Lifeist Wellness Inc. (“Lifeist” or the “Company”) (TSXV:
LFST) (FRANKFURT: M5B) (OTCMKTS: LFSWF), a health-tech
company that leverages advancements in science and technology to
build breakthrough companies that transform human wellness, today
reported its financial results for the three months ended May 31,
2023 (“Q2 2023”) compared to the same period last year (“Q2 2022”).
All financial figures are in Canadian dollars unless otherwise
indicated.
Second Quarter Highlights
- Net revenue for Q2 2023 increased
51% from the same quarter last year to $6.2 million compared to
$4.1 million in Q2 2022. The improvement was mainly driven by a
year-over-year increase of $1.2 million in Aus Vapes hardware
revenue, due to a two-months shut-down in 2022. CannMart cannabis
revenue and Mikra nutraceutical revenue also contributing to the
growth with year-over-year revenue growth of $580,000 and $255,000
respectively.
- The success of CannMart’s in-house
Roilty brand and the launch of the Mikra nutraceuticals business is
driving growth, leading to a 22.5% increase in North American sales
for Q2 2023 versus Q2 2022.
- The strategic focus on high margin
activities and operational efficiency continues to pay off in Q2
2023 with a $1.1 million improvement in gross profit, a $2.1
million reduction in Adjusted EBITDA losses, and gross margins of
29% as Lifeist drives toward profitability.
"Our ongoing journey to transform Lifeist into a
diversified wellness company with high-margin business units
remains on track," affirmed Meni Morim, CEO of Lifeist. "In our
second quarter results, we experienced growth across all our key
metrics, including achieving another historic high gross profit.
Though the path has been challenging, we are making continuous
improvements and efficiencies are having an impact as we move
toward our goal of profitability and positive cash flow."
"The growth in second quarter 2023 revenue was
led by our Aus Vapes business which experienced a significant
rebound in revenue having introduced new product categories, a new
marketing strategy, and successfully relocated warehouse operations
into a larger and more modern facility improving efficiencies after
devastating spring floods. In addition, both of our main wellness
businesses CannMart and Mikra continue to deliver solid results.
CannMart has successfully established itself a leading cannabis
brand within a short span of two years. Through innovation,
strategic partnerships with provincial buyers, and unwavering
support from our retailers, we are driving distribution and
enhanced sell-through of our expanding portfolio of premium and
mid-range concentrate products."
"Mikra too has undergone a transformation and is
now selling multiple products through our own website and through
Amazon.com, the largest online direct-to-consumer platform in the
world. Looking ahead, we anticipate accelerated growth as we shift
our focus towards our partnership with Jose Bautista and launching
new products and expanding our range of SKUs through these and
other established channels. We continue to execute our strategy
with our vision for Lifeist to becoming a leading player in the
wellness industry. We remain committed to delivering exceptional
products, pursuing innovation, and driving sustainable growth for
our valued customers and shareholders.”
Second Quarter Operating
Highlights
Cannabis: CannMart Inc. (“CannMart”) and
CannMart Labs Inc. (“CannMart Labs”)
- Lifeist’s cannabis
business continued to make progress on its path to profitability in
Q2 2023, highlighted by expanding gross profit and a narrowing of
Adjusted EBITDA losses. The improved profitability is being driven
by the shift to in-house brand Roilty.
- Recreational
cannabis revenue (net of exercise taxes) grew 16.3% to $4.1 million
in Q2 2023 compared to $3.6 million in Q2 2022, driven largely by
Roilty through increased distribution and retail sell-through of an
expanding portfolio of premium and mid-range concentrate products
in all of Canada’s provincial markets.
- Adjusted EBITDA
loss for CannMart improved to $625,363 in Q2 2023 compared to $1.1
million in Q2 2022. The reduced loss was due to higher gross
margins and better operational efficiency.
Nutraceuticals: Mikra Cellular Sciences, Inc.
(“Mikra”)
- Mikra took several
significant steps to expand its product portfolio and open new
distribution channels over the past several months, which is
bolstering the platform for future revenue growth.
- Mikra reported
revenue of $361,049 in Q2 2023 compared to $106,262 in Q2 2022.
Results were driven by sales of flagship product CELLF, with
additional contribution from RESCUE which was launched in
mid-December.
- Mikra sales in Q2
2023 have been generated on www.wearemikra.com.
- Adjusted EBITDA
loss for Mikra improved to $280,047 in Q2 2023 compared to $733,077
in Q2 2022.
Australian Vaporizers Pty Ltd. (“Aus Vapes”)
- Aus Vapes revenue
increased by 271% to $1.7 million in Q2 2023, due to the Aus Vapes
team introducing new product categories and a new marketing
strategy, plus the successful relocation of warehouse operations
into a larger and more modern facility improving efficiencies and
product assortment, after a shutdown in 2022 due to flooding.
Financial Summary
Net revenue increased 50.6% to $6.2 million in
Q2 2023 compared to $4.1 million in Q2 2022 due mainly to a $1.3
million increase in Aus Vapes hardware revenue in Q2 2023, as
compared to Q2 2022. Also contributing to the increase was a 16.3%
increase or $579,750 in cannabis revenue and $254,787 increase in
revenue generated by Mikra.
Gross profit before inventory adjustment
increased 167% to $1.8 million compared to $667,118 in Q2 2022,
with margins expanding to 29% from 16%.
The increase in Gross Profit in Q2 2023 as
compared to the same period prior year reflects the Company’s
resilience and confirms the success of its strategic focus on
individual segments, geographies, and products, as well as a
continuous effort to improve production efficiencies across all
segments.
Adjusted EBITDA loss improved to $2.4 million in
Q2 2023 compared to $4.5 million in Q2 2022. Net loss from
continuing operations was $2.2 million, or ($0.01) per diluted
share, in Q2 2023 compared to a loss of $4.6 million, or ($0.01)
per share, in Q2 2022.
Balance Sheet and Cash Flow
Cash and cash equivalents were $2.2 million at
May 31, 2023, compared to $3.8 million at November 30, 2022.
Inventories were $5.7 million at May 31, 2023
compared to $4.5 million at November 30, 2022.
The working capital position was $4.2 million at
May 31, 2023.
Net cash provided by operations was $0.6 million
in Q2 2023 compared to $8.9 million used in operations in Q2 2022,
due in part to investments in CannMart and Mikra, offset by
improved margins and higher revenue.
Corporate Update
Sitting at the forefront of the growing wellness
movement, Lifeist is transforming human wellness through
advancements in science and technology. While maintaining its
legacy business in the cannabis and vape sectors, Lifeist is
leveraging expertise in innovation, consumer packaging, and
distribution to forge its own path in the large and growing
nutraceutical sector. Here is a corporate update of our recent
activities.
Mikra
Mikra is Lifeist’s biosciences and consumer
wellness subsidiary seeking to unlock cellular potential and
maximize the health of humans. Mikra management team is focused on
growth through expanding its product portfolio organically and
through M&A, and through the addition of new distribution
channels. To that goal Mikra has engaged Singular Narrative, a
U.S.-based strategic business consulting firm, which specializes in
business and product development within the biotech, wellness, and
nutraceuticals markets. Singular has identified a number of
potential business opportunities which the Company is pursuing.
In Q2 2023 Mikra’s CELLF and RESCUE debuted on
Amazon.com gaining exposure to a wide customer base. Amazon.com
provides a global reach and unparalleled visibility, allowing Mikra
to showcase its unique offerings to health-conscious consumers
across North America and beyond. CELLF and RESCUE are available for
purchase at WeAreMikra.com and on Amazon USA.
Mikra's dedication to scientific research and
development has resulted in a significant milestone in Q2 2023: a
pre-clinical study aimed at understanding the effects of CELLF on
health span (the years of one's life spent in good health) and
lifespan (the number of years lived). This study showcases Mikra's
commitment to evidence-based products and its pursuit of solutions
that positively impact people's well-being. Such breakthroughs are
crucial in establishing Mikra as a brand trusted for its innovation
and efficacy.
Mikra also began production activities in Q2 on
its third product a new wellness-focused protein bar, “Chroma”.
Chroma is Mikra’s first product to offer consumers a healthy
alternative nutritional bar packed with cordyceps, free of added
sugars, and certified gluten-free and vegan. When available Chroma
will attract a broad and diverse health conscience audience and the
grocery-focused formulation will appeal to large brick and mortar
chains like Whole Foods Market, small gyms, studios, and
health-focused shops alike.
Earlier in 2023, Mikra announced an exciting
collaboration as part of its focus on nutraceuticals, joining
forces with the highly accomplished athlete Jose Bautista. The
initial collaboration centered around a remarkable cellular
therapeutic designed for athletes aged 30 and above to optimize
exercise performance, reduce post-workout fatigue and inflammation,
and accelerate recovery time. While launch of this product is
targeted for the second half of 2023, the teams are working to
expand the collaboration into a diverse line of cellular health
products and accessories.
In January 2023, Lifeist announced a
distribution agreement with GNC for CELLF™ v1.2 and its future
derivatives in the United States through retail stores, at gnc.com
and on GNC’s channel on Amazon.com. GNC is a leading global health
and wellness brand that provides high-quality, science-based
products and solutions consumers need to live mighty, live fit, and
live well. After an initial purchase order, Mikra and GNC have
decided to step back to refine marketing strategies, packaging, and
display designs, with the future goal of making a significant
impact in both GNC's online and retail stores. This will ensure the
greatest impact within GNC’s complex vendor system.
CannMart
CannMart continues to make strides establishing
itself as the leading business-to-business intermediary for
Canadian LPs and brands, and their recreational consumers across
Canada. Growth across key business drivers including store
penetration, product expansion and market share has been reported
across all categories in the first half of 2023.
With the recent acquisition of Zest Cannabis,
CannMart has two in-house brands it can call its own: Roilty,
CannMart’s brand for high-quality concentrates serving everything
from shatter to sugar wax, resin, vape cartridges and wax; and now
Zest which offers premium quality extract-infused pre-roll and
Liquid Diamond vape products. These leading brands are joined by
Rilaxe, LOT 420, and Apothecary Labs rounding out CannMart’s
portfolio of cannabis brands.
In addition, CannMart launched a new business-to
business (“B2B”) platform to facilitate wider wholesale
distribution for its exclusive partnership with award-winning
Hamilton Devices. Leveraging its existing wholesale distribution
channel, the portal makes these award-winning products available to
a wider range of customers, including head shops, vape and smoke
shops, convenience stores, including gas stations, and other
retailers that sell cannabis accessories.
Aus Vapes
After a challenging 2022, Aus Vapes has emerged
as a stronger, more versatile company. The company has made
significant changes due to the changing landscape in the local
market including devastating floods of spring 2022. The Aus Vapes
team have worked incredibly hard introducing new product
categories, executing a new marketing strategy, plus successfully
relocated warehouse operations into a larger and more modern
facility improving efficiencies and product assortment, which has
led to a significant rebound in business year-over-year.
Corporate Update
The Company reports that Slava Klems, CFO at
Lifeist, is transitioning to a fractional CFO position. Having
established a robust financial structure and a strong and efficient
team that handles day to day operations, Slava will continue to
lead the Company's financial strategy and oversee financial
operations focused on optimizing revenues and reducing costs. This
decision aligns with the Company’s ongoing efforts to optimize
resources, track and measure business metrics while maintaining
financial stability.
The Company also announces a correction to its
press release entitled “Lifeist Wellness Closes on Zest
Acquisition” issued on July 21, 2023 (the “Initial Press Release”).
The Initial Press Release incorrectly stated that the Acquisition
was completed pursuant to the terms of an amended and restated
share purchase agreement, dated July 19, 2023. The Acquisition was
completed on July 20, 2023. This correction does not change any
other information reported in the Initial Press Release.
Additional Information
The Company’s complete financial statements and
management’s discussion & analysis (“MD&A”) for Q2 2023 are
available on Lifeist’s website (www.lifeist.com) and SEDAR
(www.sedar.com).
About Lifeist Wellness Inc.
Sitting at the forefront of the post-pandemic
wellness revolution, Lifeist leverages advancements in science and
technology to build breakthrough companies that transform human
wellness. Portfolio business units include: CannMart, which
operates a B2B wholesale distribution business facilitating
recreational cannabis sales to Canadian provincial government
control boards; CannMart Labs, a BHO extraction facility for the
production of high margin cannabis 2.0 products; Aus Vapes,
Australia’s largest online retailer of vaporizers and accessories;
and Mikra, a biosciences and consumer wellness company seeking to
develop innovative therapies for cellular health.
Information on Lifeist and its businesses can be
accessed through the links below:
www.lifeist.comwww.cannmart.comwww.australianvaporizers.com.auwww.wearemikra.com
ContactsMeni Morim, Lifeist
Wellness Inc., CEOPh: 647-362-0390Email: ir@lifeist.com
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release or has in any way approved
or disapproved of the contents of this press release.
Non-IFRS Financial Measures
Management evaluates the Company’s performance
using a variety of measures, including “Net loss before income tax,
depreciation and amortization” and “Adjusted EBITDA”. The non-IFRS
measures discussed below should not be considered as an alternative
to or to be more meaningful than revenue or net loss. These
measures do not have a standardized meaning prescribed by IFRS and
therefore they may not be comparable to similarly titled measures
presented by other publicly traded companies and should not be
construed as an alternative to other financial measures determined
in accordance with IFRS.
The Company believes these non-IFRS financial
measures provide useful information to both management and
investors in measuring the financial performance and financial
condition of the Company.
Management uses these and other non-IFRS
financial measures to exclude the impact of certain expenses and
income that must be recognized under IFRS when analyzing
consolidated underlying operating performance, as the excluded
items are not necessarily reflective of the Company’s underlying
operating performance and make comparisons of underlying financial
performance between periods difficult. From time to time, the
Company may exclude additional items if it believes doing so would
result in a more effective analysis of underlying operating
performance. The exclusion of certain items does not imply that
they are non-recurring.
(i) Current and deferred income taxes,
depreciation and amortization, and share-based compensation were
excluded from the Adjusted EBITDA calculation as they do not
represent cash expenditures.(ii) Other income consisting of gain on
disposal of subsidiary, interest income, realized gain on
disposition of AFS investments, unrealized gain on derivatives and
other miscellaneous non-recurring income were excluded from
Adjusted EBITDA calculation.(iii) Non-recurring costs related to
restructuring and legacy issues were excluded from Adjusted EBITDA
calculation.(iv) Impairment loss relating to goodwill, customer
list, domains and brand names were excluded from Adjusted EBITDA
calculation.(v) Impairment loss relating to receivable is a
provision for expected credit loss to an associate and was excluded
from Adjusted EBITDA calculation.(vi) Share of associates loss, net
of tax, is excluded due to lack of control.
Forward Looking Information
This news release contains “forward-looking
information” within the meaning of applicable securities laws. All
statements contained herein that are not historical in nature
contain forward-looking information. Forward-looking information
can be identified by words or phrases such as “may”, “expect”,
“likely”, “should”, “would”, “plan”, “anticipate”, “intend”,
“potential”, “proposed”, “estimate”, “believe” or the negative of
these terms, or other similar words, expressions and grammatical
variations thereof, or statements that certain events or conditions
“may” or “will” happen.
The forward-looking information contained
herein, including, without limitation, statements related to: the
Company’s continuing focus and further development efforts relating
to its B2B recreational cannabis and nutraceuticals, including the
anticipated introduction of new products in the future, and its
expectations from such businesses to increase revenue growth and
profitability are made as of the date of this press release and is
based on assumptions management believed to be reasonable at the
time such statements were made, including, without limitation,
Lifeist’s ability to continue to increase revenue through its B2B
recreational cannabis business, including through increased sales
of Roilty and anticipated sales of shatter and THCa diamonds, and
to maintain momentum of expanding its nutraceutical business,
including through the anticipated sales of CELLF™ v1.2 and other
cellular therapeutics designed for athletes aged over 30, its
ability to broaden its total addressable market and to evolve into
a recognized wellness company, the Company’s expectation that the
nutraceutical and wellness market will develop as currently
anticipated, the nutraceutical market will continue to be a
multi-billion dollar high-margin market, the introduction of new
products and brands will generate additional revenue, expectations
that CELLF™ v1.2 and other cellular health products and accessories
to be developed by the Company will gain market acceptance along
with the expansion of the market for nutraceutical products, as
well as other considerations that are believed to be appropriate in
the circumstances. While we consider these assumptions to be
reasonable based on information currently available to management,
there is no assurance that such expectations will prove to be
correct. By its nature, forward-looking information is subject to
inherent risks and uncertainties that may be general or specific
and which give rise to the possibility that expectations,
forecasts, predictions, projections or conclusions will not prove
to be accurate, that assumptions may not be correct and that
objectives, strategic goals and priorities will not be achieved. A
variety of factors, including known and unknown risks, many of
which are beyond our control, could cause actual results to differ
materially from the forward-looking information in this press
release. Such factors include, without limitation: the inability of
the Company to develop its business as anticipated and to increase
revenues and/or its profitable margin on such revenues,
unanticipated changes to current regulations that would adversely
impact the Company’s businesses, the unanticipated decline in
demand for cannabis products, competition from others, unforeseen
developments that would impede Mikra’s ability to sell CELLF™ or
CELLF™ v1.2 and any other developed nutraceutical products as
anticipated and in a timely manner, the risk that pre-clinical
trials relating to CELLF™ are not as successful as anticipated and
do not demonstrate the expected therapeutic benefits and/or fail to
strengthen the Company’s patent claim, the risk that the expected
demand for nutraceutical products in general and those of Mikra in
particular does not develop as anticipated, the failure to maintain
the churn rate of subscription sales of CELLF™ at anticipated
levels, regulatory risk, risks relating to the Company’s ability to
execute its business strategy and the benefits realizable therefrom
and risks specifically related to the Company’s operations.
Additional risk factors can also be found in the Company’s current
MD&A which has been filed under the Company’s SEDAR profile at
www.sedar.com. Readers are cautioned not to put undue reliance on
forward-looking information. The Company undertakes no obligation
to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by applicable law. Forward-looking statements contained in
this news release are expressly qualified by this cautionary
statement.
Source: Lifeist Wellness Inc.
Lifeist Wellness (TSXV:LFST)
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