Marapharm Announces Amended and Restated Financial Statements and MD&A and Clarifies Previous Disclosure
KELOWNA, BC, Sept. 7, 2017 /CNW/ - As a result of a review by the British Columbia Securities Commission, we are issuing the following press release to clarify our disclosure.
Marapharm Ventures Inc. ("Marapharm" or the "Company") (CSE: MDM) (MDM.CN) (FSE: 2M0) (OTCQB: MRPHF) announces that it has amended and restated its interim financial statements (the "Financial Statements") and management discussion and analysis (the "Interim MD&A") for the three and nine months ending December 31, 2016, and its management discussion and analysis (the "Annual MD&A") for the year ended March 31, 2017.
The Company has revised its Annual MD&A in order to comply with Form 51-0102F1 requirements regarding the Related Party Information transactions with the current President of the Company and the entities related to him. For further information regarding the amended and re-filed Financial Statements and Interim MD&A, see the Company's news release dated August 23, 2017.
Continuous Disclosure Update
Update on Lease Terms for the 11 Acre Kelowna Property
The Company provided disclosure regarding the lease of an 11 acre property in Kelowna, British Columbia in its annual information form dated July 12, 2016 (the "AIF"). Further to the information provided in the AIF, the Company will pay to the lessor annual base rent of $15,000 per acre, by way of monthly payments and a percentage rent equal to six percent of the Company's gross revenue (defined as the entire amount of the sales price, whether wholesale or retail, for cash, credit, or otherwise, of all sales of merchandise and services, and all other receipts and receivables whatsoever of all business conducted at, in, upon, or from the leased premises). The lease commences within 14 days of the satisfaction of the following conditions precedent: (1) the Company is granted a license from Health Canada to purchase and sell medical cannabis under the Marihuana for Medical Purposes Regulation by March 30, 2016 (subsequently amended to 2017) and (2) the company being satisfied that the appropriate municipal authorities of the City of Kelowna have granted it the requisite occupancy permit and business license for the Company's intended use of the leased premises by March 30, 2016 (subsequently amended to 2017). The conditions precedent are for the sole benefit of the Company and may be waived in whole or in part by the Company. The Company is in the process of negotiating a further extension of the deadline for the satisfaction of the conditions precedent. Pursuant to this lease transaction, the Company has advanced a $225,000 deposit to secure the property for the duration of the Company's application to Health Canada. Further, the lease option has been extended from a two year period to a five year period.
Update on MMPR/ACMPR Application
Further to the Company's previously announced MMPR application, the application process had included the following seven stages:
- Application received
- Preliminary screening
- Enhanced screening
- Initiation of security clearance process
- Review
- Pre-license inspection
- Licensing
As disclosed in the Company's February 12, 2016 news release, the Company had passed the Security Clearance Stage and entered the Review Stage. Effective May 25, 2017, the application process for becoming a license producer of cannabis for medical purposes is as follows:
- Intake and Initial Screening
- Detailed Review and Initiation of Security Clearance Process
- Issuance of License to Produce
- Introductory Inspection (as cultivation begins)
- Pre-Sales Inspection
- Issuance of License to Sell
Under the revised application process, the Company is in the Detailed Review Stage, although the security clearance has been completed as of February 12, 2016. Further information with respect to the application process can be found on Health Canada's website (http://www.canada.ca/en/health-canada). The Company will not be able to grow or sell medical marijuana in Canada without a license from Health Canada. In order to obtain a license from Health Canada, the Company must meet all the licensing requirements, including but not limited to the construction of various infrastructure for attaining and maintaining a license, controls around distribution and access and various inspections of such facilities by Health Canada. The Company has advised Health Canada that no existing building is in place and that a building will be constructed to suit upon Health Canada approval. The Company has also supplied Health Canada with plans and operational procedures which the Company believes will meet the necessary requirements and guidelines.
Clarification on the Acquisition of Two Provisional Licenses in Nevada
The Company's news release dated March 8, 2016 indicated that the Company had advanced US$ 300,000 to the agent of the transaction as part of the purchase price of the licenses; however, this statement was an error. The Company advanced US$ 225,000 to the agent as of September 1, 2016 and has subsequently advanced the remaining US$ 75,000 due to the agent pursuant the purchase agreement.
Clarification on the Exercise of the Company's Option for a Provisional License in Nevada
Further to the Company's news releases dated May 12, 2015 and February 19, 2016 regarding the purchase of 5.9 acres in the Apex Industrial Park in Las Vegas, Nevada at a price of US$1,000,000 and the assignment of an option agreement for a provisional marijuana license, respectively, the seller of the property and assignor of the option agreement was Pinto Ventures Ltd., a company controlled by Mr. Brian Lovig. Title to the property was transferred to the Company on October 9, 2015. The option agreement is still in place and is expected to remain in place through the final inspection and final approval. The terms of the option agreement provided that the license is to be transferred by PhenoFarm NV LLC ("PhenoFarm"), a company controlled by Mr. Kurt Keating, to Marapharm Las Vegas LLC when the provisional license receives final state approval for a medical marijuana license, which was completed on May 19, 2017. The transfer is to occur via an initial option for 85% interest in the license, available upon final state approval, and a second option for the remaining 15% interest in the license, exercisable within two years from the date of exercise of the initial option. The original aggregate purchase price was $1,250,000, payable by way of a $5,000 initial deposit, $245,000 for the initial 85% option and $1,000,000 for the remaining 15% option; however, the Company has renegotiated the option agreement to provide for a purchase price of $250,000 for the initial 85% option and 100,000 common shares of the Company for the remaining 15% option. The Company has exercised both options and expects the transfer of the license to be completed shortly.
Update on Permitting and Construction of the Nevada Property
Further to the Company's previously announced construction of a medical marijuana facility in Apex Industrial Park, located in North Las Vegas, the Company had expected completion of the buildings by December, 2016; however, there were delays with the approval of the utility plans. After several weeks of delay, the Company put a temporary hold on the building order as there had been occurrences in the area of building components subject to delays being stole off-site. Accordingly, the delivery date was amended to December. Buildings were delivered on schedule and construction teams were prepared to begin in January; however, the City of North Las Vegas would not grant the final building permit until their master utilities plan was approved. The Company was issued a grading permit and a building permit for the property on February 16, 2017 and May 30, 2017, respectively. The Company has started construction of the facility. In the meantime, the Company has moved two modular buildings on the property that are equipped to operate on a smaller scale.
In addition, and further to the Company's news release dated September 23, 2015 regarding the contract of the entire cultivation of the 80,000 square foot development to several dispensaries in Las Vegas, while a letter of intent has been executed, the Company cannot sign a formal agreement with such dispensaries until the Company is in production.
Clarification on Compensation of Les Kjosness
The summary compensation table in the Company's information circular dated August 22, 2016 indicated that Les Kjosness, former CEO of the Company, was provided no salary for the 2016 fiscal year; however, Mr. Kjosness was provided $45,000 of salary, as disclosed in the Company's audited financial statements for the year ended March 31, 2016.
Clarification on the Acquisition of a License Operating Marijuana Business in Whatcom County, Washington
The Company's news release dated March 10, 2016 indicated that the Company entered into an agreement for the acquisition of a license operating marijuana business (AlphaPheno Inc.) located in Whatcom Country, Washington. Further news releases dated June 16, 2016, August 17, 2016, September 27, 2016 and November 1, 2016 provided further updates to this transaction. As the current regulations in Washington do not permit out of state entities to hold licenses, the transaction had been structured in two parts, the first including an asset purchase agreement between Living Green Inc. and the Company, and the second being a share purchase agreement between the new license holder, Kurt Keating, a consultant of the Company and resident of the State of Washington, and Living Green Inc. Subsequent to the share purchase agreement, the name of Living Green Inc. was changed to AlphaPheno Inc. Further to the Company's previous disclosure, the Company's references to "a cultivation license for up to 30,000 square feet and a production license with no footage limitations", "a Tier 3 production license" and a "Tier 3 production and processing license" each refer to the same licenses held by AlphaPheno. The Tier 3 production license is the largest license currently available in the State of Washington and will permit the Company to maximize the square footage of the property. The processing license includes unlimited square footage. In addition, the previously disclosed rental receivable of $200,000 per month payable by AlphaPheno, which had accrued from March 2016 was incorrectly omitted from the Company's previously filed December 31, 2016 interim financial statements and MD&A. Lease payments have been deferred until completion of renovations. The Company has since exercised its option to purchase the property for an aggregate total of US$4,200,000. The effective date for the transaction is March 1, 2017; however, the purchase price is to be paid in installments. An initial deposit of $500,000 was paid on February 28, 2017 and further payments of $100,000 are made each month, with rents from other tenants accruing as an adjustment to the purchase price. Once the Company has paid 50% of the total purchase price, the title will transfer to the Company. The Company expects to make payment of 50% of the purchase price by September 2018.
Clarification on US$5,500,000 Bond Offering
The Company's news release dated November 14, 2016 indicated that the Company's US$5,500,000 bond offering was fully subscribed. While the Company received expressions of interest by a current shareholder for the entire bond subscription, such subscription was not received. Accordingly, the Company's disclosure in the November 14, 2016 that the bond offering was fully subscribed was incorrect.
Clarification on the Purchase of Two Automated Cannabis Machines
The Company's news release dated November 23, 2016 disclosed that the Company ordered and paid for two automated cannabis machines ("ACMs") with delivery expected to occur in January 2017. Further, the Company's interim financial statements for the period ended December 31, 2016 disclosed that the ACMs would be used in dispensaries in Washington and Nevada pending investigation into the regulatory requirements regarding ACMs. As preliminary investigations revealed restrictions on the use of vending machines to dispense marijuana in Washington and Nevada, the Company has placed the order on hold pending further investigations and, if necessary, lobbying of regulatory departments. The ACMs have not been received and no payments have been made by the Company for the ACMs as of the date hereof.
Forward-Looking Information Identified in Previous Disclosure
The Company has identified certain forward-looking information in the following news releases that had not previously been identified:
The Company's news release dated May 12, 2015, contains certain forward-looking information that was not previously identified, including: the good standing and transfer of the license; the construction of the medical marijuana facility; the permitting of the construction and whether the construction will occur at all; the estimated costs of construction; the ability of the Company to raise funds through debt and/or equity financing; the ability to produce marijuana, at a consistent pace to meet expected levels of output or efficiency; estimated revenues of the sale of marijuana; and the expected production date of marijuana. Management's estimation of revenue or net profit is based on a number of assumptions including square footage of the production facility (approximately 48,000 sq. ft.), likely yield of plants (approximately 33,000 lbs. per year) and prevailing sales prices at the time of estimation (approximately $2,000 per lb.).
The Company's news release dated September 23, 2015, contains certain forward-looking information that was not previously identified, including: the construction of the medical marijuana facility; the permitting of the construction and whether the construction will occur at all; estimated revenues of the sale of marijuana; the general development of the industrial park; the retail price of marijuana products; and the legalization of recreational marijuana. Management's estimation of revenue or net profit is based on a number of assumptions including square footage of the production facility, likely yield of plants (approximately 2,291 lbs. per year) and prevailing sales prices at the time of estimation (approximately $1,530 per lb.).
The Company's news release dated March 10, 2016, contains certain forward-looking information that was not previously identified, including: the good standing and transfer of the licenses; the Company's business strategy; the payment of the purchase price and issuance of shares; the ability of the Company to raise funds through debt and/or equity financing; the execution of the long-term lease and option to purchase; and estimated monthly revenues of marijuana sales. Management's estimation of revenue or net profit is based on a number of assumptions including square footage of the production facility, likely yield of plants (approximately 12,833 lbs. per year) and prevailing sales prices at the time of estimation (approximately $1,500 per lb.).
The Company's news release dated June 16, 2016, contains certain forward-looking information that was not previously identified, including: the good standing, location and merger of the Nevada licenses; the construction of the medical marijuana facility; the permitting of the construction and whether the construction will occur at all; the Company's relative production and cultivation of marijuana in relation to its competitors; the transfer of the Washington licenses; the completion of renovations to the Washington property; and the estimated revenue from the lease agreement.
The Company's news releases dated August 17, 2016 and November 1, 2016, contains certain forward-looking information that was not previously identified, including: completion of the renovations; and expected revenue received from rental of the Washington property.
The Company's news releases dated September 27, 2016, contains certain forward-looking information that was not previously identified, including: the negotiation and purchase of the additional property; the good standing and merger of the Nevada licenses; the legalization of recreational marijuana; expected revenue received from rental of the Washington property; and the approval of the Health Canada licenses.
The Company's news release dated February 27, 2017, contains certain forward-looking information that was not previously identified, including: the good standing of the license; completion of the renovations; the ability to produce marijuana, at a consistent pace to meet expected levels of output or efficiency; estimated revenues of the sale of marijuana; and the expected production date of marijuana. Management's estimation of revenue or net profit is based on a number of assumptions including square footage of the production facility, likely yield of plants (approximately 12,833 lbs. per year) and prevailing sales prices at the time of estimation (approximately 75% at $1,500 per lb. and 25% at wholesale market price of $10 per gram).
The Company's news release dated March 11, 2017, contains certain forward-looking information that was not previously identified, including: the construction of the medical marijuana facilities; the permitting of the construction and whether the construction will occur at all; the estimated costs of construction and renovation; and the expected date of production.
The Company's news release dated May 24, 2017, contains certain forward-looking information that was not previously identified, including: whether a recreational marijuana license will be obtained; the construction of the medical marijuana facility; the permitting of the construction and whether the construction will occur at all; the ability to produce marijuana, at a consistent pace to meet expected levels of output or efficiency; and estimated revenues of the sale of marijuana. Management's estimation of revenue or net profit is based on a number of assumptions including square footage of the production facility, likely yield of plants (approximately 4,583 lbs. per year) and prevailing sales prices at the time of estimation (approximately $2,160 per lb.).
The Company's news release dated June 12, 2017, contains certain forward-looking information that was not previously identified, including: the ability to produce marijuana, at a consistent pace to meet expected levels of output or efficiency; estimated revenues of the sale of marijuana; the ability of the Company to raise funds through debt and/or equity financing; the good standing of the license; and the timeframe of the application process. Management's estimation of revenue or net profit is based on a number of assumptions including square footage of the production facility (29,193 sq. ft.), likely yield of plants (approximately 20,000 lbs. per year) and prevailing sales prices at the time of estimation (approximately $1,000 per lb.).
About Marapharm Ventures Inc.
Marapharm has more than 300,000 square feet of medical marijuana licenses for its land and facilities in WA, CA and NV. In Nevada, the building footprint is 360,000 square feet. The Nevada Department of Agriculture report by Tessa Rognier states that the average size of a cultivation facility in Nevada is 26,000 square feet. About three years ago, Marapharm applied in Canada to Health Canada for a MMPR (production and sales) license and has passed the necessary security clearances. The application is currently in the in-depth screening process. In September 2016, Health Canada contacted Marapharm with a provision to amend its application to allow for the new regulations, ACMPR. Marapharm owns 15 million shares and warrants of Veritas Pharma Inc., a public company.
Additional information on the operations or financial results of Marapharm are included in reports on file with applicable securities regulatory authorities and may be accessed through the CSE website (http://www.thecse.com), the OTC website (http://www.otcmarkets.com), and the SEDAR website (http://www.sedar.com) under the profile for Marapharm Ventures Inc.
ON BEHALF OF THE BOARD OF DIRECTORS,
"Linda Sampson"
Chief Executive Officer
Forward-Looking Statements and Information
This press release contains forward-looking statements within the meaning of applicable United States securities laws and forward looking information within the meaning of Canadian securities laws (collectively, "forward-looking statements"). Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur.
Forward-looking statements are subject to known and unknown trends, uncertainties, risks and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: good standing of all licenses, including the licenses to produce and sell cannabis products; compliance with the regulatory requirements, including those imposed by Health Canada; changes to laws, regulations and guidelines relating to marketing, acquisition, manufacture, management, transportation, storage, sale and disposal of medical marijuana; business risks and uncertainties associated with any early-stage enterprise; public's perception of marijuana's medicinal applications; competition from companies that have secured or will secure production licenses under the Access to Cannabis for Medical Purposes Regulations; ability to produce marijuana, at a consistent pace to meet expected levels of output or efficiency; high cost of insurance premiums or liability for risks against which the Company cannot insure; dependence on key personnel, including management, scientific, and marketing staff; conflicts of interest of directors and officers are also directors and officers in other companies; impact of litigation, mediation and/or arbitration to which the Company may become a party to in the ordinary course of business; risks inherent with agricultural businesses (such as disease and insect pests); availability of cost-effective and efficient transportation services; fluctuating prices of raw materials, including inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new production and distribution developments and improved production and distribution methods; environmental and safety laws and regulations concerning, among other things, emissions and discharges to water, air and land, disposal of hazardous materials, and employee health and safety; ability to protect the Company's ideas and technology in the countries in which it operates by means of trademarks, patents, copyrights or by other means; possible political or economic instability, including terrorism, military repression, extreme fluctuations in currency exchange rates and high rates of inflation; potential problems and uncertainties associated with construction of the new facilities; effect of factors, including commodity prices, government regulation, interest rate on the market price for the common shares of the Company; economic downturn of global capital markets that may affect the ability of the Company to raise additional capital; inability to pay dividends; and risks associated due to the Company being a holding company with its operating assets held by its subsidiaries. In addition to these the Company may also be subject to general business, economic and competitive uncertainties, regulatory risks, including risks inherent in manufacturing operations of the cannabis industry,
Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements. Forward-looking statements are provided herein for the purpose of presenting information about management's current expectations relating to the future and readers are cautioned that such information may not be appropriate for other purpose. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. A more complete discussion of the risks and uncertainties facing the Company appears in the Company's Annual Information Form and continuous disclosure filings, which are available at http://www.sedar.com.
These statements are only predictions. Examples of forward looking statements in this news release include the when construction of the Nevada property will occur, if at all, and the approval of the Health Canada license. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Companies are under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Neither the CSE, the FSE nor the OTCQB has approved nor disapproved the contents of this news release. Neither the CSE, the FSE nor the OTCQB accepts responsibility for the adequacy or accuracy of the content of this news release.
SOURCE Marapharm Ventures Inc.
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Linda Sampson, Chief Executive Officer, +1-778-583-4476, [email protected], http://www.marapharm.com
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