Fiore Cannabis Ltd FIORF

Earnings

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https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00035394

RESULTS OF OPERATIONS
The Company incurred a net loss and total comprehensive loss of $604,401 and $635,435, respectively, during the three months ended September 30, 2016, an increase of $48,546 and $79,580 respectively, as compared to net loss and total comprehensive loss of $555,855 for the three months ended September 30, 2015. The key components contributing to the change in the net loss during the quarter ended September 30, 2016 compared to the quarter ended September 30, 2015 was comprised of the following:
Consulting costs of $218,014 (2015 – $83,130) was higher by $134,884 over the same period last year due the shift in focus to the Washington property and developing new business in the USA.
Project investigation costs of $106,429 (2015 – nil) related to the proposed transaction in the State of Washington. Testing and various other expenses were incurred during the feasibility and negotiation process where no such activity occurred in the same period last year.
Rent expense of $61,967 (2015 – $39,391) was $22,576 higher than the same period last year due to the Washington property lease.
The increase in costs noted above were offset by a decrease in share based compensation. Share based payments of $nil (2015 – $302,069) was lower in the current period as no stock options were vested during the three months ended September 30, 2016. There were 925,000 unvested options issued during the three months ended September 30, 2016 and there were 3,475,000 fully vested options issued in the three months ended September 30, 2015. The key components contributing to the change in the net loss during the six months ended September 30, 2016 compared to the six months` ended September 30, 2015 was comprised of the following:
Consulting costs of $355,925 (2015 – $251,268) was higher by $104,657 over the same period last year due the shift in focus to the Washington property and new work related to expanding business in US. Project investigation costs of $186,753 (2015 – nil) related to the proposed transaction in the State of Washington. Testing and various other expenses were incurred during the feasibility and negotiation process where no such activity occurred in the same period last year.
Rent expense of $106,155 (2015 – $78,771) was $27,384 higher than the same period last year due to the Washington property lease.
Professional fees of $195,850 for the six months ended September 30, 2016 was $151,326 higher than the $44,524 in professional fees during the six months ended September 30, 2015. The majority of the increase related to increased legal work related to obtaining new licenses and general business expansion.
The increase in costs noted above were offset by a decrease in share based compensation. Share based payments of $nil (2015 – $302,069) was lower in the current period as no stock options were vested during the three months ended September 30, 2016. There were 925,000 unvested options issued during the three months ended September 30, 2016 and there were 3,475,000 fully vested options issued in the three months ended September 30, 2015.

LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2016 the Company had $1,422,869 in current assets (March 31, 2016 – $534,211) and had working capital of $1,117,225 (March 31, 2016 – $51,210). The Company raised $2,821,750, through the sale of common shares during the six months ended September 30, 2016. The Company is dependent on raising equity capital to carry on its business operations for the next 12 months. It has $18,462 cash on hand as at September 30, 2016. There is no guarantee that the Company will be able to raise the additional equity capital required to fund its ongoing operations The Company's liquidity for analysis has increased substantially due to its financing and increased activity from its start of a commercial venture in the medical marijuana business. Other than the Washington property, there are no fixed payment contracts with management, personnel, landlords or any other party and accordingly is capable of operating with very little working capital needs. The Company’s ability to continue its operations is dependent on its success in raising equity through share issuances, suitable debt financing, and/or other financing arrangements. The Company will need to raise additional funds since the current cash position is not sufficient to cover the anticipated operating budget for the next twelve months. Given the continuation of weak investor sentiment and capital market conditions in the cannabis sector, there exists a material uncertainty as to the Company’s ability to raise additional funds on favorable terms in order to continue as a going concern.

SUBSEQUENT EVENTS
On November 14, 2016, the Company announced that it has entered into an agreement to purchase an industrial facility in southern California and three (3) medical marijuana licenses for manufacturing, cultivation, and retail uses. The land size is 40,510 square feet and the existing building size is 6,875 square feet, with a 19-foot-ceiling clearance, for a purchase price of $3.2 million USD, based on $450 USD per square foot for the building and $65 USD per square foot for the land. The yard area is paved and suitable for greenhouse growing. The purchase is subject to, and contingent upon, completion of satisfactory due diligence, including background checks, and closing documentation for the issuances of the three (3) licenses to the Company within 120 days, with the closing to take place 120 days from the removal of contingencies. On November 16, 2016, the Company announced, that in addition to the transaction described in the news release dated November 14, 2016, it has entered into another agreement to purchase an industrial facility in southern California and three (3) medical marijuana licenses for manufacturing, cultivation, and retail uses. The land size is 0.32 acres and the existing building size is 2,756 square feet, with an 18-foot-ceiling clearance, for a purchase price of $950,000.00 USD, based on a purchase price of less than $350 USD per square foot. There is excess land for expansion on the corner parcel and the yard area is paved and suitable for greenhouse growing. The purchase is subject to, and contingent upon, completion of satisfactory due diligence, including background checks, and closing documentation for the issuances of the three (3) licenses to Marapharm within 60 days, with the closing to take place 60 days from the removal of contingencies. The Company purchased an automated cannabis machine (“ACM”) for US$34,000. The ACM system provides for point-of-sale transactions, inventory management, secure product storage, enhanced availability of product, privacy, and a reduction in labor costs. Subsequent to September 30, 2016, 310,000 warrants expired unexercised. Subsequent to September 30, 2016, 2,707,000 warrants were exercised for cash proceeds of $1,592,250. On November 29, 2016 the Company purchased 25% interest in Econevada for US$25,000 to acquire 100% ownership of the option to purchase 2 licenses (note 7(c)).