Vibe Bioscience Ltd.
(CSE: VIBE) (the “Company” or
“Vibe”), a vertically integrated cannabis retailer and cultivator,
is pleased to announce its financial and operating results for the
three and six months ended June 30, 2019. All financial information
is provided in U.S. dollars (“USD”) unless otherwise indicated. The
Financial Statements and Management’s Discussion and Analysis
(“MD&A”) for the three and six months ended June 30, 2019 are
available on the Company’s SEDAR profile at www.sedar.com and on
Vibe’s website at www.vibebycalifornia.com.
Q2 2019 Financial Highlights:
The Company was incorporated on June 11, 2018
with the only material transaction in the three months ended June
30, 2018 consisting of the issuance of initial common share capital
for nominal consideration. Therefore, there are no comparative
results for the three months ended June 30, 2019. Further, the
Company’s core cannabis business did not commence until February
18, 2019 when the Company acquired certain dispensary and
cultivation operations in California (the “U.S. Operations”).
Consequently, revenue, gross margin(a) and adjusted EBITDA(a) for
Q1 2019 include results from February 18, 2019 to March 31, 2019
(42 days) for the Company’s U.S. Operations and for the entire
three months ended March 31, 2019 for the Company’s Canadian head
office.
|
Consolidated (U.S. Operations and Canadian Head Office)
Highlights |
USD |
Q22019 |
Q12019(b) |
Change |
Percentchange |
Revenue |
$ |
3,096,836 |
$ |
1,313,726 |
$ |
1,783,110 |
135.7 |
Gross
margin |
1,296,113 |
583,307 |
712,806 |
122.2 |
Adjusted
EBITDA (a) |
$ |
113,322 |
$ |
59,336 |
$ |
53,986 |
91.0 |
Gross margin
% (a) |
42.0 |
44.4 |
- |
- |
Adjusted EBITDA %
(a) |
3.7 |
4.5 |
- |
- |
U.S. Operations Highlights |
|
|
Q2 |
Q1 |
|
Percent |
USD |
2019 |
2019(b) |
Change |
change |
Revenue |
$ |
3,096,836 |
$ |
1,313,726 |
$ |
1,783,110 |
135.7 |
Gross margin (a) |
1,296,113 |
583,307 |
712,806 |
122.2 |
Adjusted EBITDA (a) |
$ |
673,505 |
$ |
330,870 |
$ |
342,635 |
103.6 |
Gross margin % (a) |
41.9 |
44.4 |
- |
- |
Adjusted EBITDA % (a) |
21.7 |
25.2 |
- |
- |
-
- Readers are cautioned that these measures are non-IFRS measures
and do not have standardized meanings prescribed by IFRS. See the
discussion of Non-IFRS Measures in the Q2 2019 MD&A for
reconciliation to IFRS amounts reported in Vibe’s financial
statements.
- Results for the U.S. Operations are included from February 18,
2019 to March 31, 2019 (42 days).
- Results of the U.S. Operations are included for a full three
months for the first time in Q2 2019. The Company’s U.S. dispensary
and cultivation operations continued their positive results in the
three months ended June 30, 2019, generating revenue and adjusted
EBITDA(a) of $3,096,836 and $673,505, respectively, compared to
revenue and adjusted EBITDA(a) of $1,313,726 and $303,870,
respectively, from February 18, 2019 (the acquisition date) to
March 31, 2019. The U.S. operations also benefited from the
seasonality of the retail cannabis business which experiences
higher revenue in the summer months.
- Delivery service commenced. In June 2019, the Company, through
Alpine Alternative, was granted a delivery license for the City of
Sacramento which allows for door-to-door delivery of cannabis
products throughout California’s Central Valley. The Company
launched its delivery service on June 7, 2019 and expects(b) to
realize the benefits of the delivery license throughout the
remainder of 2019 and into 2020 as customers become familiar with
the service offering.
- New extracts product development completed. In the second
quarter of 2019, the Company completed the development of its new
Hype brand extracts product which Vibe began selling in its Alpine
Alternative and Port City dispensaries in August 2019.
- Planned improvements to the Company’s cultivation facilities
are expected(b) to be complete in Q4. The first phase of upgrades
to the Vibe’s cultivation facilities located in Sacramento, CA are
near completion with the resulting increased nursery capacity
expected to be operational in the fourth quarter of 2019.
Q2 2019 versus Q1 2019 – Operating Review:
Revenue, gross margin(a) and adjusted EBITDA(a)
increased in Q2 2019 compared to Q1 2019 as a result of the
acquisition of the dispensary and cultivation operations in
California which was completed on February 18, 2019. Therefore, the
three months ended June 30, 2019 is the first quarter the results
of the U.S. Operations are included for the entire period.
Vibe also realized increased revenue and gross
margin(a) from the U.S. Operations in Q2 2019 as a result of the
summer month seasonality inherent in the adult-use recreational
cannabis business. The gross margin %(a) realized by the U.S.
Operations will differ slightly period-over-period as a result of
variations in product mix sold at each dispensary in addition to
the timing of plant harvests at the cultivation operations.
Management expects(b) the profitability of the
U.S. Operations will continue into the third quarter of 2019 as the
seasonality from the summer months generally continues through
September. In addition, Vibe introduced the new Hype branded
extracts product in August 2019 and continues the roll-out of the
door-to-door delivery service provided by the Alpine Alternative
dispensary.
- Readers are cautioned that these measures are non-IFRS measures
and do not have standardized meanings prescribed by IFRS. See
discussion of Non-IFRS Measures in the Q2 2019 MD&A for
reconciliation to IFRS amounts reported in Vibe’s financial
statements.
- Readers are cautioned that statement represents forward looking
information that is based on various assumptions and subject to
certain risk factors – see discussion of Cautionary Note Regarding
Forward Looking Information in the Q2 2019 MD&A.
The increased profitability of the U.S.
Operations in Q2 2019 was partially offset by an increase in
certain general and administrative expenses incurred by the
Canadian head office related to the costs associated with being a
public company pursuant to the Company’s public listing completed
in April 2019. Consequently, adjusted EBITDA %(a) on a consolidated
basis decreased to 3.7% in Q2 2019 compared to 4.5% in Q1 2019.
Management expects(b) general and administrative expenses in the
second half of the year to be reflective of the expenses incurred
in the second quarter of 2019.
For more information, please visit our website
at www.vibebycalifornia.com and sign-up for our mailing
list.
Further details about Vibe are included in Vibe's Listing
Statement (CSE Form 2) dated March 25, 2019, a copy of which is
available under Vibe’s profile on SEDAR at www.sedar.com and
at www.vibebycalifornia.com
About Vibe
Vibe is a vertically integrated cannabis company
whose mission is to become an industry leading multi-state
operator. The Company delivers exceptional retail experiences with
its “Vibe by CaliforniaTM” brand and ethos, premier cultivation
product, and high-efficiency delivery and distribution. The
Company’s management team brings expertise in retail, cannabis
cultivation, and mergers and acquisitions to support its U.S.
expansion through accretive acquisitions and organic growth.
Forward-Looking Information
Certain statements contained in this press
release constitute forward-looking information. These statements
relate to future events or future performance. The use of any of
the words “anticipate”, “could”, “intend”, “expect”, “believe”,
“will”, projected”, “estimated” and similar expressions and
statements relating to matters that are not historical facts are
intended to identify forward-looking information and are based on
the managements’ current belief or assumptions as to the outcome
and timing of such future events. Actual future results may differ
materially.
The forward-looking information contained in
this release is made as of the date hereof and the Company is not
obligated to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise,
except as required by applicable securities laws. Because of the
risks, uncertainties and assumptions contained herein, investors
should not place undue reliance on forward looking information. The
foregoing statements expressly qualify any forward looking
information contained herein. Risk factors related to the Company
are described in the Company’s Listing Statement dated March 25,
2019, a copy of which is available under the Company’s profile on
SEDAR.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in the United
States. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
“U.S. Securities Act”) or any State securities laws and may not be
offered or sold within the United States or to U.S. Persons unless
registered under the U.S. Securities Act and applicable State
securities laws or an exemption from such registration is
available. Not for distribution to U.S. Newswire Services or for
dissemination in the United States. Any failure to comply with this
restriction may constitute a violation of U.S. securities laws.
- Readers are cautioned that these measures are non-IFRS measures
and do not have standardized meanings prescribed by IFRS. See
discussion of Non-IFRS Measures in the Q2 2019 MD&A for
reconciliation to IFRS amounts reported in Vibe’s financial
statements.
- Readers are cautioned that statement represents forward looking
information that is based on various assumptions and subject to
certain risk factors – see discussion of Cautionary Note Regarding
Forward Looking Information in the Q2 2019 MD&A.
Forward-Looking Information (cont’d)
Unlike in Canada which has Federal legislation
uniformly governing the cultivation, distribution, sale and
possession of cannabis under the Cannabis Act (Federal), readers
are cautioned that in the U.S., cannabis is largely regulated at
the State level. To the knowledge of Vibe Bioscience Ltd., there
are to date a total of 33 states, plus the District of Columbia,
that have legalized cannabis in some form. Notwithstanding the
permissive regulatory environment of medical cannabis at the State
level, cannabis continues to be categorized as a controlled
substance under the Controlled Substances Act in the U.S. and as
such, cannabis-related practices or activities, including without
limitation, the manufacture, importation, possession, use or
distribution of cannabis are illegal under U.S. Federal law. Strict
compliance with State laws with respect to cannabis will neither
absolve Vibe Bioscience Ltd. of liability under the U.S. Federal
law, nor will it provide a defense to any Federal proceeding, which
may be brought against Vibe Bioscience Ltd. Any such proceedings
brought against Vibe Bioscience Ltd. may adversely affect its
operations and financial performance.
Company Contacts:Ryan Mercier, Chief Financial
Officer Phone: +1 833-420-VIBE x 102Email:
ryanm@vibebycalifornia.com
Tyler R. Townsend, VP, Finance Phone: +1 833-420-VIBE x
107Email: tylert@vibebycalifornia.com
Investor Contact:Allison Soss, Vice President
KCSA Strategic Communications Phone: +1 212-896-1267Email:
Vibe@KCSA.com
Media Contacts:Caitlin Kasunich / Dave
Schemelia KCSA Strategic CommunicationsPhone: +1 212-896-1241 / +1
212-896-1242Email: Vibe@KCSA.com
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