Avant Brands Inc., a leading producer of innovative, premium handcrafted cannabis products, is pleased to provide a corporate update.
Strategic Growth
The Company executed two key transactions recently that are expected to contribute to the ongoing growth of Avant. On December 8, 2022, the Company announced that Avant Brands K1 Inc. (formerly 1000343100 Ontario Inc.), an entity of which Avant owns 50% of the issued and outstanding shares, was the successful bidder to purchase The Flowr Group (Okanagan) Inc., including its 80,000 square-foot production facility in Kelowna, BC (the “Flowr Facility”). On December 19, 2022, the Company announced it has entered into a binding share purchase agreement to acquire the remaining 50% equity stake of 3PL Ventures Inc. for its flagship production facility in Vernon, BC (the “3PL Facility”).
The Flowr Facility remains fully operational and is expected to increase Avant’s production capabilities by approximately 60%⁽ᴬ⁾, which has the potential to make Avant one of the largest indoor producers of high-quality cannabis in Canada⁽ᴮ⁾. The Company expects to make certain modifications to production processes at the Flowr Facility throughout the 2023 fiscal year to align with Avant’s cultivation methodologies in order to continue striving to produce the premium quality products that its customers demand.
The acquisition of the remaining 50% of 3PL will provide Avant’s wholly owned subsidiary, GreenTec Holdings Ltd., with full ownership of the 3PL Facility, which is expected to generate meaningful cash flows over the course of the 2023 fiscal year. With the buyout of the non-controlling interest in 3PL, the Company will eliminate the shareholder loan of approximately $12.0 million owing to the non-controlling shareholder, F-20 Developments Corp. (“F-20”), which, in accordance with the terms of the shareholders agreement for 3PL, had first priority to receive the majority of 3PL’s operating free cash flow in order to repay this shareholder loan.
Fiscal 2023 Strategic Objectives and Outlook
Upon closing of the acquisitions of Flowr Okanagan and 3PL, Avant’s strategic objectives and outlook for the 2023 year include:
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Increasing production through the Flowr Facility and the 3PL Facility;
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Implementing modifications to the Flowr Facility to facilitate production of Avant premium cannabis flower;
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Fulfilling all Provincial government purchase orders and export demand;
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Exploring new global markets for exporting product, leveraging the Company’s reputation in existing markets, such as Israel and Australia;
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Launching new cultivars from Avant’s extensive library of genetics;
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Continuing to operate in a fiscally responsible manner, while seeking opportunities to reduce the Company’s overall cost of production; and
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Continuing to explore contract growing or acquisition opportunities to the extent that the acquisition of Flowr Okanagan does not completely fulfill unmet customer demand.
Cash and Liquidity
As of November 30, 2022, the Company had approximately $7 million in cash and no interest-bearing debt on the balance sheet. As of the date of this news release, the Company has approximately $6.9 million in cash to continue to fund this expected growth.
All figures reported above with respect to November 30, 2022, are preliminary and are unaudited and subject to change and adjustment as the Company prepares its consolidated financial statements for the years ended November 30, 2022, and November 30, 2021. Accordingly, investors are cautioned not to place undue reliance on the foregoing information. The Company does not intend to provide preliminary results in the future. The preliminary results provided in this news release constitute “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and U.S. securities laws, are based on several assumptions and are subject to a number of risks and uncertainties. Actual results may differ materially. See “Cautionary Statement Regarding Forward-Looking Information” below. All references to “$” in this news release are to Canadian dollars.
Note (A) – This estimate is based on the assumption that the output at the Flowr Facility will be consistent with the production output at Avant’s existing facilities.
Note (B) – This estimate is based on publicly available information on other Licensed Producers, with products for sale on OCS.ca, that are priced in-line with Avant’s flagship brand, BLK MKT or higher.
About Avant Brands Inc.
Avant is an innovative, market-leading premium cannabis company. Avant has multiple operational production facilities across Canada, which produce high-quality, handcrafted cannabis products, based on unique and exceptional cultivars. Avant’s products are distributed via three complementary sales channels: recreational, medical and export. Avant’s recreational consumer brands include: BLK MKT™, Tenzo™, Cognōscente™ and Treehugger™, which are sold in British Columbia, Saskatchewan, Manitoba, Ontario, Atlantic Canada and the territories. The Company’s medical cannabis brand, GreenTec™, is distributed nationwide, directly to qualified patients through its GreenTec Medical portal and through various medical cannabis partners. To learn more about Avant, access the investor presentation, or learn more about its consumer brands, please visit www.avantbrands.ca.
