Lifeist Wellness Inc. (OTCQB:NXTTF) (TSXV:LFST) (FRANKFURT:M5B) Q3 2022 net revenue increased 27% to CA$6.8 million ($5 million), compared to CA$5.4 million in Q3 2021.
Third Quarter 2022 Highlights
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Net revenue increase was driven by a CA$1.8 million, or 61%, increase in Canadian cannabis revenue and CA$0.3 million contribution from Mikra. This growth was partially offset by a CA$0.4 million decrease at Aus Vapes which continues to recover from the spring floods and CA$0.4 million from the planned wind-down of hardware sales in Europe through Lifeist Bahamas.
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Gross profit before inventory adjustment increased 50% to CA$1.4 million compared to CA$0.9 million in Q3 2021, with margins expanding from 17% to 20%.
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Adjusted EBITDA loss was CA$1.2 million in Q3 2022 compared to a loss of CA$5.0 million in Q3 2021.
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Working capital position of CA$11.5 million at quarter end.
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Net loss was CA$2.0 million, or (CA$0.0047) per diluted share, in Q3 2022 compared to a loss of CA$6.1 million, or (CA$0.02) per share, in Q3 2021, due to improved gross margins and lower operating expenses.
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Cash and cash equivalents were CA$3.6 million at August 31, 2022, compared to CA$12.7 million at November 30, 2021.
“Our strategic emphasis on high-margin opportunities is well underway and progress is clear in our improved profitability,” stated Meni Morim, CEO of Lifeist. “This is most evident in our cannabis business, which is becoming one of the pre-eminent distributors of Cannabis 2.0 products across Canada and is successfully leveraging its sales license for its award winning in-house Roilty brand. Roilty revenue doubled from last quarter to CA$3.0 million to represent nearly 60% of CannMart revenue, which in turn drove continued gross margin expansion. We are increasingly bullish on CannMart’s prospects given the recent expansion of production capacity at CannMart Labs, and as well as ongoing distribution gains and the expansion of the Roilty product portfolio into new categories, which will soon include shatter and THCa diamonds. Roilty’s growing success has enabled CannMart to transition away from its historical dependency on the Phyto brand sooner than expected, which in turn should further benefit profitability.”
Share Issuance related to CannMart Labs Acquisition
The acquisition of CannMart Labs included a potential earn-out payment related to the achievement of certain performance criteria, which were achieved in Q3 2022 due to the strong financial performance. As a result, Lifeist intends to issue an aggregate of 11 million common shares, without a hold period, as payment of an earn-out and true-up, to the vendors under the share purchase agreement for the acquisition of CannMart Labs. The issuance is considered to be a shares for debt transaction under the policies of the TSX Venture Exchange and remains subject to their approval.
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Photo by Giorgio Trovato on Unsplash
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