The firm will issue between 10,000 and 14,000 units at a price of $1,000 apiece and they will each contain one 8.5% unsecured convertible debenture and 826 common share purchase warrants. It will use the net proceeds for working capital and other general corporate purposes as it embarks on ambitious expansion plans.
The Winnipeg-based vertically integrated cannabis company should have the capacity to produce 60,000 kg of cannabis flower on an annualized basis at its facility once expansion is completed. The current output is just 4,224 kg per year, but that will rise to 16,768 kg by Q4 2019, then to 28,288 kg by Q4 2020, 42,688 kg by Q4 2021 and then 60,000 kg by Q4 2022.
Delta 9 plans to have five retail stores in Manitoba and it also has a wholesale supply deal in place for 23,000 kg of marijuana with the provincial government. It has further wholesale deals in place with Canopy Growth Corp., Auxly and West Leaf Cannabis.
It opened its first retail store in October 2018, and four more are in the works. The Delta 9 cannabis brand was launched in 2017.
The other side of its business involves selling proprietary grow pods and plants to the cannabis industry. It claims these pods hold “great earning potential” for Delta 9 and its customers, as they can be stacked upon one another in cannabis facilities to maximize production space, while they also prevent the spread of mites and mildew.
In April, the firm announced sequential revenue growth of 320% for Q4 2018 after opening its first store. Delta 9 posted net losses of $7.24 million in 2017, or $0.16 per share. That widened to $8.61 million, or $0.10 per share, for 2018.
“Our strategy of being one of Canada’s only vertically integrated cannabis companies with licences for production, processing, distribution and retail operations is paying off and now producing significant financial results,” said chief executive John Arbuthnot.
Last month it secured a provincial supply contract with Alberta and received approval from Health Canada for Phase II of the expansion at its Winnipeg facility, which will be complete by the end of the year.
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