Emblem Announces Second Quarter 2017 Financial Results

Press Release

Q2 2017 Financial Highlights:

  • Revenues amounted to $538,475
  • Grams sold totaled 53,895 grams
  • Average selling price amounted to $7.39 per gram

Highlights subsequent to June 30, 2017:

  • Active patients at 2,154 as at August 24, 2017
  • Substantially completed three out of four Phase 2 Grow Rooms[1], providing an additional 5,200 sq. ft. of grow space; first harvest from the new rooms is expected in November 2017
  • Closed on land purchase to house production facility for the anticipated recreational market

Toronto, Ontario, August 28, 2017 – 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.

For further information contact:

Ali Mahdavi
Emblem Corp.
(416) 962-3300

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”].