LXR LXRandCo Inc

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MONTREAL, March 28, 2023 /CNW/ - LXRandCo, Inc. ("LXR" or the "Company") (TSX: LXR) (TSX: LXR.WT), a socially-responsible digital-first omni-channel retailer of authenticated pre-owned luxury handbags and accessories, today provided an update on the status of the brokered private placement of convertible debenture units announced on March 1, 2023, an update on the renewal of its banking facilities which mature May 25, 2023 and provided preliminary financial results for the year ended December 31, 2022.

As previously announced on March 1, 2023 ("March 1, 2023 Press Release"), subject to receipt of all necessary corporate and regulatory approvals including the approval of the Toronto Stock Exchange, the Company expects to close on a brokered private placement (the "Private Placement") of 1,235 unsecured convertible debenture units of the Company (the "Debenture Units"), for gross proceeds of $1,235,000 on March 30, 2023. The net proceeds of the Private Placement will be used for working capital and for general corporate purposes. Further details on the Private Placement are available in the March 1, 2023 Press Release.

On March 9, 2023, the Company and its lenders agreed on terms for a renewal of its working capital and term loan facilities, both of which mature on May 25, 2023. While final terms are being finalized, the new facilities are expected to mature on May 25, 2025 with all other underlying terms and conditions remaining substantially unchanged from the existing facilities.

LXR also announced today that, based on information currently available to management as of the date hereof, it is providing select preliminary unaudited financial results for the full-year ended December 31, 2022 ("FY 2022"). The audited annual consolidated financial statements of the Company for the FY 2022 and related Management Discussion and Analysis are expected to be released on March 31, 2023.

The following are select preliminary highlights for FY 2022. All comparatives, unless otherwise noted, are versus the same period in the prior year.

• FY 2022 total net revenue was $20.0 million, an increase of 11% — e-commerce net revenue as a per cent of net revenue was 60.7%
  
  
• Gross profit was $7.6 million, an increase of 12.7% — gross profit margin was 38.2% as compared to 37.6%
  
  
• Adjusted EBITDA (a non-IFRS measure) was ($1.4) million, same level as the prior year
  
  
• Cash earnings (a non-IFRS measure) was a loss of ($0.7) million compared to a loss of ($1.8) million
  
  
• Operating cash flow (Net loss plus changes in non-cash working capital) was break-even, a significant improvement versus net outflows of ($3.6) million in the prior year
  
  
• Cash on hand on December 31, 2022 was $2.6 million, a decrease of $1.0 million from the prior year, primarily due to debt repayment

Comparative Financial Highlights (for the years ended December 31)

All figures reported with respect to FY 2022 are preliminary results and are subject to change and adjustment as the Company's fourth quarter 2022 financial results are finalized and such changes and adjustments could be material. Accordingly, investors are cautioned not to place undue reliance on the above preliminary figures. The Company is issuing preliminary results in order to enable it to disclose such information in connection with the Private Placement and does not intend to continue to provide preliminary results in the future. This update should not be viewed as a substitute for the Company's full audited annual results and does not present all necessary information for an understanding of the Company's financial position or results with respect to FY 2022.

In assessing performance, among other things, the Company relies on EBITDA, Adjusted EBITDA and Cash Earnings, which are all non-GAAP measures that do not have a standardized meaning prescribed by GAAP. These financial measures may not be comparable to similar measures presented by other issuers. Investors are cautioned that this measure should not be construed as an alternative to profit or cash flow from operating activities determined in accordance with GAAP as an indicator of the Corporation's performance. The Corporation's management believes that these measures are commonly reported and widely used by investors as an indicator of a company's cash operating performance and ability to service debt.

EBITDA is defined by the Company as earnings before finance costs, income tax expense and depreciation and amortization. Adjusted EBITDA excludes from EBITDA the effects of expenses that are non-recurring in nature. Cash Earnings/(Loss) (or net cash generated before changes in non-cash working capital) is a measure we consider to be important as it serves as an indicator of the actual cash being generated from continuing operations. We define Cash Earnings as Net Profit/(Loss) plus non-cash charges.

The following is a reconciliation of the above to its nearest IFRS measure for the years ended December 31, 2020, 2021 and 2022:

The preliminary results provided in this news release constitute forward-looking statements within the meaning of applicable securities laws, are based on a number of assumptions and are subject to a number of risks and uncertainties. Actual results may differ materially. Please see the section below entitled Cautionary Statement Regarding Forward-Looking Information.

Certain statements in this press release are prospective in nature and constitute forward-looking information and/or forward-looking statements within the meaning of applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements generally, but not always, can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "could", "would", "will", "expect", "intend", "estimate", "forecasts", "project", "seek", "anticipate", "believes", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events and the negative of any of these terms. Forward- looking statements in this news release include, but are not limited to, statements regarding the anticipated proceeds from the Private Placement, the Company's intended use of proceeds from the Private Placement, the participation of insiders in the Private Placement, the expected closing date of the Private Placement, the Company's ability to renew its working capital and term loan facilities on substantially similar terms and conditions, the expected maturity of such facilities and our anticipated results for FY 2022. Forward-looking statements reflect management's current beliefs, expectations and assumptions and are based on information currently available to management, which includes assumptions about management's historical experience, perception of trends and current business conditions, expected future developments and other factors which management considers appropriate. With respect to the forward- looking statements included in this press release, management has made certain assumptions with respect to, among other things, the Company's ability to meet its future objectives and strategies, the Company's ability to achieve its future projects and plans and that such projects and plans will proceed as anticipated, as well as assumptions concerning the satisfaction of all conditions of closing to the Private Placement, including receipt of all necessary regulatory and stock exchange approvals, and the successful completion of the Private Placement within the anticipated timeframe, general economic and market growth rates, currency exchange and interest rates and competitive intensity.

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated or implied by such forward- looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur.

All forward-looking statements included in and incorporated into this press release are qualified by these cautionary statements. Unless otherwise indicated, the forward-looking statements contained herein are made as of the date of this press release, and except as required by applicable law, the Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Readers are cautioned that the actual results achieved may vary from the information provided herein and that such variations may be material. Consequently, there are no representations by LXRandCo that actual results achieved will be the same in whole or in part as those set out in the forward-looking statements.

Further to the Company's press release on March 1, 2023, Gibraltar & Company, Inc. Eric Graveline, a director of the Company and Groupe Colsa Inc. (a company controlled by Javier San Juan, a director of the Company) are related parties of the Company (the "Insider Participants") which are expected to participate in the Private Placement and, as such, the Private Placement constitutes a related party transaction under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Investments ("MI 61-101"). The Company is relying on the exemption from the formal valuation requirement in Section 5.5(a) of MI 61-101 and the exemption from the minority approval requirement in Section 5.7(1)(a) of MI 61-101 based on the board of directors of the Company having determined, that the fair market value of the securities subscribed for by "interested parties" (as defined under MI 61-101), or the consideration paid for such securities, does not exceed 25% of the Company's market capitalization before giving effect to the Private Placement. The Company anticipates it will file a material change report less than 21 days before the closing of the Private Placement. This shorter period is reasonable and necessary in the circumstances as the Company wants to complete the Private Placement as expeditiously as possible and definitive information with respect to insider participation has only become recently available. Information regarding the effect of the Private Placement on the shareholdings of the Insider Participants is provided below.

Gibraltar & Company, Inc.  currently beneficially owns, controls or directs, directly or indirectly, 17,929,156 Class B shares of the Company ("Shares"), representing approximately 19.6% of the aggregate issued and outstanding Shares on a non-diluted basis as of the date hereof. In addition, Camillo di Prata, a director and the interim chief executive officer of the Company and an insider of Gibraltar, currently beneficially owns, controls or directs, directly or indirectly, approximately 7,053,143 Shares, representing approximately 7.7% of the aggregate issued and outstanding Shares on a non-diluted basis as of the date hereof and Valerie Sorbie, a director and the chair of the Company and an insider of Gibraltar, beneficially owns, controls or directs, directly or indirectly, approximately 2,613,413 Shares or approximately 2.9% of the aggregate issued and outstanding Shares on a non-diluted basis. Gibraltar & Company, Inc.  is expected to acquire up to 300 Debenture Units under the Private Placement, representing approximately 24.3% of the 1,235 Debenture Units issuable pursuant to the Private Placement. Ms. Sorbie and Mr. di Prata will not be purchasing any Debenture Units personally. Upon closing of the Private Placement, Gibraltar & Company, Inc. is expected to beneficially own, control or direct, directly or indirectly, approximately $300,000 principal amount of Debentures and 210,000 Warrants (as defined in the March 1, 2023 Press Release), representing approximately 20.1% of the aggregate issued and outstanding Shares on a partially-diluted basis (assuming full conversion of the Debentures and full exercise of the Warrants issued under the Private Placement into Shares).

Groupe Colsa Inc. (a company controlled by Javier San Juan) currently beneficially owns, controls or directs, directly or indirectly, 1,200,000 Shares, representing approximately 1.3% of the aggregate issued and outstanding Shares on a non-diluted basis as of the date hereof. Groupe Colsa Inc. is expected to acquire up to 50 Debenture Units under the Private Placement, representing approximately 4.1% of the 1,235 Debenture Units issuable pursuant to the Private Placement. Upon closing of the Private Placement, Mr. San  Juan is expected to beneficially own, control or direct, directly or indirectly, approximately $50,000 principal amount of Debentures and 35,000 Warrants, representing approximately 1.6% of the aggregate issued and outstanding Shares on a partially-diluted basis (assuming full conversion of the Debentures and full exercise of the Warrants issued under the Private Placement into Shares).

Eric Graveline currently beneficially owns, controls or directs, directly or indirectly, 6,707,643 Shares, representing approximately 7.34 % of the aggregate issued and outstanding Shares on a non-diluted basis as of the date hereof. Mr. Graveline is expected to acquire up to 150 Debenture Units under the Private Placement, representing approximately 12.2% of the 1,235 Debenture Units issuable pursuant to the Private Placement. Upon closing of the Private Placement, Mr. Graveline is expected to beneficially own, control or direct, directly or indirectly, approximately $150,000 principal amount of Debentures and 105,000 Warrants, representing approximately 7.9% of the aggregate issued and outstanding Shares on a partially-diluted basis (assuming full conversion of the Debentures and full exercise of the Warrants issued under the Private Placement into Shares). 

The Private Placement was considered and unanimously approved by the board of directors of the Company. There was no contrary view or abstention by any director approving the Private Placement. The Insider Participants were not present in the final deliberations and did not participate in the approval process.

This press release is not an offer to sell or the solicitation of an offer to buy the securities in the United States or in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification or registration under the securities laws of such jurisdiction. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from U.S. registration requirements and applicable U.S. state securities laws.

LXRandCo is a socially responsible, digital-first omni-channel retailer of authenticated pre-owned luxury handbags and personal accessories. Since 2010, we have been providing consumers with authenticated branded luxury products by promoting their reuse and providing an environmentally responsible way for consumers to purchase luxury products. We achieve this through our digital-first strategy by selling directly to consumers through our website at www.lxrco.com and indirectly, by powering the e-commerce and other platforms of key channel partners. Our omni-channel model is also supported by retail 'shop-in-shop' experience centers and by wholesale ativities with select retail partners across North America.

SOURCE LXRandCo, Inc.