Christina Lake Cannabis Corp. (the “Company” or “CLC” or
“Christina Lake Cannabis”) (CSE: CLC) (OTCQB: CLCFF)
(FRANKFURT: CLB) is pleased to report its financial results
for the fourth quarter and fiscal year ended November 30, 2022
(“Q4’22” or “Fiscal 2022”). All amounts are expressed in Canadian
dollars unless otherwise noted.
“Our investment in refinement technologies and
expanded production capacity is playing a pivotal role in driving
increased sales,” said Mark Aiken, Chief Executive Officer of
Christina Lake Cannabis. “As a result of this increased capacity we
have been able to diversify our product offering to better serve
our customers’ needs. Through tightly managed customer engagements
we have significantly increased our revenues.”
Mr. Aiken continued “The organization has been
deeply focused on delivering strong results and cost of goods
optimization. This attention has allowed CLC to reduce G&A by
14% or $729k. We continue to execute on strategic diversification
opportunities addressing the headwinds within the industry. We are
leveraging our technology, experience, and manufacturing capacity
to bring turnkey formulations and products to market. I
look forward to providing a deeper dive on business operations and
expanding upon our diversification strategy through our corporate
update which will be made available on April 21st, 2023.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
|
Fiscal 2022 |
Fiscal 2021 |
$ Change |
% Change |
Revenue from the sale of goods |
$ |
10,073,055 |
|
$ |
3,633,450 |
|
$ |
6,439,605 |
|
177 |
% |
Costs
of sales |
|
(5,937,128 |
) |
|
(1,429,972 |
) |
|
(4,507,156 |
) |
315 |
% |
Gross profit before fair value adjustment |
|
4,135,927 |
|
|
2,203,478 |
|
|
1,932,449 |
|
88 |
% |
Inventory write down |
|
(2,471,436 |
) |
|
(3,861,257 |
) |
|
1,389,821 |
|
(36 |
%) |
Fair value change on growth of
biological assets |
|
4,641,853 |
|
|
3,240,450 |
|
|
1,401,403 |
|
43 |
% |
Change
in fair value of inventory sold |
|
(3,327,645 |
) |
|
(1,525,954 |
) |
|
(1,801,691 |
) |
118 |
% |
Gross profit |
|
2,978,699 |
|
|
56,717 |
|
|
2,921,982 |
|
5152 |
% |
General and administrative
expenses |
|
(4,424,879 |
) |
|
(5,153,464 |
) |
|
(728,585 |
) |
(14 |
%) |
Other
items |
|
(581,541 |
) |
|
(2,046,198 |
) |
|
1,464,657 |
|
(72 |
%) |
Loss |
|
(2,027,721 |
) |
|
(7,142,945 |
) |
|
5,115,224 |
|
(72 |
%) |
|
|
|
|
|
Loss per share |
|
(0.02 |
) |
|
(0.07 |
) |
|
|
|
|
|
|
|
Gross margin before fair value
adjustment % |
|
41.1 |
% |
|
60.6 |
% |
|
|
|
|
|
|
|
Financial
Position |
|
|
|
|
Working capital |
$ |
3,683,558 |
|
$ |
2,033,054 |
|
|
|
Cash |
|
1,810,639 |
|
|
1,046,916 |
|
|
|
Inventory and biological
assets |
|
5,766,418 |
|
|
7,153,378 |
|
|
|
Total assets |
|
18,794,418 |
|
|
19,043,713 |
|
|
|
Total liabilities |
|
7,656,458 |
|
|
9,304,524 |
|
|
|
Revenue grew 177% to $10.1M from $3.6M in the
prior year. Revenue growth was driven by the growing demand in our
premium distillate, extended product offerings, and expanding
customer base.
Gross Margin Before Fair Value Adjustments was
41% of revenue from sale of goods for the year ended November 30,
2022, compared with 61% in the comparative prior year. The Company
continued to realize production efficiencies to combat price
compression in the wholesale distillate market as production and
sales continued to ramp up. This was offset by an expanded
product mix, which includes various grades of premium
distillate.
During the year the Company incurred an
inventory write-down of $2.5M, compared with $3.9M in fiscal 2021.
A change in market conditions resulting in the price compression of
wholesale cannabis distillate, subsequent to year end, resulted in
a change of estimated inventory valuation.
Total general & administrative (“G&A”)
expenses declined by $729k or 14% in fiscal 2022 compared to fiscal
2021, driven by year-over-year reductions in corporate development,
marketing, and share based compensation expenses. G&A decreased
to 44% of revenue during the year, compared with 142% in fiscal
2021.
The fair value of the Class B preferred shares
at the transaction date was $4,976,949. As noted previously the
Company issued a promissory note in the amount of $2,000,000
bearing an interest rate of 8% per annum and 13,000,000 common
shares as part of redemption and cancellation transaction of the
Class B preferred shares. Following the transaction the Company
recorded a gain on settlement in the amount of $296,416.
Net and comprehensive loss in fiscal 2022 was
$(2.0M) which is a $5.1M decrease from fiscal 2021 loss of $(7.1M).
The year-over-year improvement is primarily driven by an increase
in revenue and reduction in G&A expenses and inventory
write-down, which was offset by an increase in cost of goods
sold.
Cash and Working Capital
As at November 30, 2022, the Company had working
capital of $3,683,558 (November 30, 2021 – $2,033,054) which
consisted of cash of $1,810,639 (November 30, 2021 - $1,046,916),
receivables of $1,906,820 (November 30, 2021 - $1,147,341), prepaid
expenses of $3,885 (November 30, 2021 - $122,755), inventory of
$5,766,418 (November 30, 2021 - $7,153,378). Current liabilities,
being accounts payable and accrued liabilities, and current portion
of loan, and current portion of convertible debentures $5,832,954
(November 30, 2021 – $7,466,086).
About Christina Lake Cannabis
Corp.
Christina Lake Cannabis is a licensed producer
of cannabis under the Cannabis Act. It has secured a standard
cultivation license and corresponding processing amendment from
Health Canada (March 2020 and August 2020, respectively) as well as
a research and development license (early 2020). Christina Lake
Cannabis’ facility consists of a 32-acre property, which includes
over 950,000 square feet of outdoor grow space, offices,
propagation and drying rooms, research facilities, and a facility
dedicated to processing and extraction. Christina Lake Cannabis
also owns a 99-acre plot of land adjoining its principal
site. CLC focuses its production on creating high quality
extracts and distillate for its B2B client base with proprietary
strains specifically developed for outdoor cultivation to enhance
extraction quality.
On behalf of Christina Lake Cannabis:
“Mark Aiken”Mark Aiken, CEO
For more information about CLC, please
visit: www.christinalakecannabis.comJennifer SmithInvestor
Relations and Media
Inquiriesinvestors@clcannabis.com902-229-7265
THE CANADIAN SECURITIES EXCHANGE (“CSE”) HAS NOT
REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ACCURACY OR
ADEQUACY OF THIS RELEASE, NOR HAS OR DOES THE CSE’S REGULATION
SERVICES PROVIDER. This news release contains statements which
constitute “forward-looking statements”, including the anticipated
use of the proceeds of the Offering, statements regarding the
plans, intentions, beliefs and current expectations of the Company
with respect to the future business activities and operating
performance of the Company. The use of any of the words
“anticipate,” “continue,” “estimate,” “expect,” “may,” “will,”
“would,” “should,” “believe” and similar expressions are intended
to identify forward-looking statements. Although the Company
believes that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because the
Company can give no assurance that they will prove to be correct.
Since forward-looking statements address future events and
conditions, by their very nature they involve inherent risks and
uncertainties. These statements speak only as of the date of this
News Release. Actual results could differ materially from those
currently anticipated due to a number of factors and risks
including various risk factors discussed in the Company’s
disclosure documents which can be found under the Company’s profile
on http://www.sedar.com. Should one or more of these risks or
uncertainties materialize, or should assumptions underlying the
forward-looking statements prove incorrect, actual results may vary
materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. The Company does not
intend, and does not assume any obligation, to update these
forward-looking statements except as otherwise required by
applicable law.
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