduled during downtime.

2. Maximize Canadian Premium Opportunity

Rubicon is focused on maximizing the gross margin we earn from each gram produced from our Delta Facility. Delivering both the right genetics and product formats to the customer at the right price to value ratio and maintaining good relationships with the provincial distributors and retail stores are critical to our success. In 2023 we are driving to grow the Simply Bare Organic brand and to premiumize opportunistically elements of the 1964 Supply Co brand, the impact of both would be positive on our gross profit.

As we have forecast demand beyond our available supply from the Delta Facility we have begun projects that we expect to incrementally grow our net revenue and gross profit. We intend to launch products that do not require the Delta Facility’s capacity that we anticipate will add incremental gross profit to our results in a cost effective and efficient manner, such as through contract grow relationships to Rubicon’s quality standards. We are also actively looking to build our revenue with the launch of new products under our existing brands which can be contracted to other licensed producers thus not utilizing our existing capacity. We intend to deliver this incremental gross profit without significant incremental overhead cost to our business, thus driving additional overall profitability.

3. Drive Efficiency in Processes and Systems

As steady state has been established at the Delta Facility, we now are seeking to create efficiency in our systems away from manual processes or those where there is reliance on key individuals to increase the resilience and repeatability of our systems and reduce cost. As part of this process, Rubicon is evaluating new information systems and expects to begin implementing new systems beginning in the second half of 2023. This project will drive incremental cost in the short-term, but we believe will improve efficiency of the existing business and ready Rubicon for further growth.

4. Create a Proud, Engaged Team Delivering Outstanding Results

With turmoil in the cannabis sector in the last number of years coupled with the stresses relating to work in the pandemic and tightness of the labour market, we have seen considerable turnover in the business. We believe that in order to deliver a premium product to market, our team members being engaged and proud is important to put our best foot forward with our consumers and customers. Furthermore, the cost and resources used when there is labour turnover can be considerable. As part of achieving an engaged and proud team, we have set clear goals and objectives linked to reward to recognize the hard work and accomplishments of team members. We also have begun reviewing our Company values listening to our people as part of the process and Rubicon’s evolution now that we are in a more steady state.

Rubicon believes that our cannabis quality, brand positionings and product offerings will drive continued growth in net revenue, resulting in an increase in gross profit and Adjusted EBITDA for the full year 2023. With a stable cost base, this anticipated growth in net revenue and gross profit would improve our operating leverage. Additionally, we expect to achieve positive cashflow for the full year, pending opportunistic investment decisions.

As a business we are now looking to increase the volume of product that we have available for sale to fill the demand we have for our quality products. The business is evaluating several options to increase our capacity. We believe that despite any market volatility, inflationary pressures, regulatory change, our product quality and brand portfolio has positioned Rubicon to win in the premium cannabis market.

Conference Call
The Company will be hosting a conference call to discuss Q4 2022 results on Monday, April 3, 2023. Conference call details are as follows:

ABOUT RUBICON ORGANICS INC.

Rubicon Organics Inc. is the global brand leader in premium organic cannabis products. The Company is vertically integrated through its wholly owned subsidiary Rubicon Holdings Corp, a licensed producer. Rubicon Organics is focused on achieving industry leading profitability through its premium cannabis flower, product innovation and brand portfolio management, including its flagship super-premium brand Simply Bare Organic, its premium brand 1964 Supply Co., its premium concentrate brand LAB THEORY, its mainstream brand Homestead Cannabis Supply and its topical brand Wildflower.

The Company ensures the quality of its supply chain by cultivating, processing, branding and selling organic certified, sustainably produced, super-premium cannabis products from its state-of-the-art glass roofed facility located in Delta, BC, Canada.

CONTACT INFORMATION

Margaret Brodie
Interim CEO & CFO
Phone: +1 (437) 929-1964
Email: ir@rubiconorganics.com

The TSX Venture Exchange or its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) does not accept responsibility for the adequacy or accuracy of this press release.

Non-GAAP Financial Measures

This press release contains certain financial performance measures that are not recognized or defined under IFRS (“Non-GAAP Measures”) including, but not limited to, “Adjusted EBITDA” and “Free Cash Flow”. As a result, this data may not be comparable to data presented by other companies. 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 as well as its liquidity. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. For more information, please refer to the “Selected Financial Information” section in the MD&A for the year ended December 31, 2022, which is available on SEDAR at www.sedar.com.

Below is the Company’s quantitative reconciliation of Adjusted EBITDA calculated as earnings (losses) from operations before interest, tax, depreciation and amortization, share-based compensation expense, and fair value changes. The following table presents a reconciliation of Adjusted EBITDA to the most comparable IFRS financial measure for the three and twelve months ended December 31, 2022 and December 31, 2021.

Free Cash Flow is a non-GAAP measure used by management that is not defined by IFRS and may not be comparable to similar measures presented by other companies. Management believes that Free Cash Flow presents meaningful information regarding the amount of cash flow required to maintain and organically expand our business, and that the Free Cash Flow measure provides meaningful information regarding our liquidity requirements.

Below is the Company’s quantitative reconciliation of Free Cash Flow calculated as net cash provided by (used in) operating activities, less purchases of and deposits on property, plant and equipment. The following table presents a reconciliation of Free Cash Flow to the most comparable IFRS financial measure for the three months ended December 31, 2022, September 30, 2022, December 31, 2021 and September 30, 2021.

Cautionary Statement Regarding Forward Looking Information

This press release contains forward-looking information 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 of future performance, statements regarding Rubicon Organics’ goal of achieving industry leading profitability are “forward-looking statements”. Forward-looking information can be identified by the use of words such as “will” or variations of such word or statements that certain actions, events or results “will” be taken, occur or be achieved.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward looking statements. The forward-looking information in this press release is based upon certain assumptions that management considers reasonable in the circumstances, including the impact on revenue of new products and brands entering the market, and the timing of achieve Adjusted EBITDA profitability and cash flow positive. Risks and uncertainties associated with the forward looking information in this press release include, among others, dependence on obtaining and maintaining regulatory approvals, including acquiring and renewing federal, provincial, local or other licenses and any inability to obtain all necessary governmental approvals licenses and permits for construction at its facilities in a timely manner; regulatory or political change such as changes in applicable laws and regulations, including bureaucratic delays or inefficiencies or any other reasons; any other factors or developments which may hinder market growth; Rubicon Organics’ limited operating history and lack of historical profits; reliance on management; and the effect of capital market conditions and other factors on capital availability; competition, including from more established or better financed competitors; and the need to secure and maintain corporate alliances and partnerships, including with customers and suppliers; and those factors identified under the heading “Risk Factors” in Rubicon Organic’s annual information form dated March 31, 2023 filed with Canadian provincial securities regulatory authorities. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. Although Rubicon Organics has attempted to identify important risk factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other risk factors that cause actions, events or results to differ from those anticipated, estimated or intended.

These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. Although Rubicon Organics has attempted to identify important risk factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other risk factors that cause actions, events or results to 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. Rubicon Organics assumes no obligation to update any forward-looking statement, even if new information becomes available as a result of future events, new information or for any other reason except as required by law.

We have made numerous assumptions about the forward-looking statements and information contained herein, including among other things, assumptions about: optimizing yield, achieving revenue growth, increasing gross profit, operating cashflow and Adjusted EBITDA profitability. Even though the management of Rubicon Organics believes that the assumptions made, and the expectations represented by such statements or information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. Investors are cautioned against undue reliance on forward-looking statements or information. Forward-looking statements and information are designed to help readers understand management’s current views of our near and longer term prospects and may not be appropriate for other purposes. Rubicon Organics assumes no obligation to update any forward-looking statement, even if new information becomes available as a result of future events, changes in assumptions, new information or for any other reason except as required by law.

¹ Adjusted EBITDA is a non-GAAP measure that is calculated as earnings (losses) from operations before interest, tax, depreciation and amortization, share-based compensation expense, and fair value changes. See ‘Non-GAAP Financial Measures’ for details on the Adjusted EBITDA calculation.
² Hifyre data for premium flower & pre-rolled products covering twelve months ending December 31, 2022
³ Free Cash Flow is a non-GAAP measure that is calculated as net cash provided by (used in) operating activities, less purchases of and deposits on property, plant and equipment. See ‘Non-GAAP Financial Measures’ for details on the Free Cash Flow calculation.
⁴ Hifyre data for flower & pre-rolled products covering three months ending December 31, 2022
⁵ Hifyre data for premium flower & pre-rolled products covering three months ending December 31, 2022

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.

• Canadian Cannabis Business Achieves Number Two Market Share Position Nationally and Maintained Number Two Position in First Two Months of 2023
• Canadian Cannabis Retail Branded Sales Increased 25% Year-Over-Year, Significantly Outpacing Market Growth
• Commenced Cannabis Exports to Israel in Early January 2023
• Fresh Produce Delivered Second Consecutive Quarter of Significant Sequential Improvement

VANCOUVER, British Columbia, March 09, 2023 (GLOBE NEWSWIRE) — Village Farms International, Inc. (“Village Farms” or the “Company”) (NASDAQ: VFF) today announced its financial results for the fourth quarter and year ended December 31, 2022. All figures are in U.S. dollars unless otherwise indicated.

Management Commentary

“The fourth quarter of 2022 once again demonstrated the momentum in our Canadian Cannabis business as investments in new brands and product innovations contributed to 25% year-over-year growth in retail branded sales and our 17th consecutive quarter of positive adjusted EBITDA,” said Michael DeGiglio, Chief Executive Officer, Village Farms. “We achieved a major milestone in 2022: Our Canadian Cannabis business became the number two top-selling cannabis company nationally¹, growing market share sequentially every quarter during 2022. We have maintained this number two position in the first two months of 2023 despite distressed sales of biomass and ongoing promotional activity in certain parts of the Canadian market. Our strong brand recognition, innovation, and low-cost, consistent cultivation are a powerful combination in a market which is expected to grow steadily over the next three to five years.”

“During 2023, we expect strong commercial execution, continuous innovation and sales to export markets will deliver another year of market-leading results in our Canadian Cannabis business. At the same time, we are focused on continued gains in production efficiencies and expense improvements.”

“In our U.S. Cannabis business, Balanced Health Botanicals continues to perform well in a challenging consumer market for CBD, based on its leading CBDistillery® brand and innovative product introductions, including the strong performance of its hemp-derived THC Synergy+ line of products. This, combined with prudent cost management, drove positive EBITDA for our U.S. Cannabis business for the fourth quarter.”

“In our Fresh Produce business, we again reduced the adjusted EBITDA loss during the fourth quarter, driven by improvements in our Texas operations. The Fresh Produce business remains strategic for Village Farms and our customers, and it must return to profitability. Following a comprehensive review of our operations, we have initiated a multi-part plan, including technology and operational enhancements, as well as the decision to divest our Permian Basin facility, which we view as non-strategic for our long-term optimized Fresh strategy or a longer-term Texas-based and national legal cannabis market. We are confident these initiatives, in aggregate, combined with an improving macro environment compared with that of 2022, will contribute to substantially improved financial performance from Fresh Produce in 2023.”

1. Based on estimated retail sales from HiFyre, other third parties and provincial boards.

Fourth Quarter 2022 Financial Highlights
(All comparable periods are for the fourth quarter of 2021 unless otherwise stated)

Consolidated

• Consolidated sales were $69.5 million, a decrease of ($3.3 million), or (5%), from $72.8 million, with the stronger U.S. dollar compared to the Canadian dollar decreasing reported U.S. sales for our Canadian Cannabis operations by ($2.4 million). On a constant currency basis, consolidated sales decreased by (1%);
• Consolidated net loss was ($49.3 million), or ($0.54) per share, compared with net income of $2.1 million, or $0.03 per share;
• Consolidated net loss included an impairment of $13.5 million related to the acquisition of Balanced Health Botanicals, a write down in the Canadian Cannabis business of $11.0 million (C$15.0 million) of lower potency flower inventory that was more than 12 months old, with the write down partially attributable to lower pricing in the non-branded market, and provision for income taxes of $30.4 million;
• Consolidated adjusted EBITDA was negative ($0.8 million) compared with positive adjusted EBITDA of $4.8 million; and,
• Completed a registered direct offering with certain institutional investors for the purchase and sale of an aggregate of 18,350,000 common shares at US$1.35 per share, together with accompanying warrants to purchase up to 18,350,000 common shares (exercise price of US$1.65 per share) for gross proceeds from the sale of the common shares of approximately US$25 million and potential proceeds from the exercise of all warrants of approximately US$30 million, with the net proceeds intended to be used for general working capital purposes.

Cannabis Segment

• Total Cannabis segment net sales decreased (2.0%) year-over-year to $33.2 million, representing 47.9% of total Village Farms sales; and,
• Total Cannabis segment adjusted EBITDA was $5.0 million compared with $6.2 million.

Canadian Cannabis (Pure Sunfarms and Rose LifeScience)

• Canadian Cannabis net sales increased 13.1% to a $27.9 million (C$38.2 million) on a constant currency basis;
• Canadian Cannabis retail branded sales increased 25% year-over-year (fourth quarter), and 25% for the full 2022 year;
• Canadian Cannabis wholesale sales decreased (35%) due to continued significant erosion in market pricing as distressed producers liquidate inventories;
• Canadian Cannabis cost of sales included an inventory write down of $11.0 million (C$15.0 million) of lower potency flower that was more than 12 months old, with the write down partially attributable to lower pricing in the non-branded market. Excluding the write down, gross margin for Canadian Cannabis was 40%, consistent with its stated target range of 30% to 40%; and
• Canadian Cannabis adjusted EBITDA was $4.7 million (C$6.3 million);

U.S. Cannabis (Balanced Health Botanicals and VF Hemp)

• U.S. Cannabis net sales were $5.3 million, with a gross margin of 67.2% and adjusted EBITDA of $0.3 million compared with net sales of $7.5 million, with a gross margin of 70.1% and adjusted EBITDA of $1.8 million.

Village Farms Fresh (Produce)

• Sales were $36.2 million compared with $38.4, primarily due to a smaller growing area in Texas in fourth quarter of 2022, lower production from our Canadian tomato greenhouse due to the Brown Rugose virus in the fourth quarter of 2022 and lower third-party supplier volume in the fourth quarter of 2022 due to loss of some contracts in late 2022 that have been replaced in 2023 with new growers.
• Adjusted EBITDA was negative ($3.0 million) compared with positive $1.2 million. Adjusted EBITDA for the fourth quarter was a sequential improvement over negative ($4.9 million) reported for the third quarter of 2022. Adjusted EBITDA for the second half of 2022 improved to negative ($7.9) from negative ($15.1 million) for the first half of 2022.

Strategic Growth and Operational Highlights

Canadian Cannabis

• Became the number two ranked cannabis producer in Canada by market share for the fourth quarter, maintaining the number two position during the first two months of 2023, and was the top-selling cannabis producer in Canada across all product categories in October 2022³;
• Continued to expand its number one market share position in the dried flower category in Canada;
• Rose LifeScience expanded its number two market share position in Quebec¹, which it achieved within the first year of acquisition by Village Farms, maintaining the number two position during the first two months of 2023³;
• Continued the roll out of a second BC-grown brand, The Original Fraser Valley Weed Co., focused on the value segment of the market, with introductions of additional SKUs in British Columbia and Alberta, as well as launch in Ontario, all of which contributed to national market share growth;
• Launched Soar, a cannabis brand complementary to its existing brands, designed to deliver an elevated cannabis experience with limited quantity batches of exotic and unique genetics that are hand-harvested, hang-dried, and hand-detailed; and,
• Rose Lifescience established partnerships with three regional micro-producers, Cannabitibi, Teca Canna and Le Malin Vert, expanding the number of micro-producers under the brand of the cannabis collective DLYS to 11.

U.S. Cannabis

• Continued to have success with its Synergy+ line of hemp-derived, THC products with strong sequential quarterly growth in sales since launch.

International Cannabis

• Commenced shipping cannabis products (produced by Pure Sunfarms) to Israel for that country’s medical market under an exclusive three-year supply agreement with Israel-based Dr. Samuelov Importing and Marketing Ltd., doing business as Better Pharma; and,
• Sales to Australia for the fourth quarter increased more than ten-fold from the first quarter of 2022.

1. Based on estimated retail sales from HiFyre, other third parties and provincial boards.

Canadian Cannabis Financial Performance Summary

1. Total cost of sales and gross margin for the three months and twelve months ended December 31, 2022 include a one-time inventory write down of C$15,000 (US$11,038). Total cost of sales and gross margin for the year ended December 31, 2022 excludes a US$1,404 catch-up of intangible amortization resulting from the finalization of Rose purchase price accounting in the third quarter of 2022. The year ended December 31, 2021, cost of sales excludes the C$2,291 (US$1,841) inventory adjustment charge from the revaluation of inventory to fair value at the acquisition date of November 2, 2020.
2. Adjusted EBITDA is a non-GAAP measure, is not a recognized earnings measure and does not have a standard meaning prescribed in by GAAP. For a reconciliation of Adjusted EBITDA to net income, see “Reconciliation of Net Income to Adjusted EBITDA” below.

Canadian Cannabis’ Percent of Sales by Product Group¹

1. Excludes Rose LifeScience commission-based revenue.

PRESENTATION OF FINANCIAL RESULTS

The Company’s financial statements for the three and 12 months ended December 31, 2022, as well as the comparative periods for 2021, have been prepared and presented under United States Generally Accepted Accounting Principles (“GAAP”). Village Farms acquired 100% of Balanced Health Botanicals on August 16, 2021 and their operating results are consolidated in our Consolidated Statements of Income (Loss) for the three and 12 months ended December 31, 2022 as well as for August 16, 2021 through December 31, 2021 for the 12 months ended December 31, 2021. The Company acquired 70% of Rose LifeScience on November 15, 2021 and their results are presented in the operations of our consolidated wholly-owned subsidiaries and the minority interest is presented in Net Income (Loss) Attributable to Non-controlling Interests, Net of Tax for the three and 12 months ended December 31, 2022.

RESULTS OF OPERATIONS
(In thousands of U.S. dollars, except per share amounts, and unless otherwise noted)

Consolidated Financial Performance

1. For the three and twelve months ended December 31, 2022 and for the period August 16, 2021 through December 31, 2021, Balanced Health is fully consolidated in the financial results of the Company. For the three and twelve months ended December 31, 2022 and for the period November 15, 2021 to December 31, 2021, Rose LifeScience financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.
2. Consists of impairments to goodwill of ($43,299) that were triggered by inflationary effects on consumer spending, decreases in market capitalization of CBD companies and the continued federal regulation lack of clarity with respect to CBD. See Part 2, Item 8 Note 11 “Goodwill and Intangible Assets” for additional details.
3. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company’s 70% interest in Rose LifeScience since acquisition and 65% interest in VFH.

SEGMENTED RESULTS OF OPERATIONS

(In thousands of U.S. dollars, except per share amounts, and unless otherwise noted)

1. For the three and twelve months ended December 31, 2022 and for the period August 16, 2021 through December 31, 2021, Balanced Health is fully consolidated in the financial results of the Company. For the three and twelve months ended December 31, 2022 and for the period November 15, 2021 to December 31, 2021, Rose LifeScience’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.
2. Consists of impairments to goodwill of ($43,299) that were triggered by inflationary effects on consumer spending, decreases in market capitalization of CBD companies and the continued federal regulation lack of clarity with respect to CBD. See Part 2, Item 8 Note 11 “Goodwill and Intangible Assets” for additional details.
3. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company’s 70% interest in Rose LifeScience since acquisition and 65% interest in VFH.

A detailed discussion of our consolidated and segment results can be found in our Annual Report on Form 10-K for the 12 months ended December 31, 2022 (the “Annual Report”), which will be filed with the Securities and Exchange Commission and will be available at www.sec.gov, and will also be filed in Canada on SEDAR (www.sedar.com). In addition, the Annual Report can be found on the Village Farms website under Financial Reports (https://villagefarms.com/financial-reports/) within the Investors section.

Reconciliation of Net Income to Adjusted EBITDA

The following table reflects a reconciliation of net income to Adjusted EBITDA, as presented by the Company:

1. For the three and twelve months ended December 31, 2022 and for the period August 16, 2021 through December 31, 2021, Balanced Health is fully consolidated in the financial results of the Company. For the three and twelve months ended December 31, 2022 and for the period November 15, 2021 to December 31, 2021, Rose LifeScience’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.
2. Consists of impairments to goodwill of ($43,299) that were triggered by inflationary effects on consumer spending, decreases in market capitalization of CBD companies and the continued federal regulation lack of clarity with respect to CBD. See Part 2, Item 8 Note 11 “Goodwill and Intangible Assets” for additional details.
3. The purchase price adjustment primarily reflects the non-cash accounting charge resulting from the revaluation of Pure Sunfarms’ inventory to fair value at the acquisition date on November 2, 2020 and the catch-up of intangible amortization resulting from the September 30, 2022 finalization of the Rose purchase price accounting.
4. Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA includes the 70% interest in Rose LifeScience since acquisition and 65% interest in VFH.

Conference Call

Village Farms’ management team will have a conference call to discuss its fourth quarter and year-end financial results today, Thursday, March 9, 2023, at 8:30 a.m. ET. Participants wanting to access the conference call by telephone must register in advance at Village Farms Fourth Quarter 2022 Conference Call to receive the telephone dial-in information.   For those wanting to listen to the webcast, please visit the Events and Presentations section of Village Farms’ website here: Events – Village Farms International. The live question and answer session will be limited to analysts, however others are invited to submit their questions ahead of the conference call via email at investorrelations@villagefarms.com.  Management will address questions received via email as part of the conference call question and answer session as time permits.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay beginning approximately one hour following completion of the call on Village Farms’ web site at http://villagefarms.com/investor-relations/investor-calls.

About Village Farms International, Inc.

Village Farms leverages decades of experience as a large-scale, Controlled Environment Agriculture-based, vertically integrated supplier for high-value, high-growth plant-based Consumer Packaged Goods opportunities, with a strong foundation as a leading fresh produce supplier to grocery and large-format retailers throughout the US and Canada, and new high-growth opportunities in the cannabis and CBD categories in North America and selected markets internationally.

In Canada, the Company’s wholly-owned Canadian subsidiary, Pure Sunfarms, is one of the single largest cannabis operations in the world, the lowest-cost greenhouse producer and one of Canada’s best-selling brands. The Company also owns 70% of Québec-based, Rose LifeScience, a leading third-party cannabis products commercialization expert in the Province of Québec.

In the US, wholly-owned Balanced Health Botanicals is one of the leading CBD brands and e-commerce platforms in the country. Subject to compliance with all applicable US federal and state laws and stock exchange rules, Village Farms plans to enter the US high-THC cannabis market via multiple strategies, leveraging one of the largest greenhouse operations in the country (more than 5.5 million square feet in West Texas), as well as the operational and product expertise gained through Pure Sunfarms’ cannabis success in Canada.

Internationally, Village Farms is targeting selected, nascent, legal cannabis and CBD opportunities with significant medium- and long-term potential, with an initial focus on the Asia-Pacific region, Israel and Europe.

Cautionary Statement Regarding Forward-Looking Information

As used in this Press Release, the terms “Village Farms”, “Village Farms International”, the “Company”, “we”, “us”, “our” and similar references refer to Village Farms International, Inc. and our consolidated subsidiaries, and the term “Common Shares” refers to our common shares, no par value. Our financial information is presented in U.S. dollars and all references in this Press Release to “$” means U.S. dollars and all references to “C$” means Canadian dollars.

This Press Release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the U.S. Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the safe harbor created by those sections. This Press Release also contains “forward-looking information” within the meaning of applicable Canadian securities laws. We refer to such forward-looking statements and forward-looking information collectively as “forward-looking statements”. Forward-looking statements may relate to the Company’s future outlook or financial position and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, expansion plans, litigation, projected production, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the Company. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the Company, the greenhouse vegetable or produce industry or the cannabis industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms as “can”, “outlook”, “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “try”, “estimate”, “predict”, “potential”, “continue”, “likely”, “schedule”, “objectives”, or the negative or grammatical variation thereof or other similar expressions concerning matters that are not historical facts. The forward-looking statements in this Press Release are subject to risks that may include, but are not limited to: our limited operating history in the cannabis and cannabinoids industry, including that of Pure Sunfarms, Inc. (“Pure Sunfarms”), Rose LifeScience Inc. (“Rose” or “Rose LifeScience”) and Balanced Health Botanicals, LLC (“Balanced Health”); the legal status of the cannabis business of Pure Sunfarms and Rose and the hemp business of Balanced Health; risks relating to the integration of Balanced Health and Rose into our consolidated business; risks relating to obtaining additional financing, including our dependence upon credit facilities; potential difficulties in achieving and/or maintaining profitability; variability of product pricing; risks inherent in the cannabis, hemp, CBD, cannabinoids, and agricultural businesses; market position; ability to leverage current business relationships for future business involving hemp and cannabinoids; the ability of Pure Sunfarms and Rose to cultivate and distribute cannabis in Canada; existing and new governmental regulations, including risks related to regulatory compliance and regarding obtaining and maintaining licenses; legal and operational risks relating to expected conversion of our greenhouses to cannabis production in Canada and in the United States; risks related to rules and regulations at the US federal (Food and Drug Administration and United States Department of Agriculture), state and municipal rules and regulations with respect to produce and hemp, cannabidiol-based products commercialization; retail consolidation, technological advances and other forms of competition; transportation disruptions; product liability and other potential litigation; retention of key executives; labor issues; uninsured and underinsured losses; vulnerability to rising energy costs; inflationary effects on costs of cultivation and transportation; recessionary effects on demand of our products; environmental, health and safety risks, foreign exchange exposure, risks associated with cross-border trade; difficulties in managing our growth; restrictive covenants under our credit facilities; natural catastrophes; the ongoing COVID-19 pandemic; and tax risks.

The Company has based these forward-looking statements on factors and assumptions about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. Although the forward-looking statements contained in this Press Release are based upon assumptions that management believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the Company’s control, which may cause the Company’s or the industry’s actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the factors contained in the Company’s filings with securities regulators, including this Press Release. In particular, we caution you that our forward-looking statements are subject to the ongoing and developing circumstances related to the COVID-19 pandemic, which may have a material adverse effect on our business, operations and future financial results.

When relying on forward-looking statements to make decisions, the Company cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future results, performance, achievements, prospects and opportunities. The forward-looking statements made in this Press Release relate only to events or information as of the date on which the statements are made in this Press Release. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Contact Information

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.

TORONTO, February 28, 2023–(BUSINESS WIRE)–Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) (“Heritage” or the “Company“), today announced its financial results as at and for the three- and twelve-month periods ended October 31, 2022. All figures are in Canadian dollars unless otherwise noted.

“We are very pleased to have achieved another quarter of top line revenue growth that signals the success of our products in market, and with year-over-year revenue growth of 125% we are demonstrating our ability to execute a sustainable growth story. We saw significant growth in gross margins year over year despite the challenging regulatory environment within the cannabis industry. The market continues to be burdened by overcapacity, lack of tax reform and regulation constraints, however we have continued to grow through innovative product launches as well as new brand introduction,” said David Schwede, CEO of Heritage. “In particular we remain at the forefront of innovation with our newly launched ‘Thrifty’ brand and expect a similar market response to the wildly successful ‘RAD’ brand we launched in 2021. Our strength in the preroll and vape & concentrate categories is a testament to both our ability to be nimble in the market while continuing to produce quality products in a crowded market. Our U.S. ventures have successfully launched, and already operating on a cashflow positive basis. We are looking forward to continuing to build on the success of 2022 in 2023 and are exploring new revenue channels both in the U.S and internationally.”

Selected Financial Highlights

Selected financial highlights for the three- and twelve-month periods ended October 31, 2022 and 2021 include the following:

2022 Financial Highlights

• The Company reported gross revenue of $11,148,059 for the three months ended October 31, 2022, an increase of $4,015,117 compared to gross revenue of $7,132,942 for the three months ended October 31, 2021, representing an increase of 56%. The growth was driven by continued strength in the vape and concentrate category which increased 37%. As the Company continued to penetrate the flower market, its pre-roll and infused offerings have continued to grow especially since the Canadian marketplace remains primarily focused on flower products.

• For the year ended October 31, 2022, the Company recorded gross revenue of $41,996,297 an increase of $23,319,339 compared to gross revenue of $18,676,958 for the year ended October 31, 2021, representing an increase of 125%. The increase in gross revenue was the result of the Company’s continued strong listing demand particularly for its flower products which grew over 2000% year over year.

• Cost of sales for the three months ended October 31, 2022 was $7,611,993, an increase of $282,339 compared to $7,329,654 for the three months ended October 31, 2021. Cost of sales, decreased on a percentage of sales basis, as a result of operational efficiencies which increased capacity output, a reduction in outsourced product costs as a result of internalizing manufacturing that was previously outsourced and decreasing the reliance of external oil to offset the internal production scale up.

• Cost of sales for the year ended October 31, 2022 was $21,599,867, an increase of $8,106,870, compared to $13,492,997 for the year ended October 31, 2021. Cost of sales decreased on percentage of gross revenue as a resulting from increased operational efficiencies and significantly less reliance on third party manufacturers.

• Gross margin for the three months ended October 31, 2022 was $426,112 compared to gross margin of $(2,680,629) for the three months ended October 31, 2021. The increase of $3,106,741 was primarily a result of increased sales activity, greater facility productivity, a lower excise percentage and end of year re-classifications. Regulatory taxes continue to be one of the largest expenses of the business.

• Gross margin for the year ended October 31, 2022 was $7,966,518 compared to gross margin of $566,133 for the year ended October 31, 2021. The increase of $7,400,385 was a result of increased sales activity as highlighted in the table above combined with improved operational efficiencies and less third party reliance which were partially offset by a higher excise percentage, which increased by almost 500bps, from the prior period driven by the production of higher THC products as well as increased sales in provinces with higher tax rates.

• For the three months ended October 31, 2022, the Company recorded a net comprehensive loss of $26,895,045 or $0.03 loss per share compared to a comprehensive loss of $42,685,990 or $0.01 loss per share for the three months ended October 31, 2021. The improvement over the prior period was due to the gross margin gains noted above and the cost management in general and administrative expenses which was partially offset by the intangible asset and goodwill impairment.

• For the year ended October 31, 2022, the Company recorded a comprehensive loss of $23,937,773 or $0.03 loss per share compared to a comprehensive loss of $57,685,532 or $0.08 loss per share for the year ended October 31, 2021. The decrease in loss was primarily attributable to a lower impairment of intangible assets and goodwill of $21,215,000 for the year ended October 31, 2022 as compared to $36,337,826 for the year ended October 31, 2021, and an unrealized gain on contingent consideration payable of $9,137,267 for the year ended October 31, 2022 as compared to an unrealized loss of $3,514,865 in 2021.

Q4 2022 Growth, Operational, and Corporate Highlights

• On August 8, 2022, Heritage announced a relationship with Harvest Care Medical, LLC, (“Harvest Care”), a leading grower, processor, and provider of top-quality medical cannabis products in the state of West Virginia, with ten dispensary licenses of which two are currently in operation. Harvest Care was granted one of ten cultivation licenses last year and will contribute the use of the license to the relationship. Similar to Heritage’s relationship in Missouri, under the agreement Heritage will supply production equipment to Harvest Care as well as provide training and supervision of staff on the proprietary methods of extraction and manufacturing of Heritage developed and branded products.

  Subsequently on October 11, 2022, Heritage announced the commencement of operations in the state of West Virginia after Harvest Care received its processing license from the West Virginia Office of Medical Cannabis. Initial production on vape products and concentrates commenced in the State shortly thereafter. This milestone marks Heritage’s second U.S. state where it is operating, and with additional states on the horizon, the U.S. strategy is gaining traction and taking shape as the U.S. moves closer to decriminalizing cannabis.

• On September 9, 2022, Heritage announced that it changed its auditors from Davidson & Company LLP (“Former Auditor”) to Welch LLP (“Successor Auditor”). At the request of the Company, the Former Auditor resigned as the auditor of the Company effective September 8, 2022 and the Board appointed the Successor Auditor as the Company’s Auditor effective as of September 9, 2022. There were no reservations or modified opinions in the Former Auditor’s reports on the Company’s financial statements during the period that the Former Auditor acted as the Company’s auditor. In addition, there are no reportable events, including disagreements, consultations or unresolved issues (as defined in National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”)) between the Company and the Former Auditor.
• On September 29, 2022, Heritage announced that it entered into a second loan amending agreement (the “Second Amending Agreement”) to an original loan agreement dated March 31, 2021, as amended October 6, 2021 with BJK Holdings Ltd. (“BJK”) in the total amount of $19,760,000 across four facilities (collectively the “Loan”). As a result of the Second Amending Agreement, the maturity date on the Loan has been extended to November 30th, 2024 (the “Maturity Date”), and an additional loan facility in the amount of $4,985,000 has been extended to the Company, bringing the total amount of proceeds that the Company has access to through the Loan to $19,760,000. A one-time loan amendment fee of $985,000 was paid to BJK on September 29, 2022.

  In connection with the Loan, Heritage issued a new warrant certificate to BJK on September 29, 2022, entitling BJK to subscribe for and purchase up to 50,000,000 common shares in the capital of Heritage at an exercise price of $0.10 per common share (the “Additional Warrants”). The Additional Warrants have an expiry date of February 28, 2025. Heritage has also agreed to amend an existing warrant certificate held by BJK dated October 6, 2021, which entitled BJK to subscribe for and purchase up to 10,000,000 common shares in the capital of Heritage at an exercise price of $0.25 per share (the “Existing Warrants”). Effective September 29, 2022, the Company amended the Existing Warrants so that the expiry date for BJK to exercise the Existing Warrants is extended from October 8, 2023 until February 28, 2026.

• On October 3, 2022, Heritage announced the commencement of operations in the state of Missouri after Como Health LLC, doing business as 3Fifteen Primo Cannabis (“3Fifteen”), received an Approval to Operate from the Missouri Section for Medical Marijuana Regulation. Initial production on vape products, concentrates, and pre-rolls has already commenced in the State.
• On October 4, 2022, Heritage announced the launch of RAD Razzlers, a cannabis gummy that marks the entry into a new product category for Heritage. Following on the immense popularity of other cannabis products sold across the country under the RAD brand, RAD Razzlers are a new addition to the edibles category and offer unique and popular flavour profiles sought after by cannabis consumers, including Cousin Eddies Eggnog which will be a limited edition flavour offered only during the holidays. RAD Razzlers will initially be offered in packages containing a total of 10 mg of THC, with each gummy containing 2.5 mg of THC.
• On September 15, 2022, Heritage acquired the remaining 25% interest in Heritage West and now owns 100% of the issued and outstanding shares in the capital of Heritage West, a holder of various Health Canada cannabis licenses, through a share cancellation acquisition with Estek Ventures Corp. As consideration for the cancellation of 500 Class A Voting Common Shares and 400,000 Class G Non-Voting Preferred Shares in the capital of Heritage West, the Company has issued Estek Ventures Corp. 2,000,000 Common Shares plus an additional CAD$50,000 in cash.
• On September 16, 2022, Heritage entered into a settlement agreement with the original shareholders of Purefarma Solutions Inc. (the “Original Purefarma Shareholders”) to settle all outstanding obligations of Heritage to the Original Purefarma Shareholders pursuant to the terms of a share exchange agreement and share purchase agreement each dated December 7, 2018. In satisfaction of all claims related to earn-out share obligations and contingent cash payment obligations, the Original Purefarma Shareholders directed Heritage to issue 14,728,762 Common Shares to its corporate shareholder, 1187940 B.C. Ltd.

Financial Statements

The consolidated financial statements of the Company as at and for the three- and twelve-month periods ended October 31, 2022, and accompanying management’s discussion and analysis have been filed with the securities regulators and are available on SEDAR at www.sedar.com under the Company’s issuer profile.

About Heritage Cannabis Holdings Corp.

Heritage Cannabis is a leading cannabis company offering innovative products to both the medical and recreational legal cannabis markets in Canada and the U.S., operating under two licensed manufacturing facilities in Canada. The company has an extensive portfolio of high-quality cannabis products under the brands Purefarma, Pura Vida, RAD, Premium 5, Thrifty, feelgood., the CB4 suite of medical products in Canada and ArthroCBD in the U.S.

ON BEHALF OF THE BOARD OF DIRECTORS OF HERITAGE CANNABIS HOLDINGS CORP.

“David Schwede”
David Schwede
CEO

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein may include, but is not limited to, assumptions related to cash flow and capital resources, and expectations related to the supply and manufacturing agreements, the intended expansion of the Company, and partnerships and Joint Venture Partnerships.

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to several risks including, without limitation, the risks discussed under the heading “Risks and Uncertainties” in the Company’s annual management discussion and analysis for the year ended October 31, 2022, and dated February 28, 2023. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230228006468/en/

Contacts

Kelly Castledine
Tel: 647-660-2560
kcastledine@heritagecann.com

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.

• Revenue of $5.07M compared to $3.76M in Q4 2021, an increase of 35%
• Adjusted EBITDA¹ (aEBITDA) of $1.66M compared to $1.2M in Q4 2021, an increase of 39%
• Positive free cash flow for Q4 2022 and fiscal 2022
• Subsequent to quarter-end, closed a $2.0M convertible debenture financing

MEDFORD, Ore., Dec. 13, 2022 /CNW/ – Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a craft cannabis company operating in Oregon and Michigan, is pleased to report its unaudited fiscal fourth quarter 2022 results for the three months ended October 31, 2022. All financial information is provided in U.S. dollars unless otherwise indicated.

Fourth Quarter 2022 Financial Summary ($USD Millions)

• Q4 2022 cash flows before changes in non-cash working capital (“CNCWC”) were decreased by new facility startup costs of $401k, which are added back in the aEBITDA reconciliation, below. Adjusted for this, Q4 2022 operating cash flows before CNCWC are $1.1M, an increase of 17.8% over Q4 2021.

Management Commentary

“I couldn’t be more thrilled about our record revenue and adjusted EBITDA, closing out a record year including achieving positive free cash flow for the year,” said Obie Strickler, CEO of Grown Rogue. “It’s even more exciting to watch our team continue to increase market share in Oregon and Michigan by staying true to our focus towards ensuring customers experience leading craft quality and genetics at an attractive value. Our business continues to show scale, with revenue up 35% year over year and aEBITDA up 39%, despite pricing headwinds in our markets, particularly in Michigan“, continued Mr. Strickler. “In Oregon, we saw continued reduction in total supply as many cultivators exit or scale back their business, which should result in a pricing rebound in 2023. It’s also great to see a shifting of investor sentiment towards strong operators and management teams reflected in our recently closed a $2.0M convertible debt financing with Mindset Capital at very attractive terms to the company.  We are planning to continue our disciplined approach to capital allocation as we look to accelerate expansion plans into new markets. I look forward to updating Grown Rogue shareholders on these efforts in the future.”

Oregon Market Highlights ($USD Millions)

• #1 Flower brand in Oregon for the sixth consecutive quarter, according to LeafLink’s MarketScape data
• Total harvested wet weights for the state of Oregon decreased 13% YoY for indoor and 21% YoY for outdoor

Michigan Market Highlights ($USD Millions)

• Gross margin of 63.4% in the quarter before fair value adjustments
• Completed the first harvests from the 13^th and 14^th growing rooms in Q4 2022

Michigan operations are through Golden Harvests, LLC

Segmented Profit & Loss and aEBTIDA Reconciliation

About Grown Rogue

Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a craft cannabis company focused on delighting customers with premium flower and flower-derived products at fair prices. Our roots are in Southern Oregon where we have demonstrated our capabilities in the highly competitive and discerning Oregon market and, more recently, we successfully expanded our platform to Michigan. We combine our passion for product and value with a disciplined approach to growth, prioritizing profitability and return on capital. Our strategy is to pursue capital efficient methods to expand into new markets, bringing our craft quality and value to more consumers. We also continue to make modest investments to improve our outdoor craft cultivation capabilities in preparation for eventual interstate commerce

NON-IFRS FINANCIAL MEASURES

EBITDA and aEBITDA are non-IFRS measures and do not have standardized definitions under IFRS. The Company has also provided unaudited pro-forma financial information, which assumes that closed and pending mergers and acquisitions in 2021 are included in the Company’s financial results as of the beginning of the quarterly and annual periods in 2021. The Company has provided the non-IFRS financial measures, which are not calculated or presented in accordance with IFRS, 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 has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS financial 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 IFRS financial measures presented herein. Accordingly, the following information provides reconciliations of the supplemental non-IFRS financial measures, presented herein to the most directly comparable financial measures calculated and presented in accordance with IFRS.

FORWARD-LOOKING STATEMENTS

This press release contains statements which constitute “forward‐looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward‐ looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward‐looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward‐looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward‐looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on Sedar.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward‐looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward‐looking information except as otherwise required by applicable law.

SAFE HARBOR STATEMENT

This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the Company’s Form 20-F and 6-K filings with the Securities and Exchange Commission.

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company’s business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

SOURCE Grown Rogue International Inc.

For further information: On Grown Rogue International please visit www.grownrogue.com or contact: Obie Strickler, Chief Executive Officer, [email protected]; Investor Relations Desk Inquiries, [email protected],(458) 226-2100

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.

Company recorded a record high of $12 million in quarterly revenue (84% YoY increase) and Net Income of $2.6 million

Full year revenues were $36 million, a 108% increase compared to 2021

Delivered its sixth consecutive quarter of positive Adjusted EBITDA of $2.5M, and $5.3M for fiscal year 2022 

All financial results are reported in Canadian dollars, unless otherwise stated.

MONTREAL, Nov. 25, 2022 /PRNewswire/ – Cannara Biotech Inc. (“Cannara” or the “Company“) (TSXV: LOVE) (OTCQB: LOVFF) (FRA: 8CB), a vertically integrated producer of premium-grade cannabis and derivative products with two mega facilities based in Québec spanning over 1,650,000 sq. ft., today announced its fiscal fourth quarter and fiscal year 2022 financial and operating results for the three-month and full year periods ended August 31, 2022.

Fiscal Fourth Quarter and Fiscal Year 2022 Financial and Operational Highlights

• Q4 2022 revenue of $12 million, an 84% increase compared to Q4 2021 and a 19% increase from the previous quarter.
• 2022 fiscal year revenue of $36 million, a 108% increase compared to 2021 fiscal year revenue.
• Recorded Q4 2022 gross profit before fair value adjustments of $4.8 million, an increase of 38% compared to Q4 2021 and a 27% increase from the previous quarter.
• Increased positive Adjusted EBITDA for Q4 2022 to $2.5 million, an 83% increase vs Q4 2021.
• Increased positive Adjusted EBITDA to $5.3 million for the fiscal year 2022, a 254% increase vs fiscal year 2021.
• Delivered the Company’s sixth straight quarter of positive Adjusted EBITDA.
• Earned net income of $2.6 million for Q4 2022, and $2.3 million for the full year end of 2022.
• Successfully redesigned and activated 6 of 24 growing zones and have produced 6 harvests from the new Valleyfield facility (the “Valleyfield Facility“) as of August 31, 2022.
• Approximately 2,570 kg of cannabis or 730,000 units sold across 3 flagship brands during Q4 2022, an increase of 26% in kg sold compared to the Q3 2022.
• The number of kg sold during the second half of 2022 increased by 69% compared to the first half of 2022, resulting from the increase in production from the Valleyfield Facility.
• Approximately 7,300 kg of cannabis or 2 million units sold across 3 flagship brands during fiscal year 2022, an increase of approximately 1.5 million of units sold or 286% compared to the prior fiscal year.
• The Company has $29 million in working capital of August 31, 2022.
• The Company granted a total of 1,200,000 stock options to employees at an exercise price of $0.18, subject to certain vesting conditions in accordance with the employee share option plan during Q4 2022 and subsequent to year-end, the Company granted a total of 7,500,000 stock options at an exercise price of $0.10 and 14,000,000 stock options at an exercise price of $0.18 to employees and 225,000 to board members at an exercise price of $0.18, subject to certain vesting conditions in accordance with the employee share option plan.
• Subsequent to year end, a total of 500,000 stock options were exercised at a price of $0.10 per share for a total consideration of $50,000, resulting in the issuance of 500,000 new common shares of the Company.

Full Year 2022 Business Highlights

• Valleyfield License Approval: In September 2021, the Company obtained from Health Canada the license necessary to be able to sell cannabis derivative products into the retail market in addition to receiving its processing and cultivation license at its Valleyfield Facility which was acquired in June 2021.
• Ontario Expansion: In October 2021, the Company started to deliver a selection of products to the Ontario Cannabis Store on a weekly basis for the Ontario retail market. This marks the Company’s second major market expansion in Canada.
• Valleyfield’s first growing zone activated: In November 2021, the Company propagated its first zone in the Valleyfield Facility with 9,600 plants. In addition, the Company launched at the beginning of November its first two hash products in Quebec retail stores.
• Valleyfield’s second growing zone activated: In January 2022, the Company completed the propagation of its second zone in the Valleyfield Facility with 9,600 plants.
• Valleyfield’s third growing zone activated/successful harvest: In February and March 2022, the Company successfully harvested its two first lots in the newly redesigned Valleyfield Facility and activated its third growing zone during March 2022.
• Valleyfield’s fourth growing zone activated: In April 2022, the Company successfully redesigned and propagated its fourth growing zone in the Valleyfield Facility.
• SWAP settlement: In April 2022, management closed an interest rate swap it had previously entered, resulting in a net cash return of $560,000.
• New Genetic/SKU released on market and fifth growing zone activated: In May 2022, the Company introduced Slapz under the  Nugz brand to the Quebec market and launched its higher potency Fresh Frozen Hash Rosin under the Nugz brand in Ontario. The Company also redesigned and propagated its fifth growing zone in the Valleyfield Facility.
• Closed $50 Million Credit Facility Led by BMO Commercial Banking (“BMO”): In May 2022, the Company entered into a new a credit facility agreement with BMO  for a total of $50 million plus a potential accordion facility for up to an additional $10 million of credit availability with favorable terms including a declining interest rate over time as the Company hits certain covenant thresholds and the ability to repay the facility without penalty at any time. Under the terms of this new credit facility, the Company will not make any principal payments for the first six months.
• Valleyfield’s sixth growing zone activated/ BHO lab extraction/approval from BCLDB: In July 2022, the Company activated its sixth growing zone, one month ahead of schedule. Also, the Company launched its Nugz Old School Hash, in addition to its first Tribal pre-roll pack in Ontario, Gelato Mint 5 x 0.5g pre-rolls. The Company also successfully commenced extraction at its in-house BHO lab. The Company obtained approval from the British Columbia Liquor Distribution Branch (“BCLDB”) to become a licensed vendor in British Columbia. A total of 7 SKUs has been accepted across the Tribal, Nugz, and Orchid CBD brands to be launched in September 2022, now providing the Company with access to 3 out of the 4 largest Canadian markets.
• Cannara signs an Exclusive Brand Partnership with Exotic Genetix in Canada: In August 2022, Cannara announced an exclusive brand partnership with 50-time award-winning US-based cannabis breeder, cultivator and hash maker, Exotic Genetix Ltd. (“Exotic Genetix“). Cannara was granted an exclusive license to use, market, sell and distribute Exotic Genetix branded products throughout Canada.
• Launch of live resin vape cartridge and its custom vape battery, Tribal Uni Pro Ark in addition to 14 other new SKUs across Ontario and Quebec: In September 2022, the Company launched its 1-gram G Mint Live Resin vape cartridge, introduced a premium universal 510 vape battery, the Tribal UNI Pro ARK, and announced plans to release 14 new SKUs of its premium-grade cannabis in Ontario and Quebec under the Company’s flagship brands.
• Increased Market Penetration: Cannara continues to increase its market penetration in Quebec, Ontario, Saskatchewan, and now British Columbia, and is currently focused on expanding its market share through higher volumes of product sold in its current markets.
• Continued Positive Adjusted EBITDA: Cannara expects to continue to report positive quarterly Adjusted EBITDA resulting from the Company’s focus on premium-grade cannabis products at disruptive retail pricing, its lean operational model and its two mega facilities benefiting from Quebec’s low electricity cost and competitive labour rates.