TORONTO, May 25, 2020 /CNW/ - 48North Cannabis Corp.
("48North" or the "Company") (TSXV:NRTH), a vertically integrated
Licensed Producer focused on manufacturing high-quality cannabis
products, building progressive and thought-provoking brands, and
low-cost cultivation, has released its financial and operating
results for the third quarter ended March
31, 2020. The Company's financial statements and related
management discussion and analysis for the period are available on
the Company's SEDAR profile at www.sedar.com and on the
Company's website at www.48nrth.com/investors.
Financial and Operating Highlights for Fiscal Q3 2020
- Quarterly revenue of $2.8
million, representing a 55 per cent quarter-over-quarter
increase over second-quarter 2020 revenues of $1.8 million, and a 307 per cent increase over
third-quarter 2019 revenues of $689,000.
- Within Q3, 48North completed the build-out of the Good:House, a
state-of-the-art extraction facility expected to be able to process
30,000 kg of cannabis annually. In addition to its current capacity
for dried flower and next generation product, the Company is
currently commissioning automated packaging lines for dried flower,
increasing pre-roll and topical manufacturing capacity, and adding
secured storage space.
- To that end, 48North announced the launch of the Company's
strategic partnership with Humble & Fume Inc.'s, Fume Labs,
Inc. The partnership will manufacture 48North and humble+fume's
vaporizer products, contract manufacture cannabis products for
cannabis brands, licensed producers and retail brands, and leverage
humble+fume's extensive nationwide sales and distribution network
and act as the sales agency for products produced at the
facility.
- In addition, the Company completed the build-out of the
purpose-built drying facility at the Good:Farm, with the capacity
to hang dry 48North's outdoor cannabis harvest. The licence
amendment application was submitted May 8,
2020, and the Company expects to receive the necessary
approvals before the fall harvest. To see the progress made at
48North's production facilities, please click here to see the
Company's recently released corporate video.
- 48North launched its initial suite of next-generation cannabis
products. This included 48North's first vape pen and topical cream.
In addition, the Company launched sun-grown flower in Alberta and the Company's first accessible
dried flower brand in Quebec.
- $17.8 million of cash and cash
equivalents on hand at the end of the quarter. During the third
quarter, the Company used $14.8
million during the period, with $6
million used in operations, $4.7
million in non-cash working capital and $4.1 million in investing activities, largely
related to the acquisition of property, plant and equipment.
- During the quarter, the Company reviewed its assumptions
regarding the licence, goodwill and intangibles amounts,
specifically, whether there was any impairment to the balance sheet
values. As such, the Company determined that the goodwill and
intangible assets relating to the Rare Industries, Inc. ("Rare")
and Sackville & Co. Merchandising Ltd. ("Sackville")
acquisitions were impaired and have been written off at quarter
end. This has resulted in an impairment of goodwill and
intangible charge of $4.1 million
during the quarter.
- The Company also reviewed the underlying assumptions for the
inventory valuation and based on current market trends regarding
expected selling price per gram, has reduced expected selling price
per gram for outdoor from $1.00 to
$0.50 per gram. As such, during
Q3 2020, the Company has increased the fair market adjustment on
inventory on the statement of loss by $5.4
million.
- Looking ahead, it is expected that 48North's quarterly expenses
will see a decrease alongside an increase in revenue driven by the
sale of additional cannabis products – in new markets and newly
launched SKUs in existing markets – and contract manufacturing
relationships with cannabis brands, retail brands, other licensed
producers, and pharmaceutical brands.
Events Subsequent to Q3 Fiscal 2020
- 48North focused its attention on the successful planting of its
second season at the Good:Farm. To date, the Company is using its
three licensed hoop-houses on the farm to propagate its clones,
adding the necessary amendments to the soil, and removed all
single-use plastic from the farm. In addition, the Company has
completed the build-out of the state-of-the-art drying facility at
the farm and submitted the applicable licence amendment on
May 8, 2020. To that end, the Company
expects to receive the necessary approval from Health Canada in
time for the fall harvest. Finally, the Company expects to begin
planting in its clones and seeds at the Good:Farm in the beginning
of June, a full month ahead of the 2019 season.
- 48North launched a collection of new products in new markets,
this includes vape-products, topical products, and additional SKUs
of outdoor flower, indoor flower, accessibly priced flower and
pre-rolls. Moreover, 48North launched its set of products into
British Columbia and Saskatchewan. Looking ahead, the Company has
immediate plans to expand into Manitoba and New
Brunswick.
- To that end, 48North successfully commercialized its cannabis
biomass from the Good:Farm and launched its first offering of
next-generation cannabis products. To date, the sell-through of
these products has been strong and the Company expects this trend
will continue.
- 48North signed a key supply agreement with Medical Cannabis by
Shoppers Drug Mart Inc. ("Shoppers"), a subsidiary of Shoppers Drug
Mart Inc. Under the terms of the agreement, 48North will become a
supplier of cannabis and cannabis products through the Shoppers
online sales platform. As a result, 48North-branded products and
licensed brands will now be available to Medical Cannabis by
Shoppers™ patients across Canada.
- 48North signed a supply agreement with Pax Labs (Canada) Inc. At launch, fume labs will
manufacture two cannabis oil pods for the PAX Era and PAX Era Pro,
which will be available to consumers within the quarter.
- In addition, 48North successfully managed to operate at
full-capacity throughout the evolving COVID-19 situation. Through
the implementation of increased health and safety protocols the
Company was able to increase through-put, launch new products,
enter new markets, finish construction activities and begin
production for the second season at the Good:Farm. To that end,
48North as seen an increase in sales volumes since the start of
pandemic.
- In an effort to sharpen its focus on the Canadian marketplace,
the Company announced two divestments, specifically 48North
returned Rare and Sackville, two
U.S.-based cannabis companies, to their previous ownership.
- Finally, the Company launched its second edition of
Latitude, 48North's onmi-channel customer acquisition tool
focused on building brand, targeting new customers and engaging
existing 48North consumers.
"This quarter marked an important turning point for 48North,"
said Charles Vennat, CEO of 48North
Cannabis Corp. "When appointed as the Company's CEO, I inherited a
strong brand with significant consumer demand, however the
organization required operational and structural improvements to
satisfy this demand.
We have now laid the groundwork for sustained, accelerated and
future growth, and done so while increasing quarterly revenue by
55%. Our strategy is built around a commitment to manufacturing
high-quality cannabis products for our own brand and other leading
brands, as well as our commitment to low-cost cultivation practices
that result in consistent biomass.
In the coming quarters, 48North will continue to respond to
consumer demand with additional products and brands in the Canadian
adult-use market, announce additional contract manufacturing
partnerships, and remains committed to the vision of the company:
that natural and high-quality products can create thought-provoking
experiences that nurture well-being. And that good cannabis can
give people the latitude to live well," continued Charles.
To that end, in addition, the Company announced the appointment
of Susan Nickle to the Company's
Board of Directors. Susan is an accomplished and strategic
executive, committed to operational and governance excellence.
Currently, Susan is the Executive Vice President, Chief People
Officer and General Counsel at London Health Sciences Centre.
Further, the Company announced the departure of Alan Gertner from 48North's Board of Directors,
effective immediately. The Company thanks Alan for his
contribution.
48North has granted an aggregate of 1,119,000 stock options
(each an "Option") to certain directors, officers, and employees of
the Company. The Options and RSU's vest through the passage
of time or the achievement of specific goals. The specific
goals for the Options and RSU's vary based upon the duties and
responsibility of the recipient. Each Option is exercisable into
one common share ("Share") of the Company at a price of
$0.255 per Share for a period of
three years from the date of grant. Each RSU is exercisable
into one Share for a period of up to three years from the date of
grant. All of the Options and RSU's have been granted
pursuant to the Company's Stock Option Plan and Restricted Share
Unit Plan which has been previously approved by the Company's
shareholders and the TSX Venture Exchange.
Selected Financial Information
All amounts are expressed in Canadian dollars
|
|
3-months ended
March 31, 2020
|
9-months ended
March 31, 2020
|
Revenue
|
2,805,875
|
6,208,656
|
Net loss
|
17,796,148
|
21,587,336
|
Total
assets
|
77,935,787
|
77,935,787
|
Total
liabilities
|
9,367,328
|
9,367,328
|
Cash and cash
equivalents
|
17,821,274
|
17,821,274
|
Third Quarter 2020 Results Conference Call
When:
May 26, 2020 at 8:30 AM (ET)
Dial-in number: 1-888-231-8191
The conference ID is 3192859 and you will be prompted to provide
your name and company.
About 48North
48North Cannabis Corp. (TSXV: NRTH) is a vertically integrated
cannabis company focused on manufacturing high-quality products,
building progressive and thought-provoking brands, and low-cost
cultivation. 48North is developing formulations and manufacturing
capabilities for its own proprietary products, as well as
positioning itself to contract manufacture similar products for
third parties. 48North operates Good:Farm, a 100-acre organic
cannabis farm which produces organically grown cannabis, securing a
significant first-mover advantage in the production of low-cost,
next-generation, extract-based cannabis products. In addition,
48North operates two indoor-licensed cannabis production sites in
Ontario. 48North cultivates unique
genetics at its wholly owned subsidiary, DelShen Therapeutics Corp.
("DelShen") and processes cannabis and manufactures next-generation
cannabis products at Good & Green Corp. ("Good & Green"),
both Licensed Producers under the Cannabis Act.
DISCLAIMER & READER ADVISORY
Neither the 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. Certain statements contained in this press release
constitute forward-looking information. These statements relate to
future events or future performance. The use of any of the words
"could," "intend," "expect," "believe," "will," "projected,"
"estimated" and similar expressions and statements relating to
matters that are not historical facts are intended to identify
forward-looking information and are based on the parties' current
beliefs or assumptions as to the outcome and timing of such future
events. Actual future results may differ materially. Please refer
to the Company's SEDAR filings for further details concerning the
risks associated with the Company's business. The forward-looking
information contained in this release is made as of the date hereof
and the parties are not obligated to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
applicable securities laws. Because of the risks, uncertainties and
assumptions contained herein, investors should not place undue
reliance on forward-looking information. The foregoing statements
expressly qualify any forward-looking information contained herein.
Public health crises, including the ongoing novel coronavirus
(COVID-19) pandemic, could have significant economic and
geopolitical impacts that may adversely affect the Company's
business, financial condition and/or results of operations.
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SOURCE 48North Cannabis Corp.