2023-Q2 Financial Highlights
- Revenues were
$21.9 million for 2023-Q2 and$49.0 million for the first 6 months of fiscal 2023. - Gross profit, before fair value adjustments, was
$6.9 million for 2023-Q2 or 32% of 2023-Q2 revenues versus$4.8 million for the quarter endedJune 30, 2022 (“2022-Q2”) or 18% of 2022-Q2 revenues. - Operating expenses were
$9.8 million for 2023-Q2 versus$13.3 million for 2022-Q2. - Adjusted EBITDA(1) was
$0.3 million for 2023-Q2 and$1.0 million for the first six months of fiscal 2023.
Recent Operating Highlights
- During 2023-Q2, construction commenced on our next high profile retail location located in
South Beach ,Florida . The location is scheduled to open in early 2023-Q4 with a full suite of “House of Platinum” product offerings. AllFlorida retail locations have now been rebranded “House of Platinum” having garnered regulatory approvals from the state. - On
June 6, 2023 , in conjunction with the execution of a binding letter agreement for a potential business combination between the Company and Aleafia Health, Inc. (the “Aleafia Letter Agreement”), the Company was assigned and acquired senior secured debt held byAleafia Heath, Inc. (“Aleafia”) at a discounted purchase price of$12.5 million from a lender of Aleafia, and subsequently loaned Aleafia an additional$1.5 million under the credit facility (the "AH Note Receivable”). - On
June 20, 2023 , the Company announced that its shareholders had approved all resolutions at the Annual General Meeting held onJune 16, 2023 . - On
July 11, 2023 , the Company successfully launched its Platinum branded vape products in theOntario (Canada ) market; which it then followed with its Platinum branded vape cartridges onAugust 23, 2023 . Through the Company’s distribution partnership, it continues to pursue product listings inAlberta ,British Columbia andManitoba . - On
July 14, 2023 , certain holders of Aleafia Debentures representing more than 33 1/3% of the outstanding Aleafia Convertible Debentures, as represented by their designated representatives, communicated to Aleafia and RWB that they would not accept the terms of the Aleafia Debenture settlement set out in the Aleafia Letter Agreement. As a result, the Company and Aleafia mutually agreed to terminate the Aleafia Letter Agreement without liability or cost to either party. - On
July 24, 2023 , in light of Aleafia's financial condition, the termination of the Aleafia Letter Agreement, and the ongoing breach of covenants under the AH Note Receivable by Aleafia, RWB issued demand letters and notices to enforce its security under Section 244 of the Bankruptcy and Insolvency Act. - On
July 25, 2023 , Aleafia announced that it had received an order (the “Initial Order”) from theOntario Superior Court of Justice (Commercial List) under the Companies’ Creditors Arrangement Act (“CCAA”), in order to restructure its business and financial affairs (the “Aleafia CCAA Proceedings”). The Initial Order approved, among other things, debtor-in-possession financing (“DIP Financing”) to be provided by RWB to fund the Aleafia CCAA Proceedings and other short-term working capital requirements pursuant to a term sheet between RWB and Aleafia datedJuly 24, 2023 (the “Aleafia DIP Term Sheet”). As specified under the Aleafia DIP Term Sheet, RWB agreed to advance DIP Financing up to$6.6 million (the “DIP Loan”). The continued availability of the DIP Loan is conditional upon, among other things, certain conditions being satisfied, including the Initial Order remaining in effect. - On
August 22, 2023 , theOntario Superior Court of Justice (Commercial List) (the “Court”) approved a stalking horse asset purchase and share subscription agreement pursuant to which RWB would acquire certain assets from Aleafia and subscribe for shares of certain subsidiaries of Aleafia if RWB becomes the successful bidder pursuant to the sale and investment solicitation process, also approved by the Court, in connection with the Aleafia’s CCAA proceedings of Aleafia and certain of its subsidiaries.
Consolidated Financial Highlights
2023-Q2 | 2022-Q2 | Variance | 2023-YTD | 2022-YTD | Variance | |||||||
$ | $ | $ | $ | $ | $ | |||||||
Revenue | 21,915,629 | 27,402,453 | (5,486,824) | 48,961,717 | 55,449,254 | (6,487,537) | ||||||
Cost of goods sold, before fair value adjustments | 15,049,199 | 22,614,856 | (7,565,657) | 32,685,613 | 39,320,191 | (6,634,578) | ||||||
Gross profit before fair value adjustments | 6,866,430 | 4,787,597 | 2,078,833 | 16,276,105 | 16,129,063 | 147,041 | ||||||
Unrealized changes in fair value of biological assets | (1,287,157) | (17,973) | (1,269,184) | (1,737,952) | (2,467,978) | 730,026 | ||||||
Realized fair value amounts included in inventory sold | 616,685 | (1,351,571) | 1,968,256 | 10,201 | (1,074,644) | 1,084,845 | ||||||
Gross Profit | 6,195,958 | 3,418,053 | 2,777,905 | 14,548,353 | 12,586,441 | 1,961,912 | ||||||
Gross profit Percentage (%) | 28% | 12% | 16% | 30% | 23% | 7% | ||||||
Total operating expenses | 9,834,870 | 13,319,495 | (3,484,625) | 20,700,898 | 24,675,078 | (3,974,180) | ||||||
Loss from operations before other expenses or income | (3,638,912) | (9,901,442) | 6,262,530 | (6,152,544) | (12,088,637) | 5,936,092 | ||||||
Total other expenses | 5,677,564 | 5,935,549 | (257,985) | 12,246,949 | 12,536,719 | (289,770) | ||||||
Loss before income taxes | (9,316,476) | (15,836,991) | 6,520,515 | (18,399,494) | (24,625,356) | 6,225,862 | ||||||
Current income tax expense | (147,034) | (1,133,396) | 986,362 | (2,122,431) | (3,204,566) | 1,082,135 | ||||||
Deferred income tax recovery | - | - | - | 1,696,281 | - | 1,696,281 | ||||||
Net loss from continuing operations | (9,463,510) | (16,970,387) | 7,506,877 | (18,825,644) | (27,829,922) | 9,004,278 | ||||||
Loss from discontinued operations | (4,953) | (675,823) | 670,870 | (39,118) | (1,573,476) | 1,534,358 | ||||||
Loss for the period | (9,468,463) | (17,646,210) | 8,177,747 | (9,396,299) | (18,864,762) | 10,538,636 | ||||||
Adjusted EBITDA(1) | 252,778 | (6,305,180) | 6,557,958 | 1,045,455 | (4,002,750) | 5,048,205 | ||||||
Adjusted EBITDA
2023-Q2 | 2022-Q2 | Variance | 2023-YTD | 2022-YTD | Variance | |||||||
$ | $ | $ | $ | $ | $ | |||||||
Net Income (Loss) for the Period | (9,468,463) | (17,646,210) | 8,177,747 | (18,864,762) | (29,403,398) | 10,538,636 | ||||||
Depreciation and amortization | 1,402,809 | 1,392,394 | 10,415 | 2,069,149 | 2,873,439 | (804,290) | ||||||
Bad debt expense | 379,716 | 891,736 | (512,020) | 934,852 | 1,299,276 | (364,424) | ||||||
Accreted interest, leases | 663,549 | 1,371,148 | (707,599) | 1,345,114 | 2,000,899 | (655,785) | ||||||
Finance expense, net | 7,503,331 | 1,809,731 | 5,693,600 | 14,422,752 | 9,183,117 | 5,239,635 | ||||||
(Gain) loss on revaluation of financial instruments | (1,276,619) | - | (1,276,619) | (2,284,312) | - | (2,284,312) | ||||||
Gain on disposal of assets | 144,359 | - | 144,359 | 144,359 | - | 144,359 | ||||||
Foreign exchange | (1,020,309) | 2,754,670 | (3,774,979) | (995,992) | 1,352,703 | (2,348,695) | ||||||
Termination costs | 153,938 | 71,237 | 82,701 | 341,081 | 71,237 | 269,844 | ||||||
(i)Non-recurring expenses | 810,556 | 547,174 | 263,382 | 1,320,700 | 1,599,789 | (279,089) | ||||||
Current income tax expense | 147,034 | 1,133,396 | (986,362) | 2,122,431 | 3,204,566 | (1,082,135) | ||||||
Deferred income tax recovery | - | - | - | (1,696,281) | - | (1,696,281) | ||||||
Fair value changes in biological assets | 1,287,157 | 17,973 | 1,269,184 | 1,737,952 | 2,467,978 | (730,026) | ||||||
Realized fair value changes in inventory sold | (616,685) | 1,351,571 | (1,968,256) | (10,201) | 1,074,644 | (1,084,845) | ||||||
Share based compensation | 142,405 | - | 142,405 | 458,614 | 273,000 | 185,614 | ||||||
Adjusted EBITDA | 252,778 | (6,305,180) | 6,557,958 | 1,045,455 | (4,002,750) | 5,048,205 | ||||||
(i) Non-recurring expenses include expenses are those that the Company does not expect to recur in the future, such as penalties and late fees | ||||||||||||
(1) Refer to Non IFRS and supplementary financial or operating measures | ||||||||||||
About
Red White & Bloom is a multi-state cannabis operator and house of premium brands in the
IR@RedWhiteBloom.com
947-225-0503, x.1003
Visit us on the web: https://www.redwhitebloom.com/.
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Twitter: @rwbbrands
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FORWARD LOOKING INFORMATION
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NON-IFRS AND SUPPLEMENTARY FINANCIAL OR OPERATING MEASURES
The Company references non-IFRS and supplementary financial or operating measures, including, but not limited to, Adjusted EBITDA. These measures do not have a standardized meaning prescribed by IFRS and are most likely not comparable to similar measures presented by other public company issuers including those operating in the cannabis industry. Non-IFRS measures provide investors with additional insights into the Company’s financial and operating performance which may not be garnered from traditional IFRS measures. The management of the Company, including its key decision makers, use non-IFRS measures in assessing the Company’s financial and operating performance. The Company calculates Adjusted EBITDA as net income or loss excluding current and deferred income tax expense, finance expense (net), depreciation and amortization, fair value changes in biological assets, changes in inventory sold, share based compensation, gains or losses on revaluation of debts or accounts payable and accrued liabilities, gains or losses on extinguishment of debts or accounts payable and accrued liabilities, impairments of tangible or intangible assets, impairment of goodwill, accreted interest on leases and applicable short term and long term liabilities, gains or losses on asset disposals, foreign exchange, gain or loss on earnouts, bad debt expense, and other non-recuring expenses.
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