Bedrocan Announces Q1 2016 Results

TORONTO, June 25, 2015 /CNW/ - Bedrocan Cannabis Corp. ("Bedrocan" or "the Company") (TSXV: BED) announced its financial and operational results for the three month period ended April 30, 2015. Bedrocan Cannabis Corp's wholly owned subsidiary Bedrocan Canada Inc. is a Licensed Producer under Health Canada's Marihuana for Medical Purposes Regulations (MMPR).

Q1 2016 Financial and Operational Highlights:

  • Revenues of medicinal cannabis to authorized patients in Canada were $439,759 for the three month period ended April 30, 2015 ("Q1/2016"), compared to $94,812 for the three month period ended March 31, 2014.
  • Gross profit was $170,858 for three months ended April 30, 2015 (Q1/2016) compared to $94,812 for the three month period ended March 31, 2014.
  • Completed construction on schedule of its 52,000 square foot domestic production facility in the Greater Toronto Area (GTA).
  • Received its second license from Health Canada to allow for the production of medicinal cannabis in the first six grow rooms of its new production facility.
  • Was issued an import license from Health Canada to allow for the transfer and import of live plant material consisting of genetic clones of Bedrocan Beheer BV's proprietary strains of medicinal cannabis.

Subsequent to Quarter-End:

  • Received further approval from Health Canada for another 12 growing rooms in its new production facility, as well as the trimming and drying rooms.
  • Delivered first four domestic harvests on schedule, with product output and consistency as anticipated.
  • On June 24, 2015 Tweed Marijuana Inc. ("TMI") (TSXV: TWD), operator of licensed cannabis producers Tweed Inc. and Tweed Farms Inc., announced an agreement to acquire all of the issued and outstanding securities of the Company in an all-share transaction by which Bedrocan will become a division of TMI. Closing, expected in August 2015, remains subject to Bedrocan shareholder approval, court approval and the approval of the TSX Venture Exchange, among other conditions precedent.

"Our results reflect the continued evolution of our business and execution, on schedule, of key initiatives to drive growth," said Marc Wayne, President and CEO. "Subsequent to quarter-end, we launched domestic production from our state-of-the-art facility, successfully delivered our first four harvests, and entered into an acquisition agreement with Tweed Marijuana Inc., to unite the two strongest Cannabis brands in Canada under one roof. With visibility to domestic supply, we are now positioned to onboard additional patients, provide a better customer experience, and further strengthen our position as the producer of choice for standardized, pharmaceutical-grade medicinal cannabis."

Financial Highlights:

The Company continued to receive financial support from its shareholders, resulting in a cash injection totalling $6,242,500 to date in fiscal 2016, from loans, exercise of warrants and leasehold inducements.

The following compares the Company's unaudited consolidated operating results for the three month period ended April 30, 2015 and period ended March 31, 2014.

Revenue:

For the three month period ended April 30, 2015, the Company generated revenues of $439,759, compared to $94,812 for the comparative period ending March 31, 2014.  All revenues were related to the import and sale of medicinal cannabis. 

Gross Profit:

For the three month period ended April 30, 2015, the Company's gross profit amounted to $170,858, compared to $94,812 for the comparative period ending March 31, 2014. Gross margins for the three month period ended April 30, 2015 were 39% compared to 55% for the comparative period ending March 31, 2014. The 39% gross margin for the quarter ending April 30, 2015 was anticipated, was based on contractual obligations with Bedrocan BV, and was derived solely from imported products, whereas the earlier period was not representative and only included part of an operational quarter.  

Net Loss:

For the three month period ended April 30, 2015, the Company recorded a net loss and comprehensive loss of $997,880 (or approximately $0.01 per share), compared to a net loss and comprehensive loss for the comparative period ended March 31, 2014 of $354,636 (or $0.01 loss per share).

Cash and Liquidity:

As at April 30, 2015 the Company's cash and short term investments amounted to $2,366,480. Harmonized sales tax receivable from Canada Revenue Agency amounted to $505,504 and consequently, the Company's available liquidity amounted to $2,871,984 as at April 30, 2015, compared with $5,416,917 as at January 31, 2015. Consequently, the Company had working capital of $321,146 as at April 30, 2015 compared to $503,891 as at January 31, 2015. The decrease in working capital was a result of the capital expenditure used in the completion of the domestic production facility during the period. As a result, addition of property and equipment during the three month period ending April 30, 2015 was $2,023,542 which was offset by the receipt of $1,500,000 from leasehold inducement. During the quarter, the Company also received cash totalling $2,532,500 in form of a loan, as well as the exercise of warrants.  Subsequent to quarter-end, the Company received a further $2,000,000 term loan from a significant shareholder and director, and $210,000 from the exercise of warrants.

Outstanding Share Data:

As at June 24, 2015, the Company had 72,830,000 common shares issued and outstanding, 3,711,000 stock options and 13,745,000 warrants to purchase common shares.

Going Concern Assumption:

The Company has completed the production facility and no significant capital expenditures are anticipated for the next twelve months. The Company's cash and short term investments on hand as of April 30, 2015 are expected to be used for working capital including the building of inventory through increased production and to expand sales and marketing. The cash on hand and other liquidities are not sufficient to support all planned activities, and the success of Bedrocan is dependent upon obtaining further approval from Health Canada in order to expand its current capacity to produce, increased sales and distribution of medicinal cannabis in Canada and achieving profitable operations, all of which are outside of management's control.

Outlook:

The transaction announced with TMI on June 24, 2015, once completed, will allow Bedrocan, as a wholly owned subsidiary of TMI, to expand patient acquisition, grow the Bedrocan brand, and develop novel products, by combining the distinct, complementary strengths of the two companies. The acquisition will allow Bedrocan to focus on establishing its leadership within the clinical and research communities. The combined entity will be poised to meet diverse consumer needs, engage in clinical research, build trust with health practitioners and medical regulators, and capture increased market share.

The full version of the financial statements and the management discussion and analysis can be viewed on the Company's web site at www.bedrocan.ca and on SEDAR at www.sedar.com.

About Bedrocan Cannabis Corp.

Bedrocan Cannabis Corp. (Bedrocan Canada) is focused on clinical research, technologically-advanced, automated production processes, and innovative product development. Bedrocan Canada and its licensor Bedrocan Beheer BV (Netherlands) are the only companies in the world currently capable of producing standardized full-bud, pharmaceutical-grade medicinal cannabis. Bedrocan Beheer BV has been producing and supplying government-regulated medicinal cannabis for 13 years. www.bedrocan.ca

Neither 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.

Forward Looking Statements

This news release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about strategic plans, including the Company's ability to implement its business development strategy and construct its production facility. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. All forward-looking information contained in this news release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. Except as required by law, Bedrocan disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise. Readers are cautioned not to put undue reliance on these forward-looking statements. This news release contains information obtained by the Company from third parties, including but not limited to market data. The Company believes such information to be accurate but has not independently verified such information. To the extent such information was obtained from third party sources, there is a risk that the assumptions made and conclusions drawn by the Company based on such representations are not accurate.

SOURCE Bedrocan Cannabis Corp.

For further information: Cam Battley, VP Communications and Corporate Development, Bedrocan Cannabis Corp., cbattley@bedrocan.ca, +1.905.864.5525, www.bedrocan.ca

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Bedrocan Cannabis Corp.

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