Strengthened team, new products, and key
distribution partnerships driving demand
Emblem Corp. (TSX-V:EMC and EMC.WT) (“Emblem” or the “Company”), a
licensed producer of medical cannabis under the Access to Cannabis
for Medical Purposes Regulations (“ACMPR”), today reported
financial and operating results for the first quarter ended March
31, 2018.
"Along with record sales and registered patient
counts, our first quarter progressed rapidly in all areas as we
focused on executing against our multi-year plan,” stated Nick
Dean, President & CEO of Emblem Corp. “Our achievements
reflect the talent of our growing and future-focused leadership
team which included several key additions in production, marketing,
operations and finance. We’ve been incredibly pleased with the
quarter over quarter growth of our patient acquisition efforts as a
result of our new seven-person sales team, working in parallel with
GrowWise. Our oils now represent close to one third of our total
patient sales. As we continue to introduce new
dose-controlled formats and sizes to the market, we expect this
trend will continue upward. We significantly strengthened our
balance sheet and initiated plans to increase our annual capacity
10-fold to 17,000kg to serve the domestic and international medical
markets, as well as the pending adult-use recreational markets.
Reach and end-user access in these markets was enhanced through
channel partners, provincial government applications, and key
supplier agreements including Shoppers Drug Mart and Fire &
Flower. Commencement of R&D activities for our oral sprays, gel
capsules and sustained release formulations position us to deliver
leading dosage precision formats and consistent user-experiences.
As a leader in precision cannabis formulations and processes, we
believe Emblem can achieve a most-trusted brand status in both
medical and adult-use markets with its value-added advanced product
lines.”
Highlights for the First Quarter of 2018
- Generated $1.3 million in revenue
- 2,950 registered patients as at March 31, 2018
- Cannabis oil sales represented 29% of Q1 patient revenue
- Signed a key supplier agreement to become a medical cannabis
supplier to Shoppers Drug Mart Inc.
- $53.8 million financing increased cash balance to $83.8 million
as at March 31, 2018
- Purchased remaining 50% of GrowWise Health Limited
- Progressed on expansion plans to increase annual capacity to
approximately 17,000kg
- Construction progressing on 30,000 square foot Phase 3
expansion at the Woodslee Production Facility with GMP extraction
facility, laboratory and pharmaceutical production facility
Highlights Subsequent to the First Quarter of
2018
- Invested in Fire & Flower Inc. and entered into 3-year
preferred supplier agreement
- Increased patient count 22% to approximately 3,600 patients at
May 28, 2018 since March 31, 2018
- Commenced R&D on oral sustained release formulations in
collaboration with Canntab Therapeutics Limited
(“Canntab”)
- Commenced inventory build for legalization of adult-use
recreational cannabis in Canada
First Quarter Financial Summary
|
|
|
|
|
Three Months Ended |
|
March 31, |
March 31, |
(Expressed in thousands
of Canadian dollars, except per share amounts) |
|
2018 |
2017 |
|
|
|
|
Operations: |
|
|
|
Revenues |
|
$ |
1,277 |
|
$ |
903 |
|
Gross
profit (loss) |
|
$ |
182 |
|
$ |
(89 |
) |
|
|
|
|
EXPENSES |
|
|
|
General
and administrative |
|
$ |
(1,638 |
) |
$ |
(897 |
) |
Research
and development |
|
$ |
(85 |
) |
$ |
(97 |
) |
Selling
and marketing |
|
$ |
(892 |
) |
$ |
(832 |
) |
Amortization of property, plant and equipment |
|
$ |
(383 |
) |
$ |
(232 |
) |
Share-based payments |
|
$ |
(400 |
) |
$ |
(305 |
) |
|
|
|
|
Net loss
and comprehensive loss |
|
$ |
(3,837 |
) |
$ |
(2,495 |
) |
Weighted
Average Basic and diluted loss per share |
|
$ |
(0.03 |
) |
$ |
(0.04 |
) |
|
|
|
|
Adjusted
EBITDA |
|
$ |
(2,433 |
) |
$ |
(1,893 |
) |
|
|
|
|
|
|
|
|
Revenue
Revenues increased to $1,277,000 in Q1 2018 from
$903,000 in Q1 2017, an increase of 41%. During the three months
ended March 31, 2018, revenues of dried cannabis flower purchased
by registered medical patients and Licensed Producers amounted to
$457,000 and $394,000, respectively (March 31, 2017 - $461,000 and
$362,000). Total dried flower sold to medical patients during the
three months ended March 31, 2018 amounted to 52.8 kilograms of
dried flower (March 31, 2017 – 54.7 kilograms), at an average
selling price of $8.59 per gram (March 31, 2017 - $8.41 per gram).
Total dried flower sold to Licensed Producers during the three
months ended March 31, 2018 amounted to 71.1 kilograms of dried
flower (March 31, 2017 – 90.0 kilograms), at an average selling
price of $5.55 per gram (March 31, 2017 - $4.02 per gram).
During the three months ended March 31, 2018,
revenues from cannabis oil products amounted to $187,000 (March 31,
2017 - $nil). Total sales during the three months ended March 31,
2018 were approximately 13.4 kilogram equivalents to medical
patients (March 31, 2017 – nil).
During the three months ended March 31, 2018,
GrowWise generated total revenues of $212,000 (March 31, 2017 -
$74,000).
Gross Profit (Loss)
Gross profit for the three months ended March
31, 2018 was $182,000 compared to a gross loss of $89,000 for the
prior year comparable period, an increase of $271,000 or 304% due
to higher revenues and a higher unrealized gain on changes in fair
value of biological assets. With a total of five grow rooms
completed and the receipt of the licence for sale of cannabis oil
during late 2017, the Company expects to generate a steady increase
in gross profit throughout the remainder of 2018.
Expenses
General and administrative expenses increased
primarily due to the continued build-out of the Company’s
management team, as well as higher legal and consulting fees
incurred in connection with various strategic initiatives. Higher
share-based payments expense is due to the incremental expense
associated with stock options granted in 2017.
Adjusted EBITDA
The Company’s Adjusted EBITDA decreased by
$540,000 or 29% during the three months ended March 31, 2018, when
compared with the three months ended March 31, 2017, mainly due to
higher operating expenses during the current period.
Outlook
Emblem is utilizing its strong balance sheet to
execute on its expansion plans for annual dried flower volumes
initially to 17,000kg and to complete its 30,000 square foot
expansion which includes a GMP certified manufacturing facility
with an advanced research lab. The GMP certification will support
international product exports. Further, Emblem is making strategic
investments in pharmaceutical research and development, clinical
research, marketing and promotion, product development and
licensing, allowing the Company to maintain its leadership position
within the medical-use market, while preparing Emblem for a unique
and competitive advantage in the recreational adult-use market.
Emblem’s medical cannabis business leads the
Company’s product innovations. Having launched four successful
cannabis oils in the first quarter of 2018, Emblem’s medical
division is developing additional oils with different cannabinoid
profiles. Additionally, Emblem will be introducing new size-formats
to address consumer demand profiles. Emblem is focused on dosage
precision to deliver repeatable user experiences, whether medical
or adult recreational use. Accordingly, the Company intends to
bring oral metered dose spray formulations and oil-filled capsules
to market in 2018.
Physician prescribed formulations for major
addressable categories including anxiety, pain, and sleep require
standard pharmaceutical dosage formats (pills, gel caps,
sub-lingual applications and measured dosage sprays). Sustained
release dosage forms are designed to release the active
pharmaceutical ingredient at a predetermined rate to maintain a
constant drug concentration over a specific period of time,
resulting in a longer duration of action from a single dose and
often with reduced side effects.
Strengthening the Company’s position as a
leading medical cannabis company, in May 2018, the Company, in
collaboration with Canntab, commenced research and development
activities on oral sustained release formulations of cannabinoids.
The Company expects to sell, subject to Health Canada approval,
sustained release pills or capsules in 2019.
For precision delivery, Emblem is also working
with Dosecann to develop a range of cannabinoid dosage formulations
designed to ensure patients are able to titrate and administer each
dose the exact same way. The objective is to bring dosage-metered
oral spray formulations to the market in 2018, followed by
dose-controlled vaporizers.
Precise. Reliable. Trusted.
Emblem believes its reputation for precise,
standardized dosages that produces a specific effect each time can
be carried over to the recreational adult-use market. Trust is
built through effectiveness and a consistent, predictable
user-experience.
Emblem has commenced managing product inventory,
distribution, education and branding in preparation to enter the
recreational adult-use market. The Company is pursuing supplier
agreements with the highest growth provinces for Emblem’s
recreational adult-use products and brands.
About Emblem
Emblem Corp. is a fully integrated licensed
producer and distributor of medical cannabis and cannabis
derivatives in Canada under the ACMPR. Led by a team of cannabis
experts and former health care and pharma executives, the Company
has three distinct verticals – cannabis production, patient
education centers, and pharmaceutical development. Emblem trades
under the ticker symbol EMC on the TSX Venture Exchange.
For further information contact:
Ethan Karayannopoulos Investor Relations Emblem
Corp. 647.748.9696
ethank@emblemcorp.com
Alex Stojanovic Chief Financial Officer Emblem Corp.
416.923.1331 alexs@emblemcorp.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This news release contains certain
forward-looking statements and forward-looking information
(collectively referred to herein as "forward-looking statements")
within the meaning of applicable Canadian securities laws. All
statements other than statements of present or historical fact are
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as
"anticipate", "achieve", "could", "believe", "plan", "intend",
"objective", "continuous", "ongoing", "estimate", "outlook",
"expect", "may", "will", "project", "should" or similar words,
including negatives thereof, suggesting future outcomes. In
particular, this news release contains forward-looking statements
relating to, among other things: (i) the development and completion
of the proposed facilities by the Company; (ii) the ability of the
Company to utilize the new facilities to produce additional dried
cannabis and or oil; (iii) potential sales of dried cannabis and
oil; produced at the new facilities and the value thereof; (iv) the
Company's future production capacity; (v) the availability of
additional sources of financing; (vi) the ability of the Company to
complete a GMP Facility; (vii) the ability of the Company to
produce high quality dried flower and oil; (viii) the success of
the partnership and collaboration arrangements entered into by the
Company (ix) the intention to grow the business, operations and
potential activities of the Company; and (x) the anticipated
changes to Canadian federal laws regarding recreational adult-use
and the corresponding business impacts on the Company. Management
of the Company believes the expectations reflected in such
forward-looking statements are reasonable as of the date hereof but
no assurance can be given that these expectations will prove to be
correct and such forward-looking statements should not be unduly
relied upon. Various material factors and assumptions are typically
applied in drawing conclusions or making the forecasts or
projections set out in forward-looking statements. Those material
factors and assumptions are based on information currently
available to the Company, including data from publicly available
governmental sources as well as from market research and industry
analysis and on assumptions based on data and knowledge of this
industry which Emblem believes to be reasonable. However, although
generally indicative of relative market positions, market shares
and performance characteristics, such data is inherently imprecise.
While Emblem is not aware of any misstatement regarding any
industry or government data presented herein, the medical marijuana
industry involves risks and uncertainties and is subject to change
based on various factors.
Forward-looking statements are not a guarantee
of future performance and are subject to and involve a number of
known and unknown risks and uncertainties, many of which are beyond
the control of the Company, which may cause the Company's actual
performance and results to differ materially from any projections
of future performance or results expressed or implied by such
forward-looking statements. These risks and uncertainties include,
but are not limited to, the risks identified in the Company's
December 31, 2017 Management's Discussion and Analysis, which has
been filed with the Canadian Securities Administrators and
available on www.sedar.com. Any forward-looking statements are made
as of the date hereof and, except as required by law, the Company
assumes no obligation to publicly update or revise such statements
to reflect new information, subsequent or otherwise.
This news release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about Emblem's prospective results of
operations, sales, revenues, funds flow, and components thereof,
all of which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth in the above
paragraphs. FOFI contained in this news release was made as of the
date of this document and was provided for the purpose of providing
further information about the Company's future business operations.
The Company disclaims any intention or obligation to update or
revise any FOFI contained in this news release, whether as a result
of new information, future events or otherwise, unless required
pursuant to applicable law. Readers are cautioned that the FOFI
contained in this news release should not be used for purposes
other than for which it is disclosed herein.In this press release,
reference is made to Adjusted EBITDA, which is not a measure of
financial performance under International Financial Reporting
Standards. The definitions for Adjusted EBITDA can be found in the
Company's March 31, 2018 Management's Discussion and Analysis,
filed on SEDAR.
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.
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