KITCHENER, Ontario, Aug. 26, 2019 (GLOBE NEWSWIRE) -- James E. Wagner Cultivation Corporation (“JWC” or the “Company”) (TSX VENTURE: JWCA, OTCQX: JWCAF), a licensed cannabis cultivator and manufacturer focused on producing clean, consistent cannabis, today reported the Company’s interim financial results for the fiscal third quarter ended June 30, 2019. Dollar amounts are in Canadian dollars unless otherwise noted.
Fiscal Q3 2019 Financial and Operational Highlights
- Revenue totaled a record $749,000, up 32% sequentially from $566,000, and compared to $3,500 in Q3 2018.
- Net loss and comprehensive loss declined 87% sequentially and 91% from the same year-ago quarter to $434,000 or $(0.01) per share.
- Both JWC’s pilot facility (“JWC1”) and phase 1 of its flagship facility (“JWC2”) achieved full operational capacity and production, with initial sales from JWC2 launched in the current quarter.
- Shipped demonstration equipment to Ascendo Group in South Africa, representing the first potential international deployment of the Company’s GrowthSTORM™ Dual Droplet™ System.
- Added 23 new strains to the Company’s dried flower collection, including its proprietary Wagner GE brand, a uniquely balanced 1:2 THC to CBD strain.
- Received cultivation license from Health Canada for the first pod of phase 2 in JWC2, a production and distribution complex totaling approximately 345,000 sf. that will utilize JWC's proprietary GrowthSTORM cultivation platform and methodologies.
“Q3 was a milestone quarter for JWC,” said Company president and CEO, Nathan Woodworth. “Revenue grew 32% sequentially and we celebrated our first harvest from our new JWC2 facility, allowing us to produce record amounts of our clean, consistent cannabis using our unique aeroponic technology.
“In fact, we achieved a 28% increase in actual yield per plant versus our previously reported estimated yields, and we expect this to be sustainable. We estimate the additional yield alone could boost revenue by at least $25 million annually once JWC2 is fully operational.
“Initial sales from the JWC2 harvest began following the end of the third quarter. However, right before the end of the quarter, we secured the additional license from Health Canada to add 11,000 sf. of flowering space, bringing the total to 22,000 sf. at JWC2. We anticipate initial sales generated by this additional capacity to begin in fiscal Q1 2020. Within the next couple of months, we expect to receive a license to double this capacity again to a total of 44,000 sf.
“In July, we received approval of a license amendment from Health Canada to allow the sale of formulated cannabis oil from our pilot JWC1 facility, thereby adding another valuable revenue stream. More recently, we signed a purchase and supply agreement with TerrAscend Corp (CSE: TER, OTCQX: TRSSF) to provide dry cannabis flower and cannabis oils for sale on its online medical sales platform. We also continue to be engaged in numerous discussions with potential partners to expand the deployment of our GrowthSTORM platform both domestically and abroad.
“As we complete the final quarter of our fiscal year, we will continue to focus on building out production capacity and distributing premium branded products for medical use and the fast-growing Canadian recreational market. Our strong progress in fiscal Q3, which has continued into the current quarter, has set the stage for rapid revenue growth and profitability, and a tremendous finish to fiscal 2019.”
|Summary Financial Results|
|Q3 2019||Q3 2018||Change %||Q2 2019||Change %|
|Loss from operations||454,547||4,216,291||(89||)||%||3,434,883||(87||)||%|
|Net and comprehensive loss||433,908||4,648,038||(91||)||%||3,405,264||(87||)||%|
|Net and comprehensive loss per share||(0.01||)||(0.06||)||(0.04||)|
|9M 2019||9M 2018||Change %|
|Loss from operations||6,265,364||6,440,025||(3||)||%|
|Net and comprehensive loss||6,164,463||8,064,865||(24||)||%|
|Net and comprehensive loss per share||(0.07||)||(0.12||)|
|Cash and cash equivalents||$||3,778,462||$||8,504,790||(56||)||%|
|Agricultural produce and biological assets||5,661,624||2,607,433||117||%|
|Other working capital||1,031,544||604,172||71||%|
|Other liabilities and long-term debt||6,945,912||3,411,615||104||%|
For the third fiscal quarter ended June 30, 2019, revenue totaled a record $749,000, up 32% sequentially from $566,000, and compared to $3,500 in the same year-ago quarter.
Revenue for the first nine months of fiscal 2019 increased to a record $1.8 million from $3,500 in the same period last year.
Net and comprehensive loss was $434,000 or $(0.01) per share in fiscal Q3 2019, improving 87% sequentially from $3.4 million or $(0.04) per share, and improving 91% from $4.6 million or $(0.06) per share in the year-ago quarter.
For the first nine months of the fiscal year, net and comprehensive loss was $6.2 million or $(0.07) per share, improving 24% from $8.1 million or $(0.12) per share in the same year-ago period.
Cash and equivalents at June 30, 2019 totaled $3.8 million, compared to $2.3 million at March 31, 2019 and $18.0 million at June 30, 2018. The decrease in cash is attributable to cash used in operations.
Inventories totaled approximately 458 kg of dried cannabis and 14 liters of formulated oil at the end of fiscal Q3 2019. These products are in the process of being sold in the fourth quarter of fiscal 2019.
The Company expects to soon begin selling cannabis products through recreational channels, further developing customer demand, as it continues scaling JWC2 towards full production capacity.
Given its expanding production capacity, the Company anticipates revenue growth to accelerate over the next several quarters, with modest increases in expenses. Management sees this trend resulting in the Company achieving breakeven to positive net and comprehensive income in Q4 2019 on an IFRS accounting basis (factoring in the anticipated net increase in biological assets). In Q1 2020, the Company expects to be revenue positive (revenue exceeding expenses), along with positive net and comprehensive income. By Q2 2020, the Company sees continued revenue growth driving strong gross margins, positive cash flow, and net and comprehensive income.
Additional details of the Company’s results for fiscal Q3 2019 are available in the interim financial statements and the management’s discussion and analysis as filed on SEDAR at www.sedar.com and available on the Company’s website at www.jwc.ca.
JWC management will hold a conference call to discuss the third quarter results later today, followed by a question and answer period.
Date: Monday August 26, 2019
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Conference ID: 13694040
Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact CMA at 1-949-432-7566.
A replay of the call will be available after 8:00 p.m. Eastern time on the same day through September 9, 2019.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 8692665
The conference call will also be webcast live and available for replay here.
About James E. Wagner Cultivation Corporation
Based in Kitchener, Ontario, James E. Wagner Cultivation Corporation (JWC) is a licensed cannabis cultivator and manufacturer focused on producing clean, consistent cannabis. The Company’s proprietary Dual Droplet™ technology and GrowthSTORM™ aeroponic platform allows for unmatched consistency in quality and potency. JWC began as a family-operated collective of patients and growers, and has remained dedicated to producing the highest quality and most consistent cannabis for medical and recreational use. To learn more, visit www.jwc.ca.
Cautionary Note Regarding forward-looking statements
This press release contains statements including forward-looking information for purposes of applicable securities laws (“forward-looking statements”) about JWC and its business and operations which include, among other things, statements regarding increased harvests at either or both of the Company’s facilities, increased distribution and sale of cannabis and cannabis oil by JWC, expected sales of cannabis to the Canadian recreational market, anticipated increases to profitability and revenue, the expected receipt of licenses for additional flowering space at JWC’s production facilities and the expected timing for receipt of such licenses, the positive financial impact of the addition of new flowering space at the Company’s facilities, potential partnerships in relation to JWC’s GrowthSTORM platform and the financial growth of the Company. The forward-looking statements can be identified by the use of such words as “will”, “expected”, “approximately”, “may”, “could”, “would” or similar words and phrases. These forward-looking statements are based on the Company’s current projections and expectations about future events and financial trends that management believes might affect its financial condition, results of operations, business strategy and financial needs, and on certain assumptions and analysis made by the Company in light of the experience and perception of historical trends, current conditions and expected future developments and other factors management believes are appropriate. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those implied in the forward-looking statements. For example, risks include risks regarding the cannabis industry, economic factors, the equity markets generally, building permit related risks and risks associated with growth and competition as well as the risks identified in the Company’s Filing Statement available under the Company’s profile at www.sedar.com. Although JWC has attempted to identify important factors that could result in actual actions, unanticipated events may cause results to differ materially from those described in forward-looking statements, and there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release and are based on current assumptions which management believes to be reasonable. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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.
President & CEO
Tel (519) 594-0144 x421
Jonathan Leuchs, CMA
Tel (949) 432-7566
|James E. Wagner Cultivation Corporation|
|Condensed Consolidated Interim Statement of Loss and Comprehensive Loss (Unaudited)|
|For the three months ending June 30,||For the nine months ending June 30,|
|Direct to patient||111,115||3,463||220,517||3,463|
|Cost of sales||738,926||2,334||3,041,747||2,334|
|Gross profit before the undernoted||10,368||1,129||(1,205,762||)||1,129|
|Changes in fair value of biological assets||2,424,930||(56,175||)||3,452,738||800,097|
|Wages and benefits||1,003,329||321,004||2,847,981||982,209|
|Office and administration||264,471||223,422||618,468||298,668|
|Advertising and promotion||143,791||123,675||433,007||204,368|
|Banking and service fees||9,506||1,759||155,005||6,417|
|Repairs and maintenance||62,876||53,925||115,546||89,052|
|Memberships and licenses||17,795||30,338||65,855||35,711|
|Loss from operations||(454,547||)||(4,216,291||)||(6,265,364||)||(6,440,025||)|
|Fair value change in contingently issuable shares||-||(462,657||)||-||(1,482,337||)|
|Interest and other revenue||20,639||30,910||100,901||57,496|
|Loss and comprehensive loss||$||(433,908||)||$||(4,648,038||)||$||(6,164,463||)||$||(8,064,865||)|
|Loss per share|
|Basic and Diluted||$||(0.01||)||$||(0.06||)||$||(0.07||)||$||(0.12||)|
|James E. Wagner Cultivation Corporation|
|Condensed Consolidated Interim Statement of Financial Position (Unaudited)|
|June 30, 2019||September 30, 2018|
|Cash and cash equivalents||$||3,778,462||$||8,504,790|
|Short term investments||6,017,153|
|Funds in trust||-||140,165|
|Government remittances recoverable||295,209||343,752|
|Prepaid expenses and deposits||888,506||943,299|
|Assets Liabilities and Shareholders’ Equity (Deficiency)|
|Accounts payable and accrued liabilities||$||1,124,986||$||1,098,212|
|Current portion of long-term debt||4,901,075||3,253|
|Retained earnings (deficit)||(21,172,091||)||(15,007,628||)|
Please see the accompanying notes, which are an integral part of these condensed interim financial statements, that are available in the interim financial statements and the management’s discussion and analysis as filed on SEDAR at www.sedar.com and available on the company’s website at www.jwc.ca.