January 2, 2019
Cannex continues with strong operating performance in Washington State
Vancouver, BC, January 2, 2019 – Cannex Capital Holdings Inc. (CSE: CNNX; OTCQB: CNXXF) (“Cannex” or the “Company”), which, through its wholly owned subsidiaries, provides a range of comprehensive and flexible growth options for licensed United States cannabis cultivators, processors, and dispensaries, is pleased to announce financial results for its second fiscal quarter of 2019 (“Q2 2019”) ended October 31, 2018. All financial amounts are in United States dollars. Cannex’s financial results have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
Below outlines the key financial metrics for Cannex’s Q2 2019. A more detailed discussion can be found in the Company’s financial statements and MD&A filed on www.sedar.com. The comparable second quarter of 2018 fiscal period is July 1, 2017 to September 30, 2017 (referred to as the “comparative period”).
Revenues increased 223% to $3,051,502 in Q2 2019, compared to $1,810,673 for the comparative period. Revenue was generated primarily by way of packaging sales and rental income.
Income for the period was $696,746 for Q2 2019, as compared to a loss of $815,188 for the comparative period.
Adjusted EBITDA was $1,039,270 for Q2 2019, as compared to $1,139,214 for the comparative period.
Adjusted EBITDA is a non-GAAP financial measures and accordingly they are not earnings measures recognized by IFRS and do not carry standard prescribed significance. Moreover, our method for calculating Adjusted EBITDA may differ from that used by other companies using the same designation. We caution readers that Adjusted EBITDA should not be substituted for determining net income (loss) as an indicator of operating results or as a substitute for cash flows from operating and investing activities.
Management Discussion & Recent Developments
Please refer to Cannex’s “Management’s Discussion and Analysis: Three Months Ended October 31, 2018” for a comprehensive overview.
“Cannex is pleased with another quarter of good topline results driven by continuing strong performance of our Washington State operations,” said Anthony Dutton, CEO of Cannex. “Washington is a critical component to our long-term strategy and forms the underpinnings of our operational template that we will leverage as Cannex expands into additional jurisdictions as a part of our recently announced business combination with 4Front Holdings.”
In November Cannex signed a binding letter agreement with 4Front Holdings, LLC (“4Front”) pursuant to which 4Front has agreed to combine with Cannex in an all-stock transaction (the “Transaction”). The transaction is subject to final due diligence and the execution of a definitive acquisition agreement which will supersede the letter agreement, the receipt of applicable corporate approvals, and other regulatory and/or governmental approvals. There can be no assurance that the transaction will complete as proposed or at all.
The resulting company will encompass proven management and operational skills in large-scale indoor cultivation, the manufacturing and branding of infused products, edibles and other derivative products, and proven retail operations. The combined company will have strong business development complemented by regulatory and compliance experts and will own, operate or manage six existing cultivation and production facilities in Washington, Illinois and Massachusetts and five retail operations in Illinois, Massachusetts, Maryland, and Pennsylvania.
Also in November, Cannex secured and closed a US$32 million investment from Gotham Green Partners, LLC (“GGP”), a leading and influential investor in the global cannabis investment sector. The use of proceeds is to support Cannex’s multi-state expansion objectives and the retirement of existing debt.