Westleaf Inc. Announces Third Quarter 2019 Results of Newly Acquired We Grow B.C. Ltd.
CALGARY, Jan. 2, 2020 /CNW/ - Westleaf Inc. (the "Company" or "Westleaf") (TSX-V:WL) (OTCQB:WSLFF) and its newly acquired wholly-owned subsidiary We Grow B.C. Ltd. ("We Grow"), released today the We Grow unaudited third quarter financial results for the fiscal year 2019, for the three and nine month interim period ending September 30, 2019. We Grow's unaudited condensed interim consolidated financial statements ("Financial Statements") for the three and nine months ended September 30, 2019 and related Management Discussion and Analysis ("MD&A") for the reporting period are available under the Company's profile at www.sedar.com.
Q3 2019 Financial Highlights:
- Net revenues of $4.4 million for the nine months ended September 30, 2019, including net revenues of $2.7 million for the three months ended September 30, 2019, an increase from $nil net revenues for the three and nine months ended September 30, 2018. Net revenues reflect a record revenue quarter for We Grow with increasing demand for Qwest-branded cannabis products in British Columbia, Alberta, Saskatchewan, Ontario and Prince Edward Island.
- Adjusted EBITDA of $0.8 million for the three months ended September 30, 2019, representing We Grow's first quarter of positive Adjusted EBITDA, driven by strong wholesale pricing of Qwest-branded cannabis products on a per gram basis, and disciplined control of production costs and corporate expenses. See "Non-GAAP Measures" below.
- Net comprehensive loss of $0.5 million for the nine months ended September 30, 2019, including a net comprehensive loss of $0.4 million for the three months ended September 30, 2019, a decrease from the net comprehensive loss of $2.6 million for the nine months ended September 30, 2018, and $0.8 million for the three months ended September 30, 2018.
Highlights Subsequent to Quarter End:
- On December 23, Westleaf and We Grow announced the completion of a plan of arrangement under Division 5 of Part 9 of the Business Corporations Act (British Columbia) involving Westleaf and We Grow and certain security holders of We Grow (the "Arrangement").
- Concurrently with the Arrangement, We Grow completed a non-brokered management and key stakeholder led private placement financing of subscription receipts of We Grow ("Subscription Receipts") for gross proceeds of $1,788,206.91 at a price of $0.21 per Subscription Receipt. Each Subscription Receipt entitled the holder thereof to acquire one We Grow Class "C" Voting Participating Share ("We Grow Class C Share") and one-half warrant to purchase a We Grow Class C Share (each whole warrant, a "We Grow Warrant"), and each We Grow Class C Share was exchanged for one common share in the capital of Westleaf ("Westleaf Share") and each whole We Grow Warrant was exchanged for one warrant to purchase a Westleaf Share ("Westleaf Warrant") under the Arrangement. Each Westleaf Warrant is exercisable at a price of $0.28 per Westleaf Share for a period of two years following the closing of the Arrangement.
"We are pleased to report We Grow's first quarter of positive Adjusted EBITDA, resulting from the strength and growth of the Qwest and Qwest Reserve brand, reaffirming our strategy to serve the ultra-premium cannabis market in Canada" states Benjamin Sze, Chief Executive Officer of We Grow and Westleaf. "Going forward we anticipate integrating the Qwest brand within the Westleaf portfolio of assets to create value for our shareholders and stakeholders".
About Westleaf Inc.
Westleaf is a Canadian cannabis company focused on cannabis brands, extraction and production of derivatives, wholly owned retail, as well as cannabis cultivation. Westleaf's extraction and processing facility, The Plant, will produce high quality and consistent cannabis derivatives and consumables, both for Westleaf's in-house brands as well as white label products. Westleaf's retail concept, Prairie Records, leverages the instinctual tie between recreational cannabis and music with stores operating or in development across Western Canada. Westleaf's Thunderchild cultivation facility is expected to be completed in Q1, 2020. http://www.westleaf.com
We Grow's cultivation facility is located in Creston, British Columbia in the heart of the Kootenays, where BC grown marijuana originated, and holds cannabis cultivation, processing and sales licenses pursuant to the applicable regulations of the Cannabis Act. We Grow has scalable production facilities currently consisting of 26,000 square feet retrofitted for phase 1 cultivation including over 14,000 square feet of growing rooms and up to 100-acre cultivation abilities for future production. We Grow's cannabis production includes its brand Qwest, which is considered a preeminent luxury cannabis brand achieving one of the highest realized flower prices in Canada.
Non-GAAP Measures
This news release contains the financial performance metric of Adjusted EBITDA, a measure that is not recognized or defined under IFRS ("Non-GAAP Measures"). As a result, this data may not be comparable to data presented by other cannabis companies. For an explanation and reconciliation of Adjusted EBITDA to related comparable financial information presented in the Financial Statements prepared in accordance with IFRS, refer to the section "Highlights for the three and nine months ended September 30, 2019" in the MD&A for the three and nine months ended September 30, 2019. The Company believes that Adjusted EBITDA is a useful indicator of operating performance and is specifically used by management to assess the financial and operational performance of the Company.
We Grow defines Adjusted EBITDA as net income or loss, excluding fair value changes on growth of biological assets, realized fair value changes on inventory sold or impaired, amortization, depreciation and accretion expense, share based payments, finance expense and income taxes. Non-GAAP Measures should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the We Grow's operating results, underlying performance and prospects in a manner similar to We Grow's management.
Accordingly, these Non-GAAP Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Notice of No Auditor Review
We Grow's unaudited condensed interim consolidated Financial Statements for the three and nine months ended September 30, 2019 have been prepared by and are the responsibility of We Grow's management.
We Grow's independent auditor has not performed a review of these unaudited condensed interim consolidated financial statements in accordance with standards established by the CPA Canada for a review of interim financial statements by an entity's auditor.
Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things, the integration of the businesses of Westleaf and We Grow; the construction and expansion of the Company's production facilities; the timing for completion of same and commencement of production at the Company's production facilities; and future production capacity. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to the ability to obtain or maintain licences to retail cannabis products; review of the Company's production facilities by Health Canada and receipt or maintenance of licences from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company's credit facilities; timing and completion of construction and expansion of the Company's production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSXV, as applicable. There can be no assurance that such statements 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 the forward-looking statements and information contained in this news release. Except as required by law, the Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
SOURCE Westleaf Inc.
Taylor Ethans, Chief Financial Officer, [email protected], 403-618-5411
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