BOCA RATON, Fla.

,

May 18, 2021

/PRNewswire/ — Stem Holdings, Inc., d/b/a Driven By Stem (“Stem” or the “Company”), a leading omnichannel, vertically-integrated cannabis branded products and technology company with state-of-the-art cultivation, processing, extraction, retail, distribution, and delivery-as-a-service (DaaS) operations throughout

the United States

, today reported its financial results for the first calendar quarter ended

March 31, 2021

.

Highlights for the quarter ended

March 31, 2021

:

• Gross revenue increased to a record
  
  $12.4 million
  
  from
  
  $2.7 million
  
  for the three months ended
  
  March 31, 2020
  
  .
• Gross profit increase of 269% to
  
  $2.7 million
  
  as compared to
  
  $0.73 million
  
  for the comparable period in the previous year.
• Retail gross revenue comps +49.5% vs. 2020, with 2,614 transactions in one day on 4-20, the annual celebration day for cannabis.
• Budee™ DaaS revenues increased vs. three months ended
  
  March 31, 2020
  
  in
  
  California
  
  and is poised to launch in
  
  Oregon
  
  in May, followed by
  
  Michigan
  
  in September.
• Cultivation yields increased 7.8% vs. three months ended
  
  March 31, 2020
  
  , and our retail footprint for our brands increased by 32%.
• Adjusted EBITDA of
  
  $1.7 million
  
  an increase from (
  
  $5.8 million
  
  ) for the three months ended
  
  March 31, 2020
  
  reflects ongoing operational improvements.
• Subsequent to the quarter end, the Company closed on a
  
  C$10.3 million
  
  public offering, previously announced
  
  December 14, 2020
  
  , led by Canaccord Genuity.

Operational Updates

• Budee
  
  ™
  
  delivery is poised to launch in
  
  Oregon
  
  in
  
  May 2021
  
  .
• New retail dispensary to open in
  
  September 2021
  
  in
  
  Michigan
  
  .
• With retail opening in
  
  Michigan
  
  ,
  
  Budee DaaS
  
  will launch for expanded state-wide market footprint by Labor Day, its third delivery state.
• Launch of Yerba Buena
  
  ™
  
  brand cannabis flower in
  
  California
  
  , the first expansion market for the brand.

Management Commentary


“Our record sales and the beginning of the successful integration of Driven Deliveries Inc. (“Driven”) has positioned us for greater growth as we expand the footprint of our retail, delivery, and branded product operations in high-growth markets,” stated

Adam Berk

, CEO of the Company. “Full integration and streamlined execution and expansion of Driven’s technology will continue over the next six months, to be completed by the end of 2021. We are leveraging our combined strength by simultaneously increasing market share of our own retail operations, as well as our branded products,” he continued. “Our plans for expansion in

Michigan

both at retail and with Budee delivery by Labor Day, as well as our ongoing efforts in

New York

, bode well for accretive growth throughout 2021. We are excited about our progress and driving synergies for continued growth in 2022.”

Mr. Berk continued, “We have continued to strengthen our balance sheet and to add strong management talent to our team to ensure that we can manage our ‘Farm-to-Home

™

‘ strategy in all current and expanded markets. We also continue to improve gross margin and cash conversion as we continue to support our initiatives building shareholder value.”

Financing


On

April 23, 2021

, the Company closed a

C$10.3 million

public offering announced in

December 2020

(the Offering”), of units of the Company (the “Units”) at a price of

$.55

per Unit.  Each Unit was comprised of one share of common stock of the Company and one share purchase warrant of the Company (a “Warrant”). Each Warrant is exercisable at an exercise price of

C$0.68

until

April 23, 2023

. The Offering was led by Canaccord Genuity Corp. The offering included a short-form prospectus and an effective S-1.

Expansion of Consumer Packaged Goods Business

• The Company’s Yerba Buena
  
  ™
  
  brand was launched in
  
  California
  
  , the first of our expansion markets for this top-shelf Oregon brand. It rapidly became the second-highest selling brand on our Budee platform covering 92% of consumers in the state, as well as at our Foothill Health and Wellness dispensary in Shingle Spring, CA.
• The Cannavore brand of edibles expanded from its original line of Salted Caramel Chews to new flavors for the holidays including the launching of Irish Cream on St. Patrick’s Day, and experienced gains in our distribution channels for those dispensaries carrying TJ’s Gardens and Yerba Buena flower. The brand will be launching a new line of calorie-free, zero-refined sugar THC-infused gummies later in June which are unique to the market, meeting demand for alternative candies to high-calorie, sugary products. They are gluten-free, vegan, and suitable for diabetics with a low glycemic index and are all natural.

Retail Business Development

• Comparable dispensary sales growth for the quarter was 49.5% vs. 2020, reaching a record of 2,614 transactions on 4-20, the annual celebration day for cannabis.
• The Company increased its retail footprint for its brands in other dispensaries by 32% as it drives market share in
  
  Oregon
  
  and
  
  Nevada
  
  . Additional distribution white space remains to further accelerate growth.
• Our Budee delivery business grew in the quarter vs. the three months ended
  
  March 31, 2020
  
  . This success includes adding over a dozen best-in-class brands in
  
  California
  
  during the quarter to enthuse consumers and increase on-line activation. This includes Premium Vape from Red, White and Bloom brands (CSE: RWB) (OTC: RWBYF); Caliva Flower, Deli Prerolls, Fund Uncle Prerolls, Yummi Karma, and Rehab by Yummi, and Chill Chocolates from The Parent Co. (NEO: GRAM.U) (OTCQX: GRAMF); Chong’s Cannabis; Dosist Pens, Tablets and Edibles; Kushy Punch Gummies; Loudpack Farms, and as mentioned, the Company’s Yerba Buena™ flower.

The Company continues its plans for accretive new product innovation with a queue of innovative products scheduled for launch throughout 2021.

About Stem Holdings, Inc.



Stem is a leading omnichannel, vertically-integrated cannabis branded products and technology company with state-of-the-art cultivation, processing, extraction, retail, distribution, and delivery-as-a-service (DaaS) operations throughout the United States . Stem’s family of award-winning brands includes TJ’s Gardens

™

, TravisxJames

™

, and Yerba Buena

™

flower and extracts; Cannavore

™

edible confections; Doseology

™

a CBD mass-market brand launching in 2021; as well as DaaS brands Budee

™

and Ganjarunner

™

through the acquisition of Driven Deliveries. Budee

™

and Ganjarunner

™

e-commerce platforms provide direct-to consumer proprietary logistics and an omnichannel UX (user experience)/CX (customer experience).

Forward-Looking Statements


This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company’s current expectations.  When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release includes information relating to: (i) the implementation of the Company’s business plan; (ii) the expansion of Stem’s brands and products into other markets; (iii) expected improvements to productivity; (iv) the expected launch of new brands and products by Stem; and (v) expected full integration of Driven into the business of Stem.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following risks: risks associated with the implementation of the Company’s business plan and matters relating thereto, risks associated with the cannabis industry, competition, regulatory change, the need for additional financing, reliance on key personnel, the potential for conflicts of interest among certain officers or directors, insurance, intellectual property and reliable supply chains; and risks related to the Company and its business generally. Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date that statements are made, and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Investors are cautioned against attributing undue certainty to forward-looking statements.

Non-GAAP Measures


This news release contains references to certain measures that are not defined under a body of generally accepted accounting principles for publicly accountable entities in

the United States

, which is commonly referred to as “GAAP” or “U.S. GAAP”. For this purpose, a non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. These non-GAAP measures are not recognized measures under GAAP, do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement GAAP measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under U.S. GAAP.

The Company uses non-GAAP measures, including adjusted EBITDA to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on GAAP measures. The Company believes that investors, securities analysts and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period and assess the Company’s ability to meet its future debt service, capital expenditure and working capital requirements.

The term “adjusted EBITDA” consists of net (loss) income and excludes interest, taxes, depreciation, amortization, share-based compensation, impairment of assets, acquisition costs, legal settlement costs, restructuring charges, and adjustments for fair value of biological assets, warrant liabilities, and stock appreciation rights. The most directly comparable measure to adjusted EBITDA calculated in accordance with GAAP is net (loss) income.

For further information, please contact:



Media Contact:


Mauria Betts

STEM HOLDINGS, INC.


[email protected]

971.319.0303

Investor Contact:


Valter Pinto / Elizabeth Barker


[email protected]




212.896.1254 / 212-896-1203

View original content to download multimedia:

http://www.prnewswire.com/news-releases/stem-holdings-dba-driven-by-stem-reports-record-gross-revenue-of-12-4-million-for-cy21-first-quarter-results-301293306.html

SOURCE Stem Holdings, Inc.