May 18, 2022

EastWest Bioscience (TSXV:EAST) Announces Significant Increase in Revenue Recognition Due to Deconsolidation of its Subsidiary

PENTICTON, BC / ACCESSWIRE / April 6, 2022 / EastWest Bioscience Inc. (“EastWest” or “Company”) (TSXV: EAST)announced that it has filed its quarterly financial statements and MD&A under its profile on SEDAR along with a material change in its earnings numbers.

During the fiscal year ended July 31, 2021, the company added self-storage to its already diversified revenue streams through a new subsidiary, 1290185BC dba Spare Room Co (“Spare Room”) is a in the start-up phase who intends to build high-quality self-services. -warehousing facilities in Western Canada. The creation of this subsidiary was initiated by the Company’s need to take advantage of its Penticton facility, which has been underutilized.

On November 4, 2021, the Company closed a financing round without intermediary via Spare Room. Spare Room received aggregate proceeds of $4,915,300 from the issuance of 9,830,600 common shares of Spare Room at C$0.50 per share. Spare Room will use the net proceeds of the offering for the acquisition and construction of new self-storage facilities and for general corporate purposes.

As a result of the financing without an intermediary, the Company lost majority control of Spare Room and the Company had to derecognize the assets and liabilities of Spare Room from its consolidated statement of financial position, recognized its retained interest in Spare Room at the fair value as an investment in an associate of $5,824,999 and recognized a deconsolidation gain of $2,874,625 associated with the loss of control. The Company has consolidated the result of Spare Room until November 4, 2021.

Update on Spare Room Operations

Since its inception in the spring of 2021, Spare Room has had two locations under construction: Penticton, BC and Oliver, BC.

Oliver’s location, which is an outdoor site, has had all necessary improvements to the site infrastructure completed and is awaiting the connection of electricity to its site. The first order of containers has arrived on site and has been installed. The site is set to open in early April and expects customer purchases to begin immediately.

The Penticton location, which is also located on the 2nd floor of the company’s headquarters, will house an indoor storage facility. Spare Room has received locker systems for the site and is currently awaiting the necessary permits from the City of Penticton.

Additionally, Spare Room has signed three Letters of Intent (LOI) for additional sites which are in the final stages of negotiations. It is expected that these negotiations will conclude during the next quarter.

The Canadian warehousing market is expected to be robust, as the self-storage market is largely underserved compared to the US market. As part of its growth strategy, Spare Room continues to focus its efforts on smaller markets where storage demand is underserved.

About the EastWest Bioscience group of companies

EastWest Bioscience is a vertically integrated wellness company with a multitude of business units and assets that enable seed-to-sale supply chain management. We source raw materials, process, manufacture, test, brand, market and distribute our products to our customers in Canada, the United States and elsewhere. The Company owns and operates retail and manufacturing subsidiaries.

The Company’s retail subsidiary is Canada’s award-winning natural health retail franchise – Sangster’s Health Centers – with over 40 years of heritage in the health and wellness industry. Sangster’s goal is to provide natural choices through quality products and informed advice for a healthy lifestyle. Sangster Health Centers hold a unique position in the industry, the stores provide vast knowledge and safe natural remedies for the prevention and treatment of diseases and ailments. Sangster’s introduction and development of over 202 exclusively labeled products (vitamins, minerals, herbs, proteins, natural body care and organic foods) have catapulted the Sangster name and product into many Canadian homes. From a solid base in Saskatchewan, Sangster’s has grown into a national brand with franchise stores across Canada.

Orchard Vale Naturals is the manufacturing arm of the company that is certified under a Health Canada site license and has GMP certified NHP manufacturing capabilities. Orchard Vale Naturals specializes in custom blends and production runs of all sizes, small to large, for premium quality products with fast turnaround times. Orchard Vale Naturals operates out of a 34,000 square foot Health Canada licensed facility in Penticton, British Columbia owned by EastWest Bioscience, which acts as the headquarters for all of EastWest’s Canadian operations.

1290185 BC LTD Company subsidiary dba Spare Room Co Self Storage (“Spare Room”) is building a network of automated self storage sites in British Columbia. The subsidiary’s business model is designed to be low capex with highly scalable logistics. It focuses on secondary markets, consumer automation, and innovative land partnerships, allowing it to expand into new regions quickly, at scale, and with minimal risk. EastWest hopes to make Spare Room a household name across Canada.

ON BEHALF OF THE BOARD OF DIRECTORS OF
EASTWEST BIOSCIENCE INC.

“Rodney Gelineau”
Co-Founder, Managing Director and Administrator

For more information:

Company website: www.eastwestbioscience.com
Contact: Rodney Gelineau at 1-800-409-1930 or investor@eastwestscience.com

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICE PROVIDER (AS ITS TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE RELEVANCE OR ACCURACY OF THIS RELEASE.

CAUTION REGARDING FORWARD-LOOKING INFORMATION: This press release contains certain “forward-looking statements” under applicable Canadian securities laws. Forward-looking statements include, but are not limited to, statements regarding the matters disclosed herein. Forward-looking statements are necessarily based on a number of estimates and assumptions which, while believed to be reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results to differ. and future events differ materially from those expressed or implied. by such forward-looking statements. These factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and delay or failure to obtain board, shareholder or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

THE SOURCE: EastWest Bioscience Inc.

See the source version on accesswire.com:
https://www.accesswire.com/696272/EastWest-Bioscience-TSXVEAST-Reports-Material-Increase-in-Earning-Recognition-Due-to-deconsolidation-of-Subsidiary