FSD Pharma Reports 2018 Year-End Results

May 6, 2019 Off By BusinessWire

TORONTO–(BUSINESS WIRE)–lt;a href="https://twitter.com/hashtag/FSDDF?src=hash" target="_blank"gt;#FSDDFlt;/agt;–FSD Pharma Inc. (CSE:HUGE) (OTC:FSDDF) (FRA:0K9) (“FSD Pharma”, “FSD” or
“the Company”) today reported its financial and operational results for
the fourth quarter and fiscal year-ended December 31, 2018. These
filings are available for review on the Company’s SEDAR profile at www.sedar.com.

“2018 was a year of major accomplishments for FSD Pharma,” said
Executive Co-Chairman & Founder Anthony Durkacz, “in which we are
pleased to report:

  • Strategic investments were valued at $18 million with a mark-to-market
    unrealized gain of $10 million;
  • Total net assets in excess of $52 million with no long-term
    liabilities; and
  • Cash position on December 31, 2018 of $22 million.”

“FSD has fully complied with all Required Filings with Canadian
securities regulators. It’s unfortunate that we missed the filing
deadline and I take full responsibility for the delay,”
said Dr Raza Bokhari, Executive Co-chairman & CEO. “I’m grateful to all
shareholders for their patience and forbearance. We are working with a
new auditing firm that started its work in the beginning of April 2019
in advance of our listing on the New York Stock Exchange and other
factors were simply beyond our control. It was important that they took
the time they needed to finalize the audit. I want to personally assure
all shareholders and regulators that we fully realize that such delays
are unacceptable and we have strengthened all internal controls and
governance processes to ensure that all future filings are completed on
time.

“Looking ahead, FSD Pharma continues to make progress in
its efforts to being a global leader in cannabinoid pharmaceutical based
treatments and will continue to invest heavily in milestone based
research & development to unlock the promise the cannabinoid molecule
offers in alleviating the pain and suffering of countless around the
world. In addition, after receiving the sales license for medicinal
cannabis in April 2019, we are tightly focused on developing a robust
expansion plan at our Cobourg, Ontario facility under the leadership of
Dr. Sara May. Finalizing the next phase of expansion, with drawings, a
construction budget and timeline is our top priority,” concluded
Dr. Bokhari.

Financial Highlights

At this point in the Company’s development, management continues to
expend required capital on the development of its business, the
continued renovation and build out of its Cobourg facility, salaries and
wages for employees and ongoing operating expenses relating to the
management of a public reporting issuer.

Without a sales license in place in 2018, the Company generated
revenue during the year from a sublease in its facility in the amount of
$86,656 (2017 – $25,943). The Company purchased its facility in November
2017 and continues to expand and build out the facility.

For the year ended December 31, 2018, total expenses increased to
$32,863,937 (2017 – $3,550,458), primarily due to increases in costs
of being a public company, in legal fees and fees being paid to support
its build out and transition to becoming a licensed producer. Included
in those expenses was a charge of $7,991,791 for listing fees,
$6,440,406 for share based compensation and an allowance for loss of
$7,499,977 due to a former vendor.

Net loss for the year ended December 31, 2018 was $32,775,174 (2017 –
$3,524,515). After accounting for its other investments, the Company
recorded an unrealized gain of $10,064,550 for the year ended December
31, 2018 (2017 – nil) which led to a net comprehensive loss of
$22,710,624 (2017 – $3,524,515).

Liquidity and Capital Resources

During the year ended December 31, 2018, the Company used net cash of
$18,489,903 in operating activities (2017 – $149,865). This is due
to substantially increased activity on the build out of the Cobourg
facility, increasing public awareness and preparing to and applying for
the numerous licenses the Company requires to produce and sell cannabis.

During the year ended December 31, 2018, the Company generated net cash
of $44,876,169 from its financing activities.

The Company had a net increase in cash of $16,394,944 during the year
ended December 31, 2018 (2017 – $4,709,907).

The Company has a working capital balance of $20,826,211 in
2018 compared to a working capital balance of $4,121,660 as at the
fiscal year ended December 31, 2017.

About FSD Pharma

FSD Pharma is focused on the development of the highest quality indoor
grown, pharmaceutical grade cannabis and on the research and development
of novel cannabinoid-based treatments for several central nervous system
disorders, including chronic pain, fibromyalgia and irritable bowel
syndrome. The Company has 25,000 square feet available for production at
its Ontario facility.

FSD facilities sit on 70 acres of land with 40 acres primed for
development and an expansion capability of up to 3,896,000 square feet.

FSD’s wholly-owned subsidiary, FV Pharma, is a licensed producer under
the Cannabis Act and Regulations, having received its
cultivation license on October 13, 2017 and its Sale for Medical
Purposes license on April 18, 2019. FV Pharma’s vision is to transform
its current headquarters in a Kraft plant in Cobourg, Ontario into the
largest hydroponic indoor grow facility in the world. FV Pharma intends
to cover all aspects of this exciting new industry, including
cultivation, legal, processing, manufacturing, extracts and research and
development.

Forward-Looking Information

Neither the Canadian Securities Exchange nor its regulation
services provider accept responsibility for the adequacy or accuracy of
this release.

Certain statements contained in this press release constitute
forward-looking information. These statements relate to future events or
future performance. The use of any of the words “could”, “intend”,
“expect”, “believe”, “will”, “projected”, “estimated” and similar
expressions and statements relating to matters that are not historical
facts are intended to identify forward-looking information and are based
on the Corporation’s current belief or assumptions as to the outcome and
timing of such future events. Actual future results may differ
materially. In particular, this release contains forward-looking
information relating to the development of the Corporation’s indoor
cannabis facility and its business goals and objectives. The
forward-looking information contained in this press release is made as
of the date hereof, and the Corporation is not obligated to update or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
applicable securities laws. Because of the risks, uncertainties and
assumptions contained herein, investors should not place undue reliance
on forward looking-information. The foregoing statements expressly
qualify any forward-looking information contained herein.

Contacts

Zeeshan Saeed, President and Founder, FSD Pharma Inc.
Email: [email protected]
Telephone:
(416) 854-8884

Investor Relations
Email: [email protected]
Website: www.fsdpharma.com

Media Relations
Ned Berkowitz
Email: [email protected]
Tel:
(646) 942-5629