Q2 2020 Strategic Update
VANCOUVER, BC / ACCESSWIRE / May 25 2020 / Experion Holdings Ltd. (the “Company” or “Experion“) (TSXV:EXP)(OTCQB:EXPFF)(FRANKFURT:MB31) is providing a Strategic Update from the CEO highlighting strategic and operational execution.
Experion continues to see tremendous opportunity for Canadian cannabis companies on the path to profitability, despite a difficult market and recent constraints due to the pandemic. We believe steadfast that companies who execute on their core competencies with positive results will weather the current market conditions and be sought out and supported long-term. Experion is such a company. We continue to develop our traditional business fundamentals of operational execution, product quality, effective branding and distribution to drive towards profitability.
In the last quarter, Experion focused its strategic business plan on being a leading processor and distributor of quality cannabis products; and accordingly, is building a clear path to profitability. We have achieved significant revenue growth quarter over quarter since Q4 2019, with the most recent quarter being the strongest in the Company’s history. We anticipate further sales growth of at least 50% in Q2 2020 (see News Release “Experion reports revenue growth First quarter 2020 and fiscal 2019” for more information). Positive financial results demonstrate our ability to focus and execute on our strategic business plan, laying the foundation not only to survive, but to thrive in the coming year.
Effects of COVID-19
To date, the effects of COVID-19 have had a limited impact on the Company’s operations. The supply chain to provincial distributors and retail locations across Canada remains active, but with new logistical challenges. Since provincial governments declared cannabis products “essential”, access to cannabis has remained available within limits. Despite these restrictions, Experion continues to grow on all fronts including licensed cultivation and processing space, distribution, brand recognition and new product offerings; ultimately, increasing sales. As retail across the country slowly opens, we are optimistic that stakeholders will continue to see the existing momentum created continue in the coming quarters.
Consumer Demand for Quality Craft Cannabis and Citizen Stash
Demand continues to grow for quality cannabis products in Canada. Many retailers and consumers are learning that it is exceptionally difficult to produce old school craft product; let alone deliver quality from large scale commercial operations. Only a handful of companies in the Canadian have been able to provide consistent high-quality cannabis products. As consumers become more experienced, demand has increased for “premium category” products which is reflected in the purchasing patterns of the provincial exchanges.
Retail is always focused on the next “new” thing and commanding first to market strains and products with a greater emphasis on quality. Original provincial mandates of stockpiling inventory to prevent shortages have migrated to smaller purchases to fill shorter windows of demand with minimum turnover requirements. Experion welcomes these shifts in provincial purchasing as it directly complements our focus on unique genetics, quality, batch sizes and processing ability to meet these needs.
Developing first to market products is key to continuously driving Experion’s retail sales growth and path to profitability. Our premium craft products are supported by our established genetic bank of high-quality commercially viable strains, allowing Experion to launch first to market, craft premium strains for years to come. Our plan for the current year is to introduce an additional three new strains on top of our existing mainstream products. Our ability to process and distribute other licensed producers dried flower further creates a unique opportunity to offer a diverse range of cannabis strains to meet consumer needs.
Experion’s consumer brand, Citizen Stash, has been servicing the premium craft market for more than a year. Citizen Stash continues to be valued in the marketplace for consistently providing a superior consumer experience, causing it to sell out as soon as it hits retail shelves. As the overall market continues to grow, we will further establish our position in the premium category, expanding it across Canada and innovating our premium product offerings to drive revenue and profitability.
Experion continues to develop, source and package cannabis products for distribution across Canada with a key focus on quality. Our right-sized facility in Mission, BC enables us to cultivate premium genetics and develop, process and package an array of products to meet consumer demand. The unique genetics we cultivate are transitioned to our grow partners once proven for commercialization which we in turn purchase, process and package for distribution across Canada under our consumer brand Citizen Stash. This flower supply will also be utilized to create new cannabis derivate products specific to the strains we cultivate. This business model has allowed us to be operationally nimble to meet the changing provincial and consumer needs by quickly getting products to the market and generating multiple revenue streams.
These are a few of Experion’s operational successes over the past six months:
- Over 65 Harvests at our Mission, BC Facility: Many competitors were granted licenses at the same time as Experion and are still attempting to build teams that can execute and earn revenue. We have successfully turned over 65 harvests of our product.
- Co-Cultivation Partnerships: We now have 7 strategic partners growing our genetics which increases our cultivation capacity 5X, with more potential partnerships underway. Cultivation partners are attracted to our model as it allows them to earn revenue without the need for additional licensing or established distribution networks.
- Increased Licensed Space: Amendment to increase cultivation and processing space approved by Health Canada resulting in:
- 20% more premium cannabis flower cultivation capacity at our Mission facility;
- 4X increase in packaging and distribution capabilities; and
- the ability develop and distribute strain specific value-added products, including pre-rolls and concentrates, allowing us to diversify our product offering.
- Increased Product Offerings: So far in Q2 2020, two new cannabis strains were introduced under the Citizen Stash brand bringing our portfolio of commercial retail strains to a total of 7. Experion has also successfully launched premium flower pre-rolls to Saskatchewan and BC with Alberta coming online late this month. Similar to Experion’s other high-end cannabis products marketed and sold under Citizen Stash, pre-rolls will extend the premium cannabis experience with a convenient delivery system for our customers. Each pre-roll consists of half a gram of high-quality flower and is 100% strain specific.
Path to Profitability
In Canada, there are almost 400 licensed cannabis companies; however, only approximately 100 can sell products to provincial retailers and conduct medical sales. Experion is a part of this elite group. We continue to build a solid foundation for the future supported by unique genetics, business partners, an established distribution network and management team, and a positive financial position.
Our immediate objective remains the same: increase top quality product volume and distribution to return a profit. To meet this objective, we have identified the following milestones for the remainder of 2020:
- Fully monetize our processing space to ramp up volume and revenue. The additional processing space at the facility enables Experion to increase the volume of product that can be processed and packaged; creating the potential to improve revenue significantly (4X) without having to deploy additional capital for more capacity. By purchasing product through our supply partners and selling it through our distribution network, we can better meet consumer demand in the near-term. Along with this increased processing capacity, comes the ability to diversify our existing product lines to include pre-rolls, oils and concentrates, creating new experience extensions of our genetics and new revenue streams.
- Obtain an extraction sales license from Health Canada. This license will enable Experion to sell new value-added, strain specific cannabis products through our established distribution network creating new revenue streams. We anticipate Health Canada to issue the amended license in early Q3 2020, but the timing of such could be impacted by the pandemic.
- Increase our national distribution footprint. Achieve additional distribution in Ontario and Quebec to support our sales objectives. In addition to registering with these provinces, we plan to target hundreds of additional retailers within our reach through retail and agency relationships to create a pull demand for our product and increase market share.
- Launch cannabis edibles and derivatives. We are actively partnering with other licensed facilities and industry experts in all areas of cannabis derivatives. Our immediate focus is to launch gummies and concentrates product lines to complement our flower products and extend the experience of our premium flower strains while diversifying revenue.
- Right-sizing operations. Experion has made significant steps in recent quarters to reduce go forward operating expense by over 30% with the aim of near-term profitability. The effects of these cost reductions will continue to be realized throughout the remaining months of 2020.
- Expand our investor communications. Experion is committed to keeping both the consumer and investment communities abreast of new developments and milestones. We relaunched Experion’s website to align with our newly focused business strategy and will be publishing tomorrow a new Q2 2020 Investor Presentation. We have transitioned social media in-house for better control over messaging and plan to implement other cost-effective communication tools to inform our communities of any new developments and to reach a wider investor audience.
As we look forward to the next quarter and the remainder of 2020, we are confident that we will continue to position our company as a national leader of top branded cannabis products; standing out from the competition and becoming the logical choice for cannabis investors seeking a profitable growth opportunity.
On behalf of the Management team, we thank you for your continued support and look forward to our journey together.
Jarrett Malnarick, CEO
About Experion Holdings Ltd.
Experion Holdings Ltd. is the parent company of Experion Biotechnologies Inc., a Health Canada licensed cultivator and processor of Cannabis, based in Mission, BC.
Experion Holdings Ltd. is invested in a portfolio of products to address a wide spectrum of consumer needs’ including Adult-use, Wellness and Therapeutic, and Medical products.
Experion trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol “EXP” on the OTCQB Venture under the symbol “EXPFF” and on the Frankfurt Stock Exchange under the symbol “MB31”
This press release contains forward-looking information within the meaning of Canadian securities laws. Although the Company believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct.
Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, forecast, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking information provided by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: the state of the financial markets for the Company’s equity securities; recent market volatility; the Company’s ability to raise the necessary capital or to be fully able to implement its business strategies; the risks identified in the Filing Statement, and other risks and factors that the Company is unaware of at this time. The reader is referred to the Filing Statement dated September 25, 2017 and/or the most recent annual and interim Management’s Discussion and Analysis for a more complete discussion of such risk factors and their potential effects, copies of which may be accessed through the Company page on SEDAR at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies ofthe TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Experion Holdings Ltd.