StateHouse Holdings Inc. (CSE:STHZ) (OTCQX:STHZF) total net revenues in Q3 2022 were $30.8 million, an increase of 77% compared with $17.5 million in Q3 2021. The growth in total net revenue was primarily due to the acquisitions of Urbn Leaf and Loudpack, which were completed in March and April of 2022, respectively, along with the opening of the Harborside branded retail dispensary in the Haight Ashbury neighborhood of San Francisco and the opening of the Urbn Leaf branded retail dispensary in Grossmont in April 2022.

Q3 2022 Financial Highlights

• Gross profit was $9.5 million, a 39% increase as compared to $6.8 million in gross profit realized during Q3 2021.

• Consolidated gross margins were 35.9% of revenues, compared to 48.3% of revenues in Q3 2021.

• Net loss was $20.5 million compared to net income of $2.7 million in Q3 2021.

Operations Update

As of September 30, 2022, the company has generated approximately $16 million of annualized cost savings. Management is exploring the potential sale of various non-core assets, which is expected to generate approximately $5-8 million of non-dilutive capital to strengthen its balance sheet and fund its growth objective.

The company has continued to execute on improvements at its cultivation operations, with significant enhancements being made at its Salinas facility. Flower yields were up approximately 150% for the nine-months ended September 2022, compared with the same period in 2021.

Based on current strength of the business and what has been achieved to date, the company excepts generate materially positive adjusted EBITDA in 2023, and to begin generating positive cash flow in the second half of 2023.

Option and RSU Grant

The company granted a total of 1.6 million options to purchase common shares of StateHouse to certain directors, officers and employees pursuant to the company's stock option plan. Of the total, 800,000 of the options vest in equal annual installments over a period of four years from the date of grant and expire 5 years from the date of grant.

The remaining 800,000 options vested immediately and expire 5 years from the date of grant. In addition, the company has issued a total of 1.55 million restricted share units to certain directors, officers and employees of the company in accordance with the company's restricted share unit plan. 1.35 million of the RSUs will vest in equal annual installments over a period of four years from the date of grant. The remaining 200,000 RSU's immediately vested. Once vested, each RSU represents the right to receive one common share of the company or the equivalent cash value thereof, at the company's discretion.

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