Mr. Khurram Malik reports
BIOME GROW : CORPORATE UPDATE
In light of current market dynamics, Biome Grow Inc. is making changes to a number of its previously announced initiatives, strategic investments and proposed relationships, including Red Sands Craft Cannabis, Weed VR, its business relationship with CBD Acres, its partnership with St. Francis Xavier University, the expansion of its Highland Grow facility, and its investments in Back Home and Great Lakes Cannabis.
"The cannabis market has changed significantly over the past year, and we recognize that our initial capital-intensive strategy no longer makes sense in this environment," shared Khurram Malik, chief executive officer of Biome Grow. "As a result, we have had to make difficult decisions in order to move the business in a different direction. We are working closely with stakeholders and creditors as Biome is straddled with significant liabilities and obligations in connection with these projects."
Red Sands Craft Cannabis Company Inc. is a wholly owned subsidiary of the
company. It was incorporated on Oct. 19, 2018, under the laws of Prince Edward Island
and was initially conceived as being a vehicle to service the local and tourist market in PEI with locally produced and regionally grown cannabis products. The company has elected not to pursue the Red Sands initiative. No significant writedowns are expected as the business had not begun execution on its proposed extraction facility.
The company acquired Weed Virtual Retail Inc. on June 11, 2018. Weed VR was conceived as a multiplatform virtual catalogue system designed to educate, engage and inform consumer cannabis purchases. Given current market conditions, the company has decided not to further pursue these objectives. The company expects to write down this asset to zero in its year-end financial statements.
On Feb. 12, 2019, the company entered into a memorandum of understanding with CBD Acres Manufacturer Inc. to provide the company with preferential access to cannabidiol (CBD) concentrate. The company and CBD Acres have mutually agreed to terminate the MOU. Biome does not plan to pursue physician-led medical cannabis and/or cannabinoid clinics related thereto at this time. In addition, all previously announced international opportunities in which Biome had planned to market medical CBD are no longer being pursued.
Partnership with St. Francis Xavier University
On Dec. 5, 2017, the company entered into a partnership with St. Francis Xavier University
(StFX) in respect of a multidispensary three-year collaboration to conduct a range of cannabis-based research initiatives. Given current market conditions and capital constraints, the company has decided not to pursue any research-based initiatives at this time and is terminating its partnership with StFX.
Expansion of Highland Grow facility
Highland Grow Inc. is a wholly owned subsidiary of the company based in Antigonish, N.S., that is licensed to cultivate, process and sell cannabis under the Cannabis Act (Canada). Biome had previously announced an intention to expand the Nova Scotia facility, but as a result of current market realities, it has decided not to complete that expansion. Consequently, the company has made an early repayment of $1-million of the $3-million debt financing announced in November, 2019, which was held in trust and earmarked specifically for this expansion. The remaining loan principal is now $2.03-million.
Strategic reviews of Back Home and Great Lakes Cannabis
Biome has two wholly owned subsidiaries that are late-stage applicants under the Cannabis Act (Canada), which have not yet been granted licences under such act: The Back Home Medical Cannabis Corp. and Great Lakes Cannabis Company Inc. Given current market dynamics, and the investment needed to complete the facilities relating to these licence applications, the company is undertaking astrategic review of these investments.
With respect to Back Home, the company is exploring various options in a collaborative manner with its stakeholders. In the interim, the company has eliminated underutilized positions and redeployed the balance toward Highland Grow initiatives within Newfoundland and Labrador.
With respect to Great Lakes, the company has halted all construction at the Great Lakes facility, reduced its head count to zero and expects to incur a significant writedown on the Great Lakes assets in its year-end financial statements.
About Biome Grow Inc.
Biome, through its wholly owned subsidiary, Highland Grow, is licensed to cultivate, process and sell cannabis.
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