Delta 9 Reports Financials for Q3 2021

Published: November 16, 2021

Delta 9 Reports Financials for Q3 2021

DELTA 9 CANNABIS INC. announced financial and operating results for the three-month and nine-month period ending September 30, 2021.

Financial Highlights for the three-month period ending September 30, 2021

  • Net revenue of $15.2 million for the third quarter of 2021, an increase of 16%, from $13.1 million for the same quarter last year.
  • Gross profit of $4.8 million for the third quarter of 2021, an increase of 55%, from $3.1 million for the same quarter last year.
  • Net loss from operations of $(55,031) for the third quarter of 2021 versus a loss from operations of $(4,578,729) for the same quarter last year.
  • Adjusted EBITDA of $191,056 for the third quarter of 2021 versus an adjusted EBITDA of $210,756 million for the same quarter last year.

Financial Highlights for the nine-month period ending September 30, 2021

  • Net revenue of $45.2 million for the first nine months of 2021, an increase of 19%, from $37.9 million for the same period last year.
  • Gross profit of $13.4 million for the first nine months of 2021, an increase of 16%, from $11.6 million for the same period last year.
  • Net loss from operations of $(4.1) million for the first nine months of 2021 versus a net income loss from operations of $(2.7) million for the same period last year.
  • Adjusted EBITDA of $1.4 million for the first nine months of 2021 versus an adjusted EBITDA of $1.4 million for the same period last year.

“We were pleased to be recognized by the Globe and Mail’s annual survey as the 7th fastest growing company in Canada with a three-year revenue growth rate of 5,413%. Delta 9’s annual revenues have grown from less than $1 Million in 2017 to over $52 Million in 2020, and we continue to see growth trending in 2021,” said John Arbuthnot, CEO. “In the third quarter of 2021 we have seen a degree of seasonality and timing issues relating to provincial government’s purchasing patterns affecting our wholesale business and impacting sequential revenue growth. We remain bullish that the remainder of 2021 looks to outperform last year’s results.”

3rd Quarter and Subsequent Operational Highlights

  • Delta 9 renewed its normal course issuer bid (NCIB). Under the NCIB, the Company can purchase: (i) up to an aggregate of 6,827,032 common shares of the public float; and (ii) up to an aggregate of $1,180,000 principal amount of 8.5% unsecured convertible debentures of the Company. The Company sought approval of the NCIB because it believes that, from time to time, the market price of the Common Shares and Debentures may not fully reflect the value of the Common Shares and Debentures. The Company believes that, in such circumstances, the purchase of Common Shares and Debentures represents an accretive use of capital.
  • Delta 9 placed 7th on the 2021 Globe and Mail’s Report on Business ranking of Canada’s Top Growing Companies. Delta 9 Cannabis earned its spot with a three-year revenue growth rate of 5,413% with revenues growing from under $1 million in 2017 to $52 million in 2020. The editorial ranking aims to celebrate entrepreneurial achievement in Canada by identifying and amplifying the success of growth-minded, independent businesses in Canada.
  • Delta 9 opened four cannabis retail stores this quarter with two in Edmonton, Alberta, and two in Manitoba, (Winnipeg and Selkirk). Delta 9 now has 16 operating cannabis retail stores with eleven in Manitoba, four in Alberta and one in Saskatchewan. Delta 9 continues to make progress on its goal of having 20 stores open in the near term. Delta 9 will accomplish this through select strategic acquisition targets and a focus on retail store build-outs at convenient and high traffic shopping locations. This growth strategy has been a successful part of the Company’s overall vertical integration strategy.
  • Delta 9 entered into a partnership with Cultivatd to compliment the Company’s B2B sales team by helping to target Grow Pod sales opportunities in Canada and the United States. Cultivatd is an indoor farming technology broker that connects people and businesses with the proper vertical farming technology for their needs. Cultivatd currently has $200 million of quotes in the pipeline with prospective clients in Canada, the United States and Australia.

Summary of Quarterly Results:

Consolidated Statement of Net Income (Loss) Q4 2020
(Restated)
Q1 2021 Q2 2021 Q3 2021
Revenue $14,149,717 $13,227,540 $16,750,695 $15,192,268
Cost of Sales 7,879,094 9,539,620 11,817,720 10,425,214
Gross Profit Before Unrealized Gain From Changes In Biological Assets 6,270,623 3,687,920 4,932,975 4,767,054
Unrealized gain from changes in fair value of biological assets (Net) (873,326 ) (736,225 ) (42,861 ) 1,690,676
Gross Profit $5,397,297 $2,951,695 $4,890,114 $6,457,730
Expenses
General and Administrative 3,021,465 3,517,490 2,742,066 3,687,945
Sales and Marketing 2,091,947 2,176,965 2,537,879 2,649,302
Share Based Compensation 353,798 501,370 413,716 175,514
Total Operating Expenses $5,467,210 $6,195,825 $5,693,661 $6,512,761
Adjusted EBITDA (Loss) 1 2,553,187 6,199 1,199,876 191,056
Income (Loss) from Operations $(69,912 ) $(3,244,130 ) $(803,547 ) $(55,031 )
Other Income/ Expenses (747,084 ) (755,851 ) (736,367 ) (788,741 )
Net Income (Loss) $(816,996 ) $(3,999,981 ) $(1,138,899 ) $(843,772 )
Basic and Diluted Earnings (Loss) Per Share $(0.01 ) $(0.04 ) $(0.01 ) $(0.01 )

A comprehensive discussion of Delta 9’s financial position and results of operations is provided in the Company’s Management Discussion & Analysis for the three-month and nine-month period ending September 30, 2021 filed on SEDAR on November 15, 2021 and can be found at www.sedar.com.

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