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GABY Reports Fourth Quarter and Fiscal Year End 2022 Results

Monday, 01 May 2023 10:00 PM



Highlights include:

  • Mankind has experienced some revenue stability with two consecutive quarters of revenue growth from Q2 to Q3 2022 of 4% and Q3 to Q4 2022 of 1% respectively.
  • Gross margin continues to improve with Q4, 2022 achieving 51% up from 47% over same quarter last year.
  • Proprietary brands expand into new product categories.
  • New delivery record reached - serving 10,163 customers in Q4 2022

SAN DIEGO, CA / ACCESSWIRE / May 1, 2023 / GABY Inc. ("GABY" or the "Company") (CSE:GABY)(OTCQB:GABLF), a California consolidator of cannabis dispensaries and the parent company of San Diego's Mankind Dispensary ("Mankind"), reported its financial and operating results for the quarter and fiscal year end December 31, 2022 ("Q4 2022"). All financial information is provided in United States dollars unless otherwise indicated. GABYs financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). The annual audited financial statements for December 31, 2022 and the corresponding management's discussion and analysis are available for download from the Company's investor website,, and on the Company's SEDAR profile.

Fourth Quarter 2022 and fiscal year end 2022 Financial & Operational Highlights

  • Mankind saw a 16% ($1.0 million) drop in revenue in Q4 2022 as compared to the same quarter in the prior year. When you compare the 2021 nine months of operations with the same period in 2022, revenue from Mankind decreased $4.2 million (21%). A reduction in curbside sales over this period ($2.4 million) represented 56% of the decrease. Management believes this decrease represents a change in consumer behavior following the removal of COVID-19 restrictions, and that the majority of this volume moved to other geographically convenient dispensaries. After four quarters of revenue decline, Mankind has experienced two consecutive quarters of revenue growth from Q2 to Q3 2022 of 4% and Q3 to Q4 2022 1% respectively.
  • Proprietary Brands are given priority shelf space and are emphasized by staff providing guidance to customers; moreover, given its value equation (price to quality) customers are naturally drawn to these products. The Corporation realizes an average variable margin of over 70% on its proprietary brands compared to 46% overall. By the end of 2022, proprietary brands had penetrated the major product categories of Flower, Pre-Rolls, and Carts. The Company's DankSpace™ brand was launched in Q1 2022 as a high-end premium brand. In Q3 2022, a sativa line of DankSpace was launched and 3 SKU's of pre-rolls were developed and launched in Q4. Dank Space branded sales are on pace to be a $1.0 million brand in 2023.
  • Gross margin continues to improve with Q4, 2022 achieving 51% up from 47% over same quarter last year. The margin improvement was driven by the closure of Wild West Industries ("WWI") in Q2, 2022 which included $0.4 million of distribution and allocated labor to cost of sales in 2021. This improvement is also attributable to operational efficiencies, strong product selection, vendor management and discounting strategy. In Q3-Q4, 2022 Mankind realigned the discount strategy to focus on selling higher margin items, and on new customer acquisition. From Q3 to Q4, 2022 discounts were reduced by 3.2 percentage points.
  • The net loss of $29.3 million increased by $19.5 million over 2021 primarily as a result of increased non-cash items, namely, impairment losses, which were $20.1 million higher in 2022 than in 2021 and the increase in exchange loss on translating the promissory note to CAD (held at GABY Inc) of $1.4 million.
  • Adjusted EBITDA1 from continuing operations of $1.0 million in 2022 decreased by $0.2 million over 2021. Sales declines at Mankind in 2022 offset the benefits of improved margins and an additional quarter of revenue on the acquisition of Mankind on April 1, 2021
  • In Q4 2022 Mankind set a new delivery record, serving 10,163 customers which represents 53% growth since Q1 2021. As more dispensaries continue to open in the market, management believes this business unit will continue to thrive as its able to service customers well outside of the reach of its physical store and competition in close proximity thereof. While ticket value has decreased in line with Market trends (-13%), the acquisition growth of customers will enable Mankind to outperform the pricing trends.
  • In 2022 there was an Impairment of goodwill of $22.0 million in the licensed CGU resulted from a significant decline in sales from the Corporation's Mankind cannabis dispensary of 21% when considering Q2-Q4 in 2021 and 2022 as a basis for comparison. Management achievements in improved margins and operating costs have not been sufficient to offset the declines in revenue to support the carrying value of goodwill.

1. GABY Announces Restructuring of its Debt - Press release April 25, 2023

Management's Commentary

After four quarters of revenue decline, Mankind has experienced two consecutive quarters of revenue growth from Q2 to Q3 2022 of 4% and Q3 to Q4 2022 1% respectively. This stabilization allows Mankind to leverage momentum in our dispensary and draw upon the strengths of our organization. Specifically:

  • Revenue and gross margin growth opportunities on the expansion of Mankind's proprietary brands, which generate a variable margin of 70% compared to 46% overall. DankSpace™ which was launched in Q1 2022 as a high-end premium flower brand, expanded in Q4 2022 to include 3 SKUs of pre-rolls which puts the brand on pace for $1.0 million of revenue in 2023. In Q4 2022, a vape cartridge and pre-roll was launched under the Kind Republic™ brand, which is a mid-tier flower brand introduced in 2021, which should build on the brand's revenue already in excess of $1.0 million in 2022.
  • Continual improvement in margin support. Gross margin continues to improve with Q4, 2022 achieving 51% up from 47% over same quarter last year. Management believes in combination with our proprietary brand's high margins, and a targeted discounting/promotional program GABY can continue to protect its margins in a very competitive marketplace.
  • GABY's delivery business in 2022 offset a declining average check (-13%) with a successful program of competitive pricing and promotional programs that grew transaction volume by 53% from Q1, 2022 to Q4, 2022. The growth was also supported by a successful search engine optimization program.
  • While Management is continuing to address the need to increase revenue. Management remains focused on controlling costs, which in 2022 included the divestiture of an unprofitable subsidiary, Wild West Industries. The divestiture enabled Miramar Professional Services to further reduce operating expenses, specifically the lease obligation and lease guarantee of $20,000 monthly through March 2025. The transaction contributed an additional $300,000 which was seller financed over a 2-year period. The sale resulted in a $1.1 million loss on divesture.
  • To alleviate a significant portion of the working capital deficit, management negotiated an agreement with the holders of the $25.5 million promissory note (issued as part of the consideration for the acquisition of Miramar), which resulted in significant amendments to the promissory note in April 2023. In addition to a $3,000,000 reduction of principal, the terms of the Settlement Agreement[1] provide an aggregate interest savings to GABY of $2,300,000 over the next two years.

[1] GABY Announces Restructuring of its Debt - Press release April 25, 2023


GABY Inc. is a California-focused retail consolidator and the owner of Mankind Dispensary, one of the oldest licensed dispensaries in California. Mankind Dispensary is a well-known and highly respected dispensary with deep roots in the California cannabis community operating in San Diego. GABY curates and sells a diverse portfolio of products, including its own proprietary brands, Kind Republic™ Dank Space™ and Lulu's™ through Mankind, A pioneer in the industry with a strong management team with experience in retail, consolidation, and cannabis, GABY is poised to grow its retail operations both organically and through acquisition.

GABY's common shares trade on the Canadian Securities Exchange ("CSE") under the symbol "GABY" and on the OTC under the symbol "GABLF". For more information on GABY, visit or the Company's SEDAR profile at

For further inquiries, please contact:
Investor Relations at [email protected]

Currency Presentation

All financial information is provided in United States dollars unless otherwise indicated.

Disclaimer and Forward-Looking Information

The CSE does not accept responsibility for the adequacy or accuracy of this release. Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties, certain of which are beyond the control of the Company. Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Forward-looking statements include, but are not limited to, the future performance of the Mankind business unit, the anticipated acquisition growth of customers for the Mankind business unit, future revenue attributable to the Dank Space brand, continued improvement in GABY's margin support, the estimated current and future cost savings of the Company, the Company's future business strategy, and the anticipated benefits to be derived from GABY's rationalization and cost cutting program. Although GABY believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because GABY can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. Without limitation, these risks and uncertainties include: the inability to support continued customer acquisition and improved margin support; slowing growth in sales under the Dank Space brand; risks associated with the cannabis industry in general; failure to benefit from partnerships or successfully integrate acquisitions; actions and initiatives of federal, state and provincial governments and changes to government policies and the execution and impact of these actions, initiatives and policies; the size of the medical-use and adult-use cannabis market; competition from other industry participants; adverse United States ("U.S."), Canadian and global economic conditions; failure to comply with certain regulations; and departure of key management personnel or inability to attract and retain talent. GABY undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. Additional risk factors can also be found in GABY's continuous disclosure documents, which have been filed on SEDAR and can be accessed at

To the extent any information contained in forward-looking statements in this press release constitutes "future-oriented financial information" or "financial outlooks" within the meaning of applicable Canadian securities laws, such information is being provided to demonstrate the anticipated financial performance of the Company and the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such future-oriented financial information or financial outlooks. Future-oriented financial information and financial outlooks, as with forward-looking statements generally, are, without limitation, based on the assumptions and subject to the risks set out above for forward-looking statements. The Company's actual financial position and results of operations may differ materially from its management's current expectations and, as a result, the Company's actual revenue may differ materially from the prospective revenue estimates or projections provided in this press release. Such information is presented for illustrative purposes only and may not be an indication of the Company's actual financial position or results of operations for the applicable financial periods.

Selected financial information outlined above for the Company's fiscal year ended December 31, 2022 should be read in conjunction with, GABY's audited annual financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2022, which has been filed on the Company's SEDAR profile at and the Company's website

Each of Mankind and GABY Manufacturing, are subsidiaries of GABY and hold a cannabis license in the State of California. Readers are cautioned that unlike in Canada which has Federal 032320-F legislation uniformly governing the cultivation, distribution, sale and possession of medical cannabis under the Cannabis Act (Federal), in the U.S., cannabis is largely regulated at the State level. Cannabis is legal in the State of California; however, cannabis remains illegal under U.S. federal laws. Notwithstanding the permissive regulatory environment of cannabis at the State level, cannabis continues to be categorized as a controlled substance under the Controlled Substances Act in the U.S. and as such, cannabis-related practices or activities, including without limitation, the manufacture, importation, possession, use or distribution of cannabis are illegal under U.S. federal law. To the knowledge of the Company, the businesses operated by each of GABY's subsidiaries are conducted in a manner consistent with the State law of California, as applicable, and are in compliance with regulatory and licensing requirements applicable in the State of California, respectively. However, readers should be aware that strict compliance with State laws with respect to cannabis will neither absolve GABY, or its subsidiary of liability under U.S. federal law, nor will it provide a defense to any federal proceeding in the U.S. which could be brought against any of GABY, or its subsidiary. Any such proceedings brought against GABY, or its subsidiary may materially adversely affect the Company's operations and financial performance generally in the U.S. market specifically.

Non-GAAP Measures

Adjusted EBITDA does not have any standardized meaning as prescribed by IFRS , and, therefore, is considered a non-GAAP measure and may not be comparable to similar measures presented by other issuers and should not be viewed as a substitute for measures reported under IFRS. Adjusted EBITDA from continuing operations is used by management and investors to analyze the Corporation's profitability based on the Corporation's principal business activities regardless of how: these activities are financed; assets are depreciated and amortized, and results are taxed in various jurisdictions or subject to entity specific tax planning. It therefore excludes interest expense, taxes, depreciation, and items which management considers are not related to operational performance of its core businesses. In addition, Adjusted EBITDA provides an indication of the Corporation's ongoing ability to service its debt, income taxes and capital expenditures and therefore excludes non-cash expenses. Readers should refer to GABY's MD&A under section entitled "NON-GAAP DISCLOSURE" for a full description of why certain items are excluded from net loss in arriving at the non-GAAP measure Adjusted EBITDA.


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