StaffAugust 31, 2022
The Daily Hit is a recap of cannabis business news for August 31, 2022.
Emerald Health Archives - Green Market Report
StaffAugust 31, 2022
Adam JacksonAugust 31, 2022
Emerald Health continues its efforts to peace out on cannabis.
StaffNovember 29, 2021
Emerald Health Therapeutics, Inc. (CSE: EMH) (OTCQX: EMHTF) announced that it is leaving the cannabis industry and pivoting to a pharmaceutical development focus. Emerald said it is looking for buyers for its cannabis assets to further strengthen its already strong capital position. The company also said that it plans significant cost cuts to decrease its monthly net burn. In addition to that, Emerald Health reported that its President and CEO Riaz Bandali was leaving the company at the end of December. The company had begun to see an increase in revenues, but the net losses continued to outweigh the progress made on that front.
“Our management team and staff have shown exemplary commitment and effort in advancing Emerald’s cannabis business, but in a market with a very large number of cannabis operating licenses, increasing competition, and declining retail prices, the path to achieving profitability and increasing shareholder value has been very challenging,” said Jim Heppell, Chairman of Emerald’s Board of Directors. “Instead of committing additional capital and effort to focus on this very challenging and saturated market, the Board has decided that Emerald shareholders would be better served by the company exiting the recreational and medical cannabis business and pivoting into pharmaceutical development. We will now set out on a new business path that we believe has much greater potential to increase shareholder value.”
Emerald will file its third-quarter financial results on Monday, November 29. Emerald said it plans to maximize its cash position and seek business opportunities in pharmaceutical development where the Board of Emerald has significant expertise. Any such acquisitions or dispositions are subject to regulatory approval and may be subject to shareholder approval.
“Riaz originally committed to take Emerald through a restructuring to achieve financial stability, and over the past two years he has been successful in repositioning Emerald, restructuring its balance sheet, and maximizing its cash position. Having reached a logical point with that effort, he has been planning to pursue new opportunities. We appreciate what Riaz has done for Emerald, thank him for his commitment, skills and effort, and wish him well,” added Mr. Heppell. “A successor to Riaz will be named prior to year-end.”
The company has agreed to retain Vantage Point Advisors to assist it in identifying potential acquisition/merger candidates involved in pharmaceutical development and to carry out due diligence on selected candidates. Vantage Point Advisors is an independent, arm’s-length business valuation firm with offices in New York, Los Angeles, San Diego, Portland, Seattle, and Dallas-Fort Worth.
StaffAugust 31, 2021
Emerald Health Therapeutics, Inc. (CSE: EMH) (OTCQX: EMHTF) reported its financial results for the second quarter ending June 30, 2021, with total sales of C$3.7 million, which increased over the first quarter’s C$2.6 million. The net losses for Emerald Health increased to $13.9 million over the previous quarter’s net loss of $2.9 million. The net loss included a $10.67 million non-cash impairment of an asset held for sale.
“In the second quarter we started to see incremental progress in executing on our renewed business strategy, resulting in a 42% sequential quarterly increase in gross revenue to $3.8M, with a concurrent significant improvement to just a small negative gross margin. Our net operating loss and cash flow utilization have improved and we ended the quarter with over $32M in working capital, providing us with significant runway,” said Riaz Bandali, President & CEO of Emerald. “As per our objectives, we kept our general and administrative costs flat (excluding non-cash items) while increasing our investment in sales and marketing by 33% and in R&D by more than double.”
Emerald said that sales in the adult-use channel represented 78% of total revenue, and volumes sold in the channel were 33% higher in the second quarter versus the first, while the average selling price per gram dropped from $3.65 in the first quarter to $3.28 in the second.
In July, Emerald said it retained a listing agent to assist in the sale of its licensed greenhouse cannabis production facility in Greater Vancouver, BC. Emerald had ceased operations at this facility on March 31, 2021, but continues to operate its defined-scale production facility for premium cannabis in St. Eustache, Quebec, and its two separate new product development and processing facilities in British Columbia.
After the quarter ended, Emerald introduced its new Fuse lifestyle brand and latest product line, the Nano Shot, a 30 ml flavored cannabis-infused beverage formulated with 10 mg of THC and a nanoemulsion formulation offering consumers a more predictable, rapid onset and shorter controlled duration of effects. The plant-derived Nano Shots are gluten-free and vegan and come in multiple flavors. In July, the beverage became available to Emerald’s patients via prescription and consumers at licensed cannabis retailers and online in British Columbia, Alberta, and Manitoba, with subsequent orders from two additional provinces.
Bandali added, “With our commitment to science-based innovation and our Defined Dose focus to offer health, wellness, and medical consumers more precise and predictable dosing and a more consistent cannabis consumption experience, our R&D efforts resulted in the launch of our new SYNCTM Tabs and, in July, FUSE Nano Shots. Our SYNC medical product sales are robust and our Quebec Souvenir brand, which now includes a Souvenir-branded strain-specific oil, has started to establish additional sales momentum in Quebec. We have also seen modest but increasing product demand in Europe via our Danish partner, Stenocare.”
Debra BorchardtAugust 13, 2020
Emerald Health Therapeutics, Inc. (OTCQX: EMHTF) reported preliminary, unaudited financial results for the second quarter of 2020 for its 41.3%-owned joint venture, Pure Sunfarms. Gross sales fell from C$32 million ($24 million) in the second quarter of 2019 to C$19 million ($14 million) in the second quarter of 2020. The company attributed the 40% decrease to a lower average selling price per gram of dried flower.
The net average selling price per gram of dried flower was 29% lower in the three months ended June 30, 2020, compared to the three months ended March 31, 2020.
While prices fell the cost of sales increased. The company blamed this on additional packaging and logistics costs associated with increased retail sales compared to the bulk wholesale model in 2019. The cost per gram sold for the second quarter was lower than the cost per gram in the first quarter of 2020, by 5%, even with the significant increase in retail sales quarter on quarter, which is a reflection of the increase in large format SKUs in the product mix and a lower cost of cultivation.
The breakdown in sales was 57% to provincial boards (flower) and 43% to the wholesale channel (flower and trim). This included nonmonetary transactions with extraction licensed producers in which Pure Sunfarms sold extraction grade dried flower and trim and purchased various forms of distillate from the same counterparties, which will be used in Pure Sunfarms’ future Cannabis 2.0 products.
“Pure Sunfarms’ leadership in low-cost production enables it to offer consumers high-quality cannabis products that are well-priced. This strong competitive positioning against both licensed and unlicensed producers has enabled it to achieve leading market share in Ontario and strong growth in other provinces,” said Riaz Bandali, President and Chief Executive Officer of Emerald. “With its broadening product mix, including forthcoming oils and Cannabis 2.0 products, we anticipate that Pure Sunfarms will continue to build on its competitiveness and accomplishments.”
Earlier this year Emerald Health entered into a settlement agreement Village Farms that settled their prior disputes over Pure Sunfarms. The result is that Village Farms will own 53.5% of Pure Sunfarms (PSF) and Emerald will own 46.5% of Pure Sunfarms. Originally this was a 50/50 joint venture, but then the two companies had a falling out.
Pure Sunfarms Sales For Village Farms
Village Farms (VFF) said its share of sales for Pure Sunfarms fell to $5.5 million for the most recent quarter from last year’s $15 million. It reported that the total Pure Sunfarm sales for the quarter were $14 million versus last year’s $24 million, a decline of 40%.
“The second quarter continues to demonstrate the earnings capacity of Pure Sunfarms as it delivered its sixth consecutive quarter of net income and seventh consecutive quarter of positive EBITDA,” said Michael DeGiglio , CEO Village Farms. “Although retail branded sales were level compared to the first quarter on a dollar basis, retail sales volume increased 89% as Pure Sunfarms’ continued to have great success with its large-format, value offerings, which have consistently ranked among the best-selling dried cannabis products with the Ontario Cannabis Store since launch.
Debra BorchardtMarch 31, 2020
Emerald Health Therapeutics, Inc. (OTCQX:EMHTF) reported some of its results for the fourth quarter and year of 2019 for its British Columbia-based joint venture, Pure Sunfarms (PSF). The company release the net sales for the year and the fourth quarter of 2019 were $82.8 million and $12.1 million, respectively, compared to $4.9 million and $4.7 million.
The company said this consisted entirely of dried cannabis. PSF also recognized revenue of $8.1 million upon the completion of the Settlement Agreement with Emerald in Q4, but it wasn’t clear if this figure was included in the $12 million figure or if it was in addition to that.
The press release noted that it was providing audited results, yet the net losses or income were nowhere to be found. Neither Sedar or the company’s website gave much information beyond the basics. Expenses did increase with selling, general and administrative expenses for the year and fourth-quarter at $10.4 million and $3.0 million versus 2018’s $3.4 million and 2018’s fourth-quarter of $1.3 million.
“In the first full year of legal recreational cannabis sales in Canada, our Pure Sunfarms joint venture achieved stellar outcomes in operations, sales as well as financial performance,” said Riaz Bandali, President and CEO, Emerald Health Therapeutics. “PSF continues to set standards for cultivation efficiency and overall operating costs in the sector and has demonstrated an ability to deliver a compelling product and value proposition to consumers and other Licensed Producers.”
The company said that Pure Sunfarms sold approximately 26,000 kilograms of flower and trim in 2019 at an average price of approximately $2.90 per gram. Roughly 92% of 2019 sales were to the bulk wholesale channel and 8% to the branded retail channel. Fourth-quarter sales were over 1,100 kilograms averaging over C$3.59 per gram. During the fourth quarter, all cannabis sales were branded retail sales to provincial distribution boards and for the most part, represented replenishment orders during the quarter.
“We are proud of PSF’s success and pleased that we continue to be a significant partner in this tremendous company. We are also very pleased with the licensing and scale-up into production of our two wholly-owned cultivation facilities in Richmond, BC, and St. Eustache, Quebec, which now serve as our source of cannabis supply for our product development efforts as well as for our medical and recreational customers. These two facilities, along with our position in PSF, provide Emerald with three distinct operating assets producing differentiated and complementary products to serve the market.”
The company opted not to discuss its recent settlement with Village Farms and Pure Sunfarms.
Village Farms had been expected to report its earnings on March 30 but had delayed releasing those figures.
Debra BorchardtJanuary 6, 2020Emerald Health Therapeutics, Inc. (TSXV: EMH)(OTCQX: EMHTF) has agreed to the second tranche of funding for the company for approximately $4.5 million. At the end of December, the company closed on the initial tranche of a private placement that was announced on December 16, 2019. The initial tranche was for gross proceeds of $1.5 million issued at a price of $0.29 per unit.
The second tranche was also issued at a price of 29 cents per share. The company was lately trading at roughly 25 cents per share. The private placement is set to purchase 10,344,827 units of Emerald for total gross proceeds of $3 million. The company said that these units will represent the remainder of the financing previously announced on December 16, 2019, however, the securities to be issued under the Offering will be offered by way of a shelf prospectus supplement to be filed in all of the provinces of Canada pursuant to National Instrument 44-102 – Shelf Distributions and will not be subject to a hold period.
Each Unit will consist of one common share of Emerald and one common share purchase warrant. Each warrant will entitle the Investor to acquire one common share of Emerald at a price of $0.385 per Warrant Share for a period of five years following the closing of the Offering.
The company said it plans to use the net proceeds for general working capital purposes and it is expected to close on or about January 13, 2020. Emerald also said it has also reached an agreement with the holder of the Convertible Debentures issued on September 10, 2019, to settle accrued interest on the Convertible Debentures to December 31, 2019, in the amount of $383,562 by issuing an additional 1,322,627 Common Shares (the “Debt Shares”) at a deemed value of $0.29 per share. The Debt Shares will also be qualified under the Prospectus Supplement. Issuance of the Debt Shares is subject to the approval of the TSX Venture Exchange.
Debra BorchardtMay 1, 2019Emerald Health Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) delivered fourth quarter and 2018 results along with an update of its first-quarter sales. The revenue in the fourth quarter was $1.1 million versus last year’s $279 thousand for the same time period. The net loss in the fourth quarter was $13.9 million, higher than the third quarter’s losses of $6.4 million.
2018
The company reported total sales of $2.1 million for the full year 2018 and total net losses of $30.9 million. Emerald has had losses of $52 million since inception.
“In the past year, we have worked closely with our 50/50 venture partner to bring into full production one of the single largest cannabis growing assets in the world. Pure Sunfarms’ 1.1 million square foot facility is now rapidly increasing production and sales. By leveraging our own technical expertise and infrastructure with strong partners in 2018, we solidified key building blocks with respect to production/supply, distribution, processing in the form of large-scale extraction, softgel encapsulation, and product innovation,” said Avtar Dhillon, MD, President and Executive Chairman of Emerald.
Pure Sunfarms
The company said that its first-quarter sales were $2.6 million. With regards to its BC-based Pure Sunfarms joint venture, Emerald noted that the fourth quarter 2018 sales were $4.9 million and the first quarter sales were expected to exceed $14 million. The company was able to records $1.4 million in the fourth quarter as a share of income from Pure Sunfarms. Emerald entered into supply agreements with Pure Sunfarms to purchase 40% of production in 2018 and 2019 as well as 25% of total production in 2020 through 2022.
Verdalite Sciences Acquisition
Emerald Health also stated that Verdélite Sciences and Verdélite Property Holdings agreed to take $7.5 million of the $22.5 million they were to receive as the final payment for their shares of Verdélite in shares of Emerald in a five-day weighted average price less 10%. Emerald is to pay the remaining $15 million of the purchase price to the Verdelite on or before May 30, 2019.
On May 2, 2018, Emerald acquired 100% of Verdélite and the shareholder loans payable by Verdélite, for a total consideration of $90 million, payable 50% in cash and 50% in shares. The company paid $22.5 million in cash upon closing and $45 million was satisfied by the issuance of 9,911,894 common shares of which 4,955,947 Common Shares will be held in escrow until May 1, 2019 pursuant to an escrow agreement.
“By further building upon our intellectual property and strategic partnerships, as well as our own internal expertise, we are working hard to increase market penetration through the development of new and differentiated ingestible and non-combustible products if, as expected, they become allowable before the end of 2019. This will coincide with the ongoing and substantial expansion of the adult-use retail system – creating significant opportunity for the Company in 2019 and what we anticipate to be a year of extraordinary sales growth for Emerald.”
On March 13, Emerald filed a final short form base shelf prospectus for the issuance and secondary sale of up to $150,000,000 of common shares.
William SumnerAugust 23, 2018
It’s time for your Daily Hit of cannabis financial news for August 23, 2018.
On The Site
Canopy Growth Corporation
Canopy Growth Corporation (CGC) is spinning off its venture capital investment arm called Canopy Rivers Corporation. The company has set September 12, 2018, as the date for a shareholder meeting regarding the proposed combination of Canopy Rivers and AIM2 Ventures. It had been previously announced that Canopy Rivers had entered into an agreement with AIM2 resulting in a reverse take-over of AIM2 by Canopy Rivers. The transaction is expected to close during the week of September 17, 2018 subject to the approval by the TSX Venture Exchange. The new symbol will be RIV.
CannaRoyalty
Canadian-based CannaRoyalty (CNNRF) reported its second-quarter earnings for the period ending June 30, 2018, with revenues increasing 266% to C$3.5 million versus last year’s revenues of C$960,157. In addition to that, CannaRoyalty made huge strides by delivering net income of C$9.3 million for the quarter versus last year’s net loss of C$2 million. The net income per diluted share was $0.17 as compared to a net loss per diluted share of $0.05 for the same time period in 2017.
In Other News
Emblem Corp.
Emblem Corp. (EMC), announced that it had secured a working capital advance for Natura Naturals Holdings Inc. The advance will help support the completion of Phase 1 construction of a 662,000 licensed greenhouse operated by Natura that is undergoing phased conversion and retrofitting while both companies negotiate a definitive agreement for Emblem to acquire Natura. The advance is made up of a one-year convertible debenture for a sum total of of up to $2,000,000. The advance is convertible into Natura shares at $0.80 per share plus one full share purchase warrant exercisable at $1.05.
Khiron Life Sciences
Khiron Life Sciences (KHRN) announced that it has priced and sized its marketed offering of common shares at a price of $0.90 per share to raise a total of up to $11.25 million. The offering will be overseen by a syndicate of agents led by Canaccord Genuity Corp. and including GMP Securities L.P., Sprott Private Wealth LP, and Cormark Securities Inc. Additionally, the agents have been granted an over-allotment option by the company to offer and sell up to an additional 15% of the number of share sold in the offering. The company expects to file a final short form prospectus form, in respect to the offering, on or around September 6, 2018 and the offering is expected to close on or around September 13, 2018.
Emerald Health Therapeutics Inc.
Emerald Health Therapeutics (EMH) and Village Farms International Inc. (VFF) announced that their joint venture, Pure Sunfarms, has received from Health Canada its third amendment to its cultivation license for its Delta 3 greenhouse in Delta, BC. The amendment will allow Pure Sunfarms to expand its production capacity to approximately 420,000 square feet of the facility’s 1.1 million square feet. “We are thrilled with the rapid pace at which the Pure Sunfarms team continues to complete conversion of additional production area, as well as the rapid pace at which it has been able to secure amendments to its cultivation license to steadily expand production,” said Michael DeGiglio, CEO of Village Farms. “It’s a testament to the value of decades of large-scale operational experience combined with an unwavering approach to doing things the right way.”
Naturally Splendid
Naturally Splendid (NSPDF) reported second-quarter results for the period ending June 30, 2018, and recorded a net loss of $1,565,098 during the six months ended June 30, 2018, compared to a loss of $2,029,552 during the six months ended June 30, 2017. The decrease in net loss was due to the sale of POS BPC Manufacturing Corp. which provided for a gain on sale of $1,535,096, offset by an increase in selling and distribution costs of $5,273 and Administrative expenses of $1,041,721 mainly due to the addition of the Prosnack business which were not included in the expenses in the comparative period, as the acquisition occurred on October 18, 2017.
Naturally Splendid recorded sales of $804,502 during the six months ended June 30, 2018, compared to $1,068,949 for the six months ended June 30, 2017. This revenue decrease was mainly due to the collapse of sales of bulk hemp seed to South Korea where the Company had recorded $Nil bulk sales in the current quarter compared to $245,400 in the six months of 2017.
StaffApril 2, 2018Emerald Health Therapeutics, Inc. (EMHTF) reported its annual 2017 earnings and fourth quarter results. Revenue for the full year increased 270% from C$253,321 in 2016 to C$937,654 in 2017. Net losses for the year also increased from (C$2.9 million) in 2016 to (C$8.7 million) in 2017. The net loss per share went from five cents in 2016 to a net loss per share of ten cents in 2017.
“Following the Canadian federal government’s introduction in April 2017 of legislation to broadly legalize adult-use cannabis, Emerald put in motion multiple strategic steps focused on placing the company in the top tier of Canadian licensed producers and pursuing international opportunities,” said Chris Wagner, CEO of Emerald Health Therapeutics. “The company made important leadership hires; took steps to assure significant, secure supply of cannabis via large-capacity production facilities; struck multiple strategic collaborations and investments; leveraged its extensive life science industry expertise to initiate product innovation and intellectual property formation; and added substantially to its treasury.”
Revenue for the fourth quarter of 2017 was C$279,362 versus C$124,251 in 2016 for the same time period. The net loss for the fourth quarter was (C$4 million) versus a net loss of (C$880,424) for the same time period in 2016.
The company is in the throes of a building phase. According to a statement, Emerald said that conversion of the first 250,000 ft2 section of the Delta 3 greenhouse to cannabis production was substantially complete, with the conversion of the remainder of the 1.1 million ft2 greenhouses ongoing and on schedule. The company also said that senior growing, financial, human resources and operational personnel, including the established team transferred from Village Farms, were in place for production ramp-up.
In addition to the Delta 3 greenhouse conversion project, Emerald has completed a significant amount of construction at its Metro Vancouver site and in October 2017 applied to Health Canada to produce cannabis at this facility.
Emerald has also signed deals with DMG Blockchain to form a joint venture, to be named CannaChain Technologies, to develop a blockchain-based supply chain management system and e-commerce marketplace for the legal cannabis industry. Plus, it signed a Letter Of Intent with Namaste Technologies to collaborate on strategic business opportunities worldwide and develop a fully integrated e-commerce platform to serve as a retail channel for the Company’s patient
Wagner added, “We look forward to a transformational year in 2018 with the expected initiation of broad legalized adult-use and our vaulting into the top tier of production capacity, enhanced branding, sophisticated sales and marketing, and progression of our medical product development and patenting plans. We are executing well on the projects we have announced and are assessing an array of potentially impactful new business opportunities.”
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