Westleaf Inc. Announces Rebrand, Corporate and Operations Update
CALGARY, Feb. 18, 2020 /PRNewswire/ - Westleaf Inc. (the "Company" or "Westleaf") (TSX-V:WL) (OTCQB:WSLFF) is pleased to provide the following corporate and operations update with respect to its ongoing cost reduction initiatives, financial position, corporate rebranding, and operations.
"The Qwest brand was built on our commitment to quality cannabis. Despite the headwinds the industry currently faces, consumer demand for quality cannabis products is strong and we are optimistic about the future of the industry" said Ben Sze, President and CEO of Westleaf. "We will continue to be fiscally disciplined and uncompromising in our quest to forge a meaningful relationship with consumers. The synergies of pairing We Grow BC with Westleaf are already being realized and I am excited about 2020 as we bring The Plant and Thunderchild facilities online."
Corporate Update
Corporate Rebrand
The combination of Westleaf and We Grow BC Ltd. resulted in an opportunity to create a market leading integrated producer of ultra-premium cannabis. In recognition of this new chapter in our history, on March 1st, 2020, Westleaf is expected to close a series of internal transactions to effect a corporate rebrand and commencing March 2nd, 2020 will carry on business under the name Decibel Cannabis Company Inc., and expects to commence trading under the symbol "DB" on the TSX-V thereafter. The Company will announce its OTCQB trading symbol on or before March 2nd, 2020 or as soon as such symbol has been made available to the Company. The Company will also make available its new corporate website and related corporate materials on March 2nd, 2020.
New Strain Launches
Qwest and Qwest Reserve brands continue to deliver on the promise to introduce unique strains to the market with the introduction of eleven new strains through January 31, 2020, including stand-outs Wedding Cake, Gelato 33, and MAC 1 among others. The new cultivars are offered in flower and pre-roll form and registered across Alberta, British Columbia, Ontario and Saskatchewan. The new strains have maintained or increased wholesale pricing levels in comparison to previous Qwest and Qwest Reserve cultivars which is reflective of the demand for the cannabis product produced at the Qwest Estate and the sustained consumer demand for rare cultivars of high-quality flower.
Launch of New Product Brand
In the coming weeks, The Company is expected to launch "Blendcraft by Qwest" as a complement to the existing Qwest and Qwest Reserve brands. With an offering of high-quality blended pre-rolls, the Company expects the launch of "Blendcraft by Qwest" to reinforce its strong premium portfolio and more fully monetize the commercial value of its harvests.
Operational Update
Cultivation Operations Update
The Company is pleased to announce that modifications have been made to the construction of the Thunderchild facility to align with existing design and SOPs from We Grow's Creston cultivation facility. These modifications will allow the Thunderchild facility to match the craft, ultra-premium product being produced from the We Grow facility in Creston, BC. Construction is expected to be completed April 2020.
Extraction Operations Update
The Plant continues its commissioning and qualification activities on its extraction, filtration and distillation processes to optimize its technical and regulatory efficiencies, as it awaits its sales license amendment.
Retail Operations Update
Following the launch of Cannabis 2.0 products, the Company's four Prairie Records stores achieved record revenue in the month of January, with combined sales of approximately $930 thousand for the month, reflecting month over month sales growth of approximately 8%. Additionally, the operating Prairie Records stores have achieved positive EBITDA from its retail operations inclusive of retail-related corporate overhead.
Construction began in late January on the Company's University of Alberta and Palace Theatre cannabis retail locations and both locations are expected to open May 2020. Furthermore, The Company has completed demolition on its Banff location and is currently evaluating designs for the potential flagship retail location.
Synergies Capture
As a part of opportunity created by the integration of Westleaf and We Grow BC Ltd. ("We Grow"), the Company has executed several cost-reduction measures to improve profitability and cashflow. These initiatives include the elimination of 11 positions at Westleaf resulting in projected annualized savings of approximately $1.4 million exclusive of one-time severance costs. Additionally, the Company has rationalized its retail portfolio significantly, from twenty-two (22) non-active retail locations to eleven (11) to reduce related carrying costs and lease obligations. With the execution of this phase of our integration programs, the Company is applying a disciplined and growth orientated approach to profitability.
Liquidity Position
As of January 31, 2020, the Company had access to $12.3 million of capital, comprised of $8.3 million of cash and the ability to draw up to $4.0 million of undrawn, low cost, non-dilutive capital under its non-revolving credit facilities with ATB Financial. The Company's capital projects are fully funded with existing capital on hand.
About Westleaf Inc.
Westleaf Inc is uncompromising in the process and craftsmanship needed to deliver the highest quality cannabis products and retail experiences. Westleaf has three production houses operating or under development along with its wholly owned retail business, Prairie Records. The Qwest Estate in Creston, BC is licensed and operating 26,000 square feet of cultivation space producing the widely championed, rare cultivar-focused brands Qwest and Qwest Reserve. These products sell in five provinces across Canada. Thunderchild Cultivation, an 80,000 square foot indoor cultivation facility in Battleford, SK is scheduled to be completed and licensed in 2020. The Plant, Westleaf's extraction facility, has 15,000 square feet of Health Canada licensed extraction and product development space. This production house will fuel the growth of our brands Qwest, Qwest Reserve, and Blendcraft by Qwest, into new and innovative product formats like vapes, concentrates, edibles and beyond.
Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.
In this news release, forward-looking statements relate to, among other things the timing and introduction of the Plant and Thunderchild facilities' online platform, the timing and expected completion of a series of internal transactions effecting the Company's corporate rebranding, including the Company continuing under the name "Decibel Cannabis Company Inc.", trading under the Company's new OTCQB trading symbol, and the availability of the Company's new corporate website and related materials, the development of new products, the timing and quality of the Company's launch of "Blendcraft by Qwest", the Company's receipt of a sales license amendment, the Company opening new retail locations by the University of Alberta and Palace Theatre, the timing and the construction of the Thunderchild Cultivation facility and corresponding license application, the ability of the Thunderchild Cultivation facility to produce certain products, and the Company's ability to execute on the foregoing. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to the ability to obtain or maintain licences to retail cannabis products; review of the Company's production facilities by Health Canada and receipt or maintenance of licences from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under the Company's credit facilities; timing and completion of construction and expansion of the Company's production facilities and retail locations; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSXV, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, the Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Non-GAAP Financial Measures
This press release contains the term " EBITDA". This indicator is not a recognized measure under International Financial Reporting Standards ("IFRS") and does not have a standardized meaning prescribed by IFRS. Accordingly, the Company's use of this term may not be comparable to similarly defined measures presented by other companies. The Company believes that EBITDA is a useful indicator of operating performance and is specifically used by management to assess the financial and operational performance of the Company. The Company believes that this measure, in addition to conventional measures prepared in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. EBITDA is defined as net earnings before any deductions for net finance costs, stock-based compensation, taxes, depreciation, and amortization.
Accordingly, these Non-GAAP Financial Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
SOURCE Westleaf Inc.
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