The Company has also signed an LOI with
Berlin-based health and life
science
company Sanity Group to better take advantage of potential German
adult-use
cannabis legalization
This news release constitutes a "designated news release" for
the purposes of the Company's prospectus supplement dated
December 3, 2021, to its short form
base shelf prospectus dated April 22,
2021.
- Current annual revenue run rate exceeds $450 million, maintaining High Tide's position as
Canada's top revenue-generating
cannabis company1
- The Company celebrated its 11th consecutive quarter of positive
adjusted EBITDA2
- The Company now counts approximately 4.5 million total
customers globally across all platforms3
- The Company's bricks-and-mortar locations generated same store
sales growth of 50% year-over-year and 9% sequentially in the
fourth fiscal quarter of 2022
- Largest non-franchised retailer in Canada with 151 locations and approximately
950,000 Cabana Club members, making it the largest
bricks-and-mortar cannabis loyalty program in Canada
- Paid ELITE membership upgrades already exceed 6,000 members
since launching this first-of-its-kind initiative in Canada at the end of November 2022
CALGARY,
AB, Jan. 31, 2023 /CNW/ - High Tide Inc.
("High Tide" or the "Company") (NASDAQ: HITI) (TSXV:
HITI) (FSE: 2LYA), a leading retail-focused cannabis company with
bricks-and-mortar as well as global e-commerce assets, filed its
year-end audited 2022 financial results on January 30, 2023, the highlights of which are
included in this news release. The full set of audited consolidated
financial statements for the fiscal years ended October 31, 2022, and 2021 (the "Financial
Statements") and accompanying management's discussion and
analysis can be accessed by visiting High Tide's website at
www.hightideinc.com, and its profile pages on SEDAR at
www.sedar.com, and EDGAR at www.sec.gov.
![High Tide Inc. Logo January 30, 2023 (CNW Group/High Tide Inc.) High Tide Inc. Logo January 30, 2023 (CNW Group/High Tide Inc.)](https://mma.prnewswire.com/media/1992599/High_Tide_Inc__High_Tide_Releases_Audited_2022_Financial_Results.jpg)
_________________________________
|
1Based on
reporting by New Cannabis Ventures as of November 14, 2022. For the
New Cannabis Ventures' senior listing, segmented cannabis-only
sales must generate more than US$25 million per quarter (CAD$31
million) – for full details, see:
https://www.newcannabisventures.com/cannabis-company-revenue-ranking/
|
2Adjusted
EBITDA is a non-IFRS financial measure
|
3This number
includes all customers in High Tide's global database across Cabana
Club, Grasscity.com, SmokeCartel.com, DailyHighClub.com,
Dankstop.com, NuLeafNaturals.com, FABCBD.com, BlessedCBD.co.uk, and
BlessedCBD.de
|
|
2022 Fiscal Year – Financial Highlights
- Revenue increased by 97% to $356.9
million for the year ended October
31, 2022, and increased sequentially by 14% to $108.2 million in the fourth quarter of 2022
- Gross profit increased by 58% to $101.0
million for the year ended October
31, 2022, and increased sequentially by 15% to $29.5 million in the fourth quarter of 2022
- Gross profit margin was 28% for the year ended October 31, 2022, and was 27% in the fourth
quarter of 2022, which was consistent with each of the prior two
quarters
- Salaries, wages and benefits represented 12% of revenue in the
fourth fiscal quarter of 2022 which compared to 15% in the fourth
fiscal quarter of 2021 and was consistent with the prior quarter.
General and administration expenses represented 7% of revenue in
the fourth fiscal quarter of 2022, which compared to 8% in the
fourth fiscal quarter of 2021 and was consistent with the prior
quarter
- Adjusted EBITDA4 was a record
$14.6 million for the year ended
October 31, 2022, up 17% versus the
prior year, and was $5.0 million for
the fourth quarter of 2022, up 18% sequentially, and up 206% versus
the fourth quarter of 2021
- Geographically, for the year ended October 31, 2022, $290.4
million of revenue was earned in Canada (an increase of 93%), $59.3 million in the
United States (an increase of 100%), and $7.1 million internationally (an increase of
671%). In the fourth quarter of fiscal 2022, revenue was
$93.9 million in Canada (an increase of 16% sequentially),
$13.2 million in the United States (an increase of 4%
sequentially), and $1.2 million
internationally (a decrease of 37% sequentially). This decrease is
related to a global slowdown in sales of CBD products
- Cabanalytics data sales from the entire retail ecosystem,
including bricks and mortar and e-commerce platforms, were
$21.7 million for the fiscal year
that ended October 31, 2022, compared
to $12.2 million for the fiscal year
ended October 31, 2021. Sequentially,
Cabanalytics data sales increased to $6.4
million from $5.5 million in
the third fiscal quarter
- The Company's bricks-and-mortar locations generated same-store
sales growth of 50% year-over-year and 9% sequentially in the
fourth fiscal quarter of 2022. Given the success of our innovative
discount club model, as well as the optional membership upgrade to
ELITE, the Company anticipates same-store sales to continue to be
strong compared to the industry average in the first fiscal quarter
of 2023
- During the fourth fiscal quarter of 2022, the Company completed
its annual impairment testing. As a result of this testing, driven
primarily by a slowdown in the global CBD sector as seen amongst
our major United States CBD competitors, the Company recorded
impairment charges of $48.6 million,
primarily relating to goodwill. The Company notes that these are
non-cash charges, with no impact on its ability to raise debt
capital from its senior lender, and that online CBD sales
represented only 6% of consolidated revenue for the fourth fiscal
quarter of 2022
- Cash on hand as of October 31,
2022, totalled $25.1 million,
compared to $14.0 million as of
October 31, 2021
____________________________
|
4Adjusted
EBITDA is a non-IFRS financial measure
|
|
"I am thrilled to share these results, which, once again,
deliver record-breaking revenue and adjusted EBITDA which further
solidifies High Tide's position as the largest revenue-generating
cannabis company in Canada with a
current annual run rate of over $450
million. While these numbers demonstrate exponential revenue
growth, it's also important to note that we have maintained
adjusted EBITDA level profitability for 11 consecutive quarters and
that we were cash flow positive from operations during the last
fiscal year. In our opinion, this is because we have the strongest
retail concept in Canadian cannabis, something that is backed up by
the fact that our Cabana Club loyalty program now has approximately
950,000 members across 151 Canadian stores. I am also excited to
report that we have already upgraded over 6,000 members into ELITE.
As we continue to introduce more ELITE offerings, we anticipate
upgrades to continue throughout 2023, providing us with an
additional high-margin recurring revenue stream to further boost
our bottom line.
On top of all this, our same-store sales increased by 50 percent
year-over-year, something that is an anomaly amongst North American
cannabis companies. Our bricks-and-mortar margins have slowly but
steadily ticked higher over the last two quarters, and we expect
this to continue, which will help amplify the impact of our
anticipated same-store sales increases. Our growing customer
loyalty and value-focused strategy have resulted in the rapid
conversion of illicit market consumers and have helped to increase
our market share by approximately 1% per quarter for the last four
quarters. With these increases, Canna Cabana now serves roughly 13%
of Canadian cannabis consumers outside of Quebec. We also continue to be a global player
in the retail sale of consumption accessories through our
world-leading e-commerce platforms and our Canadian bricks and
mortar stores." said Raj Grover, President and Chief Executive
Officer of High Tide.
"Considering the challenging macro environment and where our
equity value stands today, we have meaningfully slowed down our
M&A activity and are primarily looking at smaller, highly
accretive bricks-and-mortar opportunities to focus on free cash
flow generation from our existing business lines. I want to
sincerely thank our customers, team members, and shareholders for
another stellar year as the retail market leader in Canada, and I look forward to delivering more
of the same in 2023, with continued market share gains and further
improved cash flow generation. I also want to acknowledge our
industry and government partners who worked tirelessly to ensure
that we, as an industry, continue to make progress toward greater
sustainability within the cannabis sector." added Mr. Grover.
Letter of Intent with Sanity Group
High Tide also announced that it has entered into a non-binding
letter of intent (the "LOI") with the Berlin-based health and life science company,
Sanity Group (the "Sanity Transaction"). With big progress on
legislation expected this spring, the LOI is designed to leverage
synergies between both complementary companies and position each to
take advantage of potential German adult use legalization within
their respective supply chain verticals. With a well-established
track record in Germany with
respect to medical cannabis, finished pharmaceuticals, and
cannabinoid-based consumer goods, High Tide believes that Sanity
Group is the best-positioned potential partner in its home market
of Germany.
Sanity Group and High Tide intend to work together on
go-to-market strategies, identification of quality M&A
opportunities, sourcing of high-quality real estate, expansion
within European markets, and regulatory compliance topics such as
licensing and government outreach. Subject to relevant laws and
regulations, High Tide, aims to support Sanity Group in building a
retail consumer brand strategy using its decade-long experience
serving cannabis consumers in Canada, the United
States and Europe, as well
as providing targeted assistance in product display and advertising
opportunities (product and brand promotion) across High Tide's
assets in Germany and other
European markets in due course.
"We want to be well positioned to bring this success to the
German market, should the government proceed with its publicly
stated goal to legalize cannabis adult use. This is why we are
proud to partner with a top player in the German medical cannabis
space like Sanity Group, particularly since our business models are
complementary in nature," said Mr. Grover.
"We are very excited and proud to lay the foundation for a
strong and trustful partnership in case of recreational cannabis
legalization in Germany with a top
player like High Tide through this letter of intent. High Tide
stands for great experience and expertise in building retail
cannabis brand strategies like no other player. We strongly believe
in the mutual value of this partnership, added Finn Hänsel," Chief
Executive Officer of Sanity Group.
Fiscal Fourth Quarter 2022 – Operational Highlights
- The Company closed on its acquisition of assets from Choom
Holdings Inc. through the Companies' Creditors Arrangement Act
Proceedings, adding 9 operating retail cannabis stores to the
Company's bricks-and-mortar portfolio across British Columbia, Alberta and Ontario for $5.3
million
- The Company entered into and closed a binding commitment letter
with Connect First Credit Union Ltd. ("connectFirst") for a
$19 million credit facility with an
initial 5-year term, at connectFirst's floor interest rate
- The Globe and Mail's Report on Business magazine recognized the
Company for a second year in a row as one of Canada's top-growing companies for 2022,
ranking 21st out of 430 Canadian companies, with an audited growth
rate of 1,970% over three years
- The Company entered into a definitive agreement to add two
retail cannabis stores in British
Columbia via the acquisition of 1171882 B.C. Ltd., operating as Jimmy's Cannabis
Shop BC
- The Company announced that its Colorado-based subsidiary, NuLeaf Naturals,
launched its groundbreaking Full Spectrum Multi Cannabinoid oil and
plant-based softgels for sale in Manitoba through the Manitoba Liquor &
Lotteries Corporation and in Ontario through the Ontario Cannabis
Store
- Membership in the Cabana Club loyalty program increased to over
827,000 members as of October
31,2022
- The Company added 13 new stores: 3 in British Columbia, 9 in Alberta and 1 in Ontario
Subsequent Events
- The Company was declared the highest revenue-generating
cannabis company in Canada5
- The Company reached its communicated goal of 150
bricks-and-mortar stores across the country
- The Company launched ELITE, the first-of-its-kind cannabis paid
membership loyalty program in Canada converting over 6,000 members to ELITE
status and generating over $180,000
in high margin revenue
- The Company opened 10 new stores: 3 in British Columbia, 1 in Manitoba and 6 in Ontario
- The Company initially launched cannabis seed sales through its
subsidiaries GrassCity and Smoke Cartel and has now commenced sales
on its Daily High Club and Dankstop e-commerce platforms
- The Company completed the roll out of its proprietary Fastendr
technology across 120 Canna Cabana locations
- The Company now sponsors 302 children internationally through
World Vision, after having committed to sponsoring two additional
children for every new store that opens in Canada
- Canna Cabana membership numbers as of today stands at
approximately 950,000 members
_____________________
|
5Based on
reporting by New Cannabis Ventures as of November 14, 2022. For the
New Cannabis Ventures' senior listing, segmented cannabis-only
sales must generate more than US$25 million per quarter (CAD$31
million) – for full details, see:
https://www.newcannabisventures.com/cannabis-company-revenue-ranking/
|
|
Selected financial information for the fourth quarter and
year ended October 31, 2022:
(Expressed in thousands of Canadian Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
October 31
|
|
Audited Year Ended
October 31
|
|
|
2022
|
|
2021
|
|
Change
|
|
2022
|
|
2021
|
|
Change
|
|
|
$
|
|
$
|
|
|
|
$
|
|
$
|
|
|
Revenue
|
|
108,249
|
|
53,867
|
|
101 %
|
|
356,852
|
|
181,123
|
|
97 %
|
Gross Profit
|
|
29,520
|
|
17,538
|
|
68 %
|
|
100,952
|
|
63,983
|
|
58 %
|
Gross Profit
Margin
|
|
27 %
|
|
33 %
|
|
(6 %)
|
|
28 %
|
|
35 %
|
|
(7 %)
|
Total Operating
Expenses
|
|
(83,428)
|
|
(22,389)
|
|
273 %
|
|
(173,262)
|
|
(82,657)
|
|
110 %
|
Adjusted
EBITDA
|
|
5,018
|
|
1,641
|
|
206 %
|
|
14,620
|
|
12,503
|
|
17 %
|
Loss from
Operations6
|
|
(53,915)
|
|
(4,794)
|
|
1025 %
|
|
(72,310)
|
|
(18,674)
|
|
287 %
|
Net loss
|
|
(52,502)
|
|
(4,176)
|
|
1157 %
|
|
(70,848)
|
|
(35,037)
|
|
102 %
|
Loss per share (Basic
and
Diluted)
|
|
(0.85)
|
|
(0.09)
|
|
839 %
|
|
(1.14)
|
|
(0.84)
|
|
36 %
|
The following is a reconciliation of Adjusted EBITDA to Net
Loss:
(Expressed in thousands of Canadian Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
October 31
|
|
Year Ended October
31
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net (loss)
income
|
|
(52,502)
|
|
(4,176)
|
|
(70,848)
|
|
(35,037)
|
|
Income taxes
(recovery)
|
|
(1,782)
|
|
(1,418)
|
|
(2,915)
|
|
(730)
|
|
Accretion and
interest
|
|
782
|
|
1,515
|
|
4,921
|
|
8,150
|
|
Depreciation and
amortization
|
|
8,249
|
|
1,458
|
|
30,169
|
|
23,565
|
|
EBITDA
7
|
|
(45,253)
|
|
(2,621)
|
|
(38,673)
|
|
(4,052)
|
|
Foreign exchange loss
(gain)
|
|
(14)
|
|
473
|
|
310
|
|
539
|
|
Transaction and
acquisition costs
|
|
2,444
|
|
483
|
|
5,458
|
|
4,892
|
|
Debt restructuring
gain
|
|
-
|
|
-
|
|
-
|
|
(1,145)
|
|
(Gain) loss revaluation
of derivative liability
|
|
(3,166)
|
|
(1,564)
|
|
(10,497)
|
|
6,989
|
|
Loss (gain) on
extinguishment of debenture
|
|
609
|
|
73
|
|
354
|
|
589
|
|
Impairment
loss
|
|
48,592
|
|
2,676
|
|
48,681
|
|
2,733
|
|
Share-based
compensation
|
|
2,091
|
|
2,301
|
|
8,080
|
|
4,879
|
|
Loss (gain) on
revaluation of marketable securities
|
|
81
|
|
291
|
|
489
|
|
547
|
|
Gain on extinguishment
of financial liability
|
|
(366)
|
|
(161)
|
|
418
|
|
(161)
|
|
Gain on disposal of
property and equipment
|
|
-
|
|
(309)
|
|
-
|
|
(3,306)
|
|
Adjusted EBITDA
7
|
|
5,018
|
|
1,642
|
|
14,620
|
|
12,504
|
|
|
6 Loss
from operations, excluding non-cash impairment charges was $5.3
million for the three months ended October 31, 2022 which compared
to a loss of $2.1 million for the three months ended October 31,
2021. Excluding these charges, the Company generated a loss from
operations of $23.6 million for the year ended October 31, 2022
which compares to a loss from operations of $15.9 million for the
year ended October 31, 2021.
|
7 Earnings
before interest, taxes, depreciation, and amortization ("EBITDA")
and Adjusted EBITDA. These measures do not have a standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other issuers. Non-IFRS
measures provide investors with a supplemental measure of the
Company's operating performance and therefore highlight trends in
Company's core business that may not otherwise be apparent when
relying solely on IFRS measures. Management uses non-IFRS measures
in measuring the financial performance of the Company.
|
|
Outlook:
High Tide is the market leader in Canadian bricks and mortar
cannabis retail, with 151 locations across the country and a
loyalty base of approximately 950,000 Cabana Club members. The
Company's target is to add 40-50 new retail locations in calendar
2023, with Ontario representing
the lion's share of the increase. At the end of November, The
Company launched Cabana ELITE, its premium paid membership offering
and has already onboarded over 6,000 members. The Company expects
this number to steadily increase over the coming quarters.
With the continued increase in same-store sales and a wider
retail footprint, High Tide is currently on an annual revenue run
rate of over $450 million.
Throughout 2022, High Tide deployed its customized Fastendr™
technology in 120 locations across Canada, with this rollout continuing
throughout 2023, including an opportunity to start licensing this
technology towards the end of 2023.
Since mid-2022, High Tide has been launching white-label
products through its Cabana Cannabis Co and NuLeaf Naturals brands
in Ontario, Manitoba and Saskatchewan. The Company is actively rolling
out more SKUs through the course of the year and in conjunction
with other higher-margin revenue streams, such as the sale of
cannabis seeds in the United
States and ELITE membership fees, which should result in
consolidated gross margins remaining steady and ticking higher in
the quarters ahead.
Webcast and Conference Call
The Company will host a webcast and conference call to discuss
its audited results and outlook at 11:30 AM
(Eastern Time) today, Tuesday,
January 31, 2023.
Webcast Link for High Tide Earnings Event:
https://events.q4inc.com/attendee/917199613
Participants may pre-register for the webcast by clicking on the
link above prior to the beginning of the live webcast. Three hours
after the live webcast, a replay of the webcast will be available
at the same link above.
Participants may access the audio of the High Tide earnings
event through either the new webcast format or the conference call
line below. However, any participant who wishes to ask a question
must access the event via conference call, as the webcast does not
support live questions.
Participant Details
Joining by Telephone:
|
|
Canada dial-in number
(Toll-Free):
|
1 833 950
0062
|
Canada dial-in number
(Local):
|
1 226 828
7575
|
United
States:
|
1 844 200
6205
|
United States
(Local):
|
1 646 904
5544
|
All other
locations:
|
+1 929 526
1599
|
Access code:
|
817464
|
|
|
*Participants will need to enter the participant access code
before being met by a live operator*
ATM Program Quarterly Update
Pursuant to the Company's at-the-market equity offering program
(the "ATM Program") that allows the Company to issue up to
$40 million (or the equivalent in
U.S. dollars) of common shares ("Common Shares") from
treasury to the public from time to time, at the Company's
discretion and subject to regulatory requirements, as required
pursuant to National Instrument 44-102 – Shelf Distributions
and the policies of the TSX Venture Exchange (the "TSXV"),
the Company announces that, during its fourth quarter ended
October 31, 2022, the Company has
issued an aggregate of 256,757 Common Shares over the TSXV and
Nasdaq Capital Market ("Nasdaq"), for aggregate gross
proceeds to the Company of $0.5
million.
Pursuant to an equity distribution agreement dated December 3, 2021, entered into among the Company,
ATB Capital Markets Inc. and ATB Capital Markets USA Inc. (the "Agents"), associated
with the ATM Program (the "Equity Distribution Agreement"),
a cash commission of less than $0.01
million on the aggregate gross proceeds raised was paid to
the Agents in connection with their services under the Equity
Distribution Agreement during the fourth quarter ended October 31, 2022.
The Company intends to use the net proceeds of the ATM Program
if any, and at the discretion of the Company, to fund strategic
initiatives, it is currently developing, to support the growth and
development of the Company's existing operations, funding future
acquisitions as well as working capital and general corporate
purposes.
Common Shares issued pursuant to the ATM Program will be issued
pursuant to a prospectus supplement dated December 3, 2021 (the "Canadian Prospectus
Supplement") to the Company's final base shelf prospectus dated
April 22, 2021, filed with the
securities commissions or similar regulatory authorities in each of
the provinces and territories of Canada (the "Canadian Shelf
Prospectus") and pursuant to a prospectus supplement dated
December 3, 2021 (the "U.S.
Prospectus Supplement") to the Company's U.S. base prospectus
dated September 17, 2021 (the
"U.S. Base Prospectus") included in its registration
statement on Form F-10 (the "Registration Statement") and
filed with the U.S. Securities and Exchange Commission (the
"SEC"). The Canadian Prospectus Supplement and Canadian
Shelf Prospectus are available for download from SEDAR
at www.sedar.com, and the U.S. Prospectus Supplement, the U.S.
Base Prospectus and Registration Statement are accessible via EDGAR
on the SEC's website at www.sec.gov.
The ATM Program is effective until the earlier of (i) the date
that all Common Shares available for issue under the ATM Program
have been sold, (ii) the date the Canadian Prospectus Supplement in
respect of the ATM Program or Canadian Shelf Prospectus is
withdrawn and (iii) the date that the ATM Program is terminated by
the Company or Agents.
ABOUT HIGH TIDE
High Tide is a leading retail-focused cannabis company with
bricks-and-mortar as well as global e-commerce assets. The Company
is the largest non-franchised cannabis retail chain in Canada, with 151 current locations
spanning British Columbia,
Alberta, Saskatchewan, Manitoba and Ontario. The Company is also North America's first cannabis discount club
retailer, under the Canna Cabana banner, which is the
single-largest cannabis retail brand in Canada, with additional locations under
development across the country. High Tide's portfolio also includes
retail kiosks and smart locker technology – Fastendr™. High Tide
has been serving consumers for over a decade through its
established e-commerce platforms, including Grasscity.com,
Smokecartel.com, Dailyhighclub.com, and Dankstop.com and
more recently in the hemp-derived CBD space
through Nuleafnaturals.com, FABCBD.com, BlessedCBD.co.uk,
BlessedCBD.de, and Amazon United
Kingdom, as well as its wholesale distribution division
under Valiant Distribution, including the licensed entertainment
product manufacturer Famous Brandz. High Tide was featured in the
Report on Business Magazine's ranking of Canada's Top Growing Companies in both 2021
and 2022 and was named as one of the top 10 performing diversified
industries stocks in the 2022 TSX Venture 50™. High Tide's strategy
as a parent company is to extend and strengthen its integrated
value chain while providing a complete customer experience and
maximizing shareholder value.
For more information about High Tide, please
visit www.hightideinc.com and its profile pages on
SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains "forward-looking information"
within the meaning of applicable Canadian securities legislation.
These statements relate to future events or future performance. The
use of any of the words "could", "intend", "expect", "believe",
"will", "projected", "estimated" and similar expressions and
statements relating to matters that are not historical facts are
intended to identify forward-looking information and are based on
the Company's current belief or assumptions as to the outcome and
timing of such future events.
The forward-looking information and forward-looking
statements contained herein include, but are not limited to,
statements regarding: the Company's business objectives and
milestones and the anticipated timing of, and costs in connection
with, the execution or achievement of such objectives and
milestones (including, without limitation, proposed acquisitions,
with a focus on smaller, highly accretive bricks-and-mortar
opportunities to focus on free cash flow generation from existing
business lines); the Company improving cash flow generation; the
Company's future growth prospects and intentions to pursue one or
more viable business opportunities; the development of the
Company's business and future activities following the date hereof;
expectations relating to market size and anticipated growth in the
jurisdictions within which the Company may from time to time
operate or contemplate future operations; expectations with respect
to economic, business, regulatory and/or competitive factors
related to the Company or the cannabis industry generally; the
market for the Company's current and proposed product offerings, as
well as the Company's ability to capture market share; the
Company's strategic investments and capital expenditures, and
related benefits; the distribution methods expected to be used by
the Company to deliver its product offerings; the competitive
landscape within which the Company operates and the Company's
market share or reach; the performance of the Company's business
and the operations and activities of the Company; the Company
adding the number of additional cannabis retail store locations the
Company proposes to add to the Company's business, with
Ontario representing the lion's
share of the increase, upon the timelines indicated herein, and the
Company remaining on a positive growth trajectory; same-store sales
and consolidated gross margins (including, without limitation, from
ELITE and bricks-and-mortar) continuing to increase in the first
fiscal quarter of 2023 and beyond; the Company making meaningful
increases to its revenue profile; the Company expanding in the
German market; the Company deploying Fastendr™ technology across
the Company's retail stores upon the timelines disclosed herein,
including licensing this technology towards the end of 2023; the
Company continuing to increase its revenue through the first fiscal
quarter of 2023, and the remainder of the year; the Company
continuing to integrate and expand its CBD brands; the Company
completing the development of its cannabis retail stores; the
Company's ability to generate cash flow from operations and from
financing activities; the realization of cost savings, synergies or
benefits from the Company's recent and proposed acquisitions, and
the Company's ability to successfully integrate the operations of
any business acquired within the Company's business; the
anticipated sales from continuing operations for the financial year
of the Company ending October 31,
2023; Cabana Club and ELITE loyalty programs membership
continuing to increase; the anticipated changes to and effects of
the ELITE program on the business and operations of the Company;
the Company hitting its forecasted revenue and sales projections
for the first fiscal quarter of 2023; the Company's expectations
from its Cabana Cannabis Co. and Nuleaf Naturals white label
products; the Company launching Cabana Cannabis Co. and Nuleaf
Naturals white label products in the jurisdictions and on the
timelines outlined herein; the intention of the Company to complete
the ATM Program and any additional offering of securities of the
Company; the aggregate amount of the total proceeds that the
Company will receive pursuant to the ATM Program, connectFirst
credit facility and/or any future offering; the Company's expected
use of the net proceeds from the ATM Program, connectFirst credit
facility and/or any future offering; the listing of Common Shares
offered in the ATM Program and/or any future offering; the
anticipated effects of the ATM Program, connectFirst credit
facility and/or any future offering on the business and operations
of the Company; legislative changes occurring in Germany with respect to adult use cannabis;
the Company completing the Sanity Transaction; the intended effects
of the Sanity Transaction and synergies created by its completion
as outlined herein; the intended effects of adult use cannabis
becoming legalized in German; and the Company continuing to grow
its online retail portfolio through further strategic and accretive
acquisitions.
Forward-looking information in this press release are based
on certain assumptions and expected future events, namely: current
and future members of management will abide by the Company's
business objectives and strategies from time to time established by
the Company; the Company will retain and supplement its board of
directors and management, or otherwise engage consultants and
advisors having knowledge of the industries (or segments thereof)
within which the Company may from time to time participate; the
Company will have sufficient working capital and the ability to
obtain the financing required in order to develop and continue its
business and operations; the Company will continue to attract,
develop, motivate and retain highly qualified and skilled
consultants and/or employees, as the case may be; no adverse
changes will be made to the regulatory framework governing
cannabis, taxes and all other applicable matters in the
jurisdictions in which the Company conducts business and any other
jurisdiction in which the Company may conduct business in the
future; the Company will be able to generate cash flow from
operations, including, where applicable, the distribution and sale
of cannabis and cannabis products; the Company will be able to
execute on its business strategy as anticipated; the Company will
be able to meet the requirements necessary to obtain and/or
maintain authorizations required to conduct the business; general
economic, financial, market, regulatory, and political conditions,
including the impact of the COVID-19 pandemic, will not negatively
affect the Company or its business; the Company will be able to
successfully compete in the cannabis industry; cannabis prices will
not decline materially; the Company will be able to effectively
manage anticipated and unanticipated costs; the Company will be
able to maintain internal controls over financial reporting and
disclosure, and procedures in order to ensure compliance with
applicable laws; the Company will be able to conduct its operations
in a safe, efficient and effective manner; general market
conditions will be favourable with respect to the Company's future
plans and goals; the Company will reach the anticipated sales from
continuing operations for the financial year of the Company ending
October 31, 2023; the Company will
complete its proposed acquisitions and transactions; the Company
will hit its forecasted revenue and sales projections for the first
fiscal quarter of 2023; Cabana Club and ELITE loyalty programs
membership will continue to increase; the Company will make changes
to the ELITE program and it will have the anticipated effects on
the business and operations of the Company as outlined here; the
Company will deploy Fastendr™ technology across the Company's
retail stores upon the timelines disclosed herein and license this
technology; the Company will launch Cabana Cannabis Co. and Nuleaf
Naturals white label products in the jurisdictions and on the
timelines outlined herein and such products will achieved the
results and have the anticipated effects as disclosed herein;
same-store sales and consolidated gross margins (including, without
limitation, from ELITE and bricks-and-mortar) will continue to
increase in the first fiscal quarter of 2023 and beyond; the
Company will make meaningful increases to its revenue profile; the
Company will expand in the German market; the Company will continue
to increase its revenue through the first fiscal quarter of 2023,
and the remainder of the year; the Company will continue to
integrate and expand its CBD brands; the Company will add the
additional cannabis retail store locations to the Company's
business, with Ontario
representing the lion's share of the increase, and remain on a
positive growth trajectory; the Company will complete the
development of its cannabis retail stores; the Company will
complete the ATM Program; the Company's will use of the net
proceeds from the ATM Program, connectFirst credit facility and/or
any future offering as outlined herein; the Company will list the
Common Shares offered in the ATM Program and/or any future
offering; the ATM Program, connectFirst credit facility, and any
future offering will have the anticipated effects on the business
and operations of the Company; Germany will make legislative changes and/or
legalize adult use cannabis; the Company will complete the Sanity
Transaction and it will have the intended effects of the Company
and create synergies between the parties as more particularly
outlined herein; German adult use cannabis will have the intended
effects as more particularly outlined herein; and the Company will
continue to grow its online retail portfolio through further
strategic and accretive acquisitions.
These statements involve known and unknown risks,
uncertainties and other factors, which may cause actual results,
performance or achievements to differ materially from those
expressed or implied by such statements, including but not limited
to: the Company's inability to attract and retain qualified members
of management to grow the Company's business and its operations;
unanticipated changes in economic and market conditions (including
changes resulting from the COVID-19 pandemic) or in applicable
laws; the impact of the publications of inaccurate or unfavourable
research by securities analysts or other third parties; the
Company's failure to complete future acquisitions or enter into
strategic business relationships; interruptions or shortages in the
supply of cannabis from time to time available to support the
Company's operations from time to time; unanticipated changes in
the cannabis industry in the jurisdictions within which the Company
may from time to time conduct its business and operations,
including the Company's inability to respond or adapt to such
changes; the Company's inability to secure or maintain favourable
lease arrangements or the required authorizations necessary to
conduct the business and operations and meet its targets; the
Company's inability to secure desirable retail cannabis store
locations on favourable terms; risks relating to projections of the
Company's operations; the Company's inability to effectively manage
unanticipated costs and expenses, including costs and expenses
associated with product recalls and judicial or administrative
proceedings against the Company; risk that the Company will not
reach the anticipated sales from continuing operations for the
financial year of the Company ending October
31, 2023; risk that the Company will not hit its forecasted
revenue and sales projections for the first fiscal quarter of 2023;
risk that Cabana Club and/or ELITE loyalty programs memberships
will decrease and/or plateau; risks that the Company will not make
changes to the ELITE program and/or it may not have the intended
effects on the business and operations of the Company; risk that
the Company will be unable to deploy Fastendr™ technology across
the Company's retail stores and/or license this technology or on
the timelines disclosed herein or at all; risk that the Company
will be unable to launch Cabana Cannabis Co. and/or Nuleaf Naturals
white label products in the jurisdictions and on the timelines
outlined herein and/or that such products will be unable to achieve
the results and/or have the intended effects as disclosed herein;
risk that same-store sales and/or consolidated gross margins
(including, without limitation, from ELITE and bricks-and-mortar)
will not increase, but decease and/or plateau; risk that the
Company will be unable to increase its revenue profile; risk that
the Company will be unable to increase its revenue through the
first fiscal quarter of 2023, and the remainder of the year, but
that it will decease and/or plateau; risk that the Company will be
unable to expand in the German market; risk that the Company will
be unable to continue to integrate and expand its CBD brands; risk
that the Company will be unable to grow its online retail portfolio
through further strategic and accretive acquisitions; risk that the
Company will be unable to add additional cannabis retail store
locations to the Company's business, with Ontario representing the lion's share of the
increase and remain on a positive growth trajectory; risks that the
Company will be unable to complete the development of any or all of
its cannabis retail stores; risk the Company will not complete the
ATM Program; risks surrounding the Company's inability to list the
Common Shares offered in the ATM Program and/or any future
offering; risks surrounding the Company's failure to utilize the
use of proceeds from the ATM Program, connectFirst credit facility
and/or any future offering as expected; risks surrounding the ATM
Program, connectFirst credit facility and/or any future offering
not have its anticipated effects on the business and operations of
the Company; risks that there will not be legislative changes in
Germany; risks that the Company
will be unable to close the Sanity Transaction and/or that the
transaction will not have its intended effects on the Company;
risks that the legalization of adult use cannabis will not have the
intended effects on the Company's business and operations; risks
surrounding the sale of hemp seeds; risks surrounding the legality
of delta-8 tetrahydrocannabinol ("Delta-8") derived from hemp;
risks surrounding the uncertainty and legality of Delta-8 and
delta-9 tetrahydrocannabinol ("Delta-9") state to state; risk that
the United States Drug Enforcement Administration could consider
the Company's Delta-8 products an illegal controlled substance
under the Controlled Substances Act (the "CSA") or Federal Analogue
Act in the United States; risk
that that state or federal regulators or law enforcement could take
the position that the Delta-8 and Delta-9 products and/or
in-process hemp extract are/is a Schedule I controlled substance in
violation of the CSA and similar state laws; risk that the
Company's Delta-9 products could be considered by state law
enforcement and state regulators to be marijuana illegal under
state laws criminalizing the possession, distribution, trafficking
and sale of marijuana; risk that should the Company become subject
to enforcement action by federal or state agencies, the Company
could: (i) be forced to stop offering some or all of it Delta-8 and
Delta-9 products or stop all business operations, (ii) be subject
to other civil or criminal sanctions, (iii) be required to defend
against such enforcement and if unsuccessful could cause the
Company to cease its operations; and risk that enforcement or
regulatory action at the United
States federal and/or state level could adversely impact the
listings of the Common Shares on the TSXV and Nasdaq.
Readers are cautioned that the foregoing list is not
exhaustive. Readers are further cautioned not to place undue
reliance on forward-looking statements, as there can be no
assurance that the plans, intentions or expectations upon which
they are placed will occur. Such information, although considered
reasonable by management at the time of preparation, may prove to
be incorrect and actual results may differ materially from those
anticipated.
Forward-looking statements contained in this press release
are expressly qualified by this cautionary statement and reflect
the Company's expectations as of the date hereof and are subject to
change thereafter. The Company undertakes no obligation to update
or revise any forward-looking statements, whether as a result of
new information, estimates or opinions, future events or results or
otherwise or to explain any material difference between subsequent
actual events and such forward-looking information, except as
required by applicable law.
CAUTIONARY NOTE REGARDING FUTURE ORIENTED FINANCIAL
INFORMATION
This press release may contain future oriented financial
information ("FOFI") within the meaning of Canadian securities
legislation, about prospective results of operations, financial
position or cash flows, based on assumptions about future economic
conditions and courses of action, which FOFI is not presented in
the format of a historical balance sheet, income statement or cash
flow statement. The FOFI has been prepared by management to provide
an outlook of the Company's activities and results and has been
prepared based on a number of assumptions including the assumptions
discussed under the heading above entitled "Cautionary Note
Regarding Forward-Looking Statements" and assumptions with respect
to the costs and expenditures to be incurred by the Company,
capital expenditures and operating costs, taxation rates for the
Company and general and administrative expenses. Management does
not have, or may not have had at the relevant date, firm
commitments for all of the costs, expenditures, prices or other
financial assumptions which may have been used to prepare the FOFI
or assurance that such operating results will be achieved and,
accordingly, the complete financial effects of all of those costs,
expenditures, prices and operating results are not, or may not have
been at the relevant date of the FOFI, objectively
determinable.
Importantly, the FOFI contained in this press release are, or
may be, based upon certain additional assumptions that management
believes to be reasonable based on the information currently
available to management, including, but not limited to, assumptions
about: (i) the future pricing for the Company's products, (ii) the
future market demand and trends within the jurisdictions in which
the Company may from time to time conduct the Company's business,
(iii) the Company's ongoing inventory levels, and operating cost
estimates, (iv) the Company's net proceeds from the ATM Program and
connectFirst credit facility. The FOFI or financial outlook
contained in this press release do not purport to present the
Company's financial condition in accordance with IFRS as issued by
the International Accounting Standards Board, and there can be no
assurance that the assumptions made in preparing the FOFI will
prove accurate. The actual results of operations of the Company and
the resulting financial results will likely vary from the amounts
set forth in the analysis presented in any such document, and such
variation may be material (including due to the occurrence of
unforeseen events occurring subsequent to the preparation of the
FOFI). The Company and management believe that the FOFI has been
prepared on a reasonable basis, reflecting management's best
estimates and judgments as at the applicable date. However, because
this information is highly subjective and subject to numerous risks
including the risks discussed under the heading above entitled
"Cautionary Note Regarding Forward-Looking Statements" and under
the heading "Risk Factors" in the Company's public disclosures,
FOFI or financial outlook within this press release should not be
relied on as necessarily indicative of future results.
Readers are cautioned not to place undue reliance on the
FOFI, or financial outlook contained in this press release. Except
as required by Canadian securities laws, the Company does not
intend, and does not assume any obligation, to update such
FOFI.
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SOURCE High Tide Inc.