All amounts expressed in Canadian dollars unless otherwise noted

TORONTO and RIONEGRO, Colombia, Dec. 22, 2021 /CNW/ – PharmaCielo Ltd. (“PharmaCielo” or the “Company”) (TSXV: PCLO) (OTCQX: PCLOF), the Canadian parent of Colombia’s premier cultivator and producer of medicinal-grade cannabis extracts, PharmaCielo Colombia Holdings S.A.S. (“Holdings”), today announced that it has plans to issue up to 15,000 debenture units (each a “Unit”) in a non-brokered private placement (the “Offering”). The Units will be issued at a price of $1,000 per Unit for aggregate gross proceeds of up to $15,000,000. Insiders, including directors and management, plan to participate in the Offering.

The Company expects to issue the Units on or about December 30, 2021, in one or more closings, subject to the approval of the TSX Venture Exchange.

The Company intends to use the proceeds from the sale of the Units for operations, working capital and the build-out of its international psychoactive dry flower sales program.

Debenture Units

Each will Unit consist of $1,000 principal amount of 11% secured debentures (“Debentures”) and 250 non-transferable common share purchase warrants (“Debenture Warrants”). Each Debenture Warrant will entitle the holder for a period of 36 months from the initial closing date to acquire one common share of the Company (each a “Common Share”) at an exercise price equal to a 50% premium over the market price of the Common Shares at the time of the initial closing. The Debentures will bear interest at a rate of 11.0% per annum, will mature 36 months from the date of initial closing date, and will be guaranteed by Holdings. Holdings’ guarantee of the Debentures will be secured by mortgages on the real property of the Company and its subsidiaries.

The Company will have the right to redeem any or all of the Debentures from time to time at the following percentages of face value: (i) 105% at any time prior to the first anniversary of the initial closing date; (ii) 103% at any time on or after the first anniversary of the initial closing date and prior to the second anniversary of the initial closing date; and (iii) 101% thereafter, in each case together with accrued and unpaid interest to, but not including, the date of redemption.

Upon a change of control of the Company, holders will have the right to have their Debentures repurchased at 105% of face value plus accrued and unpaid interest to, but not including, the date of repurchase.

The Debentures, Debenture Warrants and any Common Shares issuable upon exercise of the Debenture Warrants will be subject to a four-month hold period under applicable Canadian securities laws, starting from the date of issuance of the corresponding Units.

Management Commentary

Bill Petron, CEO of PharmaCielo, commented, “We expect 2022 to be a very important year for PharmaCielo, as Colombian dried flower exports begin, and as global acceptance of and demand for imported cannabinoids continues to grow. Since I assumed the CEO role in August, our team has successfully streamlined the Company’s overall cost structure to align expenses with sales forecasts and re-focused the global sales strategy towards high-margin products, leaving us ready to execute. This Offering gives us the necessary capital to deliver on current sales opportunities, while strategically building our global sales organization to expand our pipeline.”

Mr. Petron continued, “The fact that we were able to obtain debt financing at a very reasonable cost, represents a strong vote of confidence from investors and insiders regarding both our team’s progress to date as well as in PharmaCielo’s growth potential over the next twelve months. As a management team and board of directors, we strongly believe in alignment with shareholders. In addition to participating in the Offering, I intend to purchase additional common shares of the Company on the open market once the internal trading blackout has lifted, and I know that several members of our senior team and board of directors intend to do the same. We appreciate the support and continued confidence of our shareholders and are committed to continuing to advance our strategies during 2022, which we expect will result in significant value creation.”

About PharmaCielo

PharmaCielo Ltd. (TSXV: PCLO, OTCQX: PCLOF) is a global company, headquartered in Canada, with a focus on ethical and sustainable processing and supplying of all natural, medicinal-grade cannabis oil extracts and related products to large channel distributors. PharmaCielo’s principal (and wholly owned) subsidiary is PharmaCielo Colombia Holdings S.A.S., headquartered at its cultivation and processing center located in Rionegro, Colombia.

The board of directors and executive team of PharmaCielo are comprised of a diversely talented group of international business executives and specialists with relevant and varied expertise. PharmaCielo recognized the significant role that Colombia’s ideal location plays in building a sustainable business in the medical cannabis industry, and the Company, together with its directors and executives, is executing on a business plan focused on supplying the international marketplace.

Forward-Looking Statements

This news release contains forward-looking statements. Forward-looking statements can be identified by the use of words such as “expects”, “is expected”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or state that certain actions, events or results “may” or “will” be taken, occur or be completed or achieved. Forward-looking statements in this news release include, without limitation, statements regarding the issuance of the Units, including the terms thereof and the closing date therefor.

The forward-looking statements in this news release are necessarily based on assumptions, including assumptions with respect to PharmaCielo’s ability to obtain necessary approvals for the issuance of the Units.

Forward-looking statements can be affected by known and unknown risks, uncertainties and other factors, including changes to PharmaCielo’s development plans, the failure to obtain and maintain all necessary regulatory approvals relating to the export of cannabinoid products and the import of these products into other countries, TSX Venture Exchange approval, the inability to export or distribute commercial products through sales channels as anticipated due to economic or operational circumstances, risks associated with operating in Colombia, fluctuation of the market price for the Company’s products, risks associated with global economic instability relating to COVID-19 or other developments, risks related to retention of key Company personnel, currency exchange risk, competition in PharmaCielo’s market and other risks discussed or referred to under the heading “Risk Factors” in PharmaCielo’s Annual Information Form for the financial year ended December 31, 2019, which is available at www.sedar.com. Accordingly, readers should not place undue reliance on forward-looking statements. Except as required by law, PharmaCielo undertakes no obligation to publicly update 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 press release.

SOURCE PharmaCielo Ltd.

For further information: Ian Atacan, Chief Financial Officer, +1 416-562-3220, [email protected]; Media and Investor Inquires: [email protected]

Related Links

http://www.pharmacielo.com

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

Average sales on an annual run-rate basis for stores converted to Value Buds now $3.5 million versus $1.4 million before conversion

EDMONTON, AB, Aug. 12, 2021 /CNW/ – Nova Cannabis Inc. (the “Company” or “Nova“) (TSX: NOVC) today released its unaudited condensed interim consolidated financial statements (the “interim financial statements“) and management’s discussion and analysis (“MD&A“) for the three and six months ended June 30, 2021.

“During the second quarter we continued to successfully execute against our growth strategy capturing market share at an aggressive pace,” said Darren Karasiuk, CEO of Nova. “In two months from conversion, our Value Buds stores are already operating at an average sales on an annual run-rate basis¹ of $3.5 million which is, in our estimation, at least three times the sales volume of the average Alberta cannabis retailer.”

“Value Buds is clearly resonating with Alberta cannabis consumers and drawing customers from the illicit market as well as legal cannabis retailers. We expect the same response in Ontario as we accelerate our pace of openings in Canada’s largest market. All signs suggest that our high-volume value conscious consumer strategy is disrupting the market, and we expect to benefit disproportionately from the growth tailwinds in our markets.”

Business and Operating Highlights

• Graduated from the TSX Venture Exchange and began trading on the TSX on July 15, 2021
• Converted thirty-six (36) stores from legacy banners to Value Buds
• Opened nine (9) new Value Buds stores: six (6) in Ontario and three (3) in Alberta
• Nova now has sixty (60) stores operating and a further twenty-five (25) new stores are under development/construction with thirty (30) more in Ontario under active negotiation
• Launched Nova Cannabis Analytics, an ancillary revenue stream offering comprised of a proprietary, regulatory-compliant data and analytics platform with several subscription agreements signed since its launch and subsequent to the end of the fiscal quarter
• Bolstered its board composition with the election of Marvin Singer, former senior partner at Norton Rose Fulbright

Outlook

The Company expects to adopt an aggressive and disciplined stance toward growth focusing on:

• Organic store openings
• Opportunistic and sensible acquisitions to complement organic growth
• Same-store sales growth
• Private label
• Basket size growth

When it comes to both organic growth and acquisition opportunities, the Company is focused on store locations that management believes will have long-term viability. Management recognizes that in Ontario, due to its historically slow retail cannabis store rollout, many existing cannabis retail locations have enjoyed monopoly-like positions in very large trade areas. These monopolies have provided many cannabis retailers with revenues that we believe are unsustainable with greater competition and vulnerability to new retailers who can offer better pricing as well as traditional retail fundamentals such as visibility, parking, and proximity to other customer draws.

It is anticipated that all existing stores will be converted to Value Buds by the end of Q3 2021 and all new stores will be opened with the Value Buds banner. Value Buds stores are designed to accommodate the substantially increased customer count we see in these high-volume stores.

The Company continues to expect to have at least eighty-five (85) stores built and/or opened by the end of 2021.

Second Quarter 2021 Financial Highlights

The interim financial statements for the three and six months ended June 30, 2021 reflect the results of the stores formerly owned by Alcanna Inc. as well as the results from the stores owned by the Company (when it was known as YSS Corp.) from the closing of the reverse take-over transaction on March 22, 2021 (the “RTO“) until June 30, 2021. The comparative period for 2020 in the interim financial statements only presents the financial results for the stores that were owned by Alcanna Inc. and operated under the Nova Cannabis banner with a different operating, pricing and margin strategy than they were operated within 2021. As such, the interim financial statements for the three and six months ended June 30, 2021 and 2020 are not directly comparable.

Sales increased 106.6% compared to the second quarter of 2020, to $29.7 million from $14.4 million. The increase is primarily due to the seven (7) retail cannabis stores that have opened since March 31, 2020, the retail cannabis stores acquired through the RTO and the increased sales from Nova Cannabis banner stores that were re-branded to Value Buds at various times throughout Q4 2020 and the first six months of 2021.

For further information, refer to the interim financial statements and the MD&A of the Company for the three and six months ended June 30, 2021, which are available from the Company’s profile on SEDAR, at www.sedar.com, or on the Company’s website at www.novacannabis.ca.

CONFERENCE CALL

Management will conduct a conference call on August 13, 2021 at 12:00p.m. ET (10:00a.m. MT) to discuss its second quarter operating and financial results. To participate, please dial (416) 406-0743 or (800) 806-5484 and use the required participant access code: 2286294#. The playback will be made available approximately four hours after the event at (905) 694-9451 or (800) 408-3053, required access code: 5616005#.

ABOUT NOVA CANNABIS INC.

Nova Cannabis Inc. (TSX: NOVC) is one of Canada’s largest and fastest growing cannabis retailers with a goal to disrupt the cannabis retail market by offering a wide range of high-quality cannabis products at every-day best value prices. The Company currently operates sixty (60) locations across Alberta, Ontario, and Saskatchewan primarily under its Value Buds and Nova Cannabis banners. The Company is majority owned by Alcanna Inc. (TSX: CLIQ).

Additional information about Nova Cannabis Inc. is available at www.sedar.com and the Company’s website at www.novacannabis.ca.

NON-IFRS FINANCIAL MEASURES

Average sales on an annual run-rate basis is not a measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. Investors are cautioned that this measure should not replace sales, net earnings or loss (as determined in accordance with IFRS) as an indicator of the Company’s performance, of its cash flows from operating, investing and financing activities or as a measure of its liquidity and cash flows. The Company’s method of calculating the aforementioned non-IFRS financial measure may differ from the methods used by other issuers. Therefore, the measure may not be comparable to similar measures presented by other issuers.

Average sales on an annual run-rate basis is calculated by taking the average of the actual weekly sales for July 2021 of the stores that have been converted to Value Buds for at least eight (8) weeks, and multiplying by fifty-two (52) weeks. This is one of the key metrics that the Company uses to assess performance and provides a useful comparison as to how these stores that have been converted to our Value Buds discount banner are performing. Management believes the presentation of average sales on an annual run-rate basis provides for useful information to investors and shareholders as it provides increased transparency on the current performance of these stores.

FORWARD LOOKING STATEMENTS

This news release contains forward-looking statements or information (collectively “forward-looking statements“) within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as “continue”, “anticipate”, “will”, “should”, “plan”, “intention”, and similar words suggesting future events or future performance. All statements and information other than statements of historical fact contained in this news release are forward-looking statements. In particular, this news release contains forward-looking statements pertaining to: Nova’s average sales on an annual run-rate basis; Nova’s expectations for sales growth in Ontario, in general and relative to other cannabis retailers; Nova’s retail cannabis business strategy, including organic growth and strategic acquisitions; Nova’s discount pricing model; the conversion of Nova Cannabis stores to the Value Buds banner and the timing thereof; the Company’s objectives, including planned construction of new stores, timing of new store openings, evaluation of potential sites and sales growth, particularly in the Value Buds banner; the ability of the Company to obtain government licenses for its new stores; Nova’s gross margin as a percentage of sales and sales forecast for the balance of 2021; and expectations as to consumer demands.

With respect to forward-looking statements contained in this news release, the Company has made assumptions regarding, among other things: the Company’s ability to identify locations for, construct and open new stores and the costs related thereto; the availability of hardware and equipment for those stores; government regulation and applicable laws will not change in a manner adverse to the Company; receipt of necessary regulatory approvals to open new stores; the Company’s ability to obtain leases for new sites and attract the necessary personnel to operate new stores; the cost of converting existing stores to the Value Buds banner; demand for the products the Company sells; other factors that will drive sales growth in the Value Buds banner; availability of acquisition opportunities; sustainability of competitors’ businesses and competition in the retail cannabis industry, including from the illicit cannabis market; consumer demands; and factors that influence consumer behavior.

Although the Company believes that the expectations reflected in the forward-looking statements, and the assumptions on which such forward-looking statements are made, are reasonable, especially given the unprecedented uncertainty of the full extent and impact of COVID-19, there can be no assurance that such expectations and assumptions will prove to be correct. Readers should not place undue reliance on forward-looking statements included in this news release. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that may cause actual performance and financial results to differ materially from any estimates, forecasts or projections. These risks and uncertainties include, among other things, the duration and severity of the COVID-19 pandemic on the business, operations and financial condition of the Company; the risk that Nova will be unable to execute its strategic plan and growth strategy, as planned without significant adverse impacts from various factors beyond its control; dependence on suppliers; potential delays or changes in plans with respect to capital expenditures and the availability of capital on acceptable terms; risks inherent in the retail cannabis industry; competition for, among other things, customers, supply, capital and skilled personnel; changes in labour costs and markets; incorrect assessments of the value of acquisitions; general economic and political conditions in Canada (including Alberta and Ontario), and globally; industry conditions, including changes in government regulations; fluctuations in foreign exchange or interest rates; unanticipated operating events; failure to obtain regulatory and third–party consents and approvals when required; changes in tax and other laws that affect us and our shareholders; the potential failure of counterparties to honour their contractual obligations; stock market volatility; and the other factors described in the Company’s public filings available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this news release are made as of the date hereof. Except as expressly required by applicable securities legislation, Nova does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

SOURCE Nova Cannabis Inc.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.