SMITHS FALLS, ON, Aug. 31, 2015 /CNW/ - Tweed Marijuana Inc. (TSXV:
TWD) ("TMI" or "the Company"), parent company of licensed medical
marijuana producers Tweed Inc. (Tweed) and Tweed Farms Inc. (Tweed
Farms), is pleased to announce it has officially closed an
all-stock transaction to fully acquire Bedrocan Cannabis Corp.
("Bedrocan"). The transaction has united the two strongest brands
in Canadian cannabis under one roof, and signals the Company's
intention to further solidify its position as the leading player in
the industry.
"We have established the clear market leader, and are driving
the evolution of the cannabis sector in Canada," said Bruce
Linton, Chairman and CEO of TMI. "The acquisition of
Bedrocan is the first step, and we intend to continue to take the
initiative, growing our portfolio of brands, expanding clinical
research on cannabis, adding new products and services, and
introducing additional innovations for patients and consumers."
Combined, Tweed and Bedrocan launch into priority of client
generation, with more than 5,600 active registered customers. The
Company's priority is now to build on the unique strengths of each
brand, with their distinct customer segments, to accelerate patient
acquisition and the rate of market growth.
The combination of Tweed and Bedrocan creates new advantages for
registered cannabis patients. Customers who choose either producer
will have access to both product lines – as of September 1, 2015 for dried cannabis strains, and
soon for cannabis oils as well. This enhances traditional
horizontal integration by adding a broader range of product choices
and services without switching producers, a benefit that will give
consumers more flexibility and improve the customer experience.
Market expansion requires an integrity-based approach to medical
education, outreach, and research. Tweed has led the industry by
strategically investing in medical outreach to familiarize
physicians with cannabis. The Company has created an accredited
Continuing Medical Education (CME) program for physicians, to
ensure that the healthcare community can confidently incorporate
cannabis into their practices. Bedrocan's standardized,
pharmaceutical-grade product line is a direct extension of the
product grown in the Netherlands
for more than a decade and used in medical trials. This history and
consistency appeals to the medical community, because doctors and
patients can trust that each batch of medical cannabis contains the
same percentage and ratio of cannabinoids (the active
pharmaceutical ingredients) over the duration of a prescription,
which makes titration and dosing more reliable. Both Tweed and
Bedrocan have demonstrated a commitment to research by contributing
funding for the launch of the Quebec Cannabis Registry, projected
to be the largest initiative of its kind in the world. Additional
clinical research initiatives are expected to be announced
soon.
Integration of the respective operations is underway, and
cross-training and system amalgamation are progressing on an
ambitious schedule, to ensure the front-end experience is seamless
for new and existing customers. Back-end synergies and cost-savings
will provide value to investors as duplicated expenses are phased
out.
Financial Highlights
Revenue for the first quarter was $1,710,157. The Q1 revenue is reflective of
operations in 12 of an eventual 30 climate-controlled indoor
growing rooms at the Tweed facility and utilizing 34,000 sq. ft. of
greenhouse growing space at Tweed Farms. Q1 revenue increased by
39% from the previous quarter and was 9 times the reported sales in
the corresponding quarter last year.
The total product sold in the first quarter was 215,929 grams at
an average price of $7.74 per gram,
up from the last quarter of Fiscal 2015 when 166,657 grams were
sold at an average price of $7.25 per
gram, and up from 26,205 grams sold at an average price of
$6.90 per gram in the comparative
quarter ended June 30, 2014.
Gross margin was $4,094,607 or
239% for the three-month period ended June
30, 2015. The gross margin includes the gain on the changes
in fair value of biological assets since the end of Fiscal
2015. In the three months ended June
30, 2014, last year, the reported gross margin was 58% and
reflected the very early days of commencement of operations.
Sales, branding and medical outreach and education costs for the
three-month period ended June 30,
2015 were $1,008,590 (three
months ended June 30, 2014 -
$664,802). These costs are strategic
investments designed to educate the healthcare community, build
brand awareness and attract and retain customers through diverse
acquisition and retention strategies. Management considers these
costs to be key differentiators in an industry consisting of many
companies producing similar products.
Research and Development (R&D) costs were $82,573 before deducting Scientific Research and
Experimental Development credits ("SREDs") of $44,162 for net R&D of $38,411 for the three-month period (three months
ended June 30, 2014 - $60,415 with no SREDs). General and
Administrative expenses were $1,415,372 for the three-month period ended
June 30, 2015 compared to
$362,706 in the same quarter last
year. The increase in G&A reflects the Company's
growth from the early start-up of last year, building commercial
capacity and capability as a public company and meeting all
compliance requirements with Health Canada.
The Company reported net income of $1,011,783, or $0.02 per share on a diluted basis, for the three
months ended June 30, 2015, up from a
net loss of $1,160,317 and a net loss
of $0.03 per share on a diluted basis
in the corresponding quarter of Fiscal 2015.
TMI had cash and cash equivalents of $15,166,512 as at June 30,
2015, with the reduction of cash since the end of Fiscal
2015 reflecting the capital applied to building out and expanding
the Tweed Farms greenhouse in Niagara in anticipation of increasing
the licensed production platform from 34,000 square feet to
approximately 350,000 square feet. Construction at Tweed Farms was
completed on time and on budget subsequent to Q1 2016. Health
Canada inspected the site
August 19, 2016.
The Unaudited Condensed Interim Consolidated Financial
Statements and Management's Discussion and Analysis documents have
been filed with SEDAR and are available on www.sedar.com.
Subsequent to the Quarter
License to Produce Cannabis Extractions
On August 19, 2015, the Company
announced that Tweed has received authorization from Health Canada
to begin the production of cannabis extracts in the Company's
state-of-the-art facility in Smiths Falls, Ontario. Tweed will use preeminent
pharmaceutical grade extraction methods to produce purified
cannabis derivatives. Seven new precision climate-controlled drying
rooms, a dedicated trimming room, extraction room and processing
room were also all approved for use by Health Canada. Enhanced
infrastructure will allow the Company to continue providing access
to premium, dried cannabis while simultaneously scaling for
diversified derivative production.
Bedrocan Acquisition Closed on August 28,
2015
Tweed Marijuana Inc. announced it had entered into a definitive
arrangement agreement for an all-stock transaction to acquire
Bedrocan Cannabis Corp. (Bedrocan) on June
24, 2015, subject to approval by Bedrocan shareholders,
regulatory approvals, and certain other conditions precedent.
On August 24, 2015, Bedrocan
shareholders voted in favour of the transaction. Regulatory and
legal requirements were satisfied on August
28, 2015 and the transaction became effective on that date.
In connection with the acquisition TMI issued 35,202,818 common
shares in exchange for all of the outstanding Bedrocan shares in
connection with the acquisition.
Bedrocan will operate as a separate division of TMI and offer
customers a distinct experience and product line represented by its
standardized, pharmaceutical-grade cannabis products. Bedrocan's
production facility is fully licensed by Health Canada, including
34 vegetative and growing rooms, three dispensing rooms, a
two-floor, Level 9 security vault, and the ability to dispose of
cannabis refuse via composting. The facility is licensed to produce
and sell up to 2,000 kilograms of medical cannabis over the current
license period ending on February 17,
2016. Bedrocan is also licensed to sell up to 240 kilograms
of cannabis from its second licensed facility. These sales can be
sourced from imports into Canada
from its Dutch partner and licensor Bedrocan Beheer BV, or from any
other licensed producer. With Tweed and Bedrocan Canada combined,
the Company is licensed to produce and sell 5,740 kilograms per
year.
INFOR Financial Inc. acted as financial advisor to TMI. Dundee
Securities Ltd. acted as financial advisor to the Special Committee
of the Board of Directors of Bedrocan. PowerOne Capital Markets
Limited acted as financial advisor to Bedrocan. LaBarge Weinstein
LLP acted as legal counsel to TMI and Cassels Brock & Blackwell
acted as legal counsel to Bedrocan in connection with the
transaction.
Conference Call Details
Bruce Linton, Chairman and CEO
and Tim Saunders, CFO will host a
conference call to discuss these results.
Time and Date: 8:30 a.m. ET,
Monday August 31, 2015.
Toll-Free Dial-In Number: 888-231-8191
About Tweed Marijuana Inc.
Tweed Marijuana is Canada's
first publicly traded medical marijuana company and the first
geographically diversified producer with dual licenses under the
Marihuana for Medical Purposes Regulations. Through its wholly
owned subsidiaries, Tweed, Tweed Farms, and Bedrocan Canada, the
Company operates three state-of-the-art production facilities in
Ontario and distributes marijuana
across the country to Canadian patients managing a host of medical
conditions.
The Company is dedicated to educating healthcare practitioners,
providing consistent access to high quality medication, and
furthering the public's understanding of how marijuana is used for
medical purposes. www.tweed.com
Notice Regarding Forward Looking Statements
This news release contains forward-looking statements. Often,
but not always, forward-looking statements can be identified by the
use of words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Tweed Marijuana Inc., Tweed Inc.,
Tweed Farms Inc. or Bedrocan Cannabis Corp. to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Examples of
such statements include future operational and production capacity,
the success of the acquisition of Bedrocan Cannabis Corp., the
impact of enhanced infrastructure and production capabilities, and
forecasted available product selection. The forward-looking
statements included in this news release are made as of the date of
this news release and Tweed Marijuana Inc. does not undertake an
obligation to publicly update such forward-looking statements to
reflect new information, subsequent events or otherwise unless
required by applicable securities legislation. Neither TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE Tweed Marijuana Inc.