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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 second quarter fiscal
2017 financial results for the period ended June 30, 2017.
For the second quarter ended June 30, 2017,
revenue amounted to $538,475 compared to nil in the second quarter
of 2016. Emblem 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 second quarter of 2017, sales to registered patients generated
revenues of $398,260 with 53.9 kilograms sold at an average selling
price of $7.39 per gram. Strains sold during the quarter were
priced between $7.00 and $12.00 per gram before discounts. GrowWise
education fee revenue from other licensed producers totaled
$116,373. Gross margin for the second quarter was $146 which was
impacted by the net change in fair value of biological assets,
inventory expensed and production costs. Biological assets consist
of cannabis plants at various pre-harvest stages of growth which
are recorded at fair value less costs to sell at the point of
harvest. Cost to sell include processing, testing, packaging and
related costs. At harvest, the biological assets are transferred to
inventory at their fair value less costs to sell which becomes the
deemed cost for inventory. Inventory is later expensed to cost of
sales when sold. Direct and indirect production costs such as real
estate taxes, quality assurance, insurance, security and inventory
management are expensed through cost of sales. As a result of the
foregoing, net loss from operations, net loss and loss per share
amounted to ($2,923,503), ($2,954,340) and ($0.03) per share,
respectively for the quarter.
During the second 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 substantially complete, 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 spring 2018 once the fourth
Phase 2 Grow Room1 is operational.
Figures in CDN $ |
For the three months ended June 30, 2017 |
For the three months ended March 31, 2017 |
For the three months ended June 30, 2016 |
Revenue |
538,475 |
903,274 |
- |
Gross margin (loss) |
146 |
(89,243) |
42,132 |
Operating expenses |
2,923,649 |
2,363,194 |
1,222,880 |
Loss from operations |
(2,923,503) |
(2,452,437) |
(1,180,748) |
Net loss |
(2,954,340) |
(2,495,746) |
(1,691,828) |
Net loss per share - basic and diluted |
(0.03) |
(0.04) |
(0.08) |
“With the more than doubling of our production
capacity complete and the imminent receipt of our cannabis oil
license, combined with the strength of our marketing platform and
patient registration pace, we are well positioned to demonstrate
progress towards profitability in 2018," noted Gordon H. Fox, CEO
of Emblem. "Taking a long term view, we will continue to invest in
our production and planned pharmaceutical facilities to
improve quality, yields and margins. We expect to see the
results of these investments manifest in the back half of the
current year and beyond. We are excited about the significant
growth opportunities across our entire business, including our
unique pharma strategy, and look forward to further accelerating
our growth and reporting our successes to our stakeholders in the
coming quarters.”
About Emblem
Emblem is licensed under the Access to Cannabis
for Medical Purposes Regulations (the “ACMPR”) to cultivate and
sell medical cannabis. Emblem carries out its principal activities
producing cannabis from its facilities in Paris, Ontario pursuant
to the provisions of the ACMPR and the Controlled Drugs and
Substances Act (Canada) and its regulations.
Neither 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.
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
acquisition of the newly acquired land; (ii) the completion of the
proposed facilities by the Company; (iii) the ability of the
Company to utilize the new facilities to produce additional dried
cannabis; (iv) potential sales of dried cannabis produced at the
new facilities and the value thereof; (v) the Company's future
production capacity; (vi) the availability of additional sources of
financing; (vii) the ability of the Company to establish a "closed
box" indoor production facility; (viii) the ability of the
Company to produce high quality dried flower; (ix) the benefits
associated with the acquisition of the additional land; (x) the
intention to grow the business, operations and potential activities
of the Company; (xi) receipt of approval from Health Canada to
complete such expansion and increase production and sale capacity;
and (xii) the anticipated changes to Canadian federal laws
regarding adult use and the 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
filing statement dated November 30, 2016 and in the Company's short
form prospectus dated March 16, 2017 both of which have 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.
_____________
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”].
For further information contact:
Ali Mahdavi
Emblem Corp.
(416) 962-3300
alimahdavi@emblemcorp.com
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