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8-K - CURRENT REPORT - GILLA INC. | glla_8k.htm |
Exhibit 99.1
GILLA PROVIDES CORPORATE UPDATE
NEW YORK, NY – (December 7th,
2017) - Gilla
Inc. (“Gilla” or
the “Company”) (OTCQB: GLLA), the fast-growing
designer, marketer and manufacturer of E-liquid for vaporizers and
developer of cannabis concentrate products, today provided a
corporate update along with the results of operations for the three
months ended September 30, 2017.
CORPORATE UPDATE
●
The Company continues to build its complementary
cannabis concentrates division and is utilizing a
multi-jurisdictional licensing strategy to enter and launch its
portfolio of products in both the medical and recreational markets.
To date, the Company has entered into a licensing agreement with
Alternative Medicine Association, LC, a Nevada-licensed medical
marijuana establishment which was acquired by Friday Night Inc.,
and is collaborating on product development with CannTrust Holdings
Inc. in Canada, a licensed producer of medical cannabis under the
Health Canada Access to Cannabis for Medical
Purposes Regulation (Canada).
The Company has launched its first cannabis concentrates products
in the United States under the brand name Spectrum Concentrates
(www.spectrumconcentrates.com)
which is now available in Nevada through the Company’s
licensee partner.
●
On
July 31, 2017, the Company acquired all of the issued and
outstanding shares of Vape Brands International Inc.
(“VBI”), a Canada-based E-liquid manufacturer and
distributor. Through VBI, the Company acquired a state-of-the-art
manufacturing facility in Toronto, Canada. The Company has
completed its integration process and is beginning to realize on
operational and cost-saving synergies. The Company is also focusing
on growing Canadian revenues and has invested heavily in the sales
and marketing of its brands in Canada over the third quarter of
2017. These efforts are expected to result in continued strong
revenue growth from the current annual run-rate revenue of
approximately $2.0 million per year in Canada.
●
The
Company continues to work towards becoming a reporting issuer in
the Province of Ontario and to list its shares of common stock on
the Canadian Securities Exchange (the “CSE”). Given the
recent acquisition of VBI, the Company has been focused on having
historical financial statements of VBI audited to be included in
its prospectus as per regulatory requirements. The Company is
working towards completing the VBI audit prior to the end of
calendar 2017 and thus moving forward with its listing on the CSE
in early 2018.
●
The
Company has also taken steps to strengthen its balance sheet and
working capital position. Management has worked closely with its
key creditors to extend $1,057,751 of its short-term loans until
April 30, 2019, providing the Company flexibility and term to
appropriately address such liabilities. The Company expects to
further extend or settle additional liabilities prior to filing an
updated prospectus to the Ontario Securities
Commission.
Q3 2017 HIGHLIGHTS
●
For
the three months ended September 30, 2017 (“Q3 2017”),
the Company generated $1,075,975 in revenue through sales of
proprietary E-liquid and other vaping products as compared to
$1,266,026 in revenue during the three months ended June 30, 2017
(“Q2 2017”).
●
Revenue
generated in North America increased quarter-over-quarter by 56% to
$515,567 in Q3 2017, attributable to the acquisition of VBI and the
focus on the Canadian market. The Company has heavily invested in
the sales efforts for the Canadian market in Q3 2017 and has almost
doubled month-over-month Canadian sales since the
acquisition.
●
Revenue
generated in Europe was $560,408 in Q3 2017, a decrease of 40% from
Q2 2017 resulting from a temporary slowdown in sales due to the
implementation of regulations in the market. The implementation of
the Tobacco Products Directive regulation in the European Union led
to distributors and retailers being cautious over new purchases
while adjusting to this new regulatory landscape.
●
The
months of July and August 2017 also experienced a seasonal slowdown
in the European markets as they are typically slower months for
retail in Europe.
●
The
Company generated stable gross profit margins of 58% in Q3 2017 as
compared to 57% in Q2 2017.
●
Administrative
costs, including sales and marketing expenses, decreased to
$1,046,253 in Q3 2017 from $1,146,710 in Q2 2017, such
quarter-over-quarter decrease was attributable to cost cutting
measures implemented by management during the past two
quarters.
●
Net
loss amounted to $980,617 in Q3 2017 as compared to a net loss of
$2,632,969 in Q2 2017. The quarter-over-quarter decrease was mainly
attributable to the net effects of a gain on settlement of $352,283
during Q3 2017 and a stock option issuance expense of $1,213,605
along with an amortization of debt discount expense of $505,998
resulting from the conversion of convertible debentures during Q2
2017.
“The uncertain market conditions in Europe combined with a
seasonally slow time of the year provided a challenging atmosphere
for us during the third quarter of 2017. However, our focus on
production efficiency and reducing overhead costs allowed us to
maintain profit margins and reduce the quarterly net loss despite
lower quarterly revenues,” stated Mr. Graham Simmonds, Chair
and CEO of Gilla. He added, “Looking forward, with our
cannabis division now generating revenue, our European revenue
pipeline and sales growing in the fourth quarter of 2017, and our
rapidly growing sales in Canada, we expect to complete the year
with our strongest quarter to date.”
About Gilla Inc.
Gilla Inc. manufactures, markets and distributes E-liquid for use
in vaporizers and develops turn-key vapor and cannabis concentrate
solutions for high-terpene vape oils, pure crystalline,
high-performance vape pens and other targeted products. Gilla aims
to be a global leader in delivering the most efficient and
effective vaping solutions for nicotine and cannabis related
products. The Company’s multi-jurisdictional, broad portfolio
approach services both the nicotine and cannabis markets with
high-quality products that deliver a consistent and reliable user
experience. Gilla’s proprietary product portfolio includes:
Spectrum Concentrates, Coil Glaze™, Craft Vapes™,
Siren, The Drip Factory, Shake It, Surf Sauce, Ohana, Moshi, Crisp,
Just Fruit, Vinto Vape, Vapor’s Dozen, Enriched Vapor and
Crown E-liquid™.
Forward-looking Statements
Note: This press release contains “forward looking
statements” as defined in the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on
currently available competitive, financial and economic data and
management’s views and assumptions regarding future events.
Such forward-looking statements are inherently uncertain. Gilla
Inc. cannot provide assurances that the matters described in this
press release will be successfully completed or that the company
will realize the anticipated benefits of any transaction. Actual
results may differ materially from those projected as a result of
certain risks and uncertainties, including but not limited to:
global economic and market conditions; the war on terrorism and the
potential for war or other hostilities in other parts of the world;
the availability of financing and lines of credit; successful
integration of acquired or merged businesses; changes in interest
rates; management’s ability to forecast revenues and control
expenses, especially on a quarterly basis; unexpected decline in
revenues without a corresponding and timely slowdown in expense
growth; the company’s ability to retain key management and
employees; intense competition and the company’s ability to
meet demand at competitive prices and to continue to introduce new
products and new versions of existing products that keep pace with
technological developments, satisfy increasingly sophisticated
customer requirements and achieve market acceptance; relationships
with significant suppliers and customers; as well as other risks
and uncertainties, including but not limited to those detailed from
time to time in Gilla Inc. SEC filings. Gilla Inc. undertakes no
obligation to update information contained in this release. For
further information regarding risks and uncertainties associated
with Gilla Inc.’s business, please refer to the risks and
uncertainties detailed from time to time in Gilla Inc.’s SEC
filings.
For more information, please visit gilla.com,
or contact:
Mr. Graham Simmonds
Chair and CEO
T: 1
(416) 843-2881
E:
graham.simmonds@gilla.com