WINNIPEG, Aug. 27, 2019 /CNW/ - DELTA 9 CANNABIS INC.
(TSXV: DN) (OTCQX: VRNDF) ("Delta 9" or the "Company"), is pleased
to announce financial and operating results for the second quarter
of 2019.
Financial Highlights for Q2, 2019
- Record operating revenues of $8.9
million for the second quarter of 2019, up 1,142%, from
$715,746 for the same quarter last
year.
-
- Sequential net revenues increased 58% for the second quarter of
2019 compared to $5,632,184 in Q1,
2019.
- Adjusted EBITDA1 was $(663,705) up $1.3
million or 65% compared to $(1,978,778) in Q1, 2019.
- Gross profit2 of $2.9
million for the second quarter of 2019, up 780%, from
$335,226 for the same quarter last
year.
-
- Gross profit margin was 33% for Q2, 2019.
"Management would highlight the improvement of $1.3 million in Adjusted EBITDA loss over the
past two quarters as a positive indication of the performance of
the Company's operating businesses in the wake of legalization of
recreational use cannabis on October 17,
2018," said John Arbuthnot,
CEO of Delta 9. "We believe our Q2 results demonstrate the
continued strength of our business model as we pursue a path
towards profitability and disciplined growth for this year."
Financial Highlights for the first half of 2019
- Record operating revenues of $14.5
million, up 1,286%, from $1.0
million for the same period last year.
- Gross profit2 of $4.8 million, up
973%, from $444164 for the same
period last year.
-
- Gross profit margin was 33% for the first half of 2019.
"Delta 9 will continue to drive sustainable long-term
shareholder value by leveraging its strong brand positioning in
Western Canadian markets, expanding our various wholesale supply
contracts and scaling up our cultivation operations said
John Arbuthnot," CEO of Delta 9. "We
are taking a responsible and compliant approach to growing our
business to build an authentic Delta 9 brand as we pursue retail
opportunities in the Western Canadian market place."
Operational Highlights
- On May 20, 2019, the Company
received approval from Health Canada for an additional 48 of its
proprietary "Grow Pods", bringing its total number of Grow Pods
approved by Health Canada to 202.
-
- The additional 48 Grow Pods will increase production by 1,150
kilograms per year of dried cannabis flower production, bringing
the Company's overall anticipated production capacity to 5,350
kilograms of dried cannabis flower per year.
- There are now a total of 297 Grow Pods within its Winnipeg production facility (the "Delta
Facility").
- The Company is continuing with its planned Phase II expansion
of the Delta Facility to increase cannabis production to 16,500
kilograms per year.
"The 297 Grow Pods that Delta 9 now has in in our production
facility will bring our anticipated production capacity to 7,626
kilograms once all the pods are approved by Health Canada for
production," said John Arbuthnot,
CEO of Delta 9.
Selected Quarterly Information:
|
Consolidated
Statement of Net Income
|
Q2
2019
|
Q2
2018
|
|
Revenue
|
$8,886,155
|
$715,746
|
|
Cost of
Sales
|
5,936,975
|
380,520
|
|
Gross Profit Before
Unrealized Gain from Changes In Biological Assets
|
2,949,180
|
335,226
|
|
Unrealized gain from
changes in fair value of biological assets
|
4,378,353
|
328,214
|
|
Gross
Profit
|
$3,535,546
|
$663,440
|
|
|
|
|
Expenses
|
|
|
|
General and
Administrative
|
3,075,803
|
2,056,097
|
|
Sales and
Marketing
|
1,324,537
|
265,332
|
|
Share based
Compensation
|
244,848
|
521,598
|
|
Total Operating
Expenses
|
$4,645,188
|
$2,843,027
|
|
|
|
|
Loss from
Operations
|
$(1,109,642)
|
$(2,179,587)
|
|
|
|
|
Other Income/
Expenses
|
|
|
|
Finance Income
(cost)
|
(217,975)
|
(7,172)
|
|
Rental and other
income
|
11,744
|
3,750
|
|
|
|
|
Net
Income
|
$1,315,873
|
$(2,183,009)
|
|
Other comprehensive
Income
|
|
|
|
Fair value change in
West leaf Investment
|
(9,240,000)
|
--
|
|
|
|
|
|
|
|
Net Income and
Comprehensive Income
|
$(10,555,873)
|
$(2,183,009)
|
|
|
|
|
Earnings per Share
(basic)
|
$(0.01)
|
$(0.03)
|
|
Weighted average
number of shares outstanding
|
87,713,479
|
86,759,632
|
"Additionally, Delta 9 is looking forward to being up listed on
the Toronto Stock Exchange," said John
Arbuthnot, CEO of Delta 9. "This will be a major milestone
for the evolution of our company and should enhance the financial
opportunities for our shareholders."
|
Consolidated
Statement of Net Loss
|
Q2
2019
|
Q1
2019
|
Q4
2018
|
Q3
2018
|
|
Revenue
|
$8,886,155
|
$5,632,184
|
$5,270,217
|
$1,251,213
|
|
Cost of
Sales
|
$5,936,975
|
$3,815,930
|
$4,015,644
|
$938,733
|
|
Gross Profit Before
Unrealized Gain from Changes In Biological Assets
|
$2,949,180
|
$1,816,254
|
$1,254,573
|
$312,480
|
|
Unrealized gain from
changes in fair value of biological assets
|
$586,366
|
$2,406,735
|
$2,087,367
|
$1,218,257
|
|
Gross Profit
(Loss)
|
$3,535,546
|
$4,222,989
|
$3,341,940
|
$1,530,737
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
General and
Administrative
|
$3,075,803
|
$3,451,900
|
$3,296,351
|
$2,790,227
|
|
Sales and
Marketing
|
$1,324,537
|
$969,202
|
$1,389,241
|
$300,138
|
|
Share Based
Compensation
|
$244,848
|
$748,067
|
$807,834
|
$671,606
|
|
Total Operating
Expenses
|
$4,645,188
|
$5,169,169
|
$5,493,426
|
$3,761,971
|
|
|
|
|
|
|
Adjusted EBITDA
(Loss)
|
$(663,705)
|
$(1,978,778)
|
$(2,815,412)
|
$(2,584,485)
|
|
Income (Loss) from
Operations
|
$(1,109,642)
|
$(946,180)
|
$(2,151,486)
|
$(2,231,234)
|
|
Other Income/
Expenses
|
$(206,231)
|
$17,260,525
|
$69,033
|
$(164,075)
|
|
Net Income
(Loss)
|
$(1,315,873)
|
$16,314,345
|
$(2,082,453)
|
$(2,395,309)
|
|
Basic and Diluted
Earnings (Loss) Per Share
|
$(0.01)
|
$0.19
|
$(0.02)
|
$(0.03)
|
The following chart provides a breakdown of the Company's
revenue by segment:
|
Revenue from the
Sale of Cannabis
|
Six-month
period ending
June 30, 2019
|
Six-month
period ending
June 30, 2018
|
Three-month
period ending
June 30, 2019
|
Three-month
period ending
March 31, 2019
|
|
Wholesale Cannabis
Revenue
|
$5,853,288
|
|
$2,917,647
|
$2,935,641
|
|
Retail Cannabis
Revenue
|
5,956,500
|
|
3,519,406
|
2,437,094
|
|
Medicinal Cannabis
Revenue
|
183,976
|
445,176
|
87,416
|
96,560
|
|
|
|
|
|
|
Revenue from Other
categories
|
|
|
|
|
|
Business to business
activities
|
2,210,167
|
502,634
|
2,165,167
|
45,000
|
|
Merchandise and
cannabis devices
|
339,235
|
22,985
|
184,164
|
155,071
|
|
Other
|
109,713
|
77,058
|
62,976
|
46,737
|
|
|
|
|
|
|
Sub
total
|
$14,652,879
|
$1,047,853
|
$8,936,776
|
$5,716,103
|
|
|
|
|
|
|
(Less) Excise
Taxes
|
134,540
|
0
|
50,621
|
83,919
|
|
|
|
|
|
|
Net
Revenue
|
$14,518,339
|
$1,047,853
|
$8,886,155
|
$5,632,184
|
Discussion of Operations for Q2 versus Q1,
2019:
|
Key Performance
Indicators
|
For the
three-month period
ending March 31, 2019
|
For the
three-month period
ending June 30, 2019
|
|
|
|
|
Production/
Wholesale Unit
|
|
|
|
Total Grams
Produced
|
418,901
|
675,233
|
|
Direct Production
Cost Per Gram
|
$1.44
|
$1.05
|
|
Total Cost Per
Gram
|
$1.60
|
$1.21
|
|
Total Grams Released
for Sale
|
185,626
|
565,599
|
|
Total Grams Sold
(Recreational Wholesale)
|
386,387
|
517,718
|
|
Total Grams Sold
(Medical)
|
13,400
|
9,975
|
|
Avg Selling Price per
Gram
|
$7.58
|
$5.63
|
|
|
|
|
Retail
Unit
|
|
|
|
Total Grams Sold
(Retail)
|
189,796
|
282,336
|
|
Avg Selling Price per
Gram
|
$12.84
|
$12.42
|
|
Number of
Transactions Processed
|
44,885
|
84,882
|
|
Avg Transaction
Size
|
$58.27
|
$41.46
|
|
|
|
|
Unique Website
Visitors (delta9.ca)
|
180,774
|
152,680
|
A comprehensive discussion of Delta 9's financial position and
results of operations is provided in the Company's Management
Discussion & Analysis for the second quarter and first half of
2019 filed on SEDAR and can be found at www.sedar.com.
Q2 Results 2019 Conference Call
Delta 9 has scheduled a conference call to discuss the results
for second quarter of 2019. The conference call will be hosted
August 28, 2019 at 9:00 a.m.
Eastern Time by John Arbuthnot, Chief Executive Officer
and Jim Lawson, Chief Financial
Officer, followed by a question and answer period.
|
DATE:
|
August 28,
2019
|
|
TIME:
|
9:00 a.m. Eastern
Time
|
|
DIAL IN #
|
1-888-886-7786
|
|
REPLAY:
|
1-877-674-6060
Available until 12:00 midnight Eastern Time, November 28,
2019
|
|
REPLAY
PASSCODE:
|
528211 #
|
About Delta 9 Cannabis Inc.
Delta 9 Cannabis Inc. is a vertically integrated cannabis
company focused on bringing the highest quality cannabis products
to market. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech
Inc., is a licensed producer of medical and recreational cannabis
and operates an 80,000 square foot production facility
in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of
retail stores under the Delta 9 Cannabis Store brand. Delta 9's
shares trade on the TSX Venture Exchange under the symbol "DN" and
on the OTCQX under the symbol VRNDF. For more information, please
visit www.delta9.ca.
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) increases in Delta 9's cannabis production
capacity; (ii) Delta 9's expansion plans; and (iii) Delta 9's
graduation to the Toronto Stock Exchange. 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 all risk factors set forth
in the annual information form of Delta 9 dated April 30,
2019 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.
|
________________________
|
|
1The
Company's "Adjusted EBITDA" is a measure used by management that
does not have any standardized meaning prescribed by International
Financial Reporting Standards and may not be comparable to similar
measures presented by other companies. Management defines the
Adjusted EBITDA as the income (loss) from operations, as reported,
before interest and tax, adjusted for removing share-based
compensation expense, depreciation and amortization, and the fair
value effects of accounting for biological assets and inventories.
Management believes that Adjusted EBITDA, and the attribution of
Adjusted EBITDA in the manner described above, provides meaningful
and useful financial information as these measures demonstrate the
performance of the Company's operating businesses.
|
|
2 The Company's "Gross Profit" Is
calculated before adjustments for changes in Biological
assets.
|
SOURCE Delta 9 Cannabis Inc.