Mr. Rob Hill reports
EMERALD HEALTH THERAPEUTICS REPORTS 2017 FINANCIAL RESULTS AND PROVIDES CORPORATE UPDATE
Emerald Health Therapeutics Inc. has filed its audited financial statements and management discussion and analysis for the fiscal year ended Dec. 31, 2017. They are available for viewing on the SEDAR website or on the company's website.
"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, chief executive officer 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.
"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."
Selected annual information
The financial information presented for the years as displayed in the table was derived from financial statements prepared in accordance with IFRS (international financial reporting standards).
For the years ended Dec. 31,
2017 2016 2015
Total revenue $937,654 $253,321 $31,291
Net (loss) attributable to the company (8,731,832) (2,940,501) (3,497,271)
Net (loss) per share (basic and diluted) (0.10) (0.05) (0.08)
Total assets 73,730,839 4,176,329 771,679
Summary of quarterly results
The financial information in the following tables summarizes select financial information for the company for the last eight quarters. This information was derived from annual financial statements prepared in accordance with IFRS or interim financial statements prepared in accordance with IFRS applicable to the preparation of interim financial statements, IAS 34, Interim Financial Reporting.
2017
Dec. 31 Sept. 30 June 30 March 31
Revenue $279,362 $211,316 $245,708 $201,268
Expenses 2,742,508 1,661,700 1,602,443 1,205,940
Share-based payments 1,979,553 271,968 369,788 201,186
Interest income 43,024 60,997 57,497 -
Share of (loss) from joint venture (44,562) (278,016) - -
Net (loss) (4,027,569 (1,939,371) (1,669,026) (1,205,858)
Net (loss) per share (basic and diluted) (0.04) (0.02) (0.02) (0.02)
2016
Dec. 31 Sept. 30 June 30 March 31
Revenue $124,251 $48,933 $38,729 $41,408
Expenses 867,562 590,896 547,447 507,129
Share-based payments 137,113 467,878 37,618 38,179
Net (loss) (880,424) (1,009,841) (546,336) (503,900)
Net (loss) per share (basic and diluted) (0.01) (0.02) (0.01) (0.01)
Business update for and subsequent to the reporting period
Expansion of management team
The company appointed Chris Wagner as chief executive officer, Rob Hill as chief financial officer, and Paul Dillman as vice-president of sales and marketing. Mr. Wagner spent more than 25 years in marketing pharmaceutical products and building biotechnology companies, including 10 years with Eli Lily. Mr. Hill brings over 20 years of accounting, finance and senior leadership experience as a seasoned manager of private and publicly traded technology and financial services businesses in Canada, United States and Asia. Mr. Dillman brings three decades of experience in global consumer product marketing, sales and general management. He has held senior leadership positions at The Coca-Cola Company, AB InBev, Philip Morris and Kraft Foods.
New site licences granted by Health Canada
Health Canada issued a cultivation licence for Emerald's co-owned Delta 3 greenhouse site. This optimally designed 1.1-million-square-foot cannabis growing facility is located in one of the best growing climates in Canada, in Delta, B.C., and is conservatively projected to produce 75,000 kilograms of quality cannabis annually at full production. Following receipt of the cultivation licence, starter plants were transferred to the greenhouse to initiate the ACMPR (Access to Cannabis for Medical Purposes Regulations) sales licence application process.
Health Canada also granted a sales licence for a second site of the company's wholly owned subsidiary, Emerald Health Therapeutics Canada Inc., in Victoria, B.C.
Expansion projects
Conversion of the first 250,000 square ft section of the Delta 3 greenhouse to cannabis production is substantially complete, with conversion of the remainder of the 1.1 million square ft greenhouse continuing and on schedule. Senior growing, financial, human resources and operational personnel, including the established team transferred from Village Farms, are in place for production ramp-up. Pure Sunfarms is pursuing a strategy to potentially accelerate production using short-term rental generation equipment. This would provide incremental electricity to power supplemental lighting during the 2018/2019 winter months when there is insufficient natural sunlight available and prior to the installation of the approved additional 24 megawatts from the local utility. Successful execution of this plan is expected to increase Pure Sunfarms' production in 2019 by up to 30 per cent over the current target of approximately 35,000 to 40,000 kilograms of dried cannabis.
Apart from making tremendous progress on the joint venture Delta 3 greenhouse conversion project, the company 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.
DMG Blockchain Solutions joint venture
Emerald and DMG Blockchain signed a letter of intent 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.
Namaste Technologies collaboration
The company and Namaste signed a non-binding letter of intent 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 patients.
Acquisition of Northern Vine
The company acquired control of Northern Vine, a licensed dealer under the provisions of the Controlled Drugs and Substances Act (Canada), which permits Northern Vine to carry out a broader range of cannabis research and development and pursue international business opportunities.
TSX Venture 50 performer
The company achieved the No. 1 ranking in the TSX Venture 50 for the clean technology and life science sector in 2017 and was recognized as a top performing company for the second consecutive year. The TSX Venture 50 is the TSX Venture Exchange's annual ranking of Canada's top 50 emerging publicly traded companies.
Capital resources
Subsequent to year-end, the company raised additional gross proceeds of $54.9-million from private placement offerings and warrant exercises, bringing total gross proceeds raised since February, 2017, from unit issuances and warrant exercises to $123.8-million.
The company had approximately $89-million in cash and cash equivalents as at March 29, 2018.
As of March 29, 2018, the company had 121.5 million common shares outstanding and 139.7 million common shares outstanding on a fully diluted basis, after giving effect to outstanding options, warrants and restricted stock units.
Financial
reports
Full details of the financial reports and operating results for the fiscal year 2017 are described in the company's consolidated financial statements with accompanying notes and related management's discussion and analysis. These documents and additional information on Emerald are available on SEDAR.
About Emerald Health Therapeutics Inc.
Emerald Health Therapeutics is a licensed producer under Canada's Access to Cannabis for Medical Purposes Regulations and produces and sells dried cannabis and cannabis oil for medical purposes. It is adding a 500,000 square ft greenhouse in Metro Vancouver to serve the anticipated legal Canadian adult-use cannabis market starting in 2018. Emerald owns 50 per cent of a joint venture with Village Farms International Inc. that is converting an existing 1.1 million square ft greenhouse in Delta, B.C., to grow cannabis. Emerald's team is highly experienced in life sciences, product development and large-scale agribusiness.
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