SOL Global Provides Audited Financials for Year Ended November 2021
SOL Global Investments Corp. (“SOL Global” or the “Company”) (CSE: SOL) (OTCPK: SOLCF) (Frankfurt: 9SB) today reported fourth quarter financial results and audited financial results for the year ended November 30, 2021. The Company is also pleased to present a general operational update regarding its assets and investments. All figures in this press release are in Canadian dollars, unless otherwise indicated.
Audited Year-End Results
For the year-ended November 30, 2021, the Company recorded a positive net income of $159 million vs. year-ended November 30, 2020, income of $98 million. This represents a favourable change of $61 million.
Total gain from investments totaled $307 million for the year-ended November 30, 2021, compared to a gain of $139.0 million for the year-ended November 30, 2020. This represents a favourable change of $168 million between periods.
The Net Asset Value (“NAV”) per share is equal to $6.29 at November 30, 2021 vs. $3.51 at November 30, 2020. SOL Global achieved realized liquidity events for several of its largest investments, primarily in the cannabis sector, resulting in the Company’s best performance to date. The market confirmed the value of the Company’s holdings and further demonstrated the strength of its private markets investment strategy.
Throughout the year, the Company divested a large percentage of cannabis assets while valuations were favourable and re-diversified from cannabis by investing in new thematic trends in line with its diversified growth strategy.
The Company’s financial statements for the quarter ended February 28, 2022, will be released on April 30, 2022
Forward looking guidance into the Company’s Q1 results:
On December 3, 2021 the Company repurchased for cancellation a total of 7,407,389 of its common shares (“Common Shares”) at a price of $4.05 per Common Share pursuant to its substantial issuer bid, which expired on November 26, 2021, resulting in $30 million of capital being returned to its shareholders.
On January 14,2022 the Company, through its wholly owned subsidiary, completed its US$7,456,221 investment in Andretti Acquisition Corp. (“Andretti”), a special purpose acquisition company, which began trading on the NYSE (NYSE:WNNR) on January 13, 2022. As a sponsor co-investor of Andretti’s initial public offering, the Company’s wholly owned subsidiary received 1,430,923 founder shares.
In September 2021, the Company, through its wholly owned subsidiary, invested US$11.5 million in an investment vehicle for the purpose of investing in Core Scientific Holding Co. (“Core Scientific”), a large-scale net carbon-neutral blockchain infrastructure provider and miner of digital assets in North America. As part of this investment, the Company’s wholly owned subsidiary also earned 10% interest on the initial investment amount. On January 19, 2022, Power and Digital Infrastructure Acquisition Corp., a NASQAQ-listed special purpose acquisition company, and Core Scientific, completed its previously announced merger. The combined company, Core Scientific Inc. (NASDAQ:CORZ), began trading on the NASDAQ on January 20, 2022. As of February 28, 2022, the Company, through its wholly owned subsidiary, held 1,461,928 common shares in the capital of Core Scientific Inc.
On February 18, 2022, the Company acquired an additional 4,830,000 common shares in the capital of Jones Soda Co. (“JDSA”) in connection with the reverse takeover of Pinestar Gold Inc. and the listing of the common shares of JDSA (“JSDA Shares”), as the resulting issuer, on the Canadian Securities Exchange (the “Transaction”). Upon the completion of the Transaction, SOL Global held approximately 18.7% of the issued and outstanding JSDA Shares on a non-diluted basis.
Simply Better Brands Operational Update
Simply Better Brands Corp. (“SBBC”), one of the Company’s core investment holdings, recently announced that its preliminary unaudited net sales for 2021 are expected to be between US$15.8 and US$16.0 million over net sales of US$13.8 million achieved in 2020. SBBC’s audited financials for the period ended December 31, 2021, are scheduled to be filed on April 30, 2022. Additionally, for 2022, SBBC’s expectation for consolidated net sales represent a 200% increase over its preliminary unaudited net sales for 2021 with positive EBITDA.
Other Highlights
On September 3, 2021, the Company announced the closing of its previously disclosed settlement of litigation with 1235 Fund LP.
House of Lithium Ltd. (“House of Lithium”), an electric mobility and green sustainability company that spun-off from SOL Global in 2021, continued to advance towards its upcoming public listing. Some of the assets in House of Lithium include the following:
Damon Motors Inc. (“Damon”), which closed its US$30 million financing led by House of Lithium and broke ground on its new production facility in British Columbia. It also unveiled its new HyperFighter family of motorcycles at CES in January. The HyperFighter is derived from Damon’s first multi-award-winning bike, HyperSport, and is built upon the company’s groundbreaking HyperDrive™ technology. HyperDrive is the world’s first monocoque-constructed, 100 percent electric, multi-variant powertrain; which also received a CES 2022 Innovation Award.
Tevva Motors Ltd. (“Tevva”), which appointed industry veteran Ian Harnett as its new Chairman, effective January 1, 2022 continues to develop its long-range medium to heavy-duty electric trucks with hydrogen fuel-cell range extension technology. It has already delivered many working prototypes to customers and outpaced much of the competition in the EV delivery space. During the year, Tevva closed a US$57 million oversubscribed financing with participation from House of Lithium. Tevva has secured contracts with F500 multinational corporations and governments to deploy thousands of trucks per year beginning in 2022.
Reby Inc. (“Reby”), which expanded to 17 cities within southern Europe and cemented itself as the greenest company amongst its peers, using more than 95% recycled material in its vehicles. Reby has 8 platform partners and 20,000 scooters and mopeds. Reby’s founder and chairman, Pep Gomez, is a repeat tech superstar. Previously (at age 18), Pep founded and was the Chairman and CEO of Fever (www.feverup.com), the world’s leading event discovery platform, which recently raised US$227 million in a funding round led by Goldman Sachs Group Inc.Pep was also recently recognized in Forbes Spain 30 under 30.
Kiwi Campus Inc. (“Kiwi”), which closed its US$7.5 million financing led by Headline with participation from House of Lithium. During the year, it signed a contract with food services and hospitality giant, Sodexo, to deploy over 1,200 delivery robots across 50 college campuses in the United States. The expansion puts Kiwi at the forefront of the budding last mile delivery robotics industry. It also signed a deal with the online fulfillment app, Careem, to launch 1,200 delivery robots in Dubai.
On March 29, 2022, Core Scientific Inc. reported its consolidated financial results for the fiscal year ended December 31, 2021, which was highlighted by revenue of US$544.5 million, net income of US$47.3 million and adjusted EBITDA of US$238.9 million.
Since prior to the COVID-19 pandemic, SOL Global was working on diversifying its investments by entering the real estate market. SOL Global, through a majority-owned subsidiary, acquired three properties in the Wynwood neighbourhood of Miami, which have a fair market value of $17,601,485 as of November 30, 2021. Real estate prices in the booming Wynwood market have increased 50% since last year, as it continues to attract new tech companies, and has many new residential, office, and mixed-use developments underway.
Q1 Estimated NAV
The estimated NAV is expected to be between $5.05 and $5.30.
In calculating this preliminary conservative range, significant discounts were applied as fair value adjustments for lack of liquidity and trade restrictions, minority control positions, and other relevant factors. This range is an estimate and may differ from the final Q1 results. The primary reason for this decrease is general market conditions of the small cap sectors in general but primarily the decline in valuations of the Company’s remaining cannabis investments.
“Throw us an incredibly tough investment environment and once again we delivered stellar returns,” said Andy DeFrancesco, SOL Global’ s Chairman and CEO. “While most small caps continue to dilute their stockholders for growth, we continue to reduce our issued and outstanding share count. We returned $40 million to stockholders from our substantial issuer bid priced at $4.05 per share, and I am committed to continuing this trend.
“We also reduced the principal amount of our $50 million line by more than 40% and will continue this reduction on a regular basis over the coming months. Despite great investment returns, I’m still not happy with our recent share price. That said, I will not change our strategy, as strong results pay off.
“Of course, not all of the management teams of our portfolio companies performed nor will perform in the future. I will continue to cut and divest of non-performing stocks and management teams fast and with no regret.
“The good news is that the majority of the teams and boards that we are working with today are executing and delivering results, which will be reflective in the coming quarters. Positive execution will deliver positive results. This will result in strong profits and cash returns, making more stock buy backs and return of cash to stockholders possible.
“My mission continues and I’m grateful to the unwavering commitment from my team.”
COVID-19 Update
SOL Global and its investments and portfolio companies have continued to deliver for both clients and shareholders despite challenges in the overall cannabis space and uncertain market conditions caused by the ongoing COVID-19 pandemic. SOL Global continues to monitor COVID-19 developments.
About SOL Global Investments Corp.:
SOL Global is a diversified investment and private equity holding company engaged in the small and mid-cap sectors. The Company’s investment partnerships range from minority positions to large strategic holdings with active advisory mandates. The Company’s six primary business segments include Retail (QSR & Hospitality), Agriculture (including Cannabis), Technology (with a focus on Clean-Tech and Electric Vehicles), Esports and Gaming, Cryptocurrency, and New Age Wellness.
Non-IFRS Financial Measures
This press release includes references to net asset value, which is a financial measure that does not have a standardized meaning prescribed by IFRS. Net asset value is calculated as the value of total assets less the value of total liabilities at a specific date. The Company believes this non-IFRS measure does not only provide management with comparable financial data for internal financial analysis but also provides meaningful supplemental information to investors. In particular, management believes this financial measure can provide information useful to its shareholders in understanding the performance of the Company and may assist in the evaluation of its business relative to that of its peers. Investors are cautioned that this non-IFRS measure should not be construed as an alternative to the measurements calculated in accordance with IFRS as, given the non- standardized meaning, it may not be comparable to similar measures presented by other issuers.
30-Nov-21
30-Nov-20
Investments includes Conv Debt & Prom Note
433,620,827
286,699,903
Cash
15,430,852
116,595
Deferred Taxes
–
39,898,053
–
25,572,354
Other Assets
11,338,220
9,832,685
Debenture
–
47,500,000
–
47,915,172
Other Liabilities
–
23,055,950
–
19,111,365
Net Deferred Tax Asset
13,965,329
–
Total
363,901,225
204,050,292
Diluted Shares
57,867,533
58,078,600
NAV
6.29
3.51
Cautionary Statements
This press release contains “forward-looking information” within the meaning of applicable securities laws. All statements contained herein that are not clearly historical in nature may constitute forward-looking information. In some cases, forward-looking information can be identified by words or phrases such as “may”, “will”, “expect”, “likely”, “should”, “would”, “plan”, “anticipate”, “intend”, “potential”, “proposed”, “estimate”, “believe” or the negative of these terms, or other similar words, expressions and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. The forward-looking information contained in this press release includes, without limitation, the estimated NAV of the Company in the Company’s first quarter financial statements, future operational plans of House of Lithium, strategic plans for House of Lithium to go public, and the Company’s expectations regarding its ability to operate and emerge from the COVID-19 pandemic.
Forward-looking information is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management’s perceptions of historical trends, current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances. While we consider these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.
By their nature, forward-looking information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the forward-looking information in this press release including the inability or failure of the Company’s portfolio companies to execute their business and strategic plans as contemplated or at all, inability or failure of House of Lithium to complete a going public transaction as planned or at all, the receipt of all applicable stock exchange and regulatory approvals for House of Lithium’s go-public transaction, the inability or failure of the Company’s or House of Lithium’s portfolio companies to execute their business and strategic plans as contemplated or at all, changes in national or regional economic, legal, regulatory and competitive conditions and a resurgence in the COVID-19 pandemic.
Other risk factors include: the risks resulting from investing in the US marijuana industry, which may be legal under certain state and local laws but is currently illegal under U.S. federal law; the risks of investing in securities of private companies which may limit the Company’s ability to sell or otherwise liquidate those securities and realize value; reliance on management; the ability of the Company to service its debt; the Company’s ability to obtain additional financing from time to time to pursue its business objectives; competition; litigation; inconsistent public opinion and perception regarding the medical-use and adult-use marijuana industry; and regulatory or political change. Additional risk factors can also be found in the Company’s current MD&A, which has been filed on SEDAR and can be accessed at www.sedar.com. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on forward-looking information.
The forward-looking information contained herein is made as of the date of this press release and is based on the beliefs, estimates, expectations and opinions of management on the date such forward-looking information is made. The Company undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking information, except as required by applicable law.
Financial Outlook
The Company and its management believe that the estimated NAV contained in this press release is reasonable as of the date hereof and is based on management’s current views, strategies, expectations, assumptions and forecasts, and have been calculated using accounting policies that are generally consistent with the Company’s current accounting policies. This estimate is considered future-oriented financial outlook and financial information (collectively, “FOFI”) under applicable securities laws. This estimate has been approved by management of the Company as of the date hereof. Such FOFI is provided for the purposes of presenting information about management’s current expectations and goals in determining the intrinsic value of the Company’s aggregate investments. However, because this information is highly subjective and subject to numerous risks, including the risks discussed above under “Cautionary Statements”. The FOFI should not be relied on as necessarily indicative of future results. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the FOFI prove incorrect, then the actual results could vary materially from the estimate. Although management of the Company has attempted to identify important risks factors, other uncertainties and factors not known to the Company could cause actual results to differ materially from the estimate. The Company disclaims any intention or obligation to update or revise any FOFI, whether as a result of new information, future events or otherwise, except as required by securities laws.
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Contacts
SOL Global Investments Corp.
Paul Kania, CFO
Phone: (212) 729-9208
Email: info@solglobal.com
For media inquiries, please contact:
Angela Trostle Gorman
AMW PR
P: 212.542.3146
E: SOLGlobal@amwpr.com
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