Mr. Roger Dent reports

QUINSAM REPORTS Q2/2019 RESULTS, PROVIDES CORPORATE UPDATE, RENEWS ISSUER BID

Quinsam Capital Corp. has released its Q2 2019 results, with net loss of $2.7-million (two cents per share basic, two cents fully diluted) versus net income of $4.6-million (four cents per share basic, three cents fully diluted) in Q2 2018. Investors can access the company's full financial statements on SEDAR.

"At June 30, 2019, we had net assets of approximately 38 cents per share equivalent outstanding (40 cents before deferred taxes)," said Roger Dent, chief executive officer of Quinsam. "Our trading price is currently at an extremely large discount to our underlying asset value."

Quinsam notes that the cannabis sector generally had negative performance in Q2 2019. For example, the Horizon Marijuana Life Sciences Index ETF (exchange-traded fund) NAV (net asset value) fell from $21.58 at the end of March, 2019, to $18.25 at the end of June, 2019, for a decline in the quarter of 15.4 per cent.

"In the context of a very poor cannabis sector environment in Q2, we take solace that our loss, which was under 6 per cent of our March 31, 2019, net assets, was a solid outperformance versus the sector ETF. Portfolio selection, selective dispositions as well as our focus on private company, convertible debenture and debt investments helped to shelter Quinsam from the negative environment in the quarter. We have consciously avoided (and we continue to avoid) the larger-cap cannabis names, where we did not see good value. We note Quinsam has only ever purchased one of the current top 10 holdings in the Horizon ETF and that was star-performer Charlotte's Web, which we acquired on its IPO listing and subsequently sold. NAV was also positively impacted by issuer bid share repurchases during the quarter."

Quinsam's most notable disposition in the quarter was that of Acreage Holdings, previously Quinsam's largest single holding. Quinsam sold all of its position shortly after the escrow arrangements expired. Quinsam realized prices on sales in the quarter ranged from $18.43 (U.S.) to $21.04 (U.S.). Give the recent Acreage share price of approximately $9.70 (U.S.), Quinsam is pleased with its sales of this investment. Quinsam's original cost on this holding was $8.03. For tax purposes, a gain on Acreage was triggered in Q4 2018 as a result of its prelisting corporate reorganization. Accordingly, the Q2 2019 disposition results in a loss for tax purposes in 2019 versus the $25 (U.S.) Acreage initial public offering price and helped to contribute to the tax recovery in Q2 2019.

Quinsam also sold its position in Sproutly shares, which was among its largest holdings, at prices ranging from 80 cents to 95 cents versus the recent price of approximately 45 cents. Quinsam continues to hold Sproutly convertible debentures. Quinsam sold the shares resulting from the conversion of its C21 and Halo debentures. To reduce its market leverage, Quinsam also sold its listed warrants in FlowerOne and Halo. Quinsam exercised its warrants and sold the resulting shares in Cannex in Q2 and early Q3. Quinsam also exercised warrants and sold the resulting shares from a small old-legacy position in Acasti in Q3.

Subsequent to Quinsam's July 2, 2019, press release, when it last updated investors on purchases, Quinsam invested $412,500 in subscription receipts of Atom Energy, which expects to list in Q3 2019. Atom Energy, which operates as 6th Wave Innovations, has developed a nanotechnology-based method of separating substances at the molecular level. The technology is focused on two high-value streams at present: cannabis oil extraction and gold-from-ore extraction. Quinsam see strong potential in both of these applications. Quinsam also advanced a second $1.1-million loan to Budd Hutt as part of its package of investments with them.

Q3 outlook

Pressure on cannabis share prices has continued in Q3. For example, the Horizon Marijuana Life Sciences Index ETF NAV fell from $18.25 at the end of June, 2019, to a recent level of approximately $15.19, for a decline since the start of the quarter of over 15 per cent.

While this creates a negative environment for Quinsam in the quarter, at this time Quinsam is cautiously optimistic about the quarter. As outlined in the press release dated July 31, 2019, Quinsam continues to expect a number of liquidity events in the quarter. Also, some key private issuers, notably IMC, Embark and Hemp Hydrate, are in the process of marketing new issues at premiums to Quinsam's carrying values. Of course, there is no assurance that all or any of these events will be completed. Depending on the outcome of these binary events and market conditions over the balance of the quarter, at this time Quinsam sees the potential for either a profit or a loss in Q3 2019.

Issuer bid renewal

Quinsam announced on July 30, 2018, an issuer bid to acquire up to 5,928,951 common shares. During the life of the bid, Quinsam's total purchases were 5,817,951 shares. All purchases under the bid were made well below NAV and were accretive to NAV for shareholders choosing to remain as Quinsam investors. The bid also had a positive impact on the share price by providing supportive buying for the shares. Quinsam intends to proceed with a new normal course issuer bid to purchase up to 5,733,635 of its common shares. The company is commencing the bid because it believes that the current market price of its common shares may not fully reflect the underlying value of the company's business and future prospects. The company believes that the repurchase of its common shares for cancellation is in the best interests of its shareholders because the bid will increase the respective proportionate shareholdings and equity interests of all remaining shareholders. The company has 114,672,693 common shares issued and outstanding. Under the terms of the bid, the company may acquire up to 5,733,635 of its common shares, representing 5 per cent of its issued and outstanding common shares. The company will commence the bid on Aug. 28, 2019. The bid will terminate on Aug. 27, 2020, or on an earlier date in the event that the number of common shares sought in the bid has been repurchased. The company reserves the right to terminate the bid earlier if it feels that it is appropriate to do so. All common shares will be purchased on the open market through the facilities of the Canadian Securities Exchange and payment for the common shares will be made in accordance with CSE policies. The price paid for the common shares will be the prevailing market price at the time of purchase. Purchases may be suspended at any time and no purchases will be made other than by means of open-market transactions during the term of the bid. The company has engaged M Partners to act as the broker through which the bid will be conducted.

About Quinsam Capital Corp.

Quinsam is a merchant bank based in Canada with a focus on cannabis-related investments. Quinsam also invests in non-cannabis related enterprises. Quinsam's merchant banking business may encompass a range of activities including acquisitions, advisory services, lending activities and portfolio investments. Quinsam invests its capital for its own account in assets, companies or projects which Quinsam believes are undervalued and where it sees a viable plan for unlocking such value.

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