WINNIPEG, Nov. 29, 2018 /CNW/ - DELTA 9 CANNABIS INC.
(TSXV:NINE) ("Delta 9" or the "Company") today announced its
financial and operational results for the third quarter of fiscal
2018, ended September 30, 2018.
Highlights for Q3, 2018
- Strong cash position at September 30,
2018 of $23,211,764 up from
$13,908,610 at June 30, 2018. The Company is also reporting
working capital of $28,212,041 at
September 30, 2018.
- The Company closed a $16,250,000
strategic equity investment from Auxly Cannabis Group Inc.
("Auxly") and executed a long-term cannabis supply agreement with
Auxly during the quarter.
- Revenue from the sale of cannabis products and services for the
three-month and nine-month periods ending September 30, 2018, was $1,251,213, and $2,229,066 respectively, versus revenues of
$303,877 and $641,830, for the three-month and nine-month
periods ending September 30, 2017.
These increases are reflective of a percentage increase for the
three-month and nine-month periods of 312% and 258% respectively,
compared to the previous year.
- Gross profit, after accounting for the unrealized gain from
changes in the fair value of biological assets, for the three-month
and nine-month periods ending September 30,
2018, was $1,530,737 and
$2,396,872 respectively.
- The Company secured retail licenses for its first two Delta 9
Cannabis Store locations in Manitoba on September
17, 2018. The Company plans to roll out a chain of Delta 9
branded retail stores over the coming months.
- The Company signed a letter of intent with US biotech firm
Nanosphere Health Sciences Inc. ("Nanosphere") which provides that
Delta 9 and Nanosphere intend to negotiate and enter into an
agreement pursuant to which Nanosphere will grant a master license
for Nanosphere's patented delivery system for cannabis to the
Company.
- The Company is currently completing work necessary to acquire
the European Union "Good Manufacturing Practices" (GMP)
certification in order to initiate exports of medical cannabis to
Germany.
- The Company completed its first wholesale sale of recreational
use cannabis during the period, supplying the Province of
Manitoba in advance of the
October 17, 2018 legalization of
recreational cannabis. The Company plans to deliver a minimum of
2,300,000 grams in the Province of Manitoba over the first twelve months of
legalization.
Update on Highlights which occurred Subsequent to the End of
Q3, 2018:
- On October 11, 2018, the Company
completed the acquisition from 6599362 Manitoba Ltd. of the land
and 80,000 square foot building containing the Company's current
cannabis production facility for a purchase price of $6.25 million, plus applicable taxes. The Company
also acquired 27 cannabis grow pods from 6599362 Manitoba Ltd. for
a purchase price of $952,000, plus
applicable taxes
- On October 11, 2018, the Company
closed a $12,000,000 loan and credit
facility with the Canadian Western Bank.
- From legalization of recreational cannabis on October 17, 2018 to November 28, 2018, Delta 9 has recorded more than
$1,600,000 in revenue from wholesale
recreational cannabis sales. It has also recorded more than
$2,350,000 in revenue from its first
Delta 9 Cannabis Store outlet as well as through online deliveries
in the Province of Manitoba. To
date the average price of cannabis sold by Delta 9 in retail stores
and online is approximately $11.47
per gram, with an average cost to of $8.64 per gram.
Management Commentary
"Our Q3 reporting period was dominated by Delta 9's focus on
preparing for the Canadian cannabis market in the post-legalization
era," said CEO John Arbuthnot. "We
have said before and believe even more strongly today that the real
race for primacy in the Canadian cannabis market began on
October 17, and our focus has been to
position our Company for rapid growth within that recreational
market. We feel that events have shown that our efforts were
successful, as we have managed to avoid serious supply chain
issues, kept our retail customers supplied continuously and had
higher than expected wholesale and retail sales."
During the preparation for legalized recreational cannabis, the
Company did not neglect its existing market in medical cannabis and
services. In fact, that sector of the Company's business saw record
growth over the quarter. Revenues soared by 312 per cent over the
same period last year, while growth over the nine month period
ending September 30, 2018 reached 258
per cent over the same period in 2017.
"Even while preparing for the retail market, Delta 9 has managed
to expand its offerings in ways that are attractive to the consumer
and the industry," Arbuthnot said. "This is reflected in the strong
growth we are showing in all sectors of our business."
Arbuthnot also said the Company is positioning itself for
continued growth in Canada and
globally by transforming Delta 9 into a vertically and horizontally
integrated cannabis company. The Company is opening retail cannabis
outlets; building one of the largest extract labs in the world at
its co-owned Delta West facility in Calgary; has established export partners in
Germany and is completing the
European Union "Good Manufacturing Practices" (GMP) certification
in order to initiate exports of medical cannabis to Germany.
Subsequent to the end of the quarter, Delta 9 closed
transactions to enable the Company to continue expanding its
production facility in Winnipeg
over the long term. On October 11,
2018 Delta 9 acquired the land building containing its
current 80,000 square foot production facility, and also closed a
$12 million loan and credit facility
with the Canadian Western Bank. These agreements clear the path for
continued expansion by the Company, including the creation of the
Delta 9 Cannabis Campus, with room for up to 2 million square feet
of additional production space.
"We are not just looking at the Canadian market, but at the
global market," said Arbuthnot. "Canada is the first country in the G7 to
legalize cannabis, but we believe more countries will legalize over
the coming decade. Delta 9 must be ready to grow our exports and
expand our production into these other countries."
Among the positive aspects of the growth in Q3 is that the
Company was able to report gross profit of $1,211,821 for Q3 and $2,077,956 for the first nine months of the
fiscal year.
"We have not only been able to foster growth in revenue and
production, but we have also run one of the leanest companies in
the Canadian cannabis industry," Arbuthnot said. "We believe it's
not just about how much money you earn; it's about how much money
you keep. Our focus has been to create a Company with a low cost of
goods sold, some of the lowest capital expenditure costs in the
business, and much lower than average operating costs. This will
help us maximize profits for investors going forward."
About Delta 9 Cannabis Inc.
Delta 9 Cannabis was the
fourth producer in Canada licensed
to produce legal cannabis. Delta 9 now operates its wholly-owned
subsidiary, Delta 9 Bio-Tech Inc., as a licensed producer of
medical marijuana pursuant to the ACMPR and operates an 80,000
square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 also owns
50 per cent of the 70,000 square foot Delta West facility in
Alberta, and co-owns the Delta
Nine Cannabis Store retail network. Delta 9's shares trade on the
TSX Venture Exchange under the symbol "NINE" and on the OTC under
the symbol VRNDF.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking
statements, which reflect the expectations of management regarding
the Company's future business plans and other matters.
Forward-looking statements consist of statements that are not
purely historical, including any statements regarding beliefs,
plans, expectations or intentions regarding the future. Forward
looking statements in this news release include statements relating
to: (i) Delta 9's expansion plans; and (ii) Delta 9's anticipated
production of cannabis. Such statements are subject to risks and
uncertainties that may cause actual results, performance or
developments to differ materially from those contained in the
statements, including that Delta 9's currently contemplated
expansion and development plans may cease or otherwise change,
Delta 9's production of cannabis may be lower than expected, Delta
9 may not obtain the required approvals from Health Canada, demand
for Delta 9's products may be lower than anticipated and all other
risk factors set forth in the annual information form of Delta 9
dated May 31, 2018 which has been
filed on SEDAR. No assurance can be given that any of the events
anticipated by the forward-looking statements will occur or, if
they do occur, what benefits the Company will obtain from them.
Readers are urged to consider these factors carefully in evaluating
the forward-looking statements contained in this news release and
are cautioned not to place undue reliance on such forward-looking
statements, which are qualified in their entirety by these
cautionary statements. These forward-looking statements are made as
of the date hereof and the Company disclaims any intent or
obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or results or
otherwise, except as required by applicable securities
laws.
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SOURCE Delta 9 Cannabis Inc.