CALGARY, Nov. 28, 2019 /CNW/ - Sugarbud Craft Growers
Corp. (TSXV: SUGR, SUGR.WT, SUGR.RT) ("Sugarbud" or the "Company")
is pleased to announce the filing of its unaudited condensed
consolidated interim financial statements ("Financial Statements")
for the three and nine months ended September 30, 2019 ("Q3
2019") and related management's discussion and analysis
("MD&A"), which are available on SEDAR
at www.sedar.com and on Sugarbud's website
at www.sugarbud.ca.
"Q3 2019 was a productive and pivotal period for Sugarbud,"
stated John Kondrosky, Sugarbud CEO.
"In addition to receiving our cultivation, processing and medical
licenses from Health Canada, we completed the transfer and receipt
of our starting material under our declaration to Health Canada and
began cultivation activities in our purpose built 29,800
square-foot facility in Stavely,
Alberta which, at full production, currently has an
estimated annual production design capacity of between 9.9 and 11.7
million grams."
"We are pleased with the quality and variety of the cultivars we
have received and while we held back production a little longer
than we would have liked in order to complete our incoming quality
inspections, we remain on track to deliver a strong first harvest,
which we now expect will occur in early Q1," continued Mr.
Kondrosky.
During the quarter the company also announced two cornerstone
supply agreements that combined represent 1,700,000 grams of
committed dried cannabis supply in 2020 or approximately 72% of the
total estimated initial production capacity of Sugarbud's two fully
licensed cultivation rooms in 2020. At full production capacity,
these two rooms have a design capacity to produce an estimated 3.3
to 3.9 million grams annually.
"In addition to a clear line of sight to first revenue, we
continue to take meaningful steps to strengthen our balance sheet
and control operating expenses as we focus on scaling up our
business. We have identified and are executing against a very
controlled and balanced capital expansion plan that supports
sustainable growth and maximizes return on investment," Mr.
Kondrosky added.
The Company has several facility buildout options which it can
deploy, however the current strategy; which is focused on achieving
near term capacity expansion and generating sustainable positive
cash flow by late Q3 2020, will see Phase 1a expanded
primarily through additional HVAC in cultivation rooms 1 and 2
which are already licensed. The capital budget required to
complete this expansion is estimated to be approximately
$2.5 million and the Company is
working towards financing a significant portion of this through
previously announced equipment leasing arrangements.
The company also recently announced the close of a $925,000 private placement, of which management
and board members took up 47%, and the launch of a $5 million rights offering.
Pursuant to the Rights Offering, each holder ("Eligible Holder")
of Common Shares as of the Record Date that is a resident in any
province of territory of Canada
(other than Québec) (the "Eligible Jurisdictions") will receive one
transferable right (each, a "Right") for every Common Share
held. Every four Rights will entitle the holder to
purchase one Unit at a price of $0.0550 until 4:00
p.m. (Calgary time) on the
expiry date of December 20, 2019 (the
"Expiry Date"), after which all outstanding Rights will terminate.
Each Unit will be comprised of one Common Share and one Warrant.
The Warrants issued pursuant to the Rights Offering will be on the
same terms as those issued pursuant to the Private Placement,
including early expiry upon the VWAP equaling or exceeding
$0.125. Subscribers of Units under
the Private Placement will have a right to participate in the
Rights Offering with respect to any Common Shares acquired pursuant
to the Private Placement.
There will be no additional subscription privilege and no standby
commitment in respect of the Rights Offering. The completion of the
Rights Offering will not be subject to Sugarbud receiving any
minimum amount of subscriptions from Eligible Holders.
READ: Sugarbud Closes $925,000
Private Placement
READ: Sugarbud Announces Rights Offering
"Our primary focus and attention is on getting our 2 licensed
cultivation rooms growing on 3 to 4 layers each, which we believe
is the quickest path towards demonstrating the Company can be
self-sustaining and cash flow positive," stated Mr.
Kondrosky. The buildout of additional rooms within Phase
1b and 1c will be scheduled according
to available capital but the Company believes it will have at least
one additional room completed during the second half of 2020.
Sugarbud's near term product leadership strategy is to leverage
its existing licensed cultivation and production facility to
produce exceptional premium dry flower and inhalable derivatives
such as pre-rolls and concentrates. Our strategy and approach to
revenue and value generation is driven by a relentless focus on
growing exceptional cannabis and providing high quality product
that consumers have shown they want, through targeted, controlled
expansion instead of focusing on fast paced scale up.
Significant Market Opportunity Remains
Management believes that significant opportunity remains for a
company like Sugarbud to distinguish itself as a leader in the
cannabis space by implementing a strategically integrated, product
driven supply chain that begins and ends with the end customer in
mind. Sugarbud's singular focus and mission is to delight
customers and Sugarbud is committed to meeting or exceeding
expectations 100% of the time. Sugarbud expects to submit its
amended sales license application for dried cannabis to permit
interprovincial adult recreational sales to authorized retailers in
early Q1 2020. Sugarbud expects to launch its first adult
recreational products in early Q4 2020 when facility production is
targeted to exceed its current supply commitments.
About Sugarbud
Sugarbud is a federally licensed Alberta-based publicly traded cannabis company
focused on the cultivation and production of high-quality premium
cannabis, and product leadership through the development,
production and distribution of value-added cannabis products in
Canada.
http://www.sugarbud.ca/
Forward Looking and Cautionary Statements
This news release contains forward-looking statements. More
particularly, and without limitation, this news release contains
statements concerning: Sugarbud's assessment of future plans,
operations and cannabis cultivation; product quality; the supply
agreements and partnerships; the timing of obtaining necessary
approvals required to conduct the contemplated business of the
supply agreements; future value-added cannabis product offerings of
the Company, including pre-rolls and concentrates; legalization of
broader spectrum cannabis products; and participation in the market
for such products. When used in this document, the words "will,"
"anticipate," "believe," "estimate," "expect," "intent," "may,"
"project," "should," and similar expressions are intended to be
among the statements that identify forward-looking statements. The
forward-looking statements are founded on the basis of expectations
and assumptions made by Sugarbud. Forward-looking statements are
subject to a wide range of risks and uncertainties, and although
Sugarbud believes that the expectations represented by such
forward-looking statements are reasonable, there can be no
assurance that such expectations will be realized. Any number of
important factors could cause actual results to differ materially
from those in the forward-looking statements including, but not
limited to: currently contemplated expansion and development plans
may cease or otherwise change; production of cannabis may be lower
than expected, Sugarbud may not obtain the required approvals from
Health Canada, including approving an amendment to its dried
cannabis sales licence to permit interprovincial sales, demand for
Sugarbud's products may be lower than anticipated; results of
production and sale activities; results of scientific research;
changes in prices and costs of inputs; demand for labour; demand
for products; failure of counter-parties to perform contractual
obligations; failure to maintain consumer brand recognition and
loyalty of customers; substantial and increasing regulation and
uncertainty related to the regulation and taxation of vaporizer
products; reliance on relationships with wholesalers and retailers
for distribution of products and failure to maintain strategic
business relationships; intense competition, including from illicit
sources; uncertainty and continued evolution of markets; product
liability litigation; the scientific community's lack of
information regarding the long-term health effects of electronic
cigarettes, vaporizers and e-liquids; reliance on information
technology; infringement on intellectual property; failure to
benefit from partnerships; sensitivity of end-customers to
increased sales taxes and economic conditions; failure to comply
with certain regulations; departure of key management personnel or
inability to attract and retain talent; risks associated with the
e-cigarette, vaporizer and e-liquid industry in general; actions
and initiatives of federal and provincial governments and changes
to government actions, initiatives and policies and the execution
and impact thereof; and the size of the global e-cigarette and
vaping market; the ability to implement corporate strategies; the
state of domestic capital markets; the ability to obtain financing;
changes in general market conditions; industry conditions and
events; the size of the medical marijuana market and the
recreational marijuana market; government regulations, including
future legislative and regulatory developments involving medical
and recreational marijuana; construction delays; risks inherent in
the agricultural business, such as insects, plant diseases and
similar agricultural risks which can have a significant impact on
the size and quality of the harvest of cannabis crops; competition
from other industry participants; and other factors more fully
described from time to time in the reports and filings made by
Sugarbud with securities regulatory authorities. Please refer to
Sugarbud's most recent annual information form and management's
discussion and analysis for additional risk factors relating to
Sugarbud, which can be accessed under Sugarbud's profile
on www.sedar.com.
This news release contains future-oriented financial information
and financial outlook information (collectively, "FOFI") about
SugarBud's prospective future financings, prospective operations,
future cannabis production capacity, return on investment, capital
expansion plan, balance sheet, revenue, cash flow, including the
intention to have sustainable positive cash flow by late Q3 2020,
expenses and components thereof, all of which are subject to the
same assumptions, risk factors, limitations, and qualifications as
set forth in the above paragraph. FOFI contained in this document
was approved by management as of the date of this document and was
provided for the purpose of providing further information about
SugarBud's future business operations. SugarBud disclaims any
intention or obligation to update or revise any FOFI contained in
this document, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law.
Readers are cautioned that the FOFI contained in this document
should not be used for purposes other than for which it is
disclosed herein.
Except as required by applicable laws, Sugarbud does not
undertake any obligation to publicly update or revise any
forward-looking statements.
Neither the TSXV nor its regulation services provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE SugarBud Craft Growers Corp.