SAN JOSE, Calif. - TPCO Holding Corp. ('The Parent Company' or 'the Company') (NEO: GRAM) (OTCQX: GRAMF), a leading consumer-focused California cannabis company, announced, its preliminary (unaudited) financial results for the three- ('Q4 2022') and twelve- ('FY 2022') month periods ended December 31, 2022. All amounts are expressed in U.S. dollars.
Q4 and FY 2022 Financial Highlights
Q4 and FY 2022 net sales from continuing operations were $20.0 million and $83.6 million respectively (excluding bulk wholesale business which is shown as discontinued operations)
Gross profit from continuing operations was $6.7 million, or 33% of net sales in for Q4 2022 and $26 million, or 31% of net sales in FY 2022.
Q4 2022 net loss from continuing operations was $41.0 million and a FY 2022 net loss of $237.7 million.
Adjusted EBITDA loss from continuing operations was $14.4 million in Q4 2022 and $71.8 million in FY 2022, respectively. Adjusted EBITDA removes the effects of changes in fair value of financial instruments, impairment charges, and other non-cash items.
Cash and cash equivalents totaled $93.7 million as of December 31, 2022.
Quarterly Highlights and Subsequent Events
Entered into a revised strategic arrangement with Roc Nation LLC ('ROC') and SC Branding, LLC ('SC Branding') under which approximately 7.1 million common shares were returned to the Company, and approximately $33.5 million in top-line costs are expected to be saved over an eight-year period. Additionally, The Parent Company secured an exclusive and royalty-free eight-year license to commercialize Monogram in California.
Announced that the Company had entered into a definitive business combination agreement (the 'Merger Agreement') with Gold Flora, another leading vertically-integrated California cannabis company, to combine in an all-stock merger. The proposed combined company is expected to be strongly positioned as a top 10 brand portfolio by revenue in California, with 20 retail stores by the end of 2023, 12 house brands and broad state-wide coverage. It is expected the combined company, with its comprehensive vertical integration, would achieve between $20-$25 million annualized cost savings, through benefits such as enhanced scaled and supply chain optimization. Details regarding the Merger Agreement, including the strategic benefits and rationale, can be found in the Company's press release dated February 22, 2023.
Extended the Company's license agreement with Mirayo by Santana, a line of premium cannabis products curated by ten-time GRAMMY award-winning guitarist and longtime cannabis advocate Carlos Santana.
In May 2023, Mirayo is expected to introduce its new line of solventless 10mg hash rosin gummies made with all-natural ingredients, which will be available in flavors like Guava, Prickly Pear and Raspberry at the Company's retail locations across California.
Launched Cruisers, a new all-FUN, no-frills brand that puts consumers first and offers everyday value on premium cannabis products. Cruisers combines the Company's existing brands, Fun Uncle and DELI, streamlining these top-performing products into a single consumer-centric destination. By skipping the doldrums of the daily grind, Cruisers transports consumers to that carefree place where the bowl is always full.
Enrolled four participants in the Company's Social Equity Ventures ('SEV') Brand Success Program. CRONJA, Substance & Skewville, Peakz, and Disco Jays by MAKR House will participate in the 12-week program implemented to provide minority-owned brands with guaranteed shelf space and individualized mentorship from the Company's sales, marketing, retail, and operational teams. These brands will learn best practices, operational procedures, and tips that can be applied to any retail outlet nationwide to provide them with the knowledge and opportunity to scale their business, increase brand awareness, build customer loyalty, and expand their retail presence.
Further strengthened the Company's senior management team with the appointment of Roz Lipsey to the role of Chief Operating Officer, effective March 31, 2023.
Management Commentary
'Transforming our business to emerge as a leader in California, as well as a world class brand builder has been our guiding principle throughout 2022,' said Troy Datcher, Chief Executive Officer, and Chairman of The Parent Company. 'To achieve this, we took decisive action and focused the organization company on our strongest and most profitable assets. This focus improved our cost structure, with additional benefit to be realized as we move through the year, significantly improving annual gross margin to 30% compared with only 16% for 2021. I am encouraged by the initial results of our actions and would like to thank our team for their commitment to achieving our goals. We operate in one of the most dynamic and exciting cannabis markets in the world and we must remain nimble and pivot where appropriate to create a more efficient and simplified business to remain competitive.'
Mr. Datcher, continued, 'Earlier this year we announced, in partnership with Roc Nation, that we have restructured our strategic arrangement to significantly reduce our financial commitments and eliminate future dilution for our shareholders while maintaining our successful collaboration.'
Mr. Datcher added, 'Leading the way with innovation and exceptional consumer products, we recently extended our valued partnership with Mirayo by Santana. The authenticity and genuine commitment to delivering the highest-quality products is why Mirayo is a perfect fit in our brand portfolio. We're investing in these types of relationships to connect with consumers and deliver products that meet their needs and we look forward to introducing several new brand developments to drive consumer engagement in the coming months.'
Mr. Datcher, concluded, 'We entered 2023 on solid footing, and expect to see the results of the significant work our team has done continue to positively impact our financials in the first half of the year. Our newly streamlined operations have provided us with the opportunity to take the next step in our evolution through our recently announced transformative agreement with Gold Flora. Together, our business will have the scale, cultivation capabilities, brand portfolio, and capital resources to execute on our mission to create brands and a retail experience that consumers love. The opportunity ahead of us in California is significant and the time is right to bring together two operators that can extract value along each step of the supply chain, capture more margin to drive profitability, and deliver further value to our shareholders.'
About The Parent Company
The Parent Company is a leading consumer-focused, vertically integrated cannabis company with twelve retail locations, one delivery hub and a curated product portfolio, including Monogram by Shawn 'JAY-Z' Carter, Caliva, Mirayo by Santana and Cruisers.
The Parent Company is committed to leveraging its status to help build a more equitable cannabis industry. Its social equity venture fund aims to eliminate systematic barriers to entry and provide minority entrepreneurs with meaningful participation, growth, and leadership opportunities in the multibillion-dollar legal cannabis industry.
Shares of The Parent Company common stock are traded on NEO Exchange under the ticker symbol 'GRAM' and on the OTCQX under the ticker symbol 'GRAMF.'
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Financial Disclosure Advisory
The Company has not yet completed its reporting process for the fourth quarter and year ended December 31, 2022. The preliminary results presented herein are based on the Company's reasonable estimates and the information available to the Company at this time. As such, the Company's actual results may materially vary from the preliminary results presented herein and will not be finalized until the Company reports its final results for the fourth quarter and year ended December 31, 2022. In addition, any statements regarding the Parent Company's estimated financial performance for the fourth quarter and year ended December 31, 2022, does not present all information necessary for an understanding of the Company's financial condition and results of operations as of and for these reporting periods. The preliminary financial results presented herein were not reviewed by The Parent Company's independent registered public accounting firm. The Company expects to delay the filing of its Form 10-K until Monday, April 3, 2023, as the Company and its auditor require additional time to complete the final review of the Company's financial statements and other disclosures in the Form 10-K.
Forward Looking Statements
This press release contains forward-looking information within the meaning of applicable securities legislation which reflects The Parent Company's current expectations regarding future events. The words 'will', 'expects', 'intends', 'believes' and similar expressions are often intended to identify forward looking information, although not all forward-looking information contains these identifying words.
Specific forward-looking information contained in this press release includes, but is not limited to the Company's (i) future financial performance, including, without limitation, statements regarding the Company's expected reduction in costs and timing thereof; (ii) capacity to achieve profitability; (iii) ability of The Parent Company to execute on its growth strategies, including those associated with the recently extended license agreement for the Mirayo by Santana brand; (iv) statements relating to the proposed combination with Gold Flora, including potential synergies associated with that transaction and prospects of the combined operation,(v) expectations regarding future corporate development activities and (vii) the expected timing of the filing of the Company's Form 10-K. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond The Parent Company's control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward looking information. Such risks and uncertainties include, but are not limited to: changes in general economic conditions including the impact of increasing inflation, the continued significant price compression in flower and distillate oil in the California market, competition in both our wholesale and omni-channel retail channels, business and political conditions, changes in applicable laws, the U.S. and Canadian regulatory landscapes and enforcement related to cannabis, changes in public opinion and perception of the cannabis industry, reliance on the expertise and judgment of senior management, as well as the factors discussed under the heading 'Risk Factors' in The Parent Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 29, 2023 and in the Company's periodic reports subsequently filed with the SEC and in the Company's filings on SEDAR at www.sedar.com. The Parent Company undertakes no obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Contact:
Email: investor@theparent.co
TPCO HOLDING CORP. 
