AUDACIOUS Reports Fiscal Q3 2022 Financial Results
Ryan Allway
March 1st, 2022
News, Top News
Continued Execution
2,400% YoY Revenue Growth
49% Growth in Gross Margins Over Q2
Reduced Losses, Positioned for further Growth
Earnings Conference Call Wednesday 2 March 2022 at 11am EST
LAS VEGAS, March 1, 2022 /PRNewswire/ – Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) (“AUSA”, “AUDACIOUS”, or the “Company”), today announced that the Company has filed its financials and management discussion and analysis for the three-month period ending December 31, 2021, its fiscal third quarter of fiscal 2022 (the year ending March 31, 2022). The Company’s results are filed on www.sedar.com.
Terry Booth, CEO of AUDACIOUS, commented, “The third quarter saw us expand internationally through our partnership with Green Triangle Health (“GTH”), where we have already started generating revenues. Our partner is exceptionally well-connected, which is translating into commercial arrangements with major regional and international distributors. In the U.S., we continue to make good headway too, with an important partnership with First Americans of the Saint Regis Mohawk Tribe, which sees us move into New York well ahead of statewide commencement of adult use sales, providing us with a significant early mover advantage. Our partnership with PBR has seen us launch our Wreck Relief brand, which is now starting to generate online sales, and our Provisions and LOOS brands continue to do very well in California, in part through our partnership with EAZE, the world’s largest legal cannabis delivery company.”
Jon Paul, CFO of AUDACIOUS, added, “The third quarter was an important pivot for us, as we spent heavily towards future growth opportunities while moving further from our past. We successfully launched the AUDACIOUS brand at our highly trafficked booth at MJBizCon and the Roll-Up Launch Event featuring Machine Gun Kelly. We had our first sales in California while also investing heavily in key raw materials to expand our capacity for future quarters. We began funding our relationship with PBR and built inventory in Wreck Relief for the Q4 release. Even with loss of revenue from past fintech and consulting lines, we still grew sales over Q2 and have multiple opportunities for even faster sales growth in the quarters ahead.”
Financial Highlights Q3 Fiscal 2022
Income Statement |
3 months ended |
3 months ended |
Change
Year Over |
3 months ended |
Change
Q3 Over |
Pro Forma | ||
31-Dec-21 | 31-Dec-20 | 30-Sept-21 | 31-Dec-21 | |||||
$ | $ | % | $ | % | $ | |||
Revenue | 2,371,218 | 90,378 | 2,623% | 2,271,830 | 4.4% | 2,940,876 | ||
Gross profit (loss) | 1,843,437 | (166,048) | n.a. | 1,233,766 | 49.4% | |||
Operating expenses | 6,164,519 | 4,898,793 | 25.8% | 5,637,907 | 9.3% | |||
Loss from operations | (4,321,082) | (5,064,841) | -14.7% | (4,404,141) | -1.9% |
Outlook
In the months ahead, AUDACIOUS will continue to execute on its strategy with further growth in its current markets and anticipates entering new jurisdictions, including New York, New Jersey, and others, as well as further expansion of its product line portfolio. Additionally, the Company will be pursuing multiple initiatives to increase production volume, further driving growth. The Company is following rigorous financial discipline and anticipates reducing certain operating expenses in the coming months. Additionally, following conversations with the regulators in Nevada, the Company is confident the license transfers relating to the GT acquisition will be completed shortly, following which the Company can consolidate the GT results, further boosting growth.
3Q 2022 Financial Highlights
- Total revenues of $2.37 million, an increase of 2,623% year-over-year from $90,378 in the third fiscal quarter of 2021 and even grew 4% compared to the second quarter of fiscal quarter of 2022. During the quarter under review, the Company recorded its first billings in California, offset by lower kiosk income as the Cocoon business is wound down. Furthermore, as the Company had commenced exiting its investment in Body and Mind, no further consulting fees were generated from this relationship.
- Gross profit for the fiscal second quarter of 2022 was $1.84 million compared to a gross profit loss of ($166k) in the comparable period of 2021 and increased by 51% from the second fiscal quarter of 2022. The increase in gross profit is predominantly from stronger utilization rates in the Company’s high-margin ALPS business and management fees from Green Therapeutics.
- Operating expenses increased to approximately $6.16 million, or by 25.8%, as compared to the same period in the prior year, well below the recorded revenue growth rate of over 2,400% for the same period, showing the leverage built into the business as commercial activity increases. Cost increases driving this revenue growth were increases in personnel with the acquisition of ALPS and key management, the Company’s successful rebranding as Audacious launched at MJBizCon, annual governance meeting costs, and investment in the relationship with the Professional Bull Riders (PBR) association.
- A 16% reduction in operating loss was recorded $(4.3) million as compared to $(5.1) million for the prior year, with growth in margins offsetting increased operating costs.
Q3 Highlights and Subsequent Events
- LDA Funding – securing growth capital
- MJBizCon
- Excellent start to global activities – GTH partnership in Thailand
- Bringing APIS to a new and significant audience – Priva partnership
- Speeding up high-quality cultivation – The AUDACIOUS ACHIEVE series
- From the desert to the arctic – ALPS develops profitable facilities anywhere – Pure Harvest $1.4M Kuwait deal
- Making waves in California – Herbs + EAZE
- PBR partnership off to successful start
- License applications
- Award streak continues
Conference Call Details
The Company will be hosting a conference call to discuss its results for the quarter on Wednesday, March 2, 2022, at 11am ET.
Conference call details
Canada: | 1.647.794.4605 |
North American Toll Free: | 1.888.204.4368 |
Webcast URL: | https://produceredition.webcasts.com/starthere.jsp?ei=1532386&tp_key=0ca289c8c0 |
Confirmation #: | 5701328 |
A replay of the call will be available until March 9, 2022. The replay can be accessed as follows: |
|
Encore Replay Canada: | 1.647.436.0148 |
Encore Replay North American Toll Free: | 1.888.203.1112 |
Encore Replay Entry Code: | 5701328 |
About AUDACIOUS
AUDACIOUS is a next-generation MSO growing the cannabis industry of tomorrow from the ground up, led by industry pioneer Terry Booth and an accomplished management team with proven industry track records. With operations that range from providing industry-leading sustainable cultivation design and optimization to retail storefronts, growing flower in-house, and manufacturing award-winning brands, AUDACIOUS has products and solutions for everyone. Quickly expanding through innovative partnerships and collaborations, AUDACIOUS is forging the inclusive cannabis community of tomorrow, today. Learn more about AUDACIOUS here.
AUDACIOUS common shares trade on the CSE under the symbol “AUSA” and on the OTCQB under the symbol “AUSAF.”
“Terry Booth”
________________________________
Terry Booth
Chief Executive Officer
Forward-Looking Statement
This press release contains “forward-looking information” within the meaning of applicable securities legislation. All statements, other than statements of historical fact, included herein is forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “proposed”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. In particular, this press release contains forward-looking information in relation to; the impact of the changes to U.S. federal and state statutory developments with respect to the cannabis industry and the opportunities this may present for the Company; and the Company’s current liquidity. This forward-looking information reflects the Company’s current beliefs and is based on information currently available to the Company and on assumptions the Company believes are reasonable. These assumptions include but are not limited to the ability of the Company to successfully satisfy the conditions to closing the proposed transaction; the ability of the Company to successfully execute on its plans for the Company and GT; legal changes relating to the cannabis industry proceeding as anticipated.
Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic, competitive, political and social uncertainties; general capital market conditions and market prices for securities; the actual results of the Company’s future operations; competition; changes in legislation affecting the Company; the timing and availability of external financing on acceptable terms; lack of qualified, skilled labour or loss of key individuals; risks related to the COVID-19 pandemic including various recommendations, orders and measures of governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, service disruptions, quarantines, self-isolations, shelters-in-place and social distancing, disruptions to markets, economic activity, financing, supply chains and sales channels, and a deterioration of general economic conditions that could limit the Company’s ability to obtain external financing.
A description of additional risk factors that may cause actual results to differ materially from forward-looking information can be found in the Company’s disclosure documents on the SEDAR website at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking information 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 information contained in this press release is expressly qualified by this cautionary statement. The forward-looking information contained in this press release represents the expectations of the Company as of the date of this press release and, accordingly, are subject to change after such date. However, the Company expressly disclaims any intention or obligation to update or revise any forward-looking information, whether because of new information, future events or otherwise, except as expressly required by applicable securities law.
The CSE has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accept responsibility for the adequacy or accuracy of this release.
AUSTRALIS CAPITAL INC.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited – in Canadian Dollars)
Notes | December 31, 2021 |
March 31, 2021 |
|
$ | $ | ||
Assets | |||
Current | |||
Cash and cash equivalents | 655,597 | 3,531,357 | |
Accounts receivable | 4 | 3,803,803 | 1,696,656 |
Inventory | 659,395 | 473,185 | |
Prepaid expenses | 418,273 | 470,479 | |
Current portion of deposits | 1,303,734 | 649,464 | |
Current portion of annuity receivable – SubTerra | 59,576 | 66,070 | |
Loans receivable | 2,386,414 | – | |
Marketable securities held for sale | 5 | 2,890,022 | 12,803,638 |
Land held for sale | 6 | – | 4,151,551 |
12,176,814 | 23,842,400 | ||
Non-current | |||
Investment in ALPS technology solution APIS | 8 | 3,034,309 | 1,130,233 |
Property, plant, and equipment | 9 | 2,122,250 | 298,258 |
Right-of-use assets | 9 | 754,156 | 1,097,361 |
Intangible assets | 11 | 13,287,857 | 14,227,461 |
Goodwill | 11 | 15,057,796 | 15,057,796 |
Derivative financial instrument – NCI call option | 8 | 7,320,630 | 7,320,630 |
Annuity receivable – SubTerra | 679,492 | 672,998 | |
Long-term deposits | 10 | 3,219,387 | 4,130,168 |
Other assets – acquisition deposit | 7 | 14,797,896 | 14,677,674 |
TOTAL ASSETS | 72,450,587 | 82,454,979 | |
Liabilities | |||
Current | |||
Accounts payable and accrued liabilities | 17 | 5,448,113 | 5,915,674 |
Deferred revenue | 8,858 | 17,813 | |
Current portion of lease liability | 12 | 438,641 | 459,895 |
Provisions | 10 | – | 1,029,014 |
5,895,612 | 7,422,396 | ||
Non-current | |||
Contingent consideration payable | 8 | 3,698,980 | 3,698,980 |
Lease liability | 12 | 369,991 | 686,191 |
Loan payable | 15 | – | 747,115 |
Deferred tax liability | 3,205,244 | 3,205,244 | |
TOTAL LIABILITIES | 13,169,827 | 15,759,926 | |
Shareholders’ equity | |||
Share capital | 13 | 112,002,679 | 104,617,900 |
Treasury shares | 7,13 | (11,367,770) | (11,367,770) |
Exchangeable shares reserve | 13 | 10,383,426 | 11,114,175 |
Reserves | 13 | 14,173,098 | 9,640,106 |
Accumulated other comprehensive income | 323,717 | 234,035 | |
Accumulated deficit | (71,303,420) | (52,937,270) | |
Equity attributable to owners of the Company | 54,211,730 | 61,301,176 | |
Non-controlling interest | 8 | 5,069,030 | 5,393,877 |
TOTAL SHAREHOLDERS’ EQUITY | 59,280,760 | 66,695,053 | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 72,450,587 | 82,454,979 |
AUSTRALIS CAPITAL INC.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited – in Canadian Dollars)
Three months ended December 31, |
Nine months ended December 31, |
||||
Notes | 2021 | 2020 | 2021 | 2020 | |
Revenue | $ | $ | $ | $ | |
Revenue-Services | 1,993,131 | 8,430 | 5,137,007 | 43,102 | |
Revenue-Kiosks | 94,522 | 35,181 | 315,787 | 71,510 | |
Revenue-Consulting | 283,565 | 46,767 | 918,617 | 143,368 | |
2,371,218 | 90,378 | 6,371,411 | 257,980 | ||
Cost of goods sold | (527,781) | (256,426) | (2,229,669) | (484,534) | |
Gross profit (loss) | 1,843,437 | (166,048) | 4,141,742 | (226,554) | |
Operating expenses | |||||
Wages and benefits | 1,183,865 | 3,451,617 | 3,825,604 | 5,097,118 | |
Share-based payments | 13 | 1,097,784 | (1,263,126) | 3,759,580 | 391,507 |
Selling, general and administrative | 14 | 3,476,327 | 2,557,961 | 7,415,624 | 4,137,737 |
Depreciation and amortization | 9,11 | 406,543 | 152,341 | 1,281,555 | 496,355 |
6,164,519 | 4,898,793 | 16,282,363 | 10,122,717 | ||
Loss from operations | (4,321,082) | (5,064,841) | (12,140,621) | (10,349,271) | |
Other income (expense) | |||||
Gain on asset disposal | (83,460) | 82 | (83,496) | 138 | |
Loss on investment in associate | – | (427,739) | – | (1,282,451) | |
Gain (loss) on sale of marketable securities | (142,217) | – | (180,880) | – | |
Loss on settlements | – | (3,000,000) | (237,338) | (4,025,477) | |
Loss on true-up provision | – | – | – | (1,615,835) | |
Loss on impairment – intertangle assets | – | (7,684,824) | – | (7,684,824) | |
Loss on remeasurement of land held for sale | – | (2,250,241) | – | (2,250,241) | |
Net change on investment at fair value through profit or loss | 5 | (275,278) | (796,163) | (6,202,654) | (992,718) |
Other income | – | 70 | – | 483 | |
Other expense – merger and acquisition costs | – | (118,311) | – | (286,846) | |
Foreign exchange gain (loss) | 323,052 | (88,989) | 214,362 | (87,192) | |
Income tax expense | (77,596) | – | (77,596) | – | |
Interest and other expense | (184,599) | (12,712) | (94,436) | (23,195) | |
Interest expense – leases | (4,616) | (4,880) | (33,670) | (38,685) | |
Interest income | 62,259 | 26,460 | 145,332 | 86,120 | |
(382,455) | (14,357,247) | (6,550,376) | (18,200,723) | ||
Net loss | (4,703,537) | (19,422,088) | (18,690,997) | (28,549,994) | |
Other comprehensive income (loss) | |||||
Foreign currency translation | (175,046) | 6,010 | 89,682 | (247,153) | |
Share of OCI from investments in associates | – | 144,441 | – | (51,976) | |
Total comprehensive loss | (4,878,583) | (19,271,637) | (18,601,315) | (28,849,123) | |
Net loss attributable to: | |||||
Shareholders of the Company | (4,714,729) | (19,422,088) | (18,366,150) | (28,549,994) | |
Non-controlling interest | 11,192 | – | (324,847) | – | |
Net loss | (4,703,537) | (19,422,088) | (18,690,997) | (28,549,994) | |
Total comprehensive loss attributable to: | |||||
Shareholders of the Company | (4,889,775) | (19,271,637) | (18,276,468) | (28,849,123) | |
Non-controlling interest | 11,192 | – | (324,847) | – | |
Total comprehensive loss | (4,878,583) | (19,271,637) | (18,601,315) | (28,849,123) | |
Net loss per share attributable to shareholders of the Company | |||||
Basic and diluted | (0.02) | (0.11) | (0.08) | (0.17) | |
Weighted average number of shares outstanding | |||||
Basic and diluted | 247,284,636 | 176,512,309 | 239,885,621 | 172,937,978 |
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