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Delta 9 Reports Financials for Q2 2022

T.DN

WINNIPEG, Manitoba, Aug. 15, 2022 (GLOBE NEWSWIRE) -- DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: DLTNF) (“Delta 9” or the “Company”), is pleased to announce financial and operating results for the three-month and six-month period ending June 30, 2022.

Financial Highlights for the three-month period ending June 30, 2022

  • Net revenue of $17.5 million for the second quarter of 2022, an increase of 4%, from $16.75 million for the same quarter last year.
    • Sequential net revenue increased 40% versus $12.5 million for the three-month period ending March 31, 2022
  • Gross profit of $4.6 million for the second quarter of 2022, a decrease of 6%, from $4.9 million for the same quarter last year.
  • Net Loss from operations of $(3.4) million for the second quarter of 2022 versus a loss from operations of $(0.8) million for the same quarter last year.
  • Adjusted EBITDA (loss) of $(0.4) million for the second quarter of 2022 versus an adjusted EBITDA of $1.2 million for the same quarter last year.

Financial Highlights for the six-month period ending June 30, 2022

  • Net revenue of $30 million for the first six months of 2022, no change from $30 million for the same period last year.
  • Gross profit of $7.6 million for the first six months of 2022, versus $8.6 million for the same period last year.
  • Net loss from operations of $(6.4) million for the first six months of 2022 versus a net loss from income from operations of $(4.0) million for the same period last year.
  • Adjusted EBITDA (loss) of $(2.1) million for the first six months of 2022 versus an adjusted EBITDA of $1.2 million for the same period last year.

"Our team delivered strong second quarter results with sequential and year over year topline growth and improved margins driven by a focus on our strategic growth plan,” said John Arbuthnot, CEO of Delta 9. "During our recent strategic planning review with the Board of Directors, we have identified several proactive growth opportunities to maneuver the current economic conditions by continuing to expand our retail cannabis store network across Canada and expand certain aspects of our business into new markets. Our balance sheet remains strong, enabling the repurchase of $11.8 million in convertible debt in July, while also providing meaningful working capital to support organic growth and pursue strategic M&A acquisitions.”

2nd Quarter Operational Highlights

  • Delta 9 announced the cash repayment of its unsecured 8.5% convertible debentures issued in July. The $11.8 million cash repayment represents a full payout of the Convertible Debentures. The Convertible Debentures were previously traded on the Toronto Stock Exchange under the trading symbol “DN.DB”. The Company met the pre-disbursement conditions required to draw-down $11.8 million under its credit facility with ConnectFirst Credit Union and concurrently made the cash repayment of the Convertible Debentures. The Company's $11.8 million draw-down from its credit facility is subject to a 60-month repayment term at a fixed rate of 4.55% per annum, amortized over 144 months.
  • Delta 9 raised funds in an overnight marketed equity raise. The Company issued Units at a price of $0.22 per Unit for aggregate gross proceeds of approximately $2,000,000. The Offering was led by Research Capital Corporation as sole agent and sole bookrunner.
    Each Unit is comprised of one common share of the Company and one Common Share purchase warrant of the Company. Each Warrant entitles the holder to purchase one Common Share at an exercise price of $0.255 per Common Share for a period of 36 months. Delta 9 also completed a loan from a shareholder in the amount of $4,990,264.37 that is due on July 15, 2025. The Loan shall bear interest at 6% per annum.
  • Delta 9 opened its thirty-fifth Delta 9 Cannabis retail store in Winnipeg and has a total of 13 cannabis stores in the Province of Manitoba, 21 retail stores in Alberta and one in Saskatchewan.
  • Delta 9 launched Canada’s first mobile cannabis store, licensed by the Liquor Gaming and Cannabis Authority of Manitoba (“LGCA”) to sell cannabis on-site at two major Manitoba music festivals: the 2022 Dauphin Countryfest and the 2022 Rock the Fields Minnedosa. These festivals are premier country and rock events in Manitoba, and this represents a new milestone for cannabis availability in Canada.

Summary of Quarterly Results:

Consolidated Statement of Net Income (Loss) Q3 2021 Q4 2021 Q1 2022 Q2 2022
Revenue $15,192,268 $17,120,932 $12,479,577 $17,495,078
Cost of Sales 10,425,214 12,247,951 9,515,096 12,850,777
Gross Profit Before Unrealized Gain From Changes In Biological Assets 4,767,054 4,872,981 2,964,481 4,644,301
Unrealized gain from changes in fair value of biological assets (Net) 1,690,676 (1,853,245) 874,293 (542,188)
Gross Profit $6,457,730 $3,019,736 $3,838,774 $4,102,113
Expenses
General and Administrative 3,687,945 2,972,633 3,810,316 4,043,257
Sales and Marketing 2,649,302 3,212,250 2,713,630 3,381,223
Share Based Compensation 175,514 371,433 246,944 107,121
Total Operating Expenses $6,512,761 $6,556,316 $6,770,890 $7,531,601
Adjusted EBITDA (Loss) 1 191,056 613,562 (1,694,529) (391,054)
Income (Loss) from Operations $(55,031) $(3,536,580) $(2,932,116) $(3,429,488)
Other Income/ Expenses (788,741) (1,622,996) (1,189,730) (1,402,588)
Net Income (Loss) $(843,772) $(5,159,576) $(4,121,846) $(4,832,076)
Basic and Diluted Earnings (Loss) Per Share $(0.01) $(0.05) $(0.04) $(0.04)
  1. Adjusted EBITDA is a non-IFRS measure, and is calculated as earnings before interest, tax, depreciation and amortization, share-based compensation expense, fair value changes and other non-cash items.

A comprehensive discussion of Delta 9’s financial position and results of operations is provided in the Company’s Management Discussion & Analysis for the three-month and six-month period ending June 30, 2022 filed on SEDAR on August 16, 2022 and can be found at www.sedar.com.

2022 Second Quarter Results Conference Call

A conference call to discuss the above results is scheduled for August 16, 2022. The conference call will be hosted that day at 1:00 p.m. Eastern Time by John Arbuthnot, Chief Executive Officer, and Jim Lawson, Chief Financial Officer, followed by a question-and-answer period.

DATE: August 16, 2022
TIME: 1:00 pm Eastern Time
Dial in # 1-888-886-7786
REPLAY: 1-877-674-6060
Available until 12:00 midnight Eastern Time, September 16, 2022
Replay passcode: 599533 #


For more information contact:

Investor & Media Contact:
Ian Chadsey VP Corporate Affairs
Mobile: 204-898-7722
E-mail: ian.chadsey@delta9.ca

About Delta 9 Cannabis Inc.

Delta 9 Cannabis Inc. is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. The company sells cannabis products through its wholesale and retail sales channels and sells its cannabis grow pods to other businesses. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9's shares trade on the Toronto Stock Exchange under the symbol "DN" and on the OTCQX under the symbol "DLTNF". For more information, please visit www.delta9.ca.

Disclaimer for Forward-Looking Information

Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to: (i) the Company’s plans to establish a chain of cannabis retail stores across Canada; and (ii) the anticipated production capacity of the Company’s planned cannabis processing center. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including all risk factors set forth in the annual information form of Delta 9 dated March 31, 2022 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.


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