Dear David,
The last 12 months have been very exciting for Cannara. Our impressive increase in revenue this quarter and incredible overall results for this year demonstrate a year of sustained growth and profitability, one which continued to drive our net income and Adjusted EBITDA. Our three flagship brands, Tribal, Nugz, and Orchid CBD, carved unique niches in the industry, offering premium quality, hang-dried, and hand-trimmed cannabis at competitive pricing aligned with consumer demand. The consumer response to these products outperformed even our expectations, as we saw a remarkable increase in both new and loyal customers embracing the dynamism of our product portfolio. We are also thrilled by the continued expansion of our Cannara family, as we increasingly rely on purpose-driven leaders whose talent for strategy shape the organization’s competencies. Over the course of the next fiscal, we are well-positioned for national growth and will continue to seek opportunities that support our mission, allocating efforts to existing and new activities.
Full Year 2021 Financial Highlights:
Financial
Delivered a total revenue of $17.3 million, an increase of $14.7 million from the year prior;
Gross profit of $10.5 million or 61%, representing an increase of $9.3 million from the year prior;
Operating expenses down by $2.9 million compared to prior year;
Adjusted EBITDA amounted to $1.5 million, an increase of $9.8 million from the year prior;
Net loss amounted to $1.5 million, a significant decrease of $11.6 million from a net loss of $13.1 million in the prior year;
Cash on hand of $8.2 million, an increase of $0.4 million from year prior. The Company supported the Cannabis operations for the first half of the fiscal year until it commercialized its products. In addition, the Company received financing and invested in the acquisition of the Valleyfield Facility and related capital expenditures;
Working capital of $12.4 million provides the Company with liquidity to execute on its strategy.
Q4 2021 Financial and Operating Highlights:
Financial
Delivered a total revenue of $6.5 million, an increase of $5.9 million from $0.6 million in the fourth quarter of 2020;
Gross profit of $4.5 million or 70%, representing an increase of $4.9 million from the year prior;
Adjusted EBITDA amounted to $1.4 million, an increase of $2.8 million from a negative adjusted EBITDA of $1.4 million in the fourth quarter of 2020;
Net income amounted to $1.1 million, an increase of $5.0 million from a net loss of $3.9 million in the fourth quarter of 2020;
Completed a non-brokered private placement of $24.3 million and convertible debenture raise of $5.7 million to finance the acquisition of the Valleyfield Facility. In addition, the Company converted its $5 million credit facilities bearing interest at 13% into a $5 million convertible debenture bearing interest at 4% and convertible into common shares at a price of $0.18 per share.
Operating Highlights
Acquired the Valleyfield Facility: a 1 million sq. ft. cultivation and manufacturing facility from The Green Organic Holdings Ltd. (“TGOD”), for $27 million plus funding of certain deposit requirements of approximately $5.7 million by a letter of credit The Valleyfield Facility received its cultivation license in September 2021 and propagated its first 9,600 plants in November 2021;
Expanded to the Saskatchewan market during the quarter;
Introduced new SKUs to the Quebec market: Cuban Linx and Do-Si-Dos (Tribal Brand) and CBD Runtz (Orchid CBD brand) in both 3.5 gram dry flower ad 2.5 gram pre-roll formats;
Sold approximately 1,696 kg of cannabis during the fourth quarter of 2021.
Highlights Subsequent to Fourth Quarter:
Secured additional bank credit amounting to $22 million increased from a previous loan of $5.4 million with Canadian Imperial Bank of Commerce (“CIBC”);
Expanded to Ontario market;
Launched two new hash products within the Nugz brand in Quebec retail stores: Old School Hash in a 3-gram bar and Ice Water Hash in a 1-gram temple ball;
Granted an aggregate total of 7,935,000 stock options to certain employees and board members at an exercise price of $0.18 per common share, subject to certain vesting conditions.
