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TORONTO, May 2, 2022 /CNW/ - Nova Net Lease REIT ("NOVA" or the "REIT") (CSE: NNL.U) (OTCQB: NNLRF) announced today the preliminary top numbers of its single tenant and guarantor group – "Cloud Cannabis"1. In connection with the REIT's initial public offering pursuant to a long form prospectus dated December 22, 2021, the REIT provided an undertaking to each provincial and territorial securities commission in Canada to file the audited and interim financial statements and related management discussion & analysis ("MD&A") of Cloud Cannabis until such time as Cloud Cannabis no longer comprises more than 30% of the REIT's annual revenue (the "Undertaking").
Cloud Cannabis has informed the REIT that it would be unable to provide its audited financial statements and related MD&A for the year ended December 31, 2021 prior to the filing deadline of May 2, 2022 (the "Cloud Filings"), resulting in the REIT breaching the Undertaking. Cloud Cannabis has informed the REIT that it is unable to provide the Cloud Filings at this time due to technical audit matters they have encountered as a result of this being a first-year audit, along with the time it has taken to apply the respective technical accounting literature to acquisition and lease accounting matters, all of which have taken longer than expected.
Cloud Cannabis has informed the REIT that it expects to be in a position to provide the Cloud Filings to the REIT prior to May 31, 2022.
Cloud Cannabis has provided the REIT with certain unaudited results and balances which are disclosed below. Cloud Cannabis has informed the REIT that it is comfortable that its audited results are not expected to materially deviate from these preliminary unaudited figures. The REIT has been unable to independently verify these figures and is solely relying on Cloud Cannabis for their accuracy and cautions readers to not place undue reliance on them.
Expressed in millions of US$, for the year ended December 31, 2021
Revenue: $40.2
Gross Profit: $10.3
Cash as of December 31, 2021: $2.0
Working capital as of December 31, 2021: $2.2
Tyson Macdonald, Cloud Cannabis's CFO commented, "This first year audit, which encompasses a significant acquisition that closed towards the end of 2021, has been more time consuming than we had initially planned, and we are working diligently to get it completed. From an operations perspective, Cloud Cannabis continues to execute on its business plan and has brought 3 additional stores online thus far in 2022, bringing the total to 9. With 8 additional dispensary permits in our possession, we expect to open an additional 5 stores in 2022. Cloud Cannabis is well-capitalized, with the founders of the company owning the majority of the real estate behind the Cloud Cannabis operating business and having access to an additional $50 million of personal capital. Our partnership with Nova is an integral part of our strategic plan, and we look forward to our long-term relationship."
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1 Comprised of Oak Hudson Pharma, LLC, Oak Flint, LLC, East Coastline, LLC, Pinebrook Warren, LLC and Family Brands, LLC.
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Caution Regarding Financial Estimates
The financial estimates referenced in this press release are based on the review of Cloud Cannabis' operations undertaken by Cloud Cannabis for the year ended December 31, 2021 and are subject to change. Cloud Cannabis' auditor and the REIT have not audited, reviewed or performed any procedures with respect to the accompanying financial estimates and other data, and accordingly do not express an opinion or any other form of assurance with respect thereto.
They should not be viewed as a substitute for audited financial statements prepared in accordance with generally accepted accounting principles and are not necessarily indicative of Cloud Cannabis' results for the period or any future period.
Caution Regarding Forward-Looking Statements
This press release contains statements that include forward-looking information within the meaning of Canadian securities laws. These forward-looking statements reflect the current expectations of the REIT regarding future events, including statements concerning the ability of the REIT to file the Cloud Filings prior to May 31, 2022, future compliance with the Undertaking and the future positive relationship with Cloud Cannabis. In some cases, forward-looking statements can be identified by terms such as "may", "will", "could", "occur", "expect", "anticipate", "believe", "intend", "estimate", "target", "project", "predict", "forecast", "continue", or the negative thereof or other similar expressions concerning matters that are not historical facts.
These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any result expressed or implied by such forward-looking statements, including the risks beyond the control of the REIT given its reliance on Cloud Cannabis to complete the Cloud Filings prior to May 31, 2022.
Although forward-looking statements contained in this press release are based upon what management of NOVA believes are reasonable assumptions, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. NOVA undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws.
The reader is cautioned not to place undue reliance on forward-looking statements.
SOURCE Nova Net Lease REIT
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