Tilray Brands, Inc DEFA14A, filed Feb 18, 2021

Tilray Brands, Inc. (TLRY)

DEFA14A 2021-02-18

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	Three months ended December 31,									Twelve months ended December 31,

	2020		2019		$ Change			% Change		2020		2019		$ Change			% Change
Cannabis
Adult-use	$	25,362	$	17,005	$	8,357			49%	$	83,828	$	55,763	$	28,065			50%
Canada - medical		4,204		3,333		871			26%		15,489		12,556		2,933			23%
International - medical		11,666		4,008		7,658			191%		33,886		13,378		20,508			153%
Bulk		—		3,924		(3,924	)		(100)%		402		25,450		(25,048	)		(98)%

Total Cannabis revenue	$	41,232	$	28,270	$	12,962			46%	$	133,605	$	1,07,147	$	26,458			25%

Hemp		15,328		18,665		(3,337	)		(18)%		76,877		59,832		17,045			28%

Total	$	56,560	$	46,935	$	9,625			21%	$	210,482	$	166,979	$	43,503			26%

Excise duties included in revenue	$	5,818	$	4,429	$	1,389			31%	$	19,143	$	13,136	$	6,007			46%


	Three months ended December 31,						Year ended December 31,
	2020			2019			2020			2019
Revenue	$	56,560		$	46,936		$	210,482		$	166,979
Cost of sales		39,918			103,943			185,827			190,475

Gross profit		16,642			(57,007	)		24,655			(23,496	)

General and administrative expenses		22,597			42,836			85,883			110,903
Sales and marketing expenses		6,638			22,741			54,666			63,813
Research and development expenses		928			2,450			4,411			9,172
Depreciation and amortization expenses		3,369			4,150			13,722			11,607
Impairment of assets		2,904			112,070			61,114			112,070
Acquisition-related expenses (income), net		—			(24,861	)		—			(31,427	)
Loss from equity method investments		1,488			2,667			5,983			4,504

Operating loss		(21,282	)		(219,060	)		(201,124	)		(304,138	)

Foreign exchange (gain) loss, net		(18,593	)		(7,097	)		(13,169	)		(5,944	)
Change in fair value of warrant liability		49,011			—			100,286			—
Gain on debt conversion		(61,118	)		—			(61,118	)		—
Interest expenses, net		9,072			8,685			39,219			34,690
Finance income from ABG		—			(207	)		—			(764	)
Other expense (income), net		5,387			3,572			10,333			(2,501	)

Loss before income taxes		(5,041	)		(224,013	)		(276,675	)		(329,619	)

Deferred income tax (recoveries)		(1,363	)		(4,860	)		(5,376	)		(8,847	)
Current income tax (recoveries) expenses		(731	)		(5	)		(226	)		397

Net loss	$	(2,947	)	$	(219,148	)	$	(271,073	)	$	(321,169	)

Net loss per share - basic and diluted	$	(0.02	)	$	(2.14	)	$	(2.15	)	$	(3.20	)
Weighted average shares used in computation of net loss per share - basis and diluted		143,819,967			102,405,607			126,041,710			100,455,677
Net loss		(2,947	)		(219,148	)		(271,073	)		(321,169	)

Foreign currency translation (loss) gain, net		5,687			7,588			(1,497	)		5,174
Unrealised loss on investments		(171	)		(101	)		(17	)		(21	)

Other comprehensive income (loss)		5,516			7,487			(1,514	)		5,153

Comprehensive income (loss)	$	2,569		$	(211,661	)	$	(272,587	)	$	316,016


	December 31, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	189,702		$	96,791
Accounts receivable, net of allowance for credit losses of $887 and provision for sales returns of $1,651 (December 31, 2019 - $615 and $1,400, respectively)		29,033			36,202
Inventory		93,645			87,861
Prepayments and other current assets		34,640			38,173

Total current assets		347,020			259,027

Property and equipment, net		199,559			184,217
Operating lease, right-of-use assets		17,985			17,514
Intangible assets, net		186,445			228,828
Goodwill		166,915			163,251
Equity method investments		9,300			11,448
Other investments		14,369			24,184
Other assets		4,356			7,861

Total assets	$	945,949		$	896,330

Liabilities
Current liabilities
Accounts payable		17,776			39,125
Accrued expenses and other current liabilities		39,946			50,829
Accrued lease obligations		2,913			2,473
Warrant liability		120,647			—

Total current liabilities		181,282			92,427

Accrued lease obligations		30,623			29,407
Deferred tax liability		49,274			53,363
Convertible notes, net of issuance costs		257,789			430,210
Senior Facility, net of transaction costs		48,470			—
Other liabilities		4,612			5,652

Total liabilities	$	572,050		$	611,059

Commitments and contingencies
Stockholders’ equity
Convertible Preferred stock ($0.0001 par value, 10,000,000 shares authorized and none issued or outstanding at December 31, 2018; none authorized, issued or outstanding at December 31, 2017)		—			—
Class 1 common stock ($0.0001 par value, 233,333,333 and 250,000,000 shares authorized; 0 and 16,666,667 shares issued and outstanding)		—			2
Class 2 common stock ($0.0001 par value; 500,000,000 shares authorized; 158,456,087 and 86,114,558 shares issued and outstanding, respectively)		16			9
Class 3 common stock ($0.0001 par value, none authorized, issued or outstanding at December 31, 2018; none authorized, issued or outstanding at December 31, 2017)
Additional paid-in capital		1,095,781			705,671
Accumulated other comprehensive income		8,205			9,719
Accumulated deficit		(730,103	)		(430,130	)

Total stockholders’ equity	$	373,899		$	285,271

Total liabilities and stockholders’ equity	$	945,949		$	896,330


	Three months ended December 31,						Year ended December 31,
	2020			2019			2020			2019
Adjusted EBITDA reconciliation:
Net loss	$	(2,949	)	$	(219,148	)	$	(271,073	)	$	(321,169	)
Inventory valuation adjustments		2,303			67,857			38,419			68,583
Severance costs		1,288			—			4,864			—
Depreciation and amortization expenses		4,422			5,389			18,654			15,849
Stock-based compensation expenses		6,312			9,539			29,716			31,842
Other stock-based compensation related expenses		—			8,411			—			8,411
Gain on debt conversion		(61,118	)		—			(61,118	)		—
Impairment of assets		2,904			112,070			61,114			112,070
Loss from equity method investments		1,488			2,667			5,983			4,504
Foreign exchange (gain) loss, net		(18,593	)		(7,097	)		(13,169	)		(5,944	)
Change in fair value of warrant liability		49,011			—			100,286			—
Interest expenses, net		9,072			8,685			39,219			34,690
Finance income from ABG		—			(207	)		—			(764	)
Loss from disposal of property and equipment		958			2,324			1,851			2,436
Other expenses (income), net		9,244			(21,177	)		20,573			(33,928	)
Amortization of inventory step-up		—			—			—			2,041
Deferred income tax recoveries		(1,363	)		(4,860	)		(5,376	)		(8,847	)
Current income tax (recoveries) expenses		(731	)		(5	)		(226	)		397

Adjusted EBITDA	$	2,248		$	(35,552	)	$	(30,283	)	$	(89,829	)


	For the three months ended December 31,
	Cannabis					Hemp					Total
	2020		2019			2020			2019		2020		2019
Revenue	$	41,232	$	28,270		$	15,328		$	18,665	$	56,560	$	46,935
Cost of sales
Product costs		26,152		23,864			9,900			12,221		36,052		36,085
Inventory valuation adjustments		2,753		62,922			(450	)		4,935		2,303		67,857
Stock-based compensation expenses		1,292		—			271			—		1,563		—

Gross profit (loss)		11,035		(58,516	)		5,607			1,509		16,642		(57,007	)
Inventory valuation adjustments		2,753		62,922			(450	)		4,935		2,303		67,857
Stock-based compensation expenses		1,292		—			271			—		1,563		—

Gross profit, excluding inventory valuation adjustments and stock-based compensation expenses	$	15,080	$	4,406		$	5,428		$	6,444	$	20,508	$	10,850

Gross margin, excluding inventory valuation adjustments and stock-based compensation expenses		37%		16%			35%			35%		36%		23%


	For the year ended December 31,
	Cannabis						Hemp				Total
	2020			2019			2020		2019		2020		2019
Revenue	$	133,605		$	107,147		$	76,877	$	59,832	$	210,482	$	166,979
Cost of sales
Product costs		101,509			84,876			44,336		35,395	$	145,845	$	120,271
Inventory valuation adjustments		34,379			63,532			4,040		5,050	$	38,419	$	68,582
Stock-based compensation expenses		1,292			1,041			271		581		1,563		1,622

Gross profit (loss)		(3,575	)		(42,302	)		28,230		18,806	$	24,655	$	(23,496	)
Inventory valuation adjustments		34,379			63,532			4,040		5,050	$	38,419	$	68,582
Amortization of inventory step-up		—			—			—		2,041	$	—	$	2,041
Stock-based compensation expenses		1,292			1,041			271		581	$	1,563	$	1,622

Gross profit, excluding inventory valuation adjustments and stock-based compensation expenses	$	32,096		$	22,271		$	32,541	$	26,478	$	64,637	$	48,749

Gross margin, excluding inventory valuation adjustments and stock-based compensation expenses		23%			20%			42%		43%		30%		28%




PRESS RELEASE		February 17, 2021




PRESS RELEASE		February 17, 2021




PRESS RELEASE		February 17, 2021




PRESS RELEASE		February 17, 2021