Steve Hubbard, Interim CEO and CFO of Stem, commented, “Our financial results during our fiscal first quarter 2022 reflects a period of transition as we divested our e-commerce and delivery wholly owned subsidiary on December 15, 2021. The recent business decisions we have made with Driven Deliveries and other non-core assets puts us on a path to positive working capital. We have decided to focus the majority of our resources on cultivation facilities in Oregon and retail stores in Oregon and California where, in particular, we have significant room for growth in the cultivation operations as we have recently been producing at less than 50% capacity.”
Financial Results for the Fiscal First Quarter 2022:
Revenue for the fiscal first quarter 2022 totaled $4.9 million, a decrease of 21% as compared to $6.2 million for the same period the year prior. Net revenue after discounts and returns totaled $4.2 million, a decrease of 20.1% as compared to $5.3 million for the same period the year prior, a decrease in retail sales resulting from general market conditions.
During the fiscal first quarter 2022, the Company reported impairment expense of $800 thousand predominately related to the impairment of investments and a non-refundable deposit.
The Company had other income during the three months ended December 31, 2021, of $2.4 million compared to other expenses of $.3 million for the comparable period of 2020, the increase in other income was primarily related to the change in fair value of warrant liabilities. In the three months ended December 31, 2021, we had recognized a loss from discontinued operations of $1.745 million related to the divesture of Driven compared to a loss of $.144 million in the comparable period of the prior year.
On December 31, 2021, we had working capital of approximately $1.3 million, which included cash and cash equivalents of $3.3 million. We reported a net loss of approximately $4.2 million and our net cash used in operating expenses totaled $2.0 million, our cash used in investing activities was $0.1 million and cash flows used in financing activities totaled $0.1 million. Total liabilities as of December 31, 2021 were reduced to $14.2 million as compared to $23 million as of September 30, 2021.
About Stem Holdings, Inc.
Stem is a multi-state, vertically integrated, cannabis company that, through its subsidiaries and its investments, is engaged in the cultivation, processing, packaging, distribution and branding of cannabis, hemp and their derivatives, including oils, edibles, concentrates. Additionally, the Company purchases, improves, leases, operates, and invests in properties for use in the production, distribution and sales of cannabis and cannabis-infused products licensed under the laws of the states of Oregon, Nevada, California, Massachusetts, and New York. As of December 31, 2021, Stem had ownership interests in 24 state issued cannabis licenses including nine (9) licenses for cannabis cultivation, three (3) licenses for cannabis processing, two (2) licenses for cannabis wholesale distribution, three (3) licenses for hemp production and seven (7) cannabis dispensary licenses.
Forward-Looking Statements
This news release contains forward-looking statements and information (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates, statements regarding plans, goals, objectives, intentions and expectations with respect to the future business, operations, expected financial position as a result of the divestiture of Driven Deliveries, and phrases containing words such as “ongoing”, “estimates”, “expects”, or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions “will”, “may”, “could”, or “should” occur or be achieved, or comparable terminology referring to future events or results. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and the other risks involved in the mineral exploration and development industry. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law.
Investor Contact:
KCSA Strategic Communications
Valter Pinto, Managing Director
+1 212.896.1254
valter@kcsa.com
Media Contact:
Mauria Betts
Director of Branding and Public Relations
971.266.1908
mauria@stemholdings.com
