OTTAWA, May 30, 2014 /CNW/ - Tweed Marijuana Inc. (TSXV: TWD) ("Tweed"
or the "Company"), today announced its first quarter (Q1) financial
results for the three month period ended March 31, 2014. Tweed's wholly
owned subsidiary Tweed Inc. is a licensed producer ("LP") under the
Canadian Marihuana for Medical Purposes Regulations ("MMPR"), making Tweed the first publicly traded producer of medical
marijuana in Canada.
Financial and Operational Highlights
Chuck Rifici, CEO and Co-founder of the Company noted "I am pleased to
report our progress in this first quarter as a public company. During
this period, the Company's focus and operating spending has been on
achieving commercial production to be able to sell medical marijuana to
Canadians in need." Positioning itself to be a major player in the
medical marijuana market, which became exclusively legislatively
governed by the MMPR on April 1, 2014, the Company has in particular
focused efforts on a number of priorities including:
Designing and constructing the production facilities and growth
Hiring and developing the in-house expertise for the operations,
production, management, and professional services requirements of the
Commencing the grow operations in order to be in a position to supply
The Company shipped its first product on May 5, 2014.
The Company has no revenue to report, as it had not shipped product as
of March 31, 2014.
Operating expenses for the quarter ended March 31, 2014 was $2,751,210
as compared to $nil for the quarter ended March 31, 2013. $1,259,792 of
these expenses were listing expenses and reverse acquisition costs and
are non-occurring. These expenses commenced in the first quarter of
fiscal 2014 as the Company hired employees in the areas of operations,
production and administration, pursued and invested in specific
educational and outreach initiatives as well as the required government
permits, engaged expertise in developing its business and production
strategies, and incurred costs associated with consumables used in
implementing and commencing the growing operations.
Stock compensation expense of $158,426 related to the expense associated
with the stock options granted to employees and consultants during
fiscal 2013 and the first quarter 2014.
Amortization of intangible assets for the first quarter ending March 31,
2014 amounted to $2,467 and relates to the amortization of the cost
associated with the acquisition of the tweed.com domain name, which is being amortized over a five-year period.
Amortization of property, plant and equipment for the first quarter
ending March 31, 2014 amounted to $5,555. Assets within leasehold
construction in progress will be transferred to property, plant and
equipment when construction is complete and they are available for use.
At that point, amortization on those assets will commence.
Other net expenses of $5,070 relate to foreign exchange losses and
interest income during the period.
The net loss for the quarter ending March 31, 2014 was $2,756,280.
The table below sets out the cash, short-term investments, and working
capital at December 31, 2013 and March 31, 2014.
As at March 31, 2014
As at December 31, 2013
Cash and equivalents
Short term investments
The increase in the working capital from $1,817,024 to $6,713,693 is
mainly due to the equity financing raised in the period, partially
offset by cash used in operating activities and the investment in
long-term assets for the business. The long-term assets are primarily
the leasehold construction in progress assets that relate to the
infrastructure for business production and operations.
The chart below highlights the Company's cash flows during the quarter
ending March 31, 2014.
Net cash provided by (used in):
Three months ended March 31
As at March 31, 2014, the Company had cash available of $7,700,107. The
Company consumed $2,907,054 in operating activities during the quarter;
generated cash from equity financing activities in the amount of
$9,820,384 and used cash of $1,501,017 for investing activities
associated with long-term assets. The Company has incurred losses to
date. The Company expects to generate limited revenue commencing in the
second quarter of 2014 and will incur losses until revenues reach a
level where operations become profitable.
On May 5, 2014 Tweed Inc. commenced shipping medical marijuana to
On May 14, 2014, the Company announced that it had closed a short form
prospectus offering, on a bought deal basis, of 4,687,500 common shares
for aggregate gross proceeds of $15,000,000 (the "Offering"). The
Offering was completed at a price of $3.20 per common share (the
"Offering Price") by a syndicate of underwriters led by GMP Securities
L.P. and including Jacob Securities Inc. (the "Underwriters"). The
Company also granted the Underwriters an over-allotment option to
purchase up to an additional 703,125 common shares at the Offering
Price, exercisable in whole or in part, at any time on or prior to the
date that is 30 days following the closing of the Offering. Such
over-allotment option remains outstanding unexercised as of the date of
On April 4, 2014 the Company announced that it had granted options to
purchase 251,210 common shares to directors and officers of the
Company. The TSX Venture Exchange did not accept those options for
filing and, as a result, such options were cancelled.
"Canada is leading the world with respect to regulatory and product
standards for the production of medical marijuana, and Tweed has
clearly asserted its leadership role within Canada," stated Bruce
Linton, Co-Founder and Chairman of Tweed. "This is a sector that was
established through the MMPR less than a year ago and, while much work
remains, Canadians will benefit from this bold leadership."
The MMPR structure was announced on June 19, 2013, and represents one of
the most comprehensive and safe frameworks for the private production
and sale of medical marijuana in the world. It provides a national
basis for both controlled supply and quality verification, requiring
LPs to achieve product testing standards not previously applied in
Canada, and setting a standard as high as any in the world. This is to
the benefit of the patient's health. For example, MMPR LPs are
prohibited from the use of virtually all pesticides, fungicides, and
herbicides, yet must produce a product that is without molds or other
bacteria, tested to a microscopic level. Tweed executes comprehensives
tests on all medicine prior to having it available for shipment. Third
party labs are currently being used as Tweed is in the process of
constructing its in-house laboratory. At the end of the approximately
four month growing period, the drying, trimming, curing, testing, cold
pasteurizing (as required), re-testing and packaging process can add as
many as 5 weeks of production time to the seed-to-sale process
following harvesting. This time commitment has merit, yet as Tweed has
experienced, it does delay the initial production for volume release.
Tweed began harvesting its first full size commercial growing room on
April 21st, and shipped this harvest on May 5, 2014.
As market participants are aware, an injunction announced on March 21,
2014 allowed current growers and patients under the previous regulatory
regime to continue growing until a legal challenge is completed. At
present, the priority for many LPs, including Tweed, remains production
of sufficient product to meet patient demand, even with the injunction
in place. While production is a function that can be accelerated - and
in the case of Tweed has been accelerated - the complexities of dealing
with a crop in a highly regulated environment translate into added
variables beyond the addition of further capital or personnel. The
function of construction and production are serially linked, such that
a multiple month time lag exists between decisions to expand capacity
and the availability of new medical marijuana in the market. This
constraint has been more impactful than anticipated by Tweed, has been
a frustration to patients, and appears likely to be the singular
limiter on growth in revenues for the balance of 2014. The sector as a
whole has several participants that appear to be working through the
same production volume challenge.
A further key variable surrounding the medical marijuana market is the
significant effort and uncertainty involved in becoming an MMPR
Licensed Producer. Based on publicly available information, the total
number of LPs remains below 20, yet the number of submissions to Health
Canada continues to grow, possibly exceeding 800 applications. Every
indication is that the approval process is becoming elongated as the
large number of applications creates an additional licensing burden.
New entrants will face a further operational burden given the method to
attain seeds, plants and starting genetic materials was restricted
effective April 1, 2014, effectively necessitating that new LPs can now
only secure materials from other LPs or with an approved import permit.
Prior to April 1, 2014, Tweed and other LPs could acquire these
materials from participants under the legacy regime of production.
In order to drive medium term demand in the sector, Tweed has commenced
educational programs and hired initial staff to liaise with the medical
community. This is to bridge the information and research gap and to
facilitate the acceptance of medical marijuana as a treatment under
appropriate circumstances and for relevant conditions. This work,
combined with the work of the Canadian Medical Cannabis Industry
Association (of which Tweed is a founding director) will continue to
drive forward increased awareness and understanding of the sector.
Tweed is actively seeking and reviewing acquisition opportunities as it
is management's view that the sector will present opportunities for
consolidation. There can, however, be no assurances that any such
acquisition opportunities will materialize or be completed by Tweed.
Chuck Rifici, the Company's CEO, and Don Gibbs, the Company's CFO, will
host a conference call on June 2, 2014 at 8:15 a.m. ET to discuss the
Company's financial results.
June 2, 2014
8:15 a.m. ET
888-231-8191 (toll free in North America)
A replay of the call will be available beginning June 2, 2014 at 2:30
p.m. ET through 11:59 p.m. ET on June 16, 2014 and can be accessed by
dialing 855-859-2056 (toll free in North America) or 403-451-9481
(international) and using access code 54175332.
About Tweed Marijuana Inc.
Tweed Marijuana Inc. is a TSX Venture Exchange listed company. Its
wholly owned subsidiary, Tweed Inc., is a licensed producer of medical
marijuana in Canada. The principal activities of Tweed are the
production and sale of marijuana out of its facility in Smiths Falls,
Ontario as regulated by the Marihuana for Medical Purposes Regulations.
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.
Notice regarding Forward Looking Statements
This news release contains forward-looking statements. Often, but not
always, forward-looking statements can be identified by the use of
words such as "plans", "expects" or "does not expect", "is expected",
"estimates", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved. Forward-looking statements
involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of the Tweed
Marijuana Inc. or Tweed Inc. to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Examples of such statements include: (A)
predictions of future demand; (B) plans to increase capital expenditure
and construction related expenses; (C) anticipated production yields;
(D) completion of construction and availability of new production
rooms; and (E) forecasted available product selection. Actual results
and developments are likely to differ, and may differ materially, from
those expressed or implied by the forward-looking statements contained
in this news release. Such forward-looking statements are based on a
number of assumptions which may prove to be incorrect, including, but
not limited to: the ability to obtain any necessary financing; the
economy generally; the yield from Tweed's marijuana growing operations;
consumer interest in products; competition; regulation and anticipated
and unanticipated costs and delays. Although Tweed Marijuana Inc. has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. Readers should not place undue reliance on forward-looking
statements. The factors identified above are not intended to represent
a complete list of the factors that could affect Tweed Marijuana Inc.
or Tweed Inc. Additional factors are noted under "Part IV - Description
of Risk Factors Associated with the Acquisition" in the Filing
Statement of Tweed Marijuana Inc. dated as of March 25, 2014 and
available at www.SEDAR.com. The forward-looking statements included in this news release are made
as of the date of this news release and Tweed Marijuana Inc. does not
undertake an obligation to publicly update such forward-looking
statements to reflect new information, subsequent events or otherwise
unless required by applicable securities legislation.
SOURCE: Tweed Marijuana Inc.
For further information: