VANCOUVER, British Columbia, Aug. 11, 2022 (GLOBE NEWSWIRE) — (CSE: CLC) Christina Lake Cannabis Corp. (the “Company” or “Christina Lake“) is pleased to recap its second quarter financial results for the six-month period ended May 31, 2022. All amounts are expressed in Canadian dollars unless otherwise noted.
Financial Highlights – Second Quarter
Revenue: $2.3 million of total revenue in Q2 FY2022, with 40% growth over Q1 FY2022 and 971% over Q2 2021. Total revenue for the six months ending May 31, 2022 totaled $3.9M which has already exceeded the full fiscal 2021 year-end total of $3.6M. Revenue growth was driven by both an expanding customer base and growing demand in premium distillate products.
Gross Margin Before Fair Value Adjustments: 56% in Q2 FY2022 compared to 55% in Q1 FY2022 and 67% in Q2 FY2021. The Company focused on finding production efficiencies to combat price compression in the wholesale distillate market as production and sales continued to ramp up.
Operating Expenses: Total general & administrative expenses (“G&A Expenses”) declined by 70% in Q2 FY2022 compared to in Q2 FY2021, driven by year-over-year reductions in corporate development, marketing, and share based compensation expenses.
Net Income: Net income in Q2 FY2022 was $22 thousand which is a $1.8 million increase from the net loss incurred in Q2 FY2022. The Year-over-year improvement is primarily driven by significant revenue growth and reduced G&A Expenses.
EBITDA: The Company posted $184 thousand in positive EBITDA in Q2 FY2022, compared to a loss of $507 thousand in Q1 FY2022 and a loss of $1.6 million in Q2 FY2021. There was a one-time gain on settlement of $259 thousand related to the redemption and cancellation of the Preferred Shares during Q2 FY2022. Year-over-year improvements again are primarily driven by significant revenue growth and reduced G&A Expenses.
Cash & Working Capital: As at May 31, 2022, the Company had $1.26 million of cash and $1.03 million in receivables. As announced on March 29, 2022, the Company entered into secured promissory note agreement in the amount of $2,000,000 bearing interest at a rate of 8% and maturing August 31, 2024. This was in connection with the redemption and subsequent cancellation of the Class B Preferred Shares. There were also 13,000,000 common shares issued at a deemed price of $0.20 in connection with the redemption. On March 15, 2022, the Company also announced that it extended $3.1 million of existing convertible debentures that were previously maturing twenty-four months from the date of issuance to forty-two months. There were no amendments to the conversion price or interest. As a result of the above events, current liabilities reduced by approximately $6.2 million as a large portion of the liabilities shifted out to long term debt.
The Company was able to optimize processing techniques which lead to consistent production of high potency distilled oils and other extracts, while adding additional processing capacity. That improvement was a key contributor to the significant increase in the revenue from the prior fiscal year. Fiscal 2021 was the first year the Company established a commercial inventory for the sale of premium extracts and cannabis products. The Company intends to finish processing its remaining biomass and oils from both the inaugural 2020 crop & 2021 crop and will look to accelerate processing of its third 2022 crop.
Ryan Smith, CFO, “our financial results demonstrate that our business model is performing and that by focusing upon high-quality, consistent cannabis oil, we can continue to grow our top and bottom lines.”
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.
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THE 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 press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws (“Forward-Looking Statements”) including and not limited to: the revenue growth; future crop growth and distillate sales; production capacity; and operating expenses. Forward-Looking Statements are based on certain expectations and assumptions and are subject to known and unknown risks and uncertainties and other factors that could cause actual events, results, performance and achievements to differ materially from those anticipated in these Forward-Looking Statements. Forward-Looking Statements should not be read as guarantees of future performance or results. Readers are cautioned not to place undue reliance on these Forward-Looking Statements, which speak only as of the date of this press release. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any Forward-Looking Statements as a result of new information or future events, or for any other reason.
The press release should be read in conjunction with the management’s discussion and analysis (“MD&A”) and unaudited condensed consolidated interim financial statements and notes thereto as at and for the six months ended May 31, 2022. Readers should also refer to the section regarding “Non-IFRS Measures” in the immediately following section of this press release. Additional information about Christina Lake is available on the Company’s profile on SEDAR at www.sedar.com.
In this press release, reference is made to gross profit/(loss) before fair value adjustments and EBITDA which are not measures of financial performance under International Financial Reporting Standards (IFRS). These metrics and measures are not recognized measures under IFRS, do not have meanings prescribed under IFRS and are as a result unlikely to be comparable to similar measures presented by other companies. These measures are provided as information complementary to those IFRS measures by providing a further understanding of our operating results from the perspective of management. As such, these measures should not be considered in isolation or in lieu of a review of our financial information reported under IFRS. Further information regarding the above can be found in the MD&A for the six months ended May 31, 2022, filed under the Company’s profile on SEDAR at www.sedar.com.