Emerald Wellness Therapeutics Reports Second Quarter 2020 Monetary Final results and Offers Corporate Update

Vancouver, British Columbia–(Newsfile Corp. – September 1, 2020) – Emerald Wellness Therapeutics, Inc. (TSXV: EMH) (OTCQX: EMHTF) (“Emerald”) reported monetary outcomes for the 3 and six months ended June 30, 2020. Complete versions of the Company’s unaudited condensed interim consolidated monetary statements and MD&ampA can be identified on SEDAR at www.sedar.com.

“The second quarter was a extremely strong quarter in all elements of our company. It marked a basic and notable shift in our monetary efficiency substantial progress in all elements of our operations the launch of new brands and new goods and, importantly, substantial progress on delineating our go-forward approach and vision,” stated Riaz Bandali, President &amp Chief Executive Officer of Emerald. “The truth that we had been capable to provide so properly on all of these objectives through these unprecedented instances is a testament to the tremendous work of our group and the systematic discipline that we have placed on enhancing every single aspect of our operational and monetary efficiency, which has been our concentrate considering the fact that I joined the enterprise 13 months ago.

“In the second quarter, we began to comprehend the influence of our considerable expense restructuring actions more than the final 3 quarters, which when coupled to the substantial efficiencies accomplished in our operations, had a extremely optimistic influence on our operating outcomes, gross margin and EBITDA. In addition, our 41.three% owned joint venture, Pure Sunfarms, continues to reach top market place share in Ontario and powerful development in other provinces like Alberta. Pure Sunfarms not too long ago created its very first shipment of vapes and oil tinctures to the BC liquor board, and with the shipment of its Cannabis two. goods into other provinces, it continues to entrench its competitive position across Canada. We are extremely optimistic about the worth of our assets going forward.”

Emerald and Pure Sunfarms Joint Venture Summary

Emerald 2Q20 Financials (compared to 2Q2019 and 1Q2020)

  • Optimistic gross margin of $1.0M shows substantial improvement more than a gross margin of damaging $1.3M in 2Q19 and damaging $.9M in 1Q20. Emerald accomplished a optimistic 30% margin of expense of goods sold more than net sales in the present quarter. The substantial gross margin improvement is due to a bigger proportion of greater margin item sold that has been cultivated at Emerald’s personal facilities, processing efficiencies, and a reduce expense base of input material as compared to 1Q20.
  • All-in typical expanding expense of $.99 (which includes depreciation excluding trim) per gram from Emerald’s two facilities in St. Eustache, Quebec and in Richmond, BC. Money expanding expense of $.78 (excluding depreciation) per gram. The two Emerald facilities harvested more than three,000 kilograms of cannabis flower and trim through the quarter.
  • Net sales of $two.5M decreased 46% compared to $four.6M in 2Q19 and decreased 14% from $two.9M in 1Q20. Emerald was capable to sustain sales at a somewhat flat level in 2Q20 in comparison to 1Q regardless of the substantial market place and pricing stress of dried flower in the retail sector and the delay of the launch of the SouvenirTM brand, which only occurred in the final week of June 2020.
  • Total SG&ampA expense of $three.5M, which contains $1. of non-money costs, decreased $9.0M from $12.4M in 2Q19 and decreased $two.5M from $six.0M in 1Q20.
  • Net loss of $18.9M contains a $17.1M impairment of the Verdélite money producing unit (a non-money item). Specifics on the impairment are accessible in the condensed interim consolidated monetary statements for the period ended June 30, 2020.
  • Operating loss of $two.4M decreased 82% from $12.4M in 2Q19 and decreased 64% from $six.9M in 1Q20. Improvement in operating loss was driven by improvements in gross margin and reduce SG&ampA costs when compared to 1Q20.
  • EBITDA of damaging $1.2M in 2Q20 reflects a $six.1M improvement from damaging $7.3M EBITDA in 2Q19 and $two.7M improvement more than 1Q20. The EBITDA figure does not involve any share of EBITDA from the Pure Sunfarms’ joint venture and only reflects Emerald’s operating outcomes.
  • Adjusted EBITDA of damaging $.1M reflects Emerald’s proportionate share of Pure Sunfarms’ 2Q20 EBITDA.
  • Net money flow utilized in operating and investing activities of $two.4M in 2Q20 decreased by $19.9M from $22.3M utilized in 2Q19 and decreased $two.2M from $four.6M utilized in 1Q20.

Essential Initiatives and Accomplishments

  • Elevated recreational dried flower sales by 16% and volume (kilograms) by 23% from 1Q20. Income development benefited from expanding sales of Emerald-grown, Emerald-branded flower outdoors of Quebec and one particular week of sales, just after a effective late-June launch of the new SouvenirTM brand, in Quebec. Initial shipments of Emerald-grown goods to Alberta, Manitoba, Saskatchewan and Newfoundland and Labrador had been created in April and May perhaps, and to Ontario in the final week of 2Q20. Emerald created its very first item shipments from its Richmond greenhouse to British Columbia in late 1Q20.
  • Effectively executed on our partnership with the Valens Corporation and shipped our very first version of SYNC 25 CBD oil from our partner’s facility in May perhaps 2020. Emerald also expanded its geographical market place for SYNC 25 CBD from Alberta, British Columbia, Manitoba, Ontario, Newfound Land and Labrador, Saskatchewan and Nova Scotia with its very first shipment to Quebec in June 2020.

Pure Sunfarms Joint Venture (41.three%-owned)

  • Net sales, consisting completely of dried cannabis, had been $12.9M in 2Q20 compared to $18.0M in 1Q20. This quarter was marked by an 89% boost in volume sold of branded retail goods compared to the prior quarter. The lower in net sales was largely the outcome of a 29% reduce net typical promoting price tag per gram of dried flower in 2Q20 compared to 1Q20 and a substantial lower of sales in the wholesale market place due to market place circumstances.
  • Price of goods sold of $.83 per gram in 2Q20 compared to $.88 per gram in 1Q20. The boost in big-format SKUs in Pure Sunfarms’ item mix contributed to a reduce general expense per gram sold in 2Q20.
  • Net loss of $.2M in 2Q20 was negatively impacted by a $1.7M loss on fair worth alterations in biological assets.
  • Seventh consecutive quarter of optimistic EBITDA.
  • Emerald recognized $.2M as its share of loss from Pure Sunfarms, as compared to $five.2M share of earnings recognized in 1Q20.
  • Pure Sunfarms ready for the imminent launch of its cannabis oil goods and new item types below its Cannabis two. item roll-out program.
  • Received from Wellness Canada its cannabis cultivation sales licence primarily based on an initial production region inside its second 1.1 million square foot greenhouse in Delta, British Columbia (Delta two), permitting it to expand capacity as necessary by way of license amendments.
  • Expanded its credit facility with a lending syndicate led by Bank of Montreal and which includes Farm Credit Canada and the addition of CIBC to its complete $59 million capacity with the completion of the Credit Facility’s accordion function.

Financials Final results &amp Capital Sources

Chosen quarterly monetary info

The following table summarizes chosen quarterly monetary info for the Corporation, which was derived from the audited annual monetary statements ready in accordance with IFRS or the condensed interim consolidated monetary statements ready in accordance with IFRS applicable to the preparation of interim monetary statements, IAS 34, Interim Monetary Reporting:

Q2 2020 Essential Monetary and Operational Metrics
(Thousands of Canadian dollars)

Q2 2020

Q1 2020

Monetary Final results

Gross income

$

three,106

$

three,333

Net income (net of excise duty)

two,481

two,889

Cannabis gross income

Dry cannabis

two,281

1,964

Cannabis oils

808

1,271

Other

17

98

Gross margin (net of fair worth adjustment)

142

(504)

Total SG&ampA (net of share-primarily based payments)

two,353

four,334

Total R&ampD costs

275

433

Net loss*

(18,943)

(four,879)

EBITDA**

(1,176)

(three,851)

Adjusted EBITDA*

(87)

(298)

Balance Sheet

Money &amp money equivalents

1,073

581

Net operating capital

(six,721)

(9,486)

Operational Final results

Typical promoting price tag (net of excise duty)

Recreational

$

three.59

$

four.32

Health-related

$

eight.83

$

7.95

Pure Sunfarms Monetary Final results

Gross income

$

19,307

$

21,519

Gross margin (net of fair worth adjustment)

four,308

9,397

Total SG&ampA

two,574

three,255

Net earnings (loss)

(158)

ten,891

Adjusted EBITDA***

two,639

eight,131

* Share of the net earnings from Pure Sunfarms adjusted for transactions with EMH and for fair worth alterations, and adjusted EBITDA from Pure Sunfarms are reflected in EMH net loss and adjusted EBITDA respectively.

EMH adjusted EBITDA is calculated by subtracting interest earnings, obtain on alterations in fair worth of biological assets, share of earnings from joint venture and deferred earnings tax recovery, and adding back depreciation, share-primarily based payments, other costs, loss from fair worth alterations in monetary assets, inventories written down due to fair worth alterations, non-recurring products and share of Pure Sunfarms adjusted EBITDA from EMH net loss and extensive loss.

**EBITDA is calculated by subtracting the share of Pure Sunfarms adjusted EBITDA from Adjusted EBITDA.
***Pure Sunfarms adjusted EBITDA is calculated by adding back Pure Sunfarms’ adjust in fair worth of biological asset, non operating costs and gains, amortization expense and provision for earnings tax to net earnings.

The Company’s unaudited condensed interim consolidated monetary statements and MD&ampA for the 3 and six months ended June 30, 2020, with each other with other info associated to the Corporation, which includes the Company’s most current Annual Details Type (“AIF”), can be identified on SEDAR. Further info associated to the Corporation is accessible on its web site at www.emeraldhealth.ca

Financing and Capital Sources

In 2Q20 and subsequent to the quarter, Emerald raised capital and issued shares with the following transactions. Complete information are accessible in prior press releases and in many filings on SEDAR.com.

  • April 9, 2020: raised $1.1M in gross proceeds from the physical exercise of six,250,000 warrants at $.17 per warrant. The warrants had been initially issued in 2019 with an physical exercise price tag of $two.00 per widespread share, in connection with a convertible debenture. The terms of the six,250,000 warrants had been amended in April 2020 and the physical exercise price tag of the warrants was changed to $.17 per widespread share.
  • June two, 2020: raised $two.1M in gross proceeds by way of a prospectus supplying, issuing 11,351,351 units at $.185 per unit. Each and every unit consisted of one particular widespread share and one particular widespread share buy warrant.
  • August 13, 2020: established an at-the-market place supplying (ATM) to concern shares from treasury for up to $three.25M to the public, from time to time, at the discretion of Emerald. Emerald has not accessed any proceeds from the ATM at the date of this release. The ATM is efficient till the earlier of April 13, 2021 or completion of the sale of the maximum quantity of shares thereunder.

Other Corporate Updates

SouvenirTM brand effectively launched in Quebec with exceptional market place receptivity

On June 22, 2020, Emerald introduced its new SouvenirTM cannabis brand to the Quebec adult-recreational cannabis market place by way of the Société Québécoise du Cannabis (SQDC). The brand provides goods grown in Quebec at Emerald’s Verdélite facility. Customer reaction to the Souvenir goods has been extremely powerful and the brand has contributed much more than $1.5M in sales to date. The initial goods integrated Chemdog and Grapefruit GG4, each higher potency THC strains with distinct terpene profiles.

Signed a share buy agreement for the sale of Verdélite Sciences and Verdélite Holdings, with each other, in consideration for a money buy price tag of $21. million

Emerald entered into a share buy agreement with Quinto Sources Inc. on July 30, 2020, in respect of the sale of Emerald’s wholly-owned subsidiaries, Verdélite Sciences and Verdélite Holdings. The subsidiaries personal and operate the 88,000 square foot craft cannabis production indoor facility in St. Eustache, Quebec. Pursuant to the agreement, Quinto will buy all issued and outstanding shares of the subsidiaries for a money buy price tag of $21.0M, topic to a 90-day operating capital adjustment. Upon closing, Emerald will continue to sell its personal goods in Quebec, topic to particular restrictions more than 75 days, and will retain exclusive rights to its Souvenir™ brand. Completion of the transaction is topic to many circumstances, which includes acquiring applicable consents and approval of the purchaser’s shareholders. The proceeds of this transaction will be utilized in a targeted and properly-defined manner to increase the Company’s operating capital position, which includes eliminating the deferred payment in its entirety and lowering accounts payable, as properly as lowering the extended-term debt. Even though, we count on this transaction to close in 4Q20, we can’t assure its closing.

Launched Emerald Rapid Action SYNC™ Nano Cannabis two. spray item line

On August 31, 2020, Emerald announced the launch of its Rapid Action SYNC™ Nano cannabis spray goods in the adult-recreational market place. These goods are primarily based on nanoemulsion technologies to deliver speedy onset and shorter duration of effects to deliver shoppers with higher predictability and manage of their cannabis knowledge. Saskatchewan and Alberta have received initial shipments of SYNC™ 15 Nano THC Rapid Action Spray. SYNC™ 15 Nano CBD Rapid Action Spray is planned for distribution in the coming months. Moreover, Emerald effectively launched its SYNCMED Nano CBD Rapid Action Spray into the healthcare market place in July.

Conference Contact

Emerald Wellness Therapeutics will host a conference get in touch with on Tuesday, September 1, 2020 at ten:30 a.m. ET.

To access the audio broadcast, please dial (866) 652-5200, or by means of the Web at: https://solutions.choruscall.com/hyperlinks/emhtf200619.html.

An archived version of the presentation will be accessible for 90 days on the “Investors” section of Emerald’s web site: https://dev.emeraldhealth.ca/investors/events-and-presentations/

About Emerald Wellness Therapeutics, Inc.

Emerald Wellness Therapeutics, Inc. is committed to developing new customer experiences with distinct recreational, healthcare and wellness-oriented cannabis and non-cannabis goods, with an emphasis on life science-primarily based innovation and production excellence. Emerald’s 3 distinct operating assets are created to uniquely serve the Canadian marketplace and international possibilities. These assets, all in complete production, involve: its Metro Vancouver, BC-primarily based greenhouse operation (78,000 square feet) capable of making organic-certified item Verdélite, its premium craft cannabis production indoor facility in St. Eustache, Québec (88,000 square feet) and Pure Sunfarms, its 41.three%-owned joint venture in Delta, BC, making higher good quality, affordably priced goods (1.1 M square feet).

Please take a look at www.emeraldhealth.ca for much more info or speak to:

Jenn Hepburn, Chief Monetary Officer
1(800) 757 3536 Ext. #five

Emerald Investor Relations
(800) 757 3536 Ext. #five
[email protected]

Non-GAAP Monetary Measures

This press release consists of references to EBITDA. This monetary measure is not a measure that has any standardized which means prescribed by IFRS and is hence referred to as “non-GAAP measures”. Non-GAAP measures utilized by the Corporation may possibly not be comparable to related measures utilized by other firms. EBITDA is defined as “earnings (loss) ahead of interest costs, taxes, depreciation and amortization. Refer to the table above for info on the calculation of EBITDA utilized in this press release.

The Corporation utilizes these non-GAAP measures mainly because they deliver further info relating to efficiency of the Company’s general company that are not otherwise reflected below IFRS.

Neither the TSX Venture Exchange nor its Regulation Solutions Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts duty for the adequacy or accuracy of this release.

Cautionary Note Concerning Forward-Hunting Statements: Specific statements created in this press release that are not historical details are forward-seeking statements and are topic to critical dangers, uncertainties and assumptions, each common and precise, which give rise to the possibility that actual outcomes or events could differ materially from our expectations expressed in or implied by such forward-seeking statements. Such statements involve production and processing capacity of many facilities conversion of facilities expansion of facilities use of proceeds of financings commencement of production sales volumes receipt of licenses execution of final agreements with FTI building and operation of a laboratory receipt of hemp deliveries and anticipated production charges.

We can’t assure that any forward-seeking statement will materialize, and readers are cautioned not to location undue reliance on these forward-seeking statements. These forward-seeking statements involve dangers and uncertainties associated to, amongst other issues, alterations of law and regulations alterations of government failure to get regulatory approvals failure to get needed financing outcomes of production and sale activities outcomes of scientific study regulatory alterations alterations in rates and charges of inputs demand for labour demand for goods failure of counter-parties to execute contractual obligations as properly as the danger things described in the Company’s annual info type and other regulatory filings. The forward-seeking statements contained in this press release represent our expectations as of the date hereof. Forward-seeking statements are presented for the goal of giving info about management’s present expectations and plans and permitting investors and other individuals to get a superior understanding of our anticipated operating atmosphere. Readers are cautioned that such info may possibly not be proper for other purposes. The Corporation undertakes no obligations to update or revise such statements to reflect new situations or unanticipated events as they take place, unless essential by applicable law.

To view the supply version of this press release, please take a look at https://www.newsfilecorp.com/release/62969

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