FLUENT — Interim / Quarterly Report 2020

Aug 26, 2020

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Cansortium Inc. Reports Second Quarter Financial Results

Company achieves record revenue, more than doubling last year's second quarter revenue

MIAMI, Aug. 26, 2020 /CNW/ - Cansortium Inc. (CSE:TIUM.U) (OTCQB: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated provider of premium-quality medical cannabis, today announced financial results for its second quarter and six months ended June 30, 2020. The Company's unaudited condensed interim consolidated financial statements and accompanying notes, along with the Management Discussion and Analysis (MD&A) are available under the Company's profile on SEDAR at www.sedar.com and are also accessible through a link on the Investor Relations section of the Company's website at www.cansortium.com.

Selected Second Quarter 2020 Financial Highlights

• Consolidated revenue of $13.2 million, an increase of 117 percent or $7.1 million compared with consolidated revenue of $6.1 million in the second quarter of 2019.

• Consolidated income from operations of $0.8 million, compared to loss from operations of $(8.1) million in the second quarter of 2019.

• Consolidated Adjusted EBITDA[(1)] of $2.6 million, compared to Adjusted EBITDA[(1)] loss of $(1.7) million in the second quarter of 2019.

• Consolidated net loss of $(5.5) million, or $(0.03) per diluted share, compared to consolidated net loss of $(5.3) million, or $(0.03) per diluted share for the same period last year.

• During the second quarter of 2020, the Company opened its 20[th] medical marijuana dispensary in East Orlando, FL. It operated 11 dispensaries during the comparable period in 2019. On August 21[st] , the Company opened its 21st Florida dispensary in Coral Springs, FL.

• (1) Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted EBITDA from EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus (minus) certain one-time non-operating expenses, as determined by management. Reconciliations from EBITDA and Adjusted EBITDA to Net Loss are included in the accompanying financial schedules.

Chief Financial Officer Marcos Pedreira commented, "We delivered strong results during the second quarter of 2020. Revenue more than doubled from a year ago and we continue to make significant improvements to deliver the 2020 projected financial results."

Selected Year-to-Date 2020 Financial Highlights

• Consolidated revenue of $23.4 million, an increase of 101 percent or $11.8 million compared with consolidated revenue of $11.6 million in the first half of 2019.

• Consolidated income from operations of $3.2 million, compared to loss from operations of $(20.6) million in the first half of 2019.

• Consolidated Adjusted EBITDA[(1)] of $3.3 million, compared to Adjusted EBITDA[(1)] loss of $(5.1) million in the first half of 2019.

• Consolidated net loss of $(19.4) million, or $(0.10) per diluted share, compared to consolidated net loss of $(21.8) million, or $(0.12) per diluted share for the same period last year.

• (1) Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted EBITDA from EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus (minus) certain one-time non-operating expenses, as determined by management. Reconciliations from EBITDA and Adjusted EBITDA to Net Loss are included in the accompanying financial schedules.

Full Year 2020 Outlook

The Company has continued to make progress on its targeted initiatives focused on growth and long-term shareholder value creation. In the second quarter, the Company completed its exit from the non-core markets of Canada and Puerto Rico, streamlining operations and freeing up capital for its U.S. markets. In its home state of Florida, the Company secured an additional cultivation and production facility with minimum capital outlay, with operations anticipated to commence in the fourth quarter of 2020, and has opened three of the seven dispensaries

planned for 2020. In Pennsylvania, the Company is actively pursuing two additional dispensary locations to augment the strong sales of its existing Hanover dispensary. In Michigan, the Company enhanced the cultivation team on the ground with the engagement of Freedom Town. Finally, in Texas, the Company recently secured an extension of its convertible notes to allow the Company to continue to seek longer-term solutions there. The Company reiterates its full year 2020 outlook for consolidated revenues in the range of $55 million to $60 million and Adjusted EBITDA of more than $15 million. The forecast is based on projected revenues of at least $45 million for Cansortium's Florida operations with additional revenue from the Michigan, Pennsylvania and Texas markets.

ABOUT CANSORTIUM INC.

Headquartered in Miami, Florida, and operating under the Fluent™ brand, Cansortium is focused on being the highest quality cannabis company in the State of Florida driven by unrelenting commitment to operational excellence from seed to sale. Cansortium has developed strong proficiencies in each of cultivation, processing, retail, and distribution activities, the result of successfully operating in the highly regulated cannabis industry. In addition to Florida, Cansortium is seeking to create significant shareholder value in the attractive markets of Texas, Michigan and Pennsylvania.

Cansortium Inc.'s common shares and warrants trade on the CSE under the symbol "TIUM.U" and "TIUM.WT.U", respectively, and on the OTCQB Venture Market under the symbol (OTCQB: CNTMF). Investors can find current financial disclosure and Real-Time Level 2 quotes for the Company on www.otcmarkets.com.

Forward-Looking Information

All projections related to anticipated future results are forward-looking in nature and are subject to risks and uncertainties that may cause actual results to differ, perhaps materially. Projections are predicated on the Company's ability to continue successfully implementing the strategic growth and cost-saving initiatives identified by the Special Committee of the Board. In addition, projections are based on the Company's ability to secure and effectively deploy its capital resources toward those initiatives.

Certain information in this news release, may constitute forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events. Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in the public documents of the Company available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

Financial Tables Follow

Cansortium Inc. Consolidated Statements of Financial Position As of June 30, 2020 and December 31, 2019 (USD '000)

		June 30,	December 31,	December 31,
		2020		2019
Assets
Current assets
Cash and cash equivalents	$	5,202	$	2,516
Accounts receivable		133		144
Inventory		12,045		6,709
Biological assets		5,747		3,845
Note receivable		4,416		3,870
Prepaid expenses and othercurrent assets		1,408		556
Total current assets		28,951		17,640

Investment held for sale		324		-
Assets held for sale		-		6,301
Property and equipment, net		19,334		19,128
Intangible assets, net		97,800		98,566
Right-of-use assets		19,152		20,190
Investment in associate		3,209		3,424
Goodwill		1,526		1,526
Otherassets		375		291
Total assets	$	170,671	$	167,066
Liabilities
Current liabilities
Accounts payable		5,835		7,860
Accrued liabilities		5,011		5,135
Income taxes payable		5,902		1,492
Derivative liabilities		12,762		13,198
Current portion of notes payable		35,060		9,350
Lease obligations		1,998		1,761
Other current liabilities		100		-
Total current liabilities		66,668		38,796
Liabilities held for sale		-		3,240
Notes payable, net of current portion		12,671		31,053
Lease obligations, net of current portion		20,335		21,166
Deferred income taxes		26,819		24,957
Other long-term liabilities		761		676
Total liabilities		127,254		119,888
Shareholders' equity
Share capital		145,060		149,322
Share-based compensation reserve		4,075		2,977
Equity conversion feature		12,250		7,613
Warrants		13,128		11,773
Accumulated deficit		(130,717)		(123,785)
Accumulated othercomprehensiveloss		(379)		(563)
Total shareholders' equity attributable to Cansortium Inc. shareholders		43,417		47,337
Non-controllinginterests		-		(159)
Totalshareholders'equity		43,417		47,178
Total liabilities and shareholders' equity	$	170,671	$	167,066

Cansortium Inc.

Consolidated Statement of Operations For the three and six months ended June 30, 2020 and 2019 (USD '000)

	For the three months ended June 30, 2020 2019 $ 13,241 $ 6,091 4,567 1,540 8,674 4,551 4,953 2,233 (7,572) (972) 11,293 3,290 3,064 5,369 2,362 883 3,481 2,705 1,572 2,403 10,479 11,360 814 (8,070) 34 - 3,798 2,543 (828) (1,662) 31 - - (3,388) - - (54) - (8) (1,562) 2,939 (4,069) (2,159) (4,001) 3,308 1,276	For the six months ended June 30,
		2020 2019
Revenue, net of discounts Cost ofgoods sold		$ 23,404 $ 11,619 8,227 4,100
Gross profit before fair value adjustments Realized fair value of increments on inventory sold Unrealized change in fair value of biological assets		15,177 7,519 12,515 3,351 (19,682) (2,073)
Gross profit Expenses General and administrative Share-based compensation Sales and marketing Depreciationand amortization		22,344 6,241 6,202 15,022 3,249 1,487 6,602 5,623 3,074 4,701
Total expenses		19,127 26,833
Income (loss) from operations Discontinued operations Other expense (income) Interest expense, net Change in fair market value of derivative Loss on investment in associate Gain in fair market value of investment in associate Loss on debt reestructuring Gain on disposal of assets Other expense (income)		3,217 (20,592) (342) - 7,557 6,860 1,007 (3,542) 215 - - (3,388) 8,065 - (54) - 7 28
Totalotherexpense (income)		16,797 (42)
Loss before taxes Income taxes		(13,238) (20,550) 6,141 1,276

Netloss (5,467) (5,277) Net loss attributable to non-controlling interest - (270) Net loss attributable to controlling interest $ (5,467) $ (5,007) Net loss per share Basic $ (0.03) $ (0.03) Diluted $ (0.03) $ (0.03)	(19,379) (21,826)
	- (353)
	$ (19,379) $ (21,473)
	$ (0.10) $ (0.12) $ (0.10) $ (0.12)

Cansortium Inc.

Consolidated Statement of Cash Flows For the six months ended June 30, 2020 and 2019 (USD '000)

(USD '000)
	For the six months ended June 30,
	2020 2019
Operating activities Net loss Adjustments to reconcile net loss to net cash used in operating activities: Unrealized gain on changes in fair value of biological assets Share-based compensation Depreciation and amortization Discontinued operations Amortization of debt discount Accretion of convertible debentures Interest on lease liabilities Change in fair market value of derivative Loss on investment in associate Gain in fair market value of investment in associate Loss on debt reestructuring Gain on disposal of right-of-use assets Deferred tax expense Changes in operating assets and liabilities: Accounts receivable Inventory Biological assets Prepaid expenses and other current assets Right-of-use assets Other assets Accounts payable Accrued liabilities Income taxes payable Lease obligations Other current liabilities Other liabilities	$ (19,379) $ (21,826) (19,682) (2,073) 3,249 1,747 4,059 5,412 (342) - - 2,910 3,834 - 1,987 - 1,007 (3,542) 215 - - (3,388) 8,065 - (54) - 1,862 - 11 (104) (5,401) (3,881) 17,780 2,201 (646) (1,555) (728) - (84) 1,375 968 956 1,083 (3,386) 4,410 1,406 - 1,357 - 285 115 -
Net cash provided by (used in) operating activities	2,329 (22,106)
Investing activities Purchases of property and equipment Payment of notes receivable Notes receivable Proceeds from sale of subsidiary	(2,126) (9,049) 150 - (696) - 600 -
Net cash used in investingactivities	(2,072) (9,049)
Financing activities Proceeds from IPO Proceeds from issuance of shares and warrants Proceeds from issuance of notes payable Payment of lease obligations Principal repayments of notes payable	- 56,178 4,351 - 62 41,006 (2,133) (1,305) (35) (45,341)
Net cash provided by financing activities	2,245 50,538
Effect of foreignexchange oncashand cashequivalents	184 (34)
Net increase in cash and cash equivalents Cash and cash equivalents, beginning of period	2,686 19,349 2,516 2,026
Cash and cash equivalents,end ofperiod	$ 5,202 $ 21,375
Cash paid during the period for interest Non-cash transactions: Issuance of shares to acquire additional interest in consolidated entity Shares returns for sale of interest in subsidiaries Founders shares return Note payable amendment	$ 865 $ 2,124 $ - $ 13,786 $ (4,374) $ - $ (10,970) $ - $ 10,380 $ -

Cansortium Inc. Financial Highlights

For the three and six months ended June 30, 2020 and 2019 (USD '000)

(USD '000)
Financial results	Three months ended June 30, 2020 June 30, 2019 Variance $ 13,241 $ 6,091 $ 7,150	Six months ended
		June 30, 2020 June 30, 2019 Variance
Revenue		$ 23,404 $ 11,619 $ 11,785

Gross profit	$	11,293	$	3,290	$	8,003	$	22,344	$	6,241	$	16,103
Gross margin		85.3%		54.0%		31.3%		95.5%		53.7%		41.8%
Adjusted gross profit(1)	$	8,674	$	4,551	$	4,123	$	15,177	$	7,519	$	7,658
Adjusted gross margin(1)		65.5%		74.7%		-9.2%		64.8%		64.7%		0.1%
Selling, general and administrative expenses	$	10,479	$	11,360	$	(881)	$	19,127	$	26,833	$	(7,706)
EBITDA(1)	$	3,703	$	1,772	$	1,931	$	(1,628)	$	(7,369)	$	5,741
Adjusted EBITDA(1)	$	2,629	$	(1,709)	$	4,338	$	3,343	$	(5,128)	$	8,471
Net loss	$	(5,467)	$	(5,277)	$	(191)	$	(19,379)	$	(21,826)	$	2,447
Net loss per share (basic)	$	(0.03)	$	(0.03)	$	0.00	$	(0.10)	$	(0.12)	$	0.02
Net loss per share (diluted)	$	(0.03)	$	(0.03)	$	0.00	$	(0.10)	$	(0.12)	$	0.02

(1) Adjusted gross profit, adjusted gross margin, EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Refer to the reconciliation to IFRS and quarterly results of operations sections at the Company's Management Discussion and Analysis document for reconciliation to IFRS.

Cansortium Inc.

Reconciliation of non-IFRS financial measures For the three and six months ended June 30, 2020 and 2019 (USD '000)

EBITDA

EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates EBITDA from net income (loss), plus (minus) interest expense (income), plus income taxes, plus depreciation and amortization, as follows:

	Three months ended June June 30, 2020 30, 2019 Variance $ (5,467) $ (5,277) $ (190) 3,798 2,543 1,255 3,308 1,276 2,032 2,064 3,230 (1,166) $ 3,703 $ 1,772 $ 1,931	Six months ended
		June June 30, 2020 30, 2019 Variance
Net income (loss) Interest expense Income taxes Depreciationand amortization		$ (19,379) $ (21,826) $ 2,447 7,557 6,860 697 6,141 1,276 4,865 4,053 6,322 (2,269)
EBITDA		$ (1,628) $ (7,369) $ 5,741

Adjusted EBITDA

Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted EBITDA from EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus (minus) certain one-time non-operating expenses, as determined by management. The reconciliation from EBITDA to Adjusted EBITDA is as follows:

	Three months ended June 30, 2020 June 30, 2019 Variance $ 3,703 $ 1,772 $ 1,931 (2,619) 1,261 (3,880) (828) (1,662) 834 - (3,388) 3,388 2,362 883 1,479 34 - 34 - (1,134) 1,134 (23) 559 (582) $ 2,629 $ (1,709) $ 4,338	Six months ended
		June 30, 2020 June 30, 2019 Variance
EBITDA Change in fair value of biological assets Change in fair market value of derivative Gain in fair value of investment in associate Share based compensation Discontinued operations Loss on debt restructuring Other non-recurring expense (income)		$ (1,628) $ (7,369) $ 5,741 (7,167) 1,278 (8,445) 1,007 (3,541) 4,548 - (3,388) 3,388 3,249 1,487 1,762 (342) - (342) 8,065 - 8,065 159 6,405 (6,246)
Adjusted EBITDA		$ 3,343 $ (5,128) $ 8,471

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SOURCE Cansortium Inc

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%SEDAR: 00046278E

For further information: www.getfluent.com; Cansortium Investors and Media, Marcos Pedreira, Chief Financial Officer, marcos.pedreira@getfluent.com, 786-530-3959, investors@cansortium.com

CO: Cansortium Inc

CNW 09:00e 26-AUG-20