Emerald Health Therapeutics, Inc. (TSXV:EMH; OTCQX:EMHTF)
(“Emerald” or “the Company”) has filed its financial statements and
management discussion and analysis for the three and six months
ended June 30, 2018. They are available for viewing on
www.sedar.com or on the Company’s website. All figures are
expressed in Canadian dollars unless otherwise stated.
“I am proud of the success we’ve had scaling our
business so far this year,” said Chris Wagner, CEO of Emerald
Health Therapeutics. “Since the start of the second quarter, we
acquired and began cultivating cannabis at our Quebec-based
licensed producer Agro-Biotech, substantially increased our
licensed cannabis production area at our Pure Sunfarms joint
venture to roughly 420,000 square feet, and obtained from Health
Canada Pure Sunfarms’ sales license. We signed our first provincial
supply agreement with our home province of BC on terms we were very
happy with. We also announced a term sheet for a strategic alliance
with Factors Group, Canada’s largest nutritional supplement
marketer and manufacturer, which we expect to significantly
expedite our plans to process large quantities of biomass to
extract and encapsulate bioactive compounds from cannabis and other
plants.”
Selected Quarterly Financial
Information
The financial information in the following
tables summarize selected financial information for the Company for
the last eight quarters which was derived from annual financial
statements prepared in accordance with IFRS or interim financial
statements prepared in accordance with IFRS applicable to the
preparation of interim financial statements, IAS 34, Interim
Financial Reporting:
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2018
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2017 |
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June 30 ($) |
March 31 ($) |
December 31 ($) |
September 30 ($) |
Revenue |
284,262 |
373,218 |
279,362 |
211,316 |
Share-based payments |
2,081,661 |
1,954,047 |
1,979,553 |
271,968 |
Interest revenue |
274,436 |
250,064 |
43,024 |
60,997 |
Share of income (loss) from JV |
682,431 |
(301,793) |
(44,562) |
(278,016) |
Net Loss |
(5,610,970) |
(5,045,420) |
(4,027,569) |
(1,939,371) |
Net Loss per share (basic and diluted) |
(0.04) |
(0.04) |
(0.04) |
(0.02) |
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2017
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2016 |
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June 30 ($) |
March 31 ($) |
December 31 ($) |
September 30 ($) |
Revenue |
245,708 |
201,268 |
124,251 |
48,933 |
Share-based payments |
369,788 |
201,186 |
137,113 |
467,878 |
Net Loss |
(1,726,523) |
(1,205,858) |
(880,424) |
(1,009,841) |
Net Loss per share (basic and diluted) |
(0.02) |
(0.02) |
(0.01) |
(0.02) |
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BUSINESS UPDATE FOR AND
SUBSEQUENT TO THE REPORTING PERIOD
Cannabis Sales Agreements – Adult-use
Markets
In July 24, 2018, the Company signed a
Memorandum of Understanding (“MOU”) with the British Columbia
Liquor Distribution Branch (“BCLDB”) to supply the Company’s
high-quality cannabis products to the BCLDB to serve the adult-use
market throughout British Columbia.
Expansion Projects
The Company’s joint venture, Pure Sunfarms,
continues to move towards achieving its goal of large-scale,
high-quality, low-cost cannabis production. On July 27, 2018, Pure
Sunfarms received its cannabis sales license from Health Canada.
Additional space continues to be developed for cannabis production
at the Pure Sunfarms’ 1.1 million-square foot (25-acre) greenhouse
facility located on a 50-acre parcel of land in Delta, British
Columbia (“Delta 3”), with the entire 1.1 million square foot Delta
3 site expected to be in production in 2019.
On August 21, 2018, the Company announced that
Mandesh Dosanjh has been appointed President and Chief Executive
Officer of Pure Sunfarms.
Supply Agreements
On April 30, 2018, the Company entered into a
supply agreement with Pure Sunfarms whereby the Company has agreed
to purchase 40% of Pure Sunfarms’ production in 2018 and 2019 at a
set price per gram.
Acquisitions
On May 2, 2018, the Company acquired 100% of the
issued and outstanding shares of 8611165 Canada Inc. and its
affiliate 9353-8460 Quebec Inc. (together “Agro-Biotech”), and the
shareholder loans payable by Agro-Biotech, for total consideration
of $90.0 million, subject to adjustment, payable 50% in cash and
50% in Common Shares.
Agro-Biotech is a Licenced Producer under the
ACMPR located in Saint-Eustache, Quebec. Agro-Biotech’s assets
include land and a 75,000 square foot indoor grow facility.
Agro-Biotech has built out 20,000 square feet of this facility to
date and Emerald expects to have the remainder of the 75,000 square
foot facility equipped to produce high quality dried cannabis
flower and be fully operational by early 2019.
Emerald Health Naturals
Inc.
On April 17, 2018, the Company entered into a
binding agreement with Emerald Health Bioceuticals Inc. (“EHB”, a
company related by common ownership), 1160305 BC Ltd., GAB
Innovations, Inc. and Dr. Gaetano Morello, a director of the
Company’s parent company, Emerald Health Sciences, with respect to
the formation of Emerald Health Naturals, Inc. (“EHN”).
Subject to regulatory approval, the Company agreed to invest $5.0
million for 51% ownership of EHN and EHB will grant EHN the
exclusive Canadian distribution rights to EHB’s product line for
49% ownership of EHN. EHB’s product line consists of nutritional
supplements, which use non-cannabis, non-psychoactive plant-based
ingredients to provide potentially beneficial support to the body’s
endocannabinoid system. The TSXV has given conditional approval to
the transaction subject to receipt and review of material
agreements and a news release.
Subsequent to this agreement, the Company signed
a term sheet to form a strategic alliance with Factors R&D
Technology, Inc. (“FTI”), described below, which includes a
provision for EHN to issue shares to FTI representing 25% of its
issued share capital. This share issue is expected to reduce the
Company’s future ownership of EHN to 38%.
The Formation Agreement launches the Company’s
multi-pronged program to market and sell a proprietary,
award-winning non-cannabis line of endocannabinoid-supporting
nutritional products in Canadian grocery, natural health product,
and pharmacy stores.
Factors R&D Technology,
Inc.
On August 27, 2018, the Company signed a term
sheet to form a strategic alliance with FTI, a division of Factors
Group of Nutritional Companies Inc., in which FTI will provide
pharmaceutical-grade, industrial-scale manufacturing capacity as
well as expertise in GMP-level extraction, softgel production, and
packaging. FTI will provide the Company with access to a facility
capable of processing up to 1 million kg of biomass annually and
softgel production capacity of up to 600 million capsules per year.
The Company will pay an initial $5 million fee to FTI to cover the
initial costs of transition to cannabis extraction.
The term sheet also provides that FTI will enter
into an exclusive agreement with EHN (described above). This will
enable the companies to collaborate on product innovation,
marketing, and distribution strategies to provide a range of
products containing cannabinoids, where legal, and other
herbal formulations to support the human endocannabinoid system to
the Canadian and global health products market. The collaboration
will initially focus on manufacturing, distribution, and sales of
EHN’s current product line. As part of this arrangement, EHN will
issue shares to FTI representing 25% of its issued share
capital.
The term sheet is non-binding and the strategic
alliance is subject to the negotiation and execution of definitive
agreements. The strategic alliance and related activities are also
subject to obtaining all necessary regulatory approvals.
Northern Vine Canada Inc.
On May 15, 2018, the Company exercised its right
to purchase additional common shares of Northern Vine issued from
treasury, increasing its ownership of Northern Vine to 65% for
$2.75 million.
On August 15, 2018 the Company increased its
ownership in Northern Vine to 100% by purchasing all of the shares
of Northern Vine held by Abattis Bioceuticals Corp (“Abattis”). The
Company paid Abattis $2.0 million in cash and issued 1,093,938
common shares of the Company.
The Company will pay Abattis a milestone payment
of common shares of the Company, valued at $4.0 million, if
Northern Vine and/or the Company receive gross revenue of $10
million from the sale of products or services introduced by Abattis
within thirty-six months ended August 2021.
Northern Vine continues to focus on developing
its laboratory services for the cannabis industry and expanding its
operations in oil extraction.
Financings
In January, February and May 2018, the Company
completed financings that resulted in total gross proceeds from
unit issuances and warrant exercises of $67.8 million (net proceeds
– $67.5 million) and has the potential to a raise an additional
$41.8 million if the remaining outstanding warrants from these
financings are exercised prior to expiry. The Company intends to
use the proceeds of the financings to fund the completion of
capital projects and potential future expansion and acquisitions,
including partnership transactions, for research and development,
to expand the Company’s existing extraction capabilities, and for
working capital and general corporate purposes.
Financial
Reports
Full details of the financial reports and
operating results for the first quarter of 2018 are described in
the Company’s consolidated financial statements with accompanying
notes and related Management’s Discussion and Analysis. These
documents and additional information on Emerald are available on
SEDAR at www.sedar.com.
About Emerald Health
Therapeutics
Emerald Health Therapeutics (TSXV: EMH; OTCQX:
EMHTF; Frankfurt: TBD) is a Licensed Producer under Canada’s Access
to Cannabis for Medical Purposes Regulations and produces and sells
dried cannabis and cannabis oil for medical purposes. Emerald is
preparing to serve the anticipated legal Canadian adult-use
cannabis market starting in 2018. Emerald owns 50% of Pure
Sunfarms, which is converting a licensed existing 1.1 million
square foot greenhouse in Delta, BC and is now in commercial
production. It owns Agro-Biotech, a Quebec-based licensed cannabis
grower with a 75,000 square foot indoor facility and is planning to
add a 500,000 square foot greenhouse in Metro Vancouver. Emerald’s
team is highly experienced in life sciences, product development,
large-scale agribusiness, and marketing, and is focused on
developing value-added cannabis-based products with potential
wellness and medical benefits. Emerald is part of the Emerald
Health group, which is broadly focused on developing
pharmaceutical, botanical and nutraceutical products that may
provide wellness and medical benefits by interacting with the human
body’s endocannabinoid system.
Please visit www.emeraldhealth.ca for more
information or contact:
Rob Hill |
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Ray Lagace |
CFO |
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Investor Relations
Manager |
(800) 757 3536 Ext.
#5 |
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(800) 757 3536 Ext.
#5 |
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invest@emeraldhealth.ca |
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking
Statements: Certain statements made in this press release that are
not historical facts are forward-looking statements and are subject
to important risks, uncertainties and assumptions, both general and
specific, which give rise to the possibility that actual results or
events could differ materially from our expectations expressed in
or implied by such forward-looking statements. As a result, we
cannot guarantee that any forward-looking statement will
materialize and readers are cautioned not to place undue reliance
on these forward looking statements. For more exhaustive
information on these risks and uncertainties, the reader should
refer to the risk factors described in the management's discussion
and analysis for the year ended December 31, 2017. The
forward-looking statements contained in this press release
represent our expectations as of the date hereof. We disclaim any
intention and assume no obligation to update or revise any
forward-looking statements. Forward-looking statements are
presented for the purpose of providing information about
management's current expectations and plans and allowing investors
and others to obtain a better understanding of our anticipated
operating environment. Readers are cautioned that such information
may not be appropriate for other purposes. The Company undertakes
no obligations to update or revise such statements to reflect new
circumstances or unanticipated events as they occur, unless
required by applicable law.
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