Delta 9 Announces Q2 Fiscal 2018 Results

DELTA 9 CANNABIS INC. (TSXV:NINE) today announced its financial and operational results for the second quarter of fiscal 2018, ended June 30, 2018.

Highlights

• Revenues of $715,746 and $1,047,853 – up 277% and 210% respectively – for the 3 month and 6 month period ending June 30, 2018 versus the same period in the prior year
• Gross Profit of $663,440 and $866,135 – up 172% and 215% respectively – for the 3 month and 6 month period ending June 30, 2018, versus the same period in the prior year
• The Company made a $3,000,000 Investment to acquire 50 per cent of the 70,000 square foot Delta West cannabis production facility in Calgary, Alberta, which it operates in partnership with Westleaf Cannabis, primarily to supply the cannabis market in Alberta
• The Company signed a 2,300 kg supply agreement with the Manitoba Provincial Government
• The Company came to terms on a $12,000,000 credit facility with a Tier 1 Canadian chartered bank, providing Delta 9 with additional capital for operations and expansion. The closing of such credit facility remains subject to due diligence
• The Company signed a Memorandum of Understanding with US biotech firm Nanosphere Health Sciences ceding the Master License in Canada for Nanosphere’s patented delivery system for cannabis
• The Company is currently completing work necessary to acquire the European Union “Good Manufacturing Practices” (GMP) Certification in order to initiate exports of medical cannabis to Germany
• The Company executed its option to acquire the land on which its current facility is located, as well as neighbouring property, giving Delta 9 the capacity to expand to more than 2 million square feet

Management Commentary

“This has been a pivotal period for Delta 9 as we prepare for full legalization of recreational cannabis in Canada,” said CEO John Arbuthnot. “From our perspective, the real race for primacy in the Canadian cannabis market begins on October 17, and for this reason, our focus has been to position our company for rapid growth in the post-legalization era. To this end, we acquired one of only four licenses for retail in our home province of Manitoba; invested in an expansion in Alberta and Saskatchewan through our partners at Westleaf; acquired the exclusive license for the cannabis delivery system developed by Nanosphere; and signed a major supply agreement with the Province of Manitoba.”

Arbuthnot says agreeing to the terms of a debt financing at favourable terms with a Tier 1 Chartered Bank was another important step in the Company’s development. “We were already well financed for our current phase of expansion, but this $12 million dollar financing allows us to expand readily into other areas, including our exports into Europe. Delta 9 is building a company that is both vertically and horizontally integrated, with a healthy footprint across Canada, and the ability to make inroads into the global market.” 

Arbuthnot says the other major initiative for Delta 9 was to increase the Company’s access to the Canadian and global markets. “It’s not just a matter of how much cannabis you can produce. It’s also about how much you can sell, and market access is critical. Our moves to acquire supply agreements, to acquire retail licenses, to achieve Preferred Supplier status with Pharmasave, and to acquire an export partner in Germany will be key drivers of our post-legalization revenues. Additionally, we are now moving heavily into research and development with our partners at Nanosphere, developing new and advanced products that are unique in the industry for both the medical and recreational markets.”

Expansion

Delta 9 continues to expand its production capacity in Winnipeg in a project that remains ahead of schedule and under budget. The Company anticipates that the $16 million expansion will see production capacity increase to 17,500 kilograms of cannabis per year by the end of 2019. The Company also acquired lands adjacent to its current property, giving Delta 9 the ability to increase capacity to more than 2 million square feet of production space.

Additionally, Delta 9 owns 50 per cent of the 70,000 square foot Delta West facility in Alberta, which is expected to provide an initial increase of 4,000 kilograms of cannabis to the Company’s annual production.

Financial review Q2 2018

A comprehensive discussion of Delta 9’s financials and operations are provided in the Company’s Management Discussion & Analysis and Financial Statements which have been filed on www.sedar.com. 

About Delta 9 Cannabis Inc. 

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’s shares trade on the TSX Venture Exchange under the symbol “NINE”.

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