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NAPANEE, Ontario, May 03, 2018 (GLOBE NEWSWIRE) — ABcann Global Corporation (TSXV:ABCN) (“ABcann” or the “Company”) is pleased to provide the following business update.
Over the past two quarters, we have enhanced our leadership team, strengthened our balance sheet, improved operational effectiveness, and made significant commercial advancements. ABcann is well-positioned, with approximately $130 million in cash, to accelerate the growth of our business.
Barry Fishman, Chief Executive Officer of ABcann
ABcann’s 2017 audited annual financial statements showed a cash balance at December 31, 2017 of $70.8 million, annual net sales of $0.9 million and operating expenses totalling $27.5 million. These expenses included very substantial one-time costs related to taking ABcann public and internal restructuring matters. While the restructuring continued into Q1 of 2018, the impact of these costs is expected to have a far lesser impact on the Company’s financial statements for that period.
In Q1, ABcann’s new management team formulated a growth strategy for 2018 that is focused on several key areas:
1. Production Capacity and Capability
- 2018 capacity – 800 kilograms of indoor grown premium dry flower and 1,500 kilograms of seasonal greenhouse cannabis
- 2019 capacity – 1,500 kilograms of indoor grown premium bud and 14,000 kilograms of seasonal greenhouse cannabis to be used primarily in finished medical and adult-use products
Targeted for completion in late Q3 2018, the Company’s Vanluven expansion includes state-of-the-art areas for cultivation, extraction, formulation and packaging. ABcann is expecting to receive GMP certification in late Q4 2018 or early Q1 2019, facilitating the export of products to certain international markets.
The Company is developing a plan for the construction of its Kimmett facility. The macro plan and budget for the facility are not expected to be completed until later this year, however the Company has developed the following three-phased approach to begin to generate revenue from the facility prior to its completion:
- Phase 1, which has recently commenced, consists of the construction of seasonal greenhouses and a header house with an annual production capacity of approximately 4,000 kilograms. Subject to receipt of necessary Health Canada approvals, this innovative design is expected to result in one of the lowest capital and operating costs per gram in the industry. It is estimated that cannabis produced from these seasonal greenhouses will be produced for less than $0.50 per gram.
- Phase 2, consisting of additional seasonal greenhouses with annual production capacity of approximately 10,000 kilograms, is expected to begin production in Q2 2019 and to bring the Company’s total annual production capacity to approximately 15,500 kilograms.
- Phase 3, which will include the Cannabis Wheaton expansion area, is expected to be a hybrid production facility with 17,000 kilograms of capacity and is expected to commence production in late 2019. The Company continues to work with Cannabis Wheaton on the Phase 3 facility design, with the intent of completing an agreed-upon project plan by Q3 2018, as per the amending agreement between the parties, which is further described in ABcann’s management’s discussion and analysis for the year ended December 31, 2017 (the “MD&A”). Upon completion of the Kimmett facility, the Company is expected to have a total annual production capacity of approximately 32,500 kilograms.
2. Go-to-Market Strategy
- Company to be rebranded and new consumer brands to be rolled out mid-year 2018
- Harvest Medicine to open second clinic in Edmonton in early Q3 2018
- Harvest Medicine to launch a telemedicine platform in Q3 2018 to provide access to patients seeking medical cannabis in underserved communities.
In the near future, subject to the receipt of all necessary approvals, the Company expects to announce a new company name, a new medical brand, and two new adult-use brands, each targeting a distinct segment of the soon-to-be-legalized recreational market.
To drive revenue growth and improve the customer experience, ABcann is focused on:
- securing distribution agreements for its adult-use products
- increasing its promotional interactions with cannabis clinic prescribers
- increasing the frequency and impact of its marking and communications
- upgrading its product line and service offerings, including an innovative first-of-its-kind vaporizer access program and a Q3 2018 oils launch
- introducing innovative first-to-market products that meet unmet customer needs.
ABcann’s current product development focus is on producing extracted oil products and the Company is targeting launch of three different formulations of oils in Q3 2018. The Company expects to expand its product offering to include soft gels, oral strips, patches, inhalers, and topical products when permitted by Health Canada.
In Q1 of 2018, the Company made two strategic investments: the acquisition of Harvest Medicine, a proven, scalable medical cannabis clinic business that is on track to add at least four additional locations over the next 12 months; and an investment in Choom, a Vancouver-based company focused on retail distribution in the adult-use market. The Choom investment is accompanied by a product supply agreement for their retail operations. Additional details with respect to these investments are included in the MD&A.
3. International Expansion
- Australia sales and sales activities underway
- GMP status approval, required for European sales, targeted for late 2018
ABcann has signed an agreement to supply medicinal cannabis to the Australian Medicinal Cannabis Service, as well as a research agreement with the Metro Pain Group (the “MPG”), a prominent group of pain physicians in Melbourne. ABcann is shipping product to Australia this month that will be used in conjunction with a joint study with MPG to explore the use of cannabinoids in the management of chronic pain.
This month, ABcann will submit joint applications to the German Narcotic Agency (BfArM) and the State of Brandenburg seeking approval for a narcotic import and distribution license. This approval, expected by the end of 2018, will permit ABcann to ship medicinal cannabis to the German market. The Company aims to obtain a distribution license in Germany after GMP certification of its Vanluven facility is received and the required stability testing of its products is completed. ABcann will enter the next round of the German tender process for cultivation and continues to evaluate multiple opportunities to enter into additional European markets.
4. R&D Initiatives
- University of Guelph partnership to leverage in-house state-of-the-art research
ABcann has had an industry exclusive partnership with the University of Guelph’s Controlled Environment Systems Research Facility (“CESRF”) since 2015. CESRF is the world’s leading controlled environment research and technology development institute. The coordinated R&D program is unique to the industry and has resulted in the first peer reviewed scientific publications on cannabis cultivation in North America. The custom designed growth chamber technology currently housed at the Company’s Vanluven facility, where trained plant scientists are extending the scope of cannabis production research, is state-of-the-art in this field globally.
ABcann is also working with an Ontario college, through a multifaceted partnership, on the implementation of optimized extraction methods at the Company’s Napanee facilities and the development of novel differentiated product formulations. ABcann will announce further details of this partnership in the coming weeks.
5. Organizational Effectiveness
Through the addition of new talent with backgrounds in the beverage alcohol, pharmaceutical and agriculture industries, the Company has strengthened its leadership team. ABcann has also significantly enhanced business processes and governance across the organization. This enhanced set of internal processes and capabilities is expected to create a strong platform from which to expand, and create a foothold from which to efficiently expand globally to put ABcann at the forefront of the cannabis industry.
ABcann holds production and sales licenses from Health Canada. Its flagship Vanluven facility in Napanee, Ontario contains proprietary, state-of-the-art, plant-growing technology, which allows ABcann to precisely control all environmental variables to maximize yield and produce pharmaceutical-grade cannabis. This scientific approach to production will continue to be the basis of ABcann’s growing philosophy in all current and future operations.
The Company is expanding its production capacity and pursuing partnership and product development opportunities domestically, as well as in select international markets, such as Germany, Australia and Israel.
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