Benchmark Announces Year-End 2018 Financial Results
Vancouver, British Columbia--(Newsfile Corp. - April 29, 2019) - Benchmark Botanics, Inc. (CSE: BBT) (FSE: BBW) (OTC Pink: BHHKF) ("Benchmark" or the "Company"), a cannabis producer, today released its financial and operational results for the fiscal year ended December 31, 2018.
"2018 was a truly pivotal year for Benchmark Botanics. We were issued our License to Import and License to Sell from Health Canada. The Company completed a $2,000,000 Private Placement and entered into a Trademarks License Agreement for use of the "The Bulldog" trademark in Canada. In addition, Benchmark signed a definitive agreement for the development of 4 acres of greenhouse operations in Pitt Meadows, BC and strengthened the leadership of the Company with the addition of a high-profile director and a well know industry leader," said William Ying, Benchmark Botanics President and CEO. "With this foundation in place, the Company is transitioning into a period of significant expansion with product sales, facility expansion, additional facilities being constructed, and the Asia Pacific Nutraceutical strategy being implemented. Taken together, we have strengthened our value proposition in 2018, and will be well positioned for the next stage of our growth in 2019."
2018 KEY DEVELOPMENTS
License to Import
On July 8, 2018, the Company was issued a License to Import by Health Canada. This import license allows Benchmark, through its 100% owned subsidiary Potanicals Green Growers, access to limitless genetics and strains for production. With this approved permit in hand, in July 2018 Benchmark has executed a purchase order with Dutch Passion from the Netherlands to import over 200 seeds that represent 70 different strains. This will enable Benchmark to custom produce exactly what the off-take markets are asking for. Further to this, the medical profile of the strains we are importing ranges from very high Cannabidiol (CBD) low THC, to high-THC/low-CBD, 1:1 THC: CBD strains, as well as, others. This will position the company to have many options for production when looking to service the current and future market demand.
License to Sell
On August 31, 2018, Potanicals was issued a license to sell dried cannabis under the Access to Cannabis for Medical Purposes Regulations (the "ACMPR") by Health Canada.
Non-Brokered Private Placement
On September 5, 2018, the Company closed a non-brokered private placement of 2,666,667 units (the "Units") at a price of $0.75 per Unit for aggregate gross proceeds of $2,000,000 (the "Private Placement") with an arm's-length party (the "Investor"). Each Unit is comprised of one common share of the Company ("Shares") and one common share purchase warrant ("Warrant"). Each Warrant shall be exercisable into one common share at a price of $1.20 for a period of 24 months from the closing date of the Private Placement.
License of "The Bulldog" Trademark
On September 19, 2018, the Company entered into a Trademarks License Agreement (the "Agreement") with Leidseplein Beheer B.V. (the "Licensor"), a company incorporated under the laws of the Netherlands, in which the Licensor has agreed to grant the Company use of "The Bulldog" trademark in Canada upon the terms and conditions set out in the Agreement.
Definitive Agreement with 1139000 B.C. Ltd.
The Company, together with Benchmark's wholly-owned subsidiary, Potanicals, signed a binding definitive agreement on August 30, 2018 (the "Agreement") with 1139000 B.C. Ltd. ("1139") to supersede the letter agreement with 1139 for the development of approximately 4 acres of greenhouse operations to be located in Pitt Meadows, British Columbia (the "Property") beneficially owned by 1139.
Under the terms of the Agreement, Benchmark has agreed, through Potanicals, to apply for a license under the ACMPR for the Property, and upon receipt of a license under the ACMPR will earn a 25% interest in 1139, the owner of the Property. Upon the Property being developed to a commercial stage, Benchmark will have the right to increase its ownership to 51% of 1139 in consideration for the issuance of common shares of Benchmark, such number of shares to be based on the then fair market value of 1139.
Pursuant to the Agreement, 1139 is responsible for construction of the necessary facilities on the Property for a license under the ACMPR to be obtained. Benchmark has agreed to indemnify 1139 for certain expenses relating to the acquisition of the Property and construction of the facilities if Potanicals fails to obtain a license under the ACMPR for the Property by June 30, 2019, subject to extension in certain circumstances.
KEY DEVELOPMENTS OCCURING SUBSEQUENT TO DECEMBER 31, 2018
Strengthening the management team:
Appointed Hon. James Moore as a Director.
James Moore is a Senior Business Advisor at the multinational law firm Dentons and a Public Policy Advisor at the global firm Edelman. He also serves as Chancellor of the University of Northern British Columbia, is the national vice-chair of the Canadian Cancer Society, a member of the NAFTA Council for the Government of Canada and a corporate director. Previously he served as Canada's Minister of Industry, Minister of Canadian Heritage & Official Languages and Secretary of State for the Asia Pacific Gateway and Minister for the 2010 Olympics over a 15-year career as a Member of Parliament.
Appointed of Mr. Hua Zhang PhD as Vice President of Production.
Mr. Zhang has a long and extensive history of agricultural growing and production experience. Most recently he was Head Grower and Director of Production for Hortalizas Argaman in Jalisco, Mexico where he oversaw the 135-acre farm including cucumber and tomato greenhouse production. Prior to Hortalizas Agraman, Mr. Zhang worked in Canada for 18 years which included being the Head Grower for Amoco Farms and Enns Plant Farms. He managed year-round production planning, climate and irrigation controls, labour budgeting, developing and implementing IPM strategy, personnel training and development. In 1997, he graduated with a PhD in Horticulture from Kansas State University.
OVERVIEW OF 2018 FINANCIAL RESULTS
Net loss for the year ended December 31, 2018 was $6,077,509, compared to a net loss of $4,437,847 for the year ended December 31, 2017. The increase in net loss for the year ended December 31, 2018 is due to the increase in operation expenses of $3,621,323, the write-off of deposit of $500,000 and the write-off of inventory of $122,450, offset by the unrealized gain on changes in fair value of biological assets of $424,259 and a reduction in an RTO list expenses of $2,179,852.
EBITDA before listing expenses, share-based compensation expenses, write-off of deposit, write-off of inventory and unrealized gain on changes in fair value of biological assets ("Adjusted EBITDA") for the year ended December 31, 2018 decreased to a negative $3,319,204 from a negative $1,656,275 for the same time period of last year.
At December 31, 2018, the Company had working capital of $793,516 (December 31, 2017-$3,069,384).
OUTSTANDING SHARE CAPITAL
As of April 29, 2018, the number of issued and outstanding common shares was 142,595,594, the number of stock options outstanding was 10,046,666, and the number of outstanding warrants was 2,666,667.
The corporation's audited annual consolidated financial statements for 2018 and the related management's discussion and analysis (MD&A) are available on SEDAR.
About Benchmark Botanics Inc.
Benchmark Botanics is a diversified multi-licensed cannabis producer focused on a three-way vertical business model targeting the medical, pharmaceutical, and recreational markets in Canada and the EU. The Company's business plan also includes a strategy to become a Canadian licensed producer to pioneer selling medical cannabis and hemp in China and throughout Asia.
Benchmark Botanics is focused on producing the highest-quality, indoor-grown cannabis for patients and adult recreational consumers, as well as developing international business partnerships to extend the Company's global footprint.
Benchmark Botanics' 100% owned subsidiary, Potanicals Green Growers Inc., is a Health Canada licensed producer under the Cannabis Act and its regulations (formerly ACMPR). The Company is producing at its indoor Peachland Cannabis Complex and is in the design stage for a Phase II expansion there. Along with cultivation and production, the company's Peachland BC facility also provides propagation, cultivation, cloning, storage, research and development, genetics and is progressing towards CBD oil extraction and an EU-GMP certification.
As part of its expansion strategy the company is building a second facility, a 4-acre Pitt Meadows Greenhouse Operations in BC through a joint venture (earn-in agreement) with 1139000 BC Ltd.
The Company has established several European Union partnerships including the rights to "The Bulldog" trademark in Canada. The Bulldog trademark has a long-established successful history as one of the most well-known cannabis cafe brands in Amsterdam and around the world.
Benchmark Botanics has also established German commercial partnership to potentially export the Company's products into the EU markets.
ON BEHALF OF THE BOARD OF
BENCHMARK BOTANICS INC.
/s/ "William Ying"
Chief Executive Officer
Tel: 604-238-0005 (ext. 101)
The CSE has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this release.
FORWARD LOOKING INFORMATION
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements or information. More particularly and without limitation, the news release contains forward-looking statements and information relating to Company's corporate strategy. The forward-looking statements and information are based on certain key expectations and assumptions made by management of the Company, including, without limitation, the Company's ability to carry out its business plan. Although management of the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information since no assurance can be given that they will prove to be correct.
Forward-looking statements and information are provided for the purpose of providing information about the current expectations and plans of management of the Company relating to the future. Readers are cautioned that reliance on such statements and information may not be appropriate for other purposes, such as making investment decisions. Since forward-looking statements and information address future events and conditions, by their very nature they involve risks and uncertainties. Actual results could differ materially from those currently anticipated due to several factors and risks. These include, but are not limited to, the Company's ability to identify and complete additional suitable acquisitions to further the Company's growth as well as risks associated with the medical marijuana industry in general, such as operational risks in development and production delays or changes in plans with respect to development projects or capital expenditures; the uncertainty of the capital markets; the uncertainty of receiving the required licenses, production, costs and expenses; health, safety and environmental risks; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of the potential market; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals and changes in legislation, including but not limited to tax laws and regulated regulations. Accordingly, readers should not place undue reliance on the forward-looking statements, timelines and information contained in this news release. Readers are cautioned that the foregoing list of factors is not exhaustive.
The forward-looking statements and information contained in this news release are made as of the date hereof and no undertaking is given to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws or the Canadian Securities Exchange. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.
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