Emblem Announces Third Quarter 2017 Financial Results
November 28 2017 - 4:00PM
NOT FOR DISTRIBUTION TO UNITED STATES
NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED
STATES.
Emblem Corp. (
“Emblem” or the
“
Company”) (TSXV:EMC), a vertically integrated
health and wellness company focused on research, development,
production and distribution of cannabis products for medical and
pharmaceutical purposes, announced today its third quarter fiscal
2017 financial results for the three and nine months ended
September 30, 2017.
Q3 2017 Highlights:
- Revenues increased by 10% to $592,943
- Grams sold totaled 50.8 kilograms
- Realized revenue per gram increased to $8.63
- Biological assets increased 183%, as the Company commissioned
three out of four Phase 2 Grow Rooms1, providing an additional
5,200 square feet of grow space. First harvest from the new rooms
is expected in December 2017
- Active patients increased to approximately 2,600 as at November
27, 2017
Revenue for the three-month period ended
September 30, 2017 was $592,943 compared to $29,250 in the third
quarter of 2016. The Company received its license from Health
Canada to sell medical cannabis under the predecessor to the ACMPR
on July 27, 2016 and completed its first product sale in August
2016. During the third quarter of 2017, dried flower sales to
registered patients generated revenues of $438,304 with 50.8
kilograms sold at an average selling price of $8.63 per gram.
GrowWise education fee revenue from other licensed producers
totaled $146,948. Revenue from registered patient sales increased
by 10% quarter over quarter from $398,260 in the second quarter of
2017 to $438,304 in the third quarter as the average selling price
increased from $7.39 per gram in the second quarter to $8.63 in the
third quarter. Gross profit for the third quarter of 2017 was
$49,879 compared to a gross profit of $40,306 for the same period
in 2016. Gross profit includes unrealized gain of $844,491 from
changes in biological assets in the third quarter of 2017 compared
to $378,612 during the same period in 2016. The limited increase in
gross profit is attributable to higher operational costs as the
Company ramped up production staff in advance of the completion of
three Phase 2 Grow Rooms1 in September, mostly offset by higher
revenues in the current year period.
Operating expenses during the third quarter of 2017 were
$2,773,509 compared to $1,301,940 for the same period in 2016.
Higher general and administrative expenses were incurred in 2017
due to an increase in personnel both at the Paris facility and the
Company’s Toronto head office, as well as increased compliance and
investor relations costs as the Company transitioned from a private
developmental business in the third quarter of 2016 to a fully
operational public company in 2017. Selling and marketing costs
increased as the Company commenced sales to registered patients in
November 2016 which required increased sales and marketing staff
and an increase in marketing and sales related expenses.
Stock-based compensation was also higher due to new stock option
grants made since the second quarter of 2016
“I am very pleased with our team’s efforts in
completing and commissioning the additional grow rooms which result
in increased production capacity pushing towards 2000 kilograms as
we enter 2018,” noted Harvey Shapiro, Chairman of Emblem Corp.
“Subsequent to quarter-end, Emblem received its long awaited sales
license for oil products, which combined with our increased
production capacity is expected to significantly improve our
revenue and margin profile as we enter 2018. With some of the
challenges and delays behind us, our management team and the board
of directors are encouraged with the prospects for great positive
developments in 2018 as we execute on our growth plan.”
Financial Highlights
|
|
|
|
|
|
|
|
Figures in CDN $ |
For the three months ended |
For the nine months ended |
|
|
September 30, 2017 |
September 30, 2016 |
September 30, 2017 |
September 30, 2016 |
|
|
Grams sold |
50,760 |
|
6,000 |
|
249,430 |
|
6,000 |
|
|
|
Revenue |
592,943 |
|
29,250 |
|
2,034,692 |
|
38,250 |
|
|
|
Gross profit (loss) |
49,879 |
|
40,306 |
|
(39,218 |
) |
64,610 |
|
|
|
Operating expenses |
2,773,509 |
|
1,301,940 |
|
8,060,352 |
|
3,432,077 |
|
|
|
Loss from operations |
(2,723,630 |
) |
(1,261,634 |
) |
(8,099,570 |
) |
(3,367,467 |
) |
|
|
Net loss |
(2,811,832 |
) |
(5,538,132 |
) |
(8,261,918 |
) |
(8,592,654 |
) |
|
|
Net loss per share - basic and diluted |
(0.03 |
) |
(0.14 |
) |
(0.10 |
) |
(0.31 |
) |
|
|
Adjusted EBITDA2 |
(1,923,891 |
) |
(993,894 |
) |
(5,869,499 |
) |
(2,738,159 |
) |
|
|
|
|
|
|
|
|
Subsequent Events
- Received license to sell cannabis oils from Health Canada –
initial product offering of four cannabis oils with first sales
expected in December 2017.
- Closed a bought deal offering for net proceeds of
$26,572,032.
- Approved the construction of a greenhouse facility on the newly
acquired lands in Paris, Ontario. Expected to provide up to an
additional 15,000 kilograms of annual production capacity with
construction commencing in Q2 2018.
- Received the necessary permits for and commenced construction
on a new 30,000 square foot building to facilitate the expansion of
its current facility which will include a 10,000 sq. ft. GMP
extraction facility, laboratory and pharmaceutical production
facility.
- Appointed Nick Dean as the Corporation's new Chief Executive
Officer and President.
- Announced a collaboration and licensing agreement with Canntab
Therapeutics Limited for a patent-pending oral sustained release
formulation for cannabinoids that Canntab has developed.
Outlook
During the third quarter, the Company continued
its expansion efforts to increase its dried flower production
capacity from 650 kgs per annum to more than 1,650 kgs per annum by
the end of 2017. With three out of four of the Phase 2 Grow Rooms1
now operational, the incremental capacity is expected to contribute
to the Company’s financial performance in the fourth quarter and
beyond. Production capacity is expected to further increase to
2,000 kgs per annum in the third quarter of 2018 once the fourth
Phase 2 Grow Room1 is operational. In January 2018, the
Company expects to begin producing oil filled capsules and
anticipates, subject to Health Canada approval, that sales of
capsules will commence in the Q2 2018. More advanced pharmaceutical
formulations are planned for later in 2018.
About Emblem
Emblem Corp. is a fully integrated licensed producer and
distributor of medical cannabis and cannabis derivatives in Canada
under the ACMPR (Access to Cannabis for Medical Purposes
Regulations). Led by a team of cannabis experts and former health
care and pharma executives, it has three distinct verticals –
cannabis production, patient education centers, and pharmaceutical
development. Emblem trades under the ticker symbol EMC on Toronto
Venture Exchange (TSXV).
For further information contact:
Ali MahdaviEmblem Corp.(416)
962-3300alimahdavi@emblemcorp.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION: This news release includes certain “forward-looking
statements” under applicable Canadian securities legislation.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable, are
subject to known and unknown risks, uncertainties, and other
factors which may cause the actual results and future events to
differ materially from those expressed or implied by such
forward-looking statements. Such factors include, but are not
limited to: general business, economic, competitive, political and
social uncertainties; delay or failure to receive board,
shareholder or regulatory approvals; and the results of operations.
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 and Emblem disclaim any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
Neither the Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
Exchange) accepts responsibility for the adequacy or accuracy of
this Press release.
1 Emblem’s current 23,500 sq. ft. production
building incorporates 2,400 sq. ft. of mothering and vegetation
rooms and 3,200 sq. ft. in two flowering rooms currently under
cultivation together with attendant drying, packaging &
fulfillment areas, vault area and administration. The existing
facility also has an additional four growing rooms comprising
approximately 6,800 sq. ft. [the “Phase 2 Grow Rooms”].
2 This is a non-IFRS financial measure and does not have a
standard meaning under IFRS. Please refer to the Non-GAAP Measures
section of the Company’s MD&A for the three and nine months
ended September 30, 2017 for further details.
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