GLOBE NEWSWIRE PRESS RELEASE
Future Farm Provides Midyear Update to Shareholders
GLOBE NEWSWIRE PRESS RELEASE
Future Farm Provides Midyear Update to Shareholders
GLOBE NEWSWIRE PRESS RELEASE
Future Farm Provides Midyear Update to Shareholders
Future Farm Technologies Inc.
Jul. 24, 2018
Vancouver, British Columbia, July 24, 2018 (GLOBE NEWSWIRE) -- Future Farm Technologies Inc. (the “Company” or “Future Farm”) (CSE: FFT) (OTCQB: FFRMF) is pleased to provide a mid-year update regarding activities for the first half of 2018 and plans for the remainder of 2018. The Company’s CEO, Bill Gildea, also thanks current and prospective shareholders for their ongoing support.
Future Farm had a very active winter and spring with significant activity in Canada, California, Puerto Rico, Massachusetts, Maine, Rhode Island and Florida. The market responded positively to this expansion and diversification of the portfolio. The first half of 2018 was primarily focused on integrating acquisitions, addressing market needs, improving operations, and taking advantage of synergies to increase shareholder value. The Company successfully raised US$4 million from Yorkville Advisors in March to develop and expedite growth in its operations.
The summaries below provide a more in-depth update on the Company’s various projects in its four business segments over the first half of 2018.
The Company’s wholly owned ornamental plant business in Apopka, Florida, known as White Sand Nursey, exceeded 2017 expectations by generating revenue of US$2,878,483 on a modified-cash accounting basis. For reference, the Company’s previous forecast was for US$2,800,000 in revenue. In 2018, the Company expects the business to generate US$3,000,000 in revenue with a similar cost structure, primarily due to improved efficiencies in marketing and sales.
The Company acquired White Sand in January 2018 for US$3,000,000 in order to position itself in the fast-growing Florida cannabis market. The White Sand greenhouse fits the state’s stringent criteria and designated zoning to legally cultivate, process, and dispense cannabis. Florida is positioned to be the second largest market after California, with more than 100,000 registered medical cannabis patients and projected annual sales of US$1.6 billion in 2020, according to the Arcview Group.(See: http://www.marketwired.com/press-release/new-report-florida-marijuana-sales-to-top-16-billion-by-2020-2180974.htm )
The Company continues to operate the greenhouse in full production while it applies for a cannabis cultivation license with the State of Florida. The Company retained two experienced Florida cannabis consultants, attorney Michael Minardi and operator Brett Puffenbarger, to assist with the application process. Pending license approval, the Company plans to upgrade the existing facility in preparation for cannabis production. Once fully licensed and operational as a cannabis business, the facility has the capacity to generate seven figures in revenue per month.
In addition to its plans for the White Sand greenhouse, the Company is also exploring the possibility of growing hemp on farmland acquired as part of the White Sand transaction.
In March, Future Farm exercised its right to return to the original seller the 15-acre parcel of land in Redland, Florida, along with its related mortgage, acquired in early 2017. Future Farm made the decision to focus efforts instead on the continued operation and development of its operations in Apopka.
In February, Future Farm’s 80% subsidiary, Future Farm Maine, received three licenses for industrial hemp cultivation in Maine. Future Farm Maine is expected to provide multiple revenue streams in the form of (1) harvested hemp biomass; (2) CBD concentrate and isolate extracted from the biomass; and (3) certified organic hemp seeds propagated for sale.
Future Farm is utilizing Maine farmland acquired in Amity and leased in Hersey to grow and process hemp. The combined properties total 220 acres with an option for an additional 1,000 acres. The leased land is organic and all activity will follow the Maine Organic Farmers and Gardeners Association organic guidelines. .
The Company also leased approximately 13,000 square feet of indoor space, with the option to expand, in Belfast. Future Farm Maine retrofitted the space with state-of-the-art LED lighting and equipment to germinate 200,000 feminized hemp CBD seeds for planting in the summer growing season.
Future Farm plans to bring its expertise in state-of-the-art, scalable extraction to the project to take advantage of the fast-growing CBD oil market. Once harvested this fall, the Company plans to process the hemp onsite in an extraction and isolate lab to create both CBD oil and high-value isolate that can be used to make edibles, lotions and tinctures.
Future Farm is particularly excited about the prospects for hemp and the CBD industry after the United States Senate, on June 28, 2018, passed the Farm Bill by a vote of 86-11. The bill included provisions to legalize the cultivation, processing and sale of industrial hemp. Hemp is a smaller but fast-growing business closely related to the medical and adult-use cannabis businesses.
In January, the Company purchased a 15,000-square-foot building located in an M-1 zone in Providence, Rhode Island, meaning it is legally zoned for cannabis cultivation. The Company has a Letter of Intent to lease the building to an entity that holds a provisional license for the cultivation of wholesale medical marijuana in Rhode Island.
Renovation is underway to create 6,480 square feet of cultivation space, in addition to processing space and a commercial kitchen to prepare edible cannabis products upon receipt of the required license.
PRODUCE FARMS: MARYLAND AND ALABAMA
The Company continues to pursue opportunities to grow produce using Controlled Environment Agriculture, referred to as CEA, in collaboration with CBO Financial Inc. and Volunteers of America, known as VOA. The Company, with the assistance of CBO Financial, is pursuing locations in Maryland and Alabama of approximately 25,000 square feet each. The goal is to develop the two projects together to save on financing fees, facility design and engineering, and equipment expenses. It is not yet possible to predict the exact timing of these projects.
The Company has determined that the next step for these projects is to develop a prototype farm as a demonstration project for potential financiers. Craig Stanley, President of CBO and a director and officer of Future Farm, will advise the Company with respect to New Market Tax Credits, known as NMTCs, to be used as part of the financing for these projects. NMTCs are provided to financial institutions in exchange for equity investments that eligible businesses can use to subsidize project development costs. CBO Financial helps companies such as Future Farm use NMTCs to finance facilities that will provide goods and services that benefit populations in need and revitalize communities.
Future Farm, CBO and VOA intend to use this model to expand the Company’s CEA technology as well as the training and therapeutic programs developed by VOA into other markets throughout the United States.
PROCESSING, BREEDING AND GENETICS
OIL EXTRACTION: CALIFORNIA
Future Farm’s majority-owned subsidiary, FFM Consulting Services, LLC, plans to operate large-scale alcohol extraction equipment to produce THC and CBD oil for wholesale in California. Recently, the strategic decision was made to optimize operations and take advantage of the synergies provided by co-locating the extracting facility with the Company’s genetics and breeding operation, as described further below.
BREEDING & GENETICS: CALIFORNIA AND NEWFOUNDLAND
In November 2017, Future Farm formed a joint venture with Rahan Meristem, Ltd. Rahan is a world-renowned global agro-biotechnology company based in Israel with more than 250 employees in five locations and over 40 years of experience in plant propagation and breeding. The joint venture will develop, own and utilize Rahan's proven, patented and proprietary technology to mass-produce elite clones of cannabis and hemp plants. Through elite cloning, one may create a new harvest with exact replicas of the best performing plants. The Company and Rahan intend to use Rahan’s proprietary technology of non-GMO, in-vitro mutagenesis to create varieties of cannabis with higher levels of THC and CBD.
Under the terms of the joint venture, Rahan is providing know-how and technology, as well as management. Future Farm will provide laboratory space and financing for the project. Future Farm and Rahan own the joint venture equally.
In May, Future Farm agreed to acquire 50% of CEPG Consulting and Design Inc., a Canadian corporation owned and managed by Chris Snellen, an experienced grower in Newfoundland. CEPG will work with the Rahan joint venture to conduct research and development of controlled-environment plant growth systems. CEPG will apply for a Dealer License with Health Canada, which will enable CEPG to conduct research and development and store cannabis derivatives that are not currently covered under Canada’s Access to Cannabis for Medical Purposes Regulations. The Dealer’s License also positions the Company to export cannabis oils and concentrates to international markets, as well as to process natural health products.
Given the size of the opportunity, Future Farm, CEPG, and Rahan agreed to set up laboratory space in both California and St. John’s, Newfoundland, Canada. Each facility will use state-of-the-art agro-biotechnology equipment and techniques to create a research hub and intellectual property. The joint venture is currently vetting candidates for lead scientist and preparing to set up lab operations. A location in Canada is already secured and several possible California locations have been identified.
VERTICALLY-INTEGRATED DISPENSARIES: MASSACHUSETTS
In March, Future Farm entered the cannabis market in Massachusetts, estimated to be worth over US$1 billion in sales by 2020 according to the ArcView Group*, via a Secured Convertible Promissory Note (the “Note”) with Bristol County Wellness Center, LLC. Under the terms of the Note, the Company agreed to loan BCWC US$5,003,100 over a series of payments to complete its buildout. The note will convert to 51% ownership in BCWC on the date on which BCWC receives its RMD Certificate from the Commonwealth of Massachusetts, which occurs after final site inspection of the completed facility.
BCWC holds a provisional license from the Massachusetts Department of Public Health. The license, when final, will allow BCWC to build its facility and engage in cannabis cultivation, processing and retailing via three dispensary locations in Massachusetts. BCWC leases a 24,700-square-foot building, which it is building out for cultivation, processing and, possibly, retail, unless another retail location is identified to be one of the three permitted under the license.
On April 10, 2018, the Massachusetts Cannabis Control Commission, referred to as the CCC, granted BCWC a Priority Certification to apply in the first round of applications for adult-use licenses in the state. BCWC completed and submitted its application shortly thereafter. BCWC believes that the CCC will decide whether to act favorably on the application in the near future.
DISPENSARIES: PUERTO RICO
In February 2018, Future Farm finalized its joint venture, FFPR, LLC to co-own and operate five dispensaries in Puerto Rico under the Clinica Verde brand. There are two other members of FFPR: TCG Investments, owner of the Clinica Verde brand, and an individual who is a prominent doctor in Puerto Rico. These two members are committed to contribute five pre-qualifications for medical dispensary licenses to FFPR. The pre-qualifications will be contributed to FFPR once approved by the Puerto Rico Department of Health.
Clinica Verde has already established itself as a leading medical cannabis dispensary operator in Puerto Rico.
In March 2018, FFPR signed a lease for a location in the Condado district of San Juan, one of the island’s most highly-trafficked areas. The build out of this location is expected to begin in the near future. Three of the five dispensary locations have been identified, all in desirable areas. Construction is complete in the location in Humacao, an area that is home to a large cluster of hospitals and medical centers. This location is ready to open pending municipal approval, which is expected within the next few weeks.
Hurricane Maria’s devastation to Puerto Rico after Future Farm entered into a term sheet to invest in FFPR caused concern. After careful review, however, the Company determined that it remained committed to expanding the dispensary presence, providing the people of Puerto Rico with a reliable source of medical marijuana, and continuing to create a diversified portfolio of cannabis investments for the Company’s shareholders. The Company looks forward to contributing to the expansion of the medical cannabis industry in Puerto Rico, which is a key driver for the island’s future economic development.
LED Canada continues to operate out of its showroom in Vancouver, British Columbia, which also integrates its warehouse for cost-savings. The Company plans to showcase its products at upcoming tradeshows and to update its website to better accommodate e-commerce to increase sales from this segment.
As previously announced in December 2017, the Company engaged RwE Growth Partners Inc. to conduct a business valuation and fairness opinion on its license to use augmented technology in the cannabis industry from AR E1, LLC (“ARE1”). That work, alongside other analysis, led Future Farm to conclude that the augmented reality business does not receive full value within Future Farm and, accordingly, there would be potentially greater value for shareholders if the augmented reality business was placed into a new corporation, which would be held and operated separately, rather than by Future Farm.
As a result of this analysis, and as announced by news release on January 9, 2018, Future Farm decided to spin-out shares of the new corporation, called NexTech AR Solutions Corp., to Future Farm shareholders. Assets in NexTech include: (1) a portfolio of revenue-generating apps; (2) a license agreement with ARE1 that allows the company to use ARE1’s patented technology to build augmented reality technology in the cannabis space; and (3) an exclusive five-year license to the eLearning education and training platform developed by edCetra Training Inc., with the option to buy edCetra.
On June 21, 2018, the Supreme Court of British Columbia issued an Interim Order permitting Future Farm to conduct an annual general and special meeting of its shareholders on Thursday, July 26, 2018. At the meeting shareholders will consider and, if deemed advisable, pass a special resolution authorizing a plan of arrangement among Future Farm, the Future Farm shareholders and NexTech.
If the plan of arrangement is approved, Future Farm will, effectively, spin-out 11,000,000 common shares of NexTech now owned by Future Farm to the Future Farm shareholders on a pro rata basis. Future Farm shareholders will then own approximately 25.86% of the issued and outstanding common shares of NexTech. On a per share basis, Future Farm shareholders would be entitled to receive, for every one common share of Future Farm held by them, a fraction of a NexTech common share equal to the quotient of 11,000,000 NexTech common shares divided by the number of Future Farm common shares outstanding on the close of business on the last trading day on the CSE immediately prior to the effective date, referred to as the Effective Date, of the plan of arrangement.
The last trading day on the CSE immediately prior to the Effective Date will also be the record date for the distribution of NexTech shares, known as the Share Distribution Record Date. In other words, any Future Farm shareholder of record on the Share Distribution Record Date will be the shareholder who receives the NexTech shares to be spun out. The Share Distribution Record Date cannot be set until the plan of arrangement is approved by the Future Farm shareholders at the meeting, the British Columbia Supreme Court issues its final order approving the arrangement, and other customary closing conditions are met. Future Farm expects that process will result in the Share Distribution Record Date being August 7. Notice of the actual Share Distribution Record Date and the Effective Date will be given to the Future Farm shareholders through one or more press releases. In connection with the plan of arrangement, prior to closing, Future Farm will transfer 2,000,000 common shares of NexTech (at a deemed price of CAD$0.25 per NexTech Share) to current directors, officers and consultants of Future Farm in recognition of the considerable work done by those individuals for Future Farm in the past year.
In February, Future Farm appointed Seabord Services Corp as its new accounting firm, replacing Cross Davis. Seabord is a Canadian company that provides management, administrative, regulatory and tax services to private and public companies.
That same month, the Company engaged the consulting services of Bryan Keaney as Controller. Mr. Keaney is a seasoned executive with more than thirty years of financial, administrative and operational management experience in small and midsize ventures. Mr. Keaney most recently served as CFO in consulting and full-time capacities for various clients, managing the fundraising, systems development and staffing growth required to achieve strategic goals resulting in higher valuations.
The Company completed its uplisting from OTCQB Venture Market to OTCQX Best Market in February 2018 and can be found in that market under the symbol “FFRMF.” To qualify, companies must be listed on a Qualified Foreign Exchange (as defined by OTC Markets Group, the operator of the OTCQX), meet stringent financial and disclosure standards, and be sponsored by a professional third-party advisor. Uplisting to OTCQX has been part of the Company’s corporate strategy for some time, as it provides wider visibility to the investment community and therefore strengthens shareholder value.
During its fiscal year ended February 28, 2018, the Company received proceeds of CAD$3,597,310 from the exercise of options and warrants.
In March 2018, the Company closed a second financing with Yorkville Advisors. The Company issued a Secured Convertible Debenture in the Principal Amount of US$4,000,000, bearing annual interest at 8% and repayable within 18 months, or convertible into Common Shares of the Company at a price of CAD$0.58 per share. In connection with the Debenture, the Company also granted a warrant certificate to purchase 7,421,150 Common Shares at an average price of CAD$0.70 per share. The warrant expires on March 7, 2021.
Future Farm will hold its annual general and special meeting of its shareholders at 10:00 a.m. PDT on Thursday, July 26, 2018 at 1200-750 West Pender Street, Vancouver, British Columbia. At the meeting, the shareholders will consider and, if deemed advisable, pass a special resolution authorizing a plan of arrangement among Future Farm, the Future Farm shareholders and NexTech AR Solutions Corp for the spinoff.
Future Farm has had a very productive year integrating and developing its portfolio of acquisitions, and identifying new opportunities. The Company is positioned to begin generating revenue in the fourth quarter of 2018 as the dispensaries in Puerto Rico and the medical license in Massachusetts come online, and as the hemp farm in Maine sells the products of its first harvest.
For further information, contact William Gildea, Director, at 617.834.9467.
On behalf of the Board,
Future Farm Technologies Inc.
William Gildea, CEO & Chairman
About Future Farm Technologies Inc.
Future Farm is a Canadian company with holdings throughout North America including California, Massachusetts, Florida, Maine, Puerto Rico and Newfoundland. The Company’s mission is to advance sustainable agriculture through production of wholesale and retail cannabis products, including hemp. As a leader in its field, Future Farm is committed to using only the highest quality processes and products. Towards this goal, the Company acquires or partners with licensed cannabis operators, and acquires or develops leading technologies in cannabis production, breeding, genetics, and Controlled Environment Agriculture (CEA). Future Farm’s scalable, indoor CEA systems utilize minimal land, water and energy resources. The Company holds an exclusive, worldwide license to use a patented vertical farming technology that, when compared to traditional plant production methods, generates yields up to 10 times greater per square foot of land.
Neither the Canadian Securities Exchange nor its Market Regulator (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release. The Canadian Securities Exchange has not in any way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
This news release may include forward-looking statements that are subject to risks and uncertainties. All statements within, other than statements of historical fact, are to be considered forward looking. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. There is no guarantee that the Company will complete the Arrangement, or if completed, will be listed on a stock exchange. There can be no assurances that such statements will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. We do not assume any obligation to update any forward-looking statements except as required under the applicable laws.
William Gildea, CEO & Chairman 617-834-9467 email@example.com