Delta 9 Reports Record Revenue for Q1 2019

WINNIPEG, May 30, 2019 /CNW/ - DELTA 9 CANNABIS INC. (TSXV: NINE) (OTCQX: VRNDF) ("Delta 9" or the "Company"), is pleased to announce financial and operating results for the first quarter of 2019.

Financial Highlights for Q1, 2019

• Record operating revenues of $5.63 million for the first quarter of 2019, up 1,595%, from $332,107 for the same quarter last year.
• Sequential net revenues increased 7% from $5,270,217 for the three-month period ending December 31, 2018.
• Sequentially the cost of sales of cannabis products improved by 5% to $3.82 million for Q1, 2019 from $4.02 million for the fourth quarter of 2018.
• Record gross profit of $4.22 million for the first quarter, 2019, up 1,983%, from $202,695 for the same quarter last year.
• Sequential gross profit increased 26% from the three-month period ending December 31, 2018
• Gross profit margin was 75% for Q1, 2019
• Net income for Q1, 2019 was $11.11 million or $0.13 per share versus a net loss of ($1.92) million or ($0.02) for the three-month period ending March 31, 2018.
• Management would highlight the one-time gain on the disposal of the Company's investment in the Delta West Limited Partnership (the "Delta West LP") as contributing a significant non-cash gain during the period.
• Without the one-time gain, Delta 9 recorded a loss from operations of ($946,180) or ($0.01) for Q1, 2019 versus a loss of $1,923,263 or ($0.02) for the same period last year.
• The Company reported a strong financial position, with working capital of $18.83 million and total assets of $65.35 million.

"Delta 9 is well positioned with high growth revenue streams from our wholesale, retail and business-to-business operations to continue to provide strong financial results to shareholders this year," said John Arbuthnot, CEO of Delta 9.  "2019 will continue to be an exciting year for the Company as we focus on expand our operations to eventually yield 16,000 kg of cannabis per year and begin selling our cannabis products in Saskatchewan and Alberta.

Selected Quarterly Information:

Consolidated Statement of Net Income	Q1 2019	Q1 2018
Revenue	$5,632,184	$332,107
Cost of Sales	3,815,930	223,169
Gross Profit Before Unrealized Gain from Changes In Biological Assets	1,816,254	108,938
Unrealized gain from changes in fair value of biological assets	4,060,823	93,757
Gross Profit	$4,222,989	$202,695
Expenses
General and Administrative	3,451,900	1,381,122
Sales and Marketing	969,202	123,646
Share based Compensation	748,067	621,190
Total Operating Expenses	$5,169,169	$2,125,958
Loss from Operations	$(946,180)	$(1,923,263)
Other Income/ Expenses
Finance Income (cost)	(157,619)	(5,209)
Rental and other income	17,144	4,712
Gain on derecognition Westleaf investment	12,193,000	--
Net Income	11,106,345	(1,923,760)
Other comprehensive Income
Fair value change in Westleaf Investment	(2,240,000)	--
Net Income and Comprehensive Income	$8,866,345	$(1,923,760)
Earnings per Share (basic)	$0.13	$(0.02)
Weighted average number of shares outstanding	86,759,632	79,348,934

Operational Highlights for Q1, 2019

• 2019 expansion strategy increased the number of Delta 9 grow pods approved by Health Canada by 31% to 202, increasing anticipated annual production capacity to over 5,350 Kg of dried cannabis flower.
• Delta 9 sold its 50% interest in the Delta West Limited Partnership to Westleaf Cannabis Inc. for 5.6 million Westleaf shares that had an established a value of $14.95 million as of January 25, 2019, the date of sale.
• Delta 9 announced plans to increase its annual cannabis production capacity to 60,000 kilograms per year by 2022 and for the expansion of its retail store network.
• Delta 9 now operates three retail stores, two in Winnipeg, Manitoba and one in Brandon, Manitoba. A fourth retail store in Thompson, Manitoba is scheduled to open in Q3, 2019.
• Delta 9 has received approval from the Saskatchewan Liquor and Gaming Authority to supply cannabis directly to the province's retail and wholesale markets.

Subsequent second quarter events

• May 24, 2019 - Alberta Gaming, Liquor & Cannabis (AGLC) has provided Delta 9 with authorization to supply cannabis to AGLC for retail sale in the province of Alberta. The Company plans to make its first shipment of cannabis for retail sale in Alberta in the second quarter of 2019.
• May 22, 2019 - Delta 9 received Health Canada approval to place 48 new "Grow Pods" from its Phase II expansion into production. This will bring the total number of Grow Pods approved by Health Canada to 202. This will increase the Company's estimated production capacity by 1,150 kilograms of dried cannabis flower per year. The anticipated production capacity for Delta 9's facilities is anticipated to increase to 5,350 kilograms per year going forward.
• May 9, 2019 - Company received notice from Health Canada that it has been granted an export permit to sell starting materials to authorized cannabis license holders in Australia and Tasmania. Delta 9 has two pending sales contracts for cannabis plants to licensed producers in Australia. These sales would be Delta 9's first international cannabis product sales.

Discussion of Operations: 

Key Performance Indicators	For the three-month period ending March 31, 2019
Production/ Wholesale Unit
Total Grams Produced	418,901
Cash Production Cost Per Gram	$1.44
Total Cash Cost Per Gram	$1.60
Total Grams Released for Sale	185,626
Total Grams Sold (Recreational Wholesale)	386,387
Total Grams Sold (Medical)	13,400
Avg Selling Price per Gram	$7.58
Retail Unit
Total Grams Sold (Retail)	189,796
Avg Selling Price per Gram	$12.84
Number of Transactions Processed	44,885
Avg Transaction Size	$58.27
Unique Website Visitors (delta9.ca)	180,774

A comprehensive discussion of Delta 9's financial position and results of operations is provided in the Company's Management Discussion & Analysis for the first quarter ended March 31, 2019 filed on SEDAR, which can be found at www.sedar.com.

Q1 Results 2019 Conference Call

Delta 9 has scheduled a conference call to discuss the results for its first quarter ended March 31, 2019. The conference call will be hosted May 31, 2019 at 9:00 a.m. Eastern Time by John Arbuthnot, Chief Executive Officer, and Jim Lawson, Chief Financial Officer, followed by a question and answer period.

Date	May 31, 2019
Time	9:00 EST
Dial in #	1-888-886-7786 - Toll free North America
Replay information:	1-877-674-6060
Replay Password	982130
	Available until August 31, 2019

About Delta 9 Cannabis Inc.

Delta 9 Cannabis is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical marijuana pursuant to the ACMPR and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9's shares trade on the TSX Venture Exchange under the symbol "NINE" and on the OTC under the symbol VRNDF. For more information, please visit delta9.ca.

Neither the 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.

Disclaimer for Forward-Looking Information

Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to: (i) Delta 9's expansion plans, including expansion of cannabis production capacity; and (ii) Delta 9's plans to sell cannabis in new jurisdictions. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including the Company not being able to expand its cannabis production capacity as planned as well as all risk factors set forth in the annual information form of Delta 9 dated April 30, 2019 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.

SOURCE Delta 9 Cannabis Inc.

Investor & Media Contact: Ian Chadsey VP Corporate Affairs, Mobile: [phone], E-mail: [email protected]

Related Links

www.delta9.ca