The Company has also signed an LOI with
Berlin-based health and life science company Sanity Group to better
take advantage of potential German adult-use cannabis
legalization
This news release constitutes a “designated
news release” for the purposes of the Company’s prospectus
supplement dated December 3, 2021, to its short form base shelf
prospectus dated April 22, 2021.
- Current annual revenue run rate exceeds $450 million,
maintaining High Tide’s position as Canada’s top revenue-generating
cannabis company1
- The Company celebrated its 11th consecutive quarter of positive
adjusted EBITDA2
- The Company now counts approximately 4.5 million total
customers globally across all platforms3
- The Company’s bricks-and-mortar locations generated same store
sales growth of 50% year-over-year and 9% sequentially in the
fourth fiscal quarter of 2022
- Largest non-franchised retailer in Canada with 151 locations
and approximately 950,000 Cabana Club members, making it the
largest bricks-and-mortar cannabis loyalty program in Canada
- Paid ELITE membership upgrades already exceed 6,000 members
since launching this first-of-its-kind initiative in Canada at the
end of November 2022
High Tide Inc. (“High Tide” or the “Company”)
(NASDAQ: HITI) (TSXV: HITI) (FSE: 2LYA), a leading retail-focused
cannabis company with bricks-and-mortar as well as global
e-commerce assets, filed its year-end audited 2022 financial
results on January 30, 2023, the highlights of which are included
in this news release. The full set of audited consolidated
financial statements for the fiscal years ended October 31, 2022,
and 2021 (the “Financial Statements”) and accompanying
management’s discussion and analysis can be accessed by visiting
High Tide’s website at www.hightideinc.com, and its profile pages
on SEDAR at www.sedar.com, and EDGAR at www.sec.gov.
2022 Fiscal Year – Financial Highlights
- Revenue increased by 97% to $356.9 million for the year ended
October 31, 2022, and increased sequentially by 14% to $108.2
million in the fourth quarter of 2022
- Gross profit increased by 58% to $101.0 million for the year
ended October 31, 2022, and increased sequentially by 15% to $29.5
million in the fourth quarter of 2022
- Gross profit margin was 28% for the year ended October 31,
2022, and was 27% in the fourth quarter of 2022, which was
consistent with each of the prior two quarters
- Salaries, wages and benefits represented 12% of revenue in the
fourth fiscal quarter of 2022 which compared to 15% in the fourth
fiscal quarter of 2021 and was consistent with the prior quarter.
General and administration expenses represented 7% of revenue in
the fourth fiscal quarter of 2022, which compared to 8% in the
fourth fiscal quarter of 2021 and was consistent with the prior
quarter
- Adjusted EBITDA4 was a record $14.6 million for the year ended
October 31, 2022, up 17% versus the prior year, and was $5.0
million for the fourth quarter of 2022, up 18% sequentially, and up
206% versus the fourth quarter of 2021
- Geographically, for the year ended October 31, 2022, $290.4
million of revenue was earned in Canada (an increase of 93%), $59.3
million in the United States (an increase of 100%), and $7.1
million internationally (an increase of 671%). In the fourth
quarter of fiscal 2022, revenue was $93.9 million in Canada (an
increase of 16% sequentially), $13.2 million in the United States
(an increase of 4% sequentially), and $1.2 million internationally
(a decrease of 37% sequentially). This decrease is related to a
global slowdown in sales of CBD products
- Cabanalytics data sales from the entire retail ecosystem,
including bricks and mortar and e-commerce platforms, were $21.7
million for the fiscal year that ended October 31, 2022, compared
to $12.2 million for the fiscal year ended October 31, 2021.
Sequentially, Cabanalytics data sales increased to $6.4 million
from $5.5 million in the third fiscal quarter
- The Company’s bricks-and-mortar locations generated same-store
sales growth of 50% year-over-year and 9% sequentially in the
fourth fiscal quarter of 2022. Given the success of our innovative
discount club model, as well as the optional membership upgrade to
ELITE, the Company anticipates same-store sales to continue to be
strong compared to the industry average in the first fiscal quarter
of 2023
- During the fourth fiscal quarter of 2022, the Company completed
its annual impairment testing. As a result of this testing, driven
primarily by a slowdown in the global CBD sector as seen amongst
our major United States CBD competitors, the Company recorded
impairment charges of $48.6 million, primarily relating to
goodwill. The Company notes that these are non-cash charges, with
no impact on its ability to raise debt capital from its senior
lender, and that online CBD sales represented only 6% of
consolidated revenue for the fourth fiscal quarter of 2022
- Cash on hand as of October 31, 2022, totalled $25.1 million,
compared to $14.0 million as of October 31, 2021
“I am thrilled to share these results, which, once again,
deliver record-breaking revenue and adjusted EBITDA which further
solidifies High Tide’s position as the largest revenue-generating
cannabis company in Canada with a current annual run rate of over
$450 million. While these numbers demonstrate exponential revenue
growth, it’s also important to note that we have maintained
adjusted EBITDA level profitability for 11 consecutive quarters and
that we were cash flow positive from operations during the last
fiscal year. In our opinion, this is because we have the strongest
retail concept in Canadian cannabis, something that is backed up by
the fact that our Cabana Club loyalty program now has approximately
950,000 members across 151 Canadian stores. I am also excited to
report that we have already upgraded over 6,000 members into ELITE.
As we continue to introduce more ELITE offerings, we anticipate
upgrades to continue throughout 2023, providing us with an
additional high-margin recurring revenue stream to further boost
our bottom line.
On top of all this, our same-store sales increased by 50 percent
year-over-year, something that is an anomaly amongst North American
cannabis companies. Our bricks-and-mortar margins have slowly but
steadily ticked higher over the last two quarters, and we expect
this to continue, which will help amplify the impact of our
anticipated same-store sales increases. Our growing customer
loyalty and value-focused strategy have resulted in the rapid
conversion of illicit market consumers and have helped to increase
our market share by approximately 1% per quarter for the last four
quarters. With these increases, Canna Cabana now serves roughly 13%
of Canadian cannabis consumers outside of Quebec. We also continue
to be a global player in the retail sale of consumption accessories
through our world-leading e-commerce platforms and our Canadian
bricks and mortar stores.” said Raj Grover, President and Chief
Executive Officer of High Tide.
“Considering the challenging macro environment and where our
equity value stands today, we have meaningfully slowed down our
M&A activity and are primarily looking at smaller, highly
accretive bricks-and-mortar opportunities to focus on free cash
flow generation from our existing business lines. I want to
sincerely thank our customers, team members, and shareholders for
another stellar year as the retail market leader in Canada, and I
look forward to delivering more of the same in 2023, with continued
market share gains and further improved cash flow generation. I
also want to acknowledge our industry and government partners who
worked tirelessly to ensure that we, as an industry, continue to
make progress toward greater sustainability within the cannabis
sector.” added Mr. Grover.
Letter of Intent with Sanity Group
High Tide also announced that it has entered into a non-binding
letter of intent (the “LOI”) with the Berlin-based health and life
science company, Sanity Group (the “Sanity Transaction”). With big
progress on legislation expected this spring, the LOI is designed
to leverage synergies between both complementary companies and
position each to take advantage of potential German adult use
legalization within their respective supply chain verticals. With a
well-established track record in Germany with respect to medical
cannabis, finished pharmaceuticals, and cannabinoid-based consumer
goods, High Tide believes that Sanity Group is the best-positioned
potential partner in its home market of Germany.
Sanity Group and High Tide intend to work together on
go-to-market strategies, identification of quality M&A
opportunities, sourcing of high-quality real estate, expansion
within European markets, and regulatory compliance topics such as
licensing and government outreach. Subject to relevant laws and
regulations, High Tide, aims to support Sanity Group in building a
retail consumer brand strategy using its decade-long experience
serving cannabis consumers in Canada, the United States and Europe,
as well as providing targeted assistance in product display and
advertising opportunities (product and brand promotion) across High
Tide’s assets in Germany and other European markets in due
course.
“We want to be well positioned to bring this success to the
German market, should the government proceed with its publicly
stated goal to legalize cannabis adult use. This is why we are
proud to partner with a top player in the German medical cannabis
space like Sanity Group, particularly since our business models are
complementary in nature,” said Mr. Grover.
“We are very excited and proud to lay the foundation for a
strong and trustful partnership in case of recreational cannabis
legalization in Germany with a top player like High Tide through
this letter of intent. High Tide stands for great experience and
expertise in building retail cannabis brand strategies like no
other player. We strongly believe in the mutual value of this
partnership, added Finn Hänsel,” Chief Executive Officer of Sanity
Group.
Fiscal Fourth Quarter 2022 – Operational Highlights
- The Company closed on its acquisition of assets from Choom
Holdings Inc. through the Companies’ Creditors Arrangement Act
Proceedings, adding 9 operating retail cannabis stores to the
Company’s bricks-and-mortar portfolio across British Columbia,
Alberta and Ontario for $5.3 million
- The Company entered into and closed a binding commitment letter
with Connect First Credit Union Ltd. (“connectFirst”) for a $19
million credit facility with an initial 5-year term, at
connectFirst’s floor interest rate
- The Globe and Mail’s Report on Business magazine recognized the
Company for a second year in a row as one of Canada’s top-growing
companies for 2022, ranking 21st out of 430 Canadian companies,
with an audited growth rate of 1,970% over three years
- The Company entered into a definitive agreement to add two
retail cannabis stores in British Columbia via the acquisition of
1171882 B.C. Ltd., operating as Jimmy’s Cannabis Shop BC
- The Company announced that its Colorado-based subsidiary,
NuLeaf Naturals, launched its groundbreaking Full Spectrum Multi
Cannabinoid oil and plant-based softgels for sale in Manitoba
through the Manitoba Liquor & Lotteries Corporation and in
Ontario through the Ontario Cannabis Store
- Membership in the Cabana Club loyalty program increased to over
827,000 members as of October 31,2022
- The Company added 13 new stores: 3 in British Columbia, 9 in
Alberta and 1 in Ontario
Subsequent Events
- The Company was declared the highest revenue-generating
cannabis company in Canada5
- The Company reached its communicated goal of 150
bricks-and-mortar stores across the country
- The Company launched ELITE, the first-of-its-kind cannabis paid
membership loyalty program in Canada converting over 6,000 members
to ELITE status and generating over $180,000 in high margin
revenue
- The Company opened 10 new stores: 3 in British Columbia, 1 in
Manitoba and 6 in Ontario
- The Company initially launched cannabis seed sales through its
subsidiaries GrassCity and Smoke Cartel and has now commenced sales
on its Daily High Club and Dankstop e-commerce platforms
- The Company completed the roll out of its proprietary Fastendr
technology across 120 Canna Cabana locations
- The Company now sponsors 302 children internationally through
World Vision, after having committed to sponsoring two additional
children for every new store that opens in Canada
- Canna Cabana membership numbers as of today stands at
approximately 950,000 members
_____________________
1 Based on reporting by New Cannabis
Ventures as of November 14, 2022. For the New Cannabis Ventures’
senior listing, segmented cannabis-only sales must generate more
than US$25 million per quarter (CAD$31 million) – for full details,
see:
https://www.newcannabisventures.com/cannabis-company-revenue-ranking/
2 Adjusted EBITDA is a non-IFRS financial
measure
3 This number includes all customers in
High Tide’s global database across Cabana Club, Grasscity.com,
SmokeCartel.com, DailyHighClub.com, Dankstop.com,
NuLeafNaturals.com, FABCBD.com, BlessedCBD.co.uk, and
BlessedCBD.de
4 Adjusted EBITDA is a non-IFRS financial
measure
5 Based on reporting by New Cannabis
Ventures as of November 14, 2022. For the New Cannabis Ventures’
senior listing, segmented cannabis-only sales must generate more
than US$25 million per quarter (CAD$31 million) – for full details,
see:
https://www.newcannabisventures.com/cannabis-company-revenue-ranking/
Selected financial information for the
fourth quarter and year ended October 31, 2022: (Expressed in
thousands of Canadian Dollars)
Three months ended October
31
Audited Year Ended October
31
2022
2021
Change
2022
2021
Change
$
$
$
$
Revenue
108,249
53,867
101
%
356,852
181,123
97
%
Gross Profit
29,520
17,538
68
%
100,952
63,983
58
%
Gross Profit Margin
27
%
33
%
(6
%)
28
%
35
%
(7
%)
Total Operating Expenses
(83,428
)
(22,389
)
273
%
(173,262
)
(82,657
)
110
%
Adjusted EBITDA
5,018
1,641
206
%
14,620
12,503
17
%
Loss from Operations6
(53,915
)
(4,794
)
1025
%
(72,310
)
(18,674
)
287
%
Net loss
(52,502
)
(4,176
)
1157
%
(70,848
)
(35,037
)
102
%
Loss per share (Basic and Diluted)
(0.85
)
(0.09
)
839
%
(1.14
)
(0.84
)
36
%
The following is a reconciliation of
Adjusted EBITDA to Net Loss: (Expressed in thousands of Canadian
Dollars)
Three Months Ended October
31
Year Ended October 31
2022
2021
2022
2021
Net (loss) income
(52,502
)
(4,176
)
(70,848
)
(35,037
)
Income taxes (recovery)
(1,782
)
(1,418
)
(2,915
)
(730
)
Accretion and interest
782
1,515
4,921
8,150
Depreciation and amortization
8,249
1,458
30,169
23,565
EBITDA 7
(45,253
)
(2,621
)
(38,673
)
(4,052
)
Foreign exchange loss (gain)
(14
)
473
310
539
Transaction and acquisition costs
2,444
483
5,458
4,892
Debt restructuring gain
-
-
-
(1,145
)
(Gain) loss revaluation of derivative
liability
(3,166
)
(1,564
)
(10,497
)
6,989
Loss (gain) on extinguishment of
debenture
609
73
354
589
Impairment loss
48,592
2,676
48,681
2,733
Share-based compensation
2,091
2,301
8,080
4,879
Loss (gain) on revaluation of marketable
securities
81
291
489
547
Gain on extinguishment of financial
liability
(366
)
(161
)
418
(161
)
Gain on disposal of property and
equipment
-
(309
)
-
(3,306
)
Adjusted EBITDA 7
5,018
1,642
14,620
12,504
6 Loss from operations, excluding non-cash
impairment charges was $5.3 million for the three months ended
October 31, 2022 which compared to a loss of $2.1 million for the
three months ended October 31, 2021. Excluding these charges, the
Company generated a loss from operations of $23.6 million for the
year ended October 31, 2022 which compares to a loss from
operations of $15.9 million for the year ended October 31,
2021.
7 Earnings before interest, taxes,
depreciation, and amortization (“EBITDA”) and Adjusted EBITDA.
These measures do not have a standardized meaning prescribed by
IFRS and are therefore unlikely to be comparable to similar
measures presented by other issuers. Non-IFRS measures provide
investors with a supplemental measure of the Company’s operating
performance and therefore highlight trends in Company’s core
business that may not otherwise be apparent when relying solely on
IFRS measures. Management uses non-IFRS measures in measuring the
financial performance of the Company.
Outlook:
High Tide is the market leader in Canadian bricks and mortar
cannabis retail, with 151 locations across the country and a
loyalty base of approximately 950,000 Cabana Club members. The
Company’s target is to add 40-50 new retail locations in calendar
2023, with Ontario representing the lion’s share of the increase.
At the end of November, The Company launched Cabana ELITE, its
premium paid membership offering and has already onboarded over
6,000 members. The Company expects this number to steadily increase
over the coming quarters.
With the continued increase in same-store sales and a wider
retail footprint, High Tide is currently on an annual revenue run
rate of over $450 million.
Throughout 2022, High Tide deployed its customized Fastendr™
technology in 120 locations across Canada, with this rollout
continuing throughout 2023, including an opportunity to start
licensing this technology towards the end of 2023.
Since mid-2022, High Tide has been launching white-label
products through its Cabana Cannabis Co and NuLeaf Naturals brands
in Ontario, Manitoba and Saskatchewan. The Company is actively
rolling out more SKUs through the course of the year and in
conjunction with other higher-margin revenue streams, such as the
sale of cannabis seeds in the United States and ELITE membership
fees, which should result in consolidated gross margins remaining
steady and ticking higher in the quarters ahead.
Webcast and Conference Call
The Company will host a webcast and conference call to discuss
its audited results and outlook at 11:30 AM (Eastern Time)
tomorrow, Tuesday, January 31, 2023.
Webcast Link for High Tide Earnings Event:
https://events.q4inc.com/attendee/917199613
Participants may pre-register for the webcast by clicking on the
link above prior to the beginning of the live webcast. Three hours
after the live webcast, a replay of the webcast will be available
at the same link above.
Participants may access the audio of the High Tide earnings
event through either the new webcast format or the conference call
line below. However, any participant who wishes to ask a question
must access the event via conference call, as the webcast does not
support live questions.
Participant Details
Joining by Telephone:
Canada dial-in number (Toll-Free):
1 833 950 0062
Canada dial-in number (Local):
1 226 828 7575
United States:
1 844 200 6205
United States (Local):
1 646 904 5544
All other locations:
+1 929 526 1599
Access code:
817464
*Participants will need to enter the participant access code
before being met by a live operator*
ATM Program Quarterly Update
Pursuant to the Company’s at-the-market equity offering program
(the “ATM Program”) that allows the Company to issue up to
$40 million (or the equivalent in U.S. dollars) of common shares
(“Common Shares”) from treasury to the public from time to
time, at the Company’s discretion and subject to regulatory
requirements, as required pursuant to National Instrument 44-102 –
Shelf Distributions and the policies of the TSX Venture Exchange
(the “TSXV”), the Company announces that, during its fourth
quarter ended October 31, 2022, the Company has issued an aggregate
of 256,757 Common Shares over the TSXV and Nasdaq Capital Market
(“Nasdaq”), for aggregate gross proceeds to the Company of
$0.5 million.
Pursuant to an equity distribution agreement dated December 3,
2021, entered into among the Company, ATB Capital Markets Inc. and
ATB Capital Markets USA Inc. (the “Agents”), associated with
the ATM Program (the “Equity Distribution Agreement”), a
cash commission of less than $0.01 million on the aggregate gross
proceeds raised was paid to the Agents in connection with their
services under the Equity Distribution Agreement during the fourth
quarter ended October 31, 2022.
The Company intends to use the net proceeds of the ATM Program
if any, and at the discretion of the Company, to fund strategic
initiatives, it is currently developing, to support the growth and
development of the Company’s existing operations, funding future
acquisitions as well as working capital and general corporate
purposes.
Common Shares issued pursuant to the ATM Program will be issued
pursuant to a prospectus supplement dated December 3, 2021 (the
“Canadian Prospectus Supplement”) to the Company’s final
base shelf prospectus dated April 22, 2021, filed with the
securities commissions or similar regulatory authorities in each of
the provinces and territories of Canada (the “Canadian Shelf
Prospectus”) and pursuant to a prospectus supplement dated
December 3, 2021 (the “U.S. Prospectus Supplement”) to the
Company’s U.S. base prospectus dated September 17, 2021 (the
“U.S. Base Prospectus”) included in its registration
statement on Form F-10 (the “Registration Statement”) and
filed with the U.S. Securities and Exchange Commission (the
“SEC”). The Canadian Prospectus Supplement and Canadian
Shelf Prospectus are available for download from SEDAR at
www.sedar.com, and the U.S. Prospectus Supplement, the U.S. Base
Prospectus and Registration Statement are accessible via EDGAR on
the SEC’s website at www.sec.gov.
The ATM Program is effective until the earlier of (i) the date
that all Common Shares available for issue under the ATM Program
have been sold, (ii) the date the Canadian Prospectus Supplement in
respect of the ATM Program or Canadian Shelf Prospectus is
withdrawn and (iii) the date that the ATM Program is terminated by
the Company or Agents.
ABOUT HIGH TIDE
High Tide is a leading retail-focused cannabis company with
bricks-and-mortar as well as global e-commerce assets. The Company
is the largest non-franchised cannabis retail chain in Canada, with
151 current locations spanning British Columbia, Alberta,
Saskatchewan, Manitoba and Ontario. The Company is also North
America's first cannabis discount club retailer, under the Canna
Cabana banner, which is the single-largest cannabis retail brand in
Canada, with additional locations under development across the
country. High Tide's portfolio also includes retail kiosks and
smart locker technology – Fastendr™. High Tide has been serving
consumers for over a decade through its established e-commerce
platforms, including Grasscity.com, Smokecartel.com,
Dailyhighclub.com, and Dankstop.com and more recently in the
hemp-derived CBD space through Nuleafnaturals.com, FABCBD.com,
BlessedCBD.co.uk, BlessedCBD.de, and Amazon United Kingdom, as well
as its wholesale distribution division under Valiant Distribution,
including the licensed entertainment product manufacturer Famous
Brandz. High Tide was featured in the Report on Business Magazine's
ranking of Canada's Top Growing Companies in both 2021 and 2022 and
was named as one of the top 10 performing diversified industries
stocks in the 2022 TSX Venture 50™. High Tide's strategy as a
parent company is to extend and strengthen its integrated value
chain while providing a complete customer experience and maximizing
shareholder value.
For more information about High Tide, please visit
www.hightideinc.com and its profile pages on SEDAR at www.sedar.com
and EDGAR at www.sec.gov.
Neither the TSXV nor its Regulation Services Provider (as that
term is defined in the policies of the TSXV) accepts responsibility
for the adequacy or accuracy of this release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking information” within
the meaning of applicable Canadian securities legislation. These
statements relate to future events or future performance. The use
of any of the words “could”, “intend”, “expect”, “believe”, “will”,
“projected”, “estimated” and similar expressions and statements
relating to matters that are not historical facts are intended to
identify forward-looking information and are based on the Company’s
current belief or assumptions as to the outcome and timing of such
future events.
The forward-looking information and forward-looking statements
contained herein include, but are not limited to, statements
regarding: the Company’s business objectives and milestones and the
anticipated timing of, and costs in connection with, the execution
or achievement of such objectives and milestones (including,
without limitation, proposed acquisitions, with a focus on smaller,
highly accretive bricks-and-mortar opportunities to focus on free
cash flow generation from existing business lines); the Company
improving cash flow generation; the Company’s future growth
prospects and intentions to pursue one or more viable business
opportunities; the development of the Company’s business and future
activities following the date hereof; expectations relating to
market size and anticipated growth in the jurisdictions within
which the Company may from time to time operate or contemplate
future operations; expectations with respect to economic, business,
regulatory and/or competitive factors related to the Company or the
cannabis industry generally; the market for the Company’s current
and proposed product offerings, as well as the Company’s ability to
capture market share; the Company’s strategic investments and
capital expenditures, and related benefits; the distribution
methods expected to be used by the Company to deliver its product
offerings; the competitive landscape within which the Company
operates and the Company’s market share or reach; the performance
of the Company’s business and the operations and activities of the
Company; the Company adding the number of additional cannabis
retail store locations the Company proposes to add to the Company’s
business, with Ontario representing the lion’s share of the
increase, upon the timelines indicated herein, and the Company
remaining on a positive growth trajectory; same-store sales and
consolidated gross margins (including, without limitation, from
ELITE and bricks-and-mortar) continuing to increase in the first
fiscal quarter of 2023 and beyond; the Company making meaningful
increases to its revenue profile; the Company expanding in the
German market; the Company deploying Fastendr™ technology across
the Company’s retail stores upon the timelines disclosed herein,
including licensing this technology towards the end of 2023; the
Company continuing to increase its revenue through the first fiscal
quarter of 2023, and the remainder of the year; the Company
continuing to integrate and expand its CBD brands; the Company
completing the development of its cannabis retail stores; the
Company’s ability to generate cash flow from operations and from
financing activities; the realization of cost savings, synergies or
benefits from the Company’s recent and proposed acquisitions, and
the Company’s ability to successfully integrate the operations of
any business acquired within the Company’s business; the
anticipated sales from continuing operations for the financial year
of the Company ending October 31, 2023; Cabana Club and ELITE
loyalty programs membership continuing to increase; the anticipated
changes to and effects of the ELITE program on the business and
operations of the Company; the Company hitting its forecasted
revenue and sales projections for the first fiscal quarter of 2023;
the Company’s expectations from its Cabana Cannabis Co. and Nuleaf
Naturals white label products; the Company launching Cabana
Cannabis Co. and Nuleaf Naturals white label products in the
jurisdictions and on the timelines outlined herein; the intention
of the Company to complete the ATM Program and any additional
offering of securities of the Company; the aggregate amount of the
total proceeds that the Company will receive pursuant to the ATM
Program, connectFirst credit facility and/or any future offering;
the Company’s expected use of the net proceeds from the ATM
Program, connectFirst credit facility and/or any future offering;
the listing of Common Shares offered in the ATM Program and/or any
future offering; the anticipated effects of the ATM Program,
connectFirst credit facility and/or any future offering on the
business and operations of the Company; legislative changes
occurring in Germany with respect to adult use cannabis; the
Company completing the Sanity Transaction; the intended effects of
the Sanity Transaction and synergies created by its completion as
outlined herein; the intended effects of adult use cannabis
becoming legalized in German; and the Company continuing to grow
its online retail portfolio through further strategic and accretive
acquisitions.
Forward-looking information in this press release are based on
certain assumptions and expected future events, namely: current and
future members of management will abide by the Company’s business
objectives and strategies from time to time established by the
Company; the Company will retain and supplement its board of
directors and management, or otherwise engage consultants and
advisors having knowledge of the industries (or segments thereof)
within which the Company may from time to time participate; the
Company will have sufficient working capital and the ability to
obtain the financing required in order to develop and continue its
business and operations; the Company will continue to attract,
develop, motivate and retain highly qualified and skilled
consultants and/or employees, as the case may be; no adverse
changes will be made to the regulatory framework governing
cannabis, taxes and all other applicable matters in the
jurisdictions in which the Company conducts business and any other
jurisdiction in which the Company may conduct business in the
future; the Company will be able to generate cash flow from
operations, including, where applicable, the distribution and sale
of cannabis and cannabis products; the Company will be able to
execute on its business strategy as anticipated; the Company will
be able to meet the requirements necessary to obtain and/or
maintain authorizations required to conduct the business; general
economic, financial, market, regulatory, and political conditions,
including the impact of the COVID-19 pandemic, will not negatively
affect the Company or its business; the Company will be able to
successfully compete in the cannabis industry; cannabis prices will
not decline materially; the Company will be able to effectively
manage anticipated and unanticipated costs; the Company will be
able to maintain internal controls over financial reporting and
disclosure, and procedures in order to ensure compliance with
applicable laws; the Company will be able to conduct its operations
in a safe, efficient and effective manner; general market
conditions will be favourable with respect to the Company’s future
plans and goals; the Company will reach the anticipated sales from
continuing operations for the financial year of the Company ending
October 31, 2023; the Company will complete its proposed
acquisitions and transactions; the Company will hit its forecasted
revenue and sales projections for the first fiscal quarter of 2023;
Cabana Club and ELITE loyalty programs membership will continue to
increase; the Company will make changes to the ELITE program and it
will have the anticipated effects on the business and operations of
the Company as outlined here; the Company will deploy Fastendr™
technology across the Company’s retail stores upon the timelines
disclosed herein and license this technology; the Company will
launch Cabana Cannabis Co. and Nuleaf Naturals white label products
in the jurisdictions and on the timelines outlined herein and such
products will achieved the results and have the anticipated effects
as disclosed herein; same-store sales and consolidated gross
margins (including, without limitation, from ELITE and
bricks-and-mortar) will continue to increase in the first fiscal
quarter of 2023 and beyond; the Company will make meaningful
increases to its revenue profile; the Company will expand in the
German market; the Company will continue to increase its revenue
through the first fiscal quarter of 2023, and the remainder of the
year; the Company will continue to integrate and expand its CBD
brands; the Company will add the additional cannabis retail store
locations to the Company’s business, with Ontario representing the
lion’s share of the increase, and remain on a positive growth
trajectory; the Company will complete the development of its
cannabis retail stores; the Company will complete the ATM Program;
the Company’s will use of the net proceeds from the ATM Program,
connectFirst credit facility and/or any future offering as outlined
herein; the Company will list the Common Shares offered in the ATM
Program and/or any future offering; the ATM Program, connectFirst
credit facility, and any future offering will have the anticipated
effects on the business and operations of the Company; Germany will
make legislative changes and/or legalize adult use cannabis; the
Company will complete the Sanity Transaction and it will have the
intended effects of the Company and create synergies between the
parties as more particularly outlined herein; German adult use
cannabis will have the intended effects as more particularly
outlined herein; and the Company will continue to grow its online
retail portfolio through further strategic and accretive
acquisitions.
These statements involve known and unknown risks, uncertainties
and other factors, which may cause actual results, performance or
achievements to differ materially from those expressed or implied
by such statements, including but not limited to: the Company’s
inability to attract and retain qualified members of management to
grow the Company’s business and its operations; unanticipated
changes in economic and market conditions (including changes
resulting from the COVID-19 pandemic) or in applicable laws; the
impact of the publications of inaccurate or unfavourable research
by securities analysts or other third parties; the Company’s
failure to complete future acquisitions or enter into strategic
business relationships; interruptions or shortages in the supply of
cannabis from time to time available to support the Company’s
operations from time to time; unanticipated changes in the cannabis
industry in the jurisdictions within which the Company may from
time to time conduct its business and operations, including the
Company’s inability to respond or adapt to such changes; the
Company’s inability to secure or maintain favourable lease
arrangements or the required authorizations necessary to conduct
the business and operations and meet its targets; the Company’s
inability to secure desirable retail cannabis store locations on
favourable terms; risks relating to projections of the Company’s
operations; the Company’s inability to effectively manage
unanticipated costs and expenses, including costs and expenses
associated with product recalls and judicial or administrative
proceedings against the Company; risk that the Company will not
reach the anticipated sales from continuing operations for the
financial year of the Company ending October 31, 2023; risk that
the Company will not hit its forecasted revenue and sales
projections for the first fiscal quarter of 2023; risk that Cabana
Club and/or ELITE loyalty programs memberships will decrease and/or
plateau; risks that the Company will not make changes to the ELITE
program and/or it may not have the intended effects on the business
and operations of the Company; risk that the Company will be unable
to deploy Fastendr™ technology across the Company’s retail stores
and/or license this technology or on the timelines disclosed herein
or at all; risk that the Company will be unable to launch Cabana
Cannabis Co. and/or Nuleaf Naturals white label products in the
jurisdictions and on the timelines outlined herein and/or that such
products will be unable to achieve the results and/or have the
intended effects as disclosed herein; risk that same-store sales
and/or consolidated gross margins (including, without limitation,
from ELITE and bricks-and-mortar) will not increase, but decease
and/or plateau; risk that the Company will be unable to increase
its revenue profile; risk that the Company will be unable to
increase its revenue through the first fiscal quarter of 2023, and
the remainder of the year, but that it will decease and/or plateau;
risk that the Company will be unable to expand in the German
market; risk that the Company will be unable to continue to
integrate and expand its CBD brands; risk that the Company will be
unable to grow its online retail portfolio through further
strategic and accretive acquisitions; risk that the Company will be
unable to add additional cannabis retail store locations to the
Company’s business, with Ontario representing the lion’s share of
the increase and remain on a positive growth trajectory; risks that
the Company will be unable to complete the development of any or
all of its cannabis retail stores; risk the Company will not
complete the ATM Program; risks surrounding the Company’s inability
to list the Common Shares offered in the ATM Program and/or any
future offering; risks surrounding the Company’s failure to utilize
the use of proceeds from the ATM Program, connectFirst credit
facility and/or any future offering as expected; risks surrounding
the ATM Program, connectFirst credit facility and/or any future
offering not have its anticipated effects on the business and
operations of the Company; risks that there will not be legislative
changes in Germany; risks that the Company will be unable to close
the Sanity Transaction and/or that the transaction will not have
its intended effects on the Company; risks that the legalization of
adult use cannabis will not have the intended effects on the
Company’s business and operations; risks surrounding the sale of
hemp seeds; risks surrounding the legality of delta-8
tetrahydrocannabinol (“Delta-8”) derived from hemp; risks
surrounding the uncertainty and legality of Delta-8 and delta-9
tetrahydrocannabinol (“Delta-9”) state to state; risk that the
United States Drug Enforcement Administration could consider the
Company’s Delta-8 products an illegal controlled substance under
the Controlled Substances Act (the “CSA”) or Federal Analogue Act
in the United States; risk that state or federal regulators or law
enforcement could take the position that the Delta-8 and Delta-9
products and/or in-process hemp extract are/is a Schedule I
controlled substance in violation of the CSA and similar state
laws; risk that the Company’s Delta-9 products could be considered
by state law enforcement and state regulators to be marijuana
illegal under state laws criminalizing the possession,
distribution, trafficking and sale of marijuana; risk that should
the Company become subject to enforcement action by federal or
state agencies, the Company could: (i) be forced to stop offering
some or all of it Delta-8 and Delta-9 products or stop all business
operations, (ii) be subject to other civil or criminal sanctions,
(iii) be required to defend against such enforcement and if
unsuccessful could cause the Company to cease its operations; and
risk that enforcement or regulatory action at the United States
federal and/or state level could adversely impact the listings of
the Common Shares on the TSXV and Nasdaq.
Readers are cautioned that the foregoing list is not exhaustive.
Readers are further cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
plans, intentions or expectations upon which they are placed will
occur. Such information, although considered reasonable by
management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those
anticipated.
Forward-looking statements contained in this press release are
expressly qualified by this cautionary statement and reflect the
Company’s expectations as of the date hereof and are subject to
change thereafter. The Company undertakes no obligation to update
or revise any forward-looking statements, whether as a result of
new information, estimates or opinions, future events or results or
otherwise or to explain any material difference between subsequent
actual events and such forward-looking information, except as
required by applicable law.
CAUTIONARY NOTE REGARDING FUTURE ORIENTED FINANCIAL
INFORMATION
This press release may contain future oriented financial
information (“FOFI”) within the meaning of Canadian securities
legislation, about prospective results of operations, financial
position or cash flows, based on assumptions about future economic
conditions and courses of action, which FOFI is not presented in
the format of a historical balance sheet, income statement or cash
flow statement. The FOFI has been prepared by management to provide
an outlook of the Company’s activities and results and has been
prepared based on a number of assumptions including the assumptions
discussed under the heading above entitled “Cautionary Note
Regarding Forward-Looking Statements” and assumptions with respect
to the costs and expenditures to be incurred by the Company,
capital expenditures and operating costs, taxation rates for the
Company and general and administrative expenses. Management does
not have, or may not have had at the relevant date, firm
commitments for all of the costs, expenditures, prices or other
financial assumptions which may have been used to prepare the FOFI
or assurance that such operating results will be achieved and,
accordingly, the complete financial effects of all of those costs,
expenditures, prices and operating results are not, or may not have
been at the relevant date of the FOFI, objectively
determinable.
Importantly, the FOFI contained in this press release are, or
may be, based upon certain additional assumptions that management
believes to be reasonable based on the information currently
available to management, including, but not limited to, assumptions
about: (i) the future pricing for the Company’s products, (ii) the
future market demand and trends within the jurisdictions in which
the Company may from time to time conduct the Company’s business,
(iii) the Company’s ongoing inventory levels, and operating cost
estimates, (iv) the Company’s net proceeds from the ATM Program and
connectFirst credit facility. The FOFI or financial outlook
contained in this press release do not purport to present the
Company’s financial condition in accordance with IFRS as issued by
the International Accounting Standards Board, and there can be no
assurance that the assumptions made in preparing the FOFI will
prove accurate. The actual results of operations of the Company and
the resulting financial results will likely vary from the amounts
set forth in the analysis presented in any such document, and such
variation may be material (including due to the occurrence of
unforeseen events occurring subsequent to the preparation of the
FOFI). The Company and management believe that the FOFI has been
prepared on a reasonable basis, reflecting management’s best
estimates and judgments as at the applicable date. However, because
this information is highly subjective and subject to numerous risks
including the risks discussed under the heading above entitled
“Cautionary Note Regarding Forward-Looking Statements” and under
the heading “Risk Factors” in the Company’s public disclosures,
FOFI or financial outlook within this press release should not be
relied on as necessarily indicative of future results.
Readers are cautioned not to place undue reliance on the FOFI,
or financial outlook contained in this press release. Except as
required by Canadian securities laws, the Company does not intend,
and does not assume any obligation, to update such FOFI.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230130005764/en/
INFORMATION
Media Inquiries Omar Khan Chief Communications and Public
Affairs Officer omar@hightideinc.com
Investor Inquiries Vahan Ajamian Capital Markets Advisor
vahan@hightideinc.com
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