Emblem Announces Second Quarter 2017 Financial Results
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 Rooms¹, 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, Aug. 28, 2017 (GLOBE NEWSWIRE) — Emblem Corp. (“Emblem” or the “Company”) (TSXV: EMC) (OTC: EMMBF), 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.
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. Taking a long term view, we will continue to invest in our production and planned pharmaceutical facilities to improve quality, yields and margins.
Gordon H. Fox, CEO of Emblem
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.
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.
¹Emblem’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”].
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