Bedrocan Announces Q4 and Fiscal 2015 Year-End Results

TORONTO, May 21, 2015 /CNW/ - Bedrocan Cannabis Corp. ("Bedrocan" or "the Company") (TSXV: BED) announced its financial and operational results for the three and thirteen month periods ended January 31, 2015. Bedrocan Cannabis Corp's wholly owned subsidiary Bedrocan Canada Inc. is a Licensed Producer under the Marihuana for Medical Purposes Regulations (MMPR).

Q4 and Year-End Financial and Operational Highlights:

• Revenues of medicinal cannabis to authorized patients in Canada were $487,430 for the three month period ended January 31, 2015 ("Q4/2015"), and $1,574,174 for the thirteen month period ended January 31, 2015.
• Gross profit was $182,897 for Q4/2015, and $587,457 for the thirteen month period ended January 31, 2015 and in line with management's forecast.
• Announced renewal of its first license from Health Canada, effective December 2, 2014 and valid for one year, for the sale of up to an additional 240 kilograms of imported dried medicinal cannabis.
• Expanded its exclusive license agreement with Bedrocan BV in December 2014 to include rights in South America.
• Established Medical Advisory Board providing expert counsel regarding ongoing research programs and clinically-appropriate uses of medicinal cannabis by patients.
• Established Patient Advisory Board to provide insights on the experience of patients and how Bedrocan can best meet the needs of current and future patients. 
• Amended lease agreement with its landlord to extend the initial term from five to ten years, ending on August 31, 2024, and also agreed to a $2,000,000 secured loan facility to complete construction of its domestic production facility. 
• Completed its Qualifying Transaction with POCML2, a capital pool company listed on the TSXV in a going-public transaction on August 20, 2014.

Subsequent to Year-End:

• 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, since expanded to eighteen grow rooms, as well as the trimming and drying rooms.
• 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 BV's proprietary strains of medicinal cannabis.
• Launched domestic production operations, transitioning to the second phase of the company's growth strategy.
• Received $1,500,000 lease inducement and was advanced $2,000,000 of the related loan for completion of leasehold improvements on the new production facility. 
• A total of 1,237,500 warrants were exercised for total gross proceeds to the Company of $742,500. 

"Our results reflect the continued growth of our revenues and execution of key initiatives to drive growth. Subsequent to year-end, we were able to initiate our domestic production activities at our new state-of-the-art production facility, marking the important transition to the second phase our growth strategy. With the successful import and transplant of live genetic clones from Bedrocan BV, we are on track to harvest our first domestic crops for shipment to patients in Canada in our quarter ending July 31, 2015," said Marc Wayne, CEO. "We are well positioned to gain additional patients and moving forward, become the producer of choice for pharmaceutical grade medicinal cannabis in Canada."

Financial Highlights:

Bedrocan Canada was incorporated on February 24, 2012 and had limited business operations during fiscal 2012 and 2013. Furthermore and pursuant to the Qualifying Transaction, Bedrocan Canada changed its year-end to January 31 in order to correspond with POCML2's year-end resulting in the below noted December 31, 2013 comparative period. The following compares the Company's audited consolidated operating results for the thirteen month period ended January 31, 2015 and year ended December 31, 2013.

Revenue

For the three and thirteen month periods ended January 31, 2015, the Company generated revenues of $487,430 and $1,574,174 respectively, compared to nil for the comparative periods ending December 31, 2013. All revenues related to the import and sale of medicinal cannabis pursuant to a license issued from Health Canada on December 16, 2013. The Company's license was further renewed by Health Canada for one additional year, effective December 2, 2014.

Gross Profit

For the three and thirteen month periods ended January 31, 2015, the Company's gross profit amounted to $182,897 and $587,457 respectively, compared to nil for the comparative periods ending December 31, 2013. Gross margins for the three and thirteen month periods ended January 31, 2015 were 37% respectively. The Company's cost of goods sold, and as a consequence, its gross profit margins, are based on a contractual obligation with Bedrocan BV for the duration of the Company's initial import strategy phase, after which the Bedrocan BV license terms, as more fully described in the "Business Overview" section of the MD&A and in the Company's filing statement on SEDAR, will then become effective.

Net Loss

For the three and thirteen month periods ended January 31, 2015, the Company recorded a net loss and comprehensive loss of $1,624,196 (or approximately $0.02 per share) and $5,745,673 (or approximately $0.10 per share) respectively, compared to a net loss and comprehensive loss for the comparative period ended December 31, 2013 of $129,490 (or $0.003 loss per share) and $190,282 (or $0.01 loss per share) respectively.

Cash and Liquidity

As at January 31, 2015 the Company's cash and short term investments amounted to $4,120,205. Harmonized sales tax receivable from Canada Revenue Agency amounted to $1,296,712 and consequently, the Company's available liquidity amounted to $5,416,917 as at January 31, 2015, compared with $64,790 as at December 31, 2013. Consequently, the Company had working capital of $503,891 as at January 31, 2015 compared to a working capital deficiency of $105,970 as at December 31, 2013, resulting in increase in working capital of $609,861 during the year. This increase in liquidity is primarily due to completion of the $4,400,000 private placement on April 4, 2014, the release of $11,475,000 in restricted cash in August 2014 related to the Company's May 2014 subscription receipt financing, offset by activities related to the Company's thirteen months of operations and net additions to leasehold improvements during the year.

Outstanding Share Data

As at May 21, 2015, 72,830,000 common shares were issued and outstanding, in addition to 3,711,000 stock options to purchase common shares and 13,745,000 warrants to purchase common shares were reserved for future issuance.

Going Concern Assumption

The Company's anticipated level of gross expenditures and remaining commitments including additions to property and equipment for the next twelve months is expected to exceed the Company's cash and short term investments on hand as of January 31, 2015 and as such, management's view is that the success of Bedrocan is dependent upon obtaining additional financing for its capital additions, obtaining further approval from Health Canada in order to expand its current capacity to produce, sell and distribute medicinal cannabis in Canada and achieving profitable operations, all of which are outside of management's control.

Outlook

Bedrocan's business strategy is to penetrate the Canadian market in two phases. The company recently transitioned to the second stage of its strategy with completion of its domestic production facility and receipt of its second license with Health Canada to begin domestic production of standardized pharmaceutical-grade cannabis for sale to authorized patients in Canada.

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.

Investor Relations

Effective May 6, 2015, the Company's contract with Equicom Group Inc. to provide investor relations services has been terminated and consequently, the Company will be managing investor relations through internal resources. The value of the contract for the core services provided is approximately $80,000 for the duration of the contract, including the required notice period.

About Bedrocan Cannabis Corp.

Bedrocan and Bedrocan BV are focused on medicinal cannabis research and product innovation, and have been producing and supplying government-regulated medicinal cannabis for 13 years. Bedrocan's strains of pharmaceutical-grade cannabis have been used by more than 20,000 patients in seven countries, including Canada. The Company is committed to clinical research with ISO 9001-rated production processes and product development, on an international scale. Bedrocan is one of only two companies currently supplying pharmaceutical-grade medicinal cannabis in Canada. Bedrocan Cannabis Corp. trades on the TSX Venture Exchange under the symbol "BED". www.bedrocan.ca

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.

Cam Battley, Bedrocan Cannabis Corp., [email protected], +1.905.864.5525