Avant Q2 FY23 Net Revenue Grows 96% YoY, What About Adjusted EBITDA?

Avant Brands Inc AVTBF AVNT((FRA:1BUP) released its financial results for the second quarter ended May 31, 2023, revealing net revenue of net revenue of CA$8 million ($6 million), an increase of 96% compared to CA$4.1 million in Q2 fiscal 2022.
Q2 Fiscal 2023 Financial Highlights

• Gross profit of of CA$3.3 million, an increase of 294% compared to CA$850,000 in Q2 fiscal 2022.

• Adjusted EBITDA of CA$1.7 million, an increase of CA$2.7 million compared to negative CA$541,000 in Q2 fiscal 2022.

• Net and comprehensive loss of CA$390,000 compared to loss of CA$3.8 million in Q2 fiscal 2022.

  At the end of the period, the company had approximately CA$781,000 in cash and approximately CA$16.7 million in working capital.

Credit Facility

On July 17, 2023, the company completed the closing of a CA$3.5 million credit facility, which will be secured by the real-estate of the company's non-operational and non-licensed real property (the GreenTec BP in-construction facility) owned by GreenTec Holdings Ltd. and guaranteed by certain subsidiaries of the company, including 3PL, Flowr Okanagan and GreenTec Holdings. The credit facility will bear an annual interest rate of 15%, as will be adjusted for any upward change in the prime rate from 8.25% at the time of any advance, with a 3-year amortization period commencing as the credit facility is drawn upon in tranches of a minimum amount of CA$500,000, subject to the satisfaction of customary conditions precedent, with a condition that Avant completes a minimum draw-down of CA$500,000 by July 31, 2023, subject to the satisfaction of customary conditions precedent. In connection with closing of the credit facility, the company also issued 1.75 million common share purchase warrants to the lender to acquire common shares in the capital of the company at an exercise price of CA$0.30 per share on or before July 17, 2026. The warrants will vest and become exercisable in accordance with the draw down schedule for the credit facility.

Desjardins Securities Inc. Claim

On May 25, 2023, the company received a statement of claim from Desjardins Securities Inc. alleging damages (of approximately CA$1 million) for breach of contract claiming that they were not paid for work they did relating to the potential acquisition of The Flowr Corporation or its affiliates. Desjardins was engaged on a success-based fee structure by Avant on March 15, 2022 for a potential transaction where Avant would acquire Flowr in an all-share transaction (prior to its restructuring process). Avant and Flowr Corp could not come to agreeable terms and negotiations were terminated on April 23, 2022. The engagement with Desjardins had a 6-month tail-period which would have expired on October 23, 2022.

Subsequently, in February 2023, a 50% owned joint venture of the company, Avant K1, acquired Flowr in connection with the proceedings under the Companies' Creditors Arrangement Act ("CCAA") for Flowr. Subsequent to that, in March 2023, nearly a full year following the company's engagement of Desjardins in connection with the failed transaction, the company acquired the remaining outstanding shares of Avant K1. According to Avant, Desjardins did minimal work in connection with the failed transaction and had absolutely no involvement in the eventual acquisition of Flowr by Avant K1 in connection with the CCAA proceedings or the company's subsequent acquisition of Avant K1. Avant stated that the claims made by Desjardins are baseless and that intends to defend itself vigorously.

Benzinga Cannabis Capital Conference

The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

Photo: Benzinga edit with photos by Kindel Media on Pexels

Related News

Why A National Cannabis Organization Sacked Half Its Staff, CEO Turnovers And More Exec Changes