Cannara Biotech Delivers Strong
Q2
2021 Results
Significant second quarter
revenue generation of $1.2
million and gross profit increase to
$2.1 million showcases Cannara's positive
trajectory
Montreal, Quebec, Canada -- April 28, 2021 --
InvestorsHub NewsWire -- Cannara Biotech
Inc.
("Cannara"
or the
"Company") (TSXV:
LOVE) (OTCQB:
LOVFF) (FRA: 8CB), a vertically integrated
producer of indoor cannabis and derivative products with one of the
largest indoor cannabis cultivation facilities in Canada and the
largest in Quebec, today announced its
operating
and financial results
for the
three and
six-month periods ended February 28, 2021 and February 29,
2020. All dollar amounts are expressed
in Canadian dollars unless otherwise
noted.
Second Quarter Highlights
- Received amended sales licence from Health
Canada to
allow sales to provincial distributors
- Successfully
launched its three flagship brands
– Tribal, Nugz and Orchid CBD – and completed its first
retail shipment through the
Société
québécoise
du
cannabis (SQDC) on February 25, 2021
and March 4, 2021
- Total cannabis sales
of
$1.22 million (net of excise tax)
in Q2 2021
compared
to nil in
the same period of the prior year
- Gross profit increased
from $470 thousand in Q2 2020 to
$2.1 million in Q2
2021
- Operating costs decreased
by 33% from Q2 2020 to Q2
2021
- Secured 100% occupancy of the
Company's Farnham Facility
- Completed two monthly
shipments totalling
399.31 kg of dried cannabis to
a
wholesale
partner under its one-year supply
agreement which commenced January 1, 2021
Highlights
Subsequent to Quarter End
- Transitioned trading
activity from the
Canadian Stock Exchange (CSE) to the TSX Venture (TSXV) on April 8, 2021
under stock
symbol LOVE.V for increased investor
awareness
- Signed significant one-time
wholesale agreements to supply approximately 1,400 kg
of cannabis for a total value of $1,265,000
- Achieved first complete
month (March 2021)
of
net
revenue
generation from retail and wholesale channels of
$1.8 million
- Granted an aggregate total of
110,000 stock options to certain employees at an exercise
price of $0.18
per common share, subject to certain vesting
conditions
- Extended
maturity date by an additional year on one of the two
mortgages
CEO
and CFO
Commentaries
"2021 has been a
transformational year for our business thus far,
marked by significant milestones
and a strong
balance sheet. From receiving our
amended
sales licence from Health Canada to
launching our brand portfolio
through the
SQDC, we
are making meaningful
strides
to capturing market share in
Quebec while positioning ourselves for long-term growth and success
across Canada," said Zohar Krivorot,
President & Chief Executive Officer of Cannara Biotech
Inc. "Our listing on the
TSXV
was also a
major milestone of our progression
that will
enhance our
profile as
a leading producer of premium-grade cannabis products, crafted with
the highest-quality genetics and at a price point that Canadians
deserve."
"Cannara is
tracking well against our
key performance
metrics,
targets and overall strategic vision. Based on our positive gross
profit from our wholesale revenues
and one
week of retail sales in Q2, I look forward
to what we can accomplish in subsequent quarters with the fully
realized impact of our retail, wholesale and rental revenue
channels," Nicholas Sosiak, Chief
Financial Officer of Cannara Biotech
Inc. "Bolstered by the positive
reception of our flagship brands and significant wholesale
agreements, we are confident in our business' ability to build
sustainable, profitable growth for our
shareholders."
Results of Operations
Cannabis Operations
For the three and
six-month periods ended February 28, 2021, the segment generated
$1,469,451 and $2,182,419 in revenues, net of excise
tax, mainly from its wholesale clients, compared to
$19,599
for the same
periods of the prior year, resulting in a
segmented gross profit
before fair value
adjustments for the three and six-month
periods ended February 28, 2021 of $733,021 and
$756,035,
representing a gross margin before far value
adjustments of 50% and
35%,
respectively.
For the three and
six-month periods ended February 28, 2021, the segment incurred
$1,529,968 and $559,477 in gross profit after fair value
adjustments compared to a gross
profit after fair value
adjustments of $19,599 in the same
periods of the prior year, representing a favorable increase of
$1,510,369 and $539,878,
respectively.
For
the three and
six-month periods ended February 28, 2021, operating expenses
were $2,050,379 and
$4,086,700
compared to
$2,587,854 and $4,522,784 for the same periods
of the prior year. The decrease in operating
expenses is mainly attributable to:
- A decrease of
$860,133
and $1,117,483 in general and administrative
expenses for the three and six-month
periods and a decrease of
$170,428 in professional fees
for the six-month
period; and
- An increase of
$100,493 and
$650,887 in research and
development; and $133,885 and
$200,940 increase in sale and
marketing expenses for the three and six-month
periods, respectively.
Real Estate Operations
As part of the
Company's capital management strategy, it has leased out all currently
unoccupied space in the Farnham Facility. The Company leased 425,480
square feet of the total 625,000 available square feet to two
tenants. For the three and six-month
periods ended February 28, 2021, the Company generated lease
revenues of $752,457 and $1,309,389 compared to $641,480 and
$1,169,008 in the same periods of the prior year.
The increase in
lease operating expenses for the six-month period is attributable
to expenses incurred in the first quarter of 2021 to accommodate
the new tenant.
The segment net
income for the three and six-month periods ended February 28, 2021
was $558,812 and $1,016,897 compared to $451,128 and $949,024 in
the same periods of the prior year, resulting in an increase of
$107,684 and $67,873 in segment
net
income.
The Company has a
working capital of $7,423,458 as at February 28,
2021,
including cash on hand of
$4,730,524. The Company has been able to
maintain its working capital ratio compared to prior year due to
the access to the credit facilities and wholesale revenues
generated.
Outstanding Shares
As at the date of
this report, the Company had 741,481,321
common shares and
37,391,588 stock options issued
outstanding.
For further
information, the complete condensed interim
consolidated
Financial Statements and Management's Discussion and Analysis for
the three and six-month periods ended
February 28, 2021 and February 29, 2020, along with additional
information about the Company and all of its public filings are
available at sedar.com and the Company's
investor
website, investors.cannara.ca.
About Cannara
Biotech Inc.
Cannara Biotech
Inc. (TSXV:
LOVE)
(OTCQB:
LOVFF) (FRA: 8CB) is a vertically integrated producer of
premium-grade indoor cannabis and cannabis-derivative products for
the Quebec and Canadian markets. Its Quebec-based facility is one
of the largest indoor cannabis cultivation facilities in Canada and
the largest in Quebec (625,000 square feet). Leveraging Quebec's
low electricity costs, the Cannara facility will produce
purposefully cultivated indoor premium cannabis flower at an
affordable price. For more information, please visit
cannara.ca.
Contact:
Nicholas Sosiak, CPA,
CA
Chief Financial
Officer
nick@cannara.ca
Zohar Krivorot
President & Chief
Executive Officer
zohar@cannara.ca
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.
Cautionary
Statement Regarding "Forward-Looking" Information
This information release contains certain forward-looking
information. Such information involves known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different
from those implied by statements herein, and therefore these
statements should not be read as guarantees of future performance
or results. All forward-looking statements are based on the
Company's current beliefs as well as assumptions made by and
information currently available to it as well as other factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. Due to risks and uncertainties, including the risks
and uncertainties identified by the Company in its public
securities filings, actual events may differ materially from
current expectations. The Company disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future
events or otherwise.
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