Pharmadrug Announces Q3 2019 Financial Results
Toronto, Ontario--(Newsfile Corp. - November 29, 2019) - Pharmadrug Inc. (CSE: BUZZ) (OTC: LMLLF) (the "Company" or "Pharmadrug"), a leading European medical cannabis distribution company, today announced its financial results for the third quarter ending September 30, 2019. The Company's full Management's Discussion and Analysis ("MD&A") is available on SEDAR (www.sedar.com).
"Q3 was Pharmadrug's first full quarter of operations in Germany since acquiring Pharmadrug Production GmbH in May 2019. Since then, we have taken significant measures to scale the Company's foothold in Germany," said Daniel Cohen, Pharmadrug's CEO.
"We eliminated the non-core tender business and focused on growing Pharmadrug's distribution network in the country. We now deal with nearly 100 of Germany's ~20,000 pharmacies and have recently expanded our sales efforts for further scalability. In addition, we have secured two supply agreements for medical cannabis product beginning in Q2 2020. We expect Pharmadrug's German operations to reach profitability in H1 with a surge in growth to begin in the latter half of next year."
Revenue for the Q3 2019 quarter was $271K with a gross margin of $67K or 24.5%. Gross margins were tempered in the quarter due to a one-time 20 kg medical cannabis sale at a small margin in effort to create a new relationship and sales channel in the German market. Normalized gross margins of ~40% should return over the coming quarters.
There is also a restatement to Q2 2019 financial statements coinciding with the simultaneous closing of the acquisition and discontinuing of the legacy tender business. There were certain purchases of inventories that were incorrectly recorded in the period. The corrected numbers reflect an increased net loss in Q2 of $119K.
About Pharmadrug Inc.
Pharmadrug is building a vertically integrated cannabis business focused on Europe and Israel. The Company (i) owns 80% of Pharmadrug Production GmbH, a German medical cannabis distributor, with a Schedule I European Union narcotics license allowing for the importation and distribution of medical cannabis to pharmacies in Germany and throughout the EU, (ii) owns a convertible note convertible into 54% of the outstanding equity of HolyCanna Ltd., a cultivation and nursery license holder in Israel, and (iii) has an agreement to acquire 57% of CannabiSendak Ltd., the builder of a network of dispensaries in Israel. Additionally, through significant extraction IP, the Company is dedicated to building a high margin, downstream business of end-user products.
For further information, please contact:
Daniel Cohen, CEO
David Posner, Chairman
Caution Regarding Forward-Looking Information:
THE CANADIAN SECURITIES EXCHANGE HAS NOT REVIEWED NOR DOES IT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This news release may contain forward-looking statements and information based on current expectations. These statements should not be read as guarantees of future performance or results of Pharmadrug. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Such statements include reference to Pharmadrug's ability to import supply and distribute additional cannabis once available and potential revenue therefrom, the timing of the receipt of the additional cannabis supply coinciding with any changes in the current supply shortages in the German market, Pharmadrug's ability to increase supply of cannabis and expand into additional European Union markets, the roles of Canada and Israel as a major supplier of medical cannabis, and the ability of the Company to building a high-margin, downstream business of end-user products. There is no certainty that any of these events will occur. Although such statements are based on management's reasonable assumptions, there can be no assurance that such assumptions will prove to be correct. We assume no responsibility to update or revise them to reflect new events or circumstances.
The Company's securities have not been registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or applicable state securities laws, and may not be offered or sold to, or for the account or benefit of, persons in the United States or "U.S. Persons", as such term is defined in Regulation S under the U.S. Securities Act, absent registration or an applicable exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in the United States or any jurisdiction in which such offer, solicitation or sale would be unlawful.
Additionally, there are known and unknown risk factors which could cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein, such as, but not limited to dependence on obtaining regulatory approvals; the ability to locate additional supply of medical cannabis, owning interests in companies or projects that are engaged in activities currently considered illegal under United States federal law; changes in laws; limited operating history, reliance on management, requirements for additional financing, competition, hindering market growth; regulatory and political change.
All forward-looking information herein is qualified in its entirety by this cautionary statement, and the Company disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.
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