TORONTO, May 30, 2023
/PRNewswire/ - Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB:
CBWTF) ("Auxly" or the "Company"), a leading
consumer packaged goods company in the cannabis products market,
announced today that it has transitioned all remaining dried flower
and pre-roll cannabis product manufacturing, processing and
distribution activities from its Auxly Ottawa facility to Auxly
Leamington, where these activities are already taking place. Auxly
will continue to wind-down its Auxly Ottawa facility in an orderly
manner and intends to sell Auxly Ottawa's assets in due course and
apply the proceeds from any such sale to support its ongoing
operations.
Auxly continues to focus its efforts on streamlining assets,
simplifying operations, reducing costs, and achieving its 2023
goals of:
- increasing net revenues by 15% with a focus on key product
categories;
- continuing to leverage Auxly Leamington's large-scale, low-cost
cultivation facility and its manufacturing automation to improve
blended Cost of Finished Cannabis Inventory Sold Margin to an
average of 35-40%;
- vigorously managing SG&A as a percentage of net revenues to
keep it below 40%; and
- prudently managing the Company's balance sheet.
This strategic decision comes after careful consideration in
identifying opportunities to optimize operations and effectively
reduce operating costs, while increasing product quality and
ensuring no material impact on the Company's manufacturing
capabilities and forecasted sales revenue.
In 2020, the Company ceased cultivation at Auxly Ottawa's 10,000
sq. ft. facility and shifted its focus to the manufacturing,
processing and distribution of dried flower and pre-roll cannabis
products. Since acquiring Auxly Leamington in November 2021, Auxly has scaled up cultivation
and post-harvest operations and fully built out manufacturing,
processing and distribution capabilities to be able to handle the
activities previously conducted at Auxly Ottawa. This allows Auxly
to be more effective and efficient in conducting its manufacturing,
processing and distribution activities for its dried flower and
pre-roll cannabis products.
Auxly Leamington is a 1.1 million sq. ft. greenhouse and
processing facility cultivating Auxly's award-winning cannabis
strains, including popular Back Forty strains and high-quality
value strains under the newly launched brand Parcel, all of which
are sold to and used by Auxly in its full suite of branded cannabis
products.
"While we believe that taking these steps ultimately makes Auxly
a more focused company that is better positioned to achieve its
strategic goals, it was an extremely difficult decision because of
the impact on our talented and hard-working Auxly Ottawa employees
who have been with us for many years. We are grateful for all of
their efforts and will do our best to help support them through
this period of transition," said Hugo
Alves, CEO of Auxly. "We are diligently working to ensure
that we achieve our goals of simplifying our operations, reducing
costs and continuing to leverage the competitive advantage provided
through our Auxly Leamington facility. The decision to undergo this
transition was made with our strategic goals in mind, and we do not
anticipate that this transition will have a material impact on the
Company's manufacturing capabilities and forecasted sales
revenue."
ON BEHALF OF THE BOARD
"Hugo Alves" CEO
About Auxly Cannabis Group Inc.
(TSX: XLY) (OTCQB: CBWTF)
Auxly is a leading Canadian consumer packaged goods company in
the cannabis products market, headquartered in Toronto, Canada. Our focus is on developing,
manufacturing and distributing branded cannabis products that
delight our consumers.
Our vision is to be a leader in branded cannabis products that
deliver on our consumer promise of quality, safety and
efficacy.
Learn more at www.auxly.com and stay up to date at Twitter:
@AuxlyGroup; Instagram: @auxlygroup; Facebook:
@auxlygroup; LinkedIn: company/auxlygroup/.
Notice Regarding Forward Looking
Information:
This news release contains certain "forward-looking information"
within the meaning of applicable Canadian securities law.
Forward-looking information is frequently characterized by words
such as "plan", "continue", "expect", "project", "intend",
"believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or information that certain
events or conditions "may" or "will" occur. This information is
only a prediction. Various assumptions were used in drawing the
conclusions or making the projections contained in the
forward-looking information throughout this news release. Forward
looking information includes, but is not limited to: the proposed
operation of the Company and its subsidiaries; the Company's
efforts to streamline its operations and reduce operating costs;
the intention of the Company to sell the Auxly Ottawa assets and
the proposed use of any proceeds; the Company's execution of its
product development, commercialization strategy and expansion
plans; the relevance of the Company's current and proposed
products; the expectation, timing and quantum of future revenues,
Cost of Finished Cannabis Inventory Sold Margin and SG&A;
consumer preferences; political change, future legislative and
regulatory developments involving cannabis and cannabis products;
and competition and other risks affecting the Company in particular
and the cannabis industry generally.
A number of factors could cause actual results to differ
materially from a conclusion, forecast or projection contained in
the forward-looking information in this release including, but not
limited to, whether: the Company is able to execute on its business
strategy and/or achieve its goals; the Company is able to sell the
Auxly Ottawa assets; the Company is able to achieve the anticipated
cost savings from the closure of the facility; the Company's
subsidiaries are able to maintain the necessary regulatory
authorizations to conduct business; there is acceptance and demand
for current and future Company products by consumers and provincial
purchasers; and general economic, financial market, regulatory and
political conditions in which the Company operates will remain the
same. Additional risk factors are disclosed in the annual
information form of the Company for the financial year ended
December 31, 2022 dated March 30, 2023.
New factors emerge from time to time, and it is not possible for
management to predict all of those factors or to assess in advance
the impact of each such factor on the Company's business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking information. The forward-looking information in
this release is based on information currently available and what
management believes are reasonable assumptions. Forward-looking
information speaks only to such assumptions as of the date of this
release. In addition, this release may contain forward-looking
information attributed to third party industry sources, the
accuracy of which has not been verified by the Company. The
forward-looking information is being provided for the purposes of
assisting the reader in understanding the Company's financial
performance, financial position and cash flows as at and for
periods ended on certain dates and to present information about
management's current expectations and plans relating to the future,
and the reader is cautioned that such forward-looking information
may not be appropriate for any other purpose. Readers should not
place undue reliance on forward-looking information contained in
this release.
The forward-looking information in this release is based on
information currently available and what management believes are
reasonable assumptions. Forward-looking information speaks only to
such assumptions as of the date of this release. In addition, this
release may contain forward-looking information attributed to third
party industry sources, the accuracy of which has not been verified
by Auxly. Readers should not place undue reliance on
forward-looking information contained in this release. The
forward-looking information contained in this release is expressly
qualified by the foregoing cautionary statements and is made as of
the date of this release. Except as may be required by applicable
securities laws, the Company does not undertake any obligation to
publicly update or revise any forward-looking information to
reflect events or circumstances after the date of this release or
to reflect the occurrence of unanticipated events, whether as a
result of new information, future events or results, or
otherwise.
Neither Toronto Stock Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Toronto
Stock Exchange) accepts responsibility for the adequacy or accuracy
of this release.
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SOURCE Auxly Cannabis Group Inc.