Avant Brands Reports Second Quarter of Fiscal 2021 Results

• Achieved record gross revenue of $2.9 million - reflecting 30% growth from the prior quarter
  
  
• Increased average selling price by 12% from the prior quarter to $7.21
  
  
• Improved Adjusted EBITDA to a nominal loss of $28,000
  
  
• Maintained strong capital position with approximately $17.6 million of cash and no debt

KELOWNA, BC, July 13, 2021 /CNW/ - Avant Brands Inc (TSX: AVNT) (OTCQX: AVTBF) (FRA: 1BUP) ("Avant" or the "Company"), a Canadian leading producer of handcrafted, high quality cannabis products, is pleased to announce that it has reported its Second Quarter ("Q2") financial results of fiscal 2021.

Key Financial Highlights of Q2 2021
(for the period ended May 31, 2021)
All figures are compared to the Company's most recent fiscal quarter (Q1 2021)

• Record gross revenue of $2.9 million, compared to $2.2 million, an increase of $675,000 or 30%
  
  
• Sold 394 kilograms ("KG") of cannabis, compared to 342 KG, an increase of 15%
  
  
• Gross margin^(A) decreased from 41% to 39%
  
  
• Gross margin^(A) dollars of $961,000(net of excise tax), compared to $811,000, an increase of $150,000 or 18%,
  
  
• Recreational cannabis sales accounted for 92% of total sales, compared to 82%
  
  
• Overall weighted average selling price increased by 12% or $0.80 to $7.21
  
  
• Recreational weighted average selling price decreased 1% to $7.37 per gram
  
  
• Operating expenses^(B) of $1.2 million, compared to $1.0 million, an increase of $200,000 or 20%
  
  
• Net loss from operations of $124,000 compared to net income from operations of $368,000, a decrease of $492,000 or 134% as the company had higher professional fees relating to its financing and TSX graduation initiatives
  
  
• Adjusted EBITDA^(C) loss of $28,000 compared to a loss of $199,000, an improvement of $171,000 or 86%
  
  
• Maintained a strong capital position with approximately $17.6 million of cash and all debt eliminated

"Our Q2 earnings have been the result of our relentless focus on building a long-term and sustainable competitive advantage within the sector. Although this was a record quarter, we still see tremendous opportunities for further growth as we increase our production, listed SKU's, and await 3PL to receive its Health Canada licences." said Norton Singhavon, Founder and CEO at Avant Brands. "We are excited to begin our journey on the Toronto Stock Exchange with a strong capital position, as Avant, a leading innovative brand house, as we continue to execute on our strategy to produce market leading products."

Key Corporate Highlights of Q2 2021

• Closed a bought deal public offering (the "Offering") of units for gross proceeds of $23,000,000, issuing 28,750,000 units at a price of $0.80 per unit. The Offering was co-led by Desjardins Capital Markets and Eight Capital as co-lead underwriters and joint book runners.
  
  
• Repaid its two Senior Secured Promissory Notes (the "Note") with NFS Leasing Canada Ltd. in full. The Notes, which carried an aggregate principal balance of approximately $6 million, were fully repaid on April 9, 2021. As a result, the Company is now free of all debt, with all security interests discharged and the Company's assets fully unencumbered.
  
  
• Executed an agreement with Focus Medical Herbs Ltd., an Israeli medical cannabis company. Under the terms of this agreement, the Company's initial shipments of cannabis will be produced by Grey Bruce, with the expectation to export 500 to 1,000 KG per year. The first purchase order is expected to ship in late fiscal Q3 or early Q4 2021.

Key Sales and Market Highlights of Q2 2021

• BLK MKT ™ continues to be a top selling premium SKU in all Provinces
  
  
• BLK MKT ™ pre-rolls rapidly emerged as a top selling premium 1 gram pre-roll in BC and Ontario. Ranking in 2nd in BC and 3rd in Ontario^(D)
  
  
• Launched BLK MKT ™ – Macflurry, a cultivar exclusive to only Avant, with overwhelming success, including rapid sell outs and exceptional reviews.
  
  
• BLK MKT ™ experienced 38% growth in sell through of 3.5G products year-over-year in BC ^(D)
• Increased market penetration in Ontario from 30 to 60% during the quarter ^(E)
  
  
• Executed a contract manufacturing agreement whereby a leading concentrates company will manufacture Tenzo ™ branded vape cartridges for sale into the Canadian recreational market
  
  
• Commenced packaging and selling Habitat ™ branded cannabis flower under an agreement that was previously executed with Habitat Craft Cannabis Ltd.
  
  
• Achieved a steady increase in medical (B2C) clients, while expanding the product offering in terms of both cultivars and package formats

Key Subsequent Events of Q2 2021

• Completed a corporate rebrand to Avant Brands Inc
  
  
• Graduated from the TSX Venture Exchange to the Toronto Stock Exchange
  
  
• Graduated from the OTCQB Market to OTCQX Best Market
  
  
• Secured initial listing for Tenzo ™ vape cartridges with the Ontario Cannabis Store (OCS)
  
  
• Filed preliminary base shelf prospectus for up to an aggregate offering of $50 million. Once final and effective, it will provide the Company with the flexibility to take advantage of financing opportunities, should favourable market conditions arise during the 25-month period that it remains active.

Conference Call

Management will host a conference call to discuss the financial results on July 14, 2021, at 5:00PM Eastern Time / 2:00PM Pacific Time.

Dial-in Information

Date: July 14, 2021
Time: 5:00PM Eastern Time / 2:00PM Pacific Time
Canada/USA TF: 1-800-319-4610
International Toll: +1-604-638-5340

A transcript of the call will be posted on the Company's website at www.avantbrands.ca within 48 hours of the call.

A copy of the Management Discussion & Analysis and Financial Statements for Q2 2021 can be downloaded from the Company's SEDAR profile, or on its website at www.avantbrands.ca.

About Avant Brands

Avant is an innovative and sector leading producer of high-quality, handcrafted cannabis products. Avant has multiple licensed and operational production facilities across Canada, which produce Avant's highly sought-after consumer brands sold across medical and recreational channels in Canada.

Avant's recreational brand portfolio includes BLK MKT™, Tenzo™, Cognōscente™, Treehugger™ and Pristine™ Seeds, which are produced from rare and exceptional cultivars, and sold in British Columbia, Ontario, Saskatchewan, Manitoba and Yukon. Avant's medical cannabis brand, GreenTec™, is distributed nationwide, directly to qualified patients through its online portal and licensed partners.

Avant is a publicly traded corporation, listed on the Toronto Stock Exchange (TSX: AVNT), and cross-trades on the OTCQX Best Market (OTCQX: AVTBF) and Frankfurt Stock Exchange (FRA: 1BUP). The Company is headquartered in Kelowna, British Columbia and has operations in British Columbia, Alberta and Ontario.

To learn more about Avant, access the investor presentation, or learn more about our consumer brands, please visit www.avantbrands.ca.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: 

This news release includes certain "forward-looking information" as defined under applicable Canadian securities legislation including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: the anticipated timing for the first shipment to Focus Medical Herbs Ltd; the timing of the earnings call; the availability of the transcript from the earnings call on the Company's website; and expectations for other economic, business, and/or competitive factors. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Examples include statements that the Company will operate in a fiscally disciplined manner, build long-term shareholder value, reduce operational expenses, or increase its revenue and gross margins. 

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; the impact of COVID-19; and the risk factors set out in the Company's annual information form dated March 16, 2021, filed with Canadian securities regulators and available on the Company's profile on SEDAR at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. 

This news release refers to certain financial performance measures that are not defined by and do not have a standardized meaning under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. These non-IFRS financial performance measures are defined in the MD&A. Non-IFRS financial measures are used by management to assess the financial and operational performance of the Company. The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and prospects in a similar manner to the Company's management. As there are no standardized methods of calculating these non-IFRS measures, the Company's approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

SOURCE Avant Brands Inc.