00:48:58 EST Mon 24 Feb 2020
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Emblem Corp
Symbol EMC
Shares Issued 104,595,227
Close 2018-03-20 C$ 1.42
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Emblem focuses on management, completes financings

2018-03-20 16:43 ET - Shareholders Letter

Mr. Nick Dean reports


Emblem Corp. has provided a letter to its shareholders.

"Spring is upon us, and Emblem is ready to bloom.

"Having just completed my first quarter as your new president and chief executive officer of Emblem, I would like to start by thanking the many groups who have made this exciting evolution of our company possible. The incredible support of our shareholder base and the significant efforts of our world-class management team have allowed us to quickly pivot our approach. This strategy strengthens our current position as a leading medical cannabis company, while creating a brand-leading division launch within the burgeoning adult-use market, slated to begin in Q3 2018.

"With the two financing transactions Emblem successfully completed in the last 120 days, our balance sheet is incredibly strong, with close to $85-million available to support our growth plans. This financial strength allows us to complete construction of two, state-of-the-art cultivation and manufacturing facilities in Paris, Ont., as well as seek out opportunities for further cultivation expansion. In addition, we will be making strategic investments in R&D [research and development], clinical research, marketing and promotion, product development, and licensing. Each of these endeavours collectively allows Emblem to maintain its leadership position within the medical side, as well as poises us for a unique and competitive advantage in the adult-use space. Our team has been very active in pursuing these opportunities, and we look forward to sharing some exciting announcements in the coming weeks.

"The focus over the last 120 days has been that of assembling a world-class executive leadership team. I'm pleased to announce that we've made a number of significant hires across our finance, marketing and operations groups that will all play critical roles in propelling Emblem to the next level. We have restructured our organization around our three key disciplines: medical under the continued leadership of John Stewart, operations under the leadership of Danny Saperia and adult use under the leadership of our new chief marketing officer (to be announced).

"Emblem is making stellar progress with two key construction projects in Paris, Ont. Targeted for completion in late Q3 is our 30,000-square-foot integrated building that includes a GMP-(good manufacturing practices)-certified, state-of-the-art formulation and analytical laboratory. This will greatly increase space available for extraction, analytical, cannabis storage, R&D and formulation production activities. Our analytical laboratory will escalate its scope of activities, reducing reliance on external laboratories and expediting analytical turnaround time to allow for more efficient operations, while significantly reducing the company's overall costs for analytical services.

"We are also making improvements to our existing closed-box cultivation facility, with retrofits to three grow rooms nearly complete in order to provide greater environmental control for our production team. In addition, we are assessing GMP certification for the facility, which would allow us to internationally export dried flower in addition to derivative products. International expansion is a key focus for Emblem's growth strategy, and we have signed an LOI [letter of intent] with a German pharmacy group to supply dried flower to Germany and the EU [European Union], subject to GMP compliance.

"We have appointed Ellis Don as the construction manager of our purpose-built 170,000-square-foot greenhouse, with construction slated to begin within four to six weeks, contingent on site-plan approval from the County of Brant. After the planned completion date of Q1 2019, this new greenhouse is expected to increase our annual capacity by an additional 15,000 kilograms, bringing our total funded capacity to 17,000 kg.

"Our medical division entered 2018 with four different cannabis oils and a production capacity to meet the anticipated market demand for these oils, while at the same time developing additional oils with different cannabinoid profiles. A second objective is to bring oral metered dose spray formulations and oil-filled capsules to market in Q3, while simultaneously advancing the development of additional novel dosage forms of cannabinoids, in particular the sustained-release formulations in partnership with Canntab.

"In anticipation of the commercial availability of the cannabis oils, a seven-person pharma sales force was established by our GrowWise division in late 2017. These individuals are now presenting information on the oils to independent physicians with appropriate patient rosters, as well as to physicians in cannabis clinics. Over the first three months that the cannabis oils have been on the market, their uptake has shown rapid growth -- to the point that they now represent approximately 30 per cent of the company's monthly sales total. As a result, we are optimistic about both the immediate and future impacts the cannabis oils and other dosage forms will have on sales. Health Canada's latest market data continues to reveal that dried flower sales growth has been minimal over the last two quarters, while oil sales have increased by approximately 35 per cent. The availability of Emblem's proprietary cannabis oils also represents the appropriate time to begin clinical research projects, demonstrating their efficacy in the management of various conditions. We anticipate these trials to be initiated in Q3.

"Emblem is also in discussion with potential partners for development of transdermal cannabis patches, topical cannabis creams, lotions and/or oils, vape pens, and metered-dose inhalers. Other potential partnerships include companies with the capability to collaborate on the development of cannabis-based oral thin strips and soft-gel cannabis capsules.

"Our adult-use division has made great progress in an incredibly short period of time. We will be entering the market with two specific brands, each targeting a distinct segment: 1. health and wellness enthusiasts and 2. casual users. To bring these brands to market, we have recently hired the services of a multiple award-winning advertising agency, No Fixed Address (NFA), as Emblem's agency of record. We will enter the market well in advance of legalization to start a groundswell of demand and anticipation for our products once they are available on shelf. The scope of services NFA will provide include:

  • "Create and execute a national PR [public relations] strategy to help Emblem Corp. launch our adult-use recreational brand ahead of the proposed date for legalization;
  • "Create and execute a series of experiential/activation campaigns with Emblem's adult-use recreational brands;
  • "Ultimately, create enough awareness that Emblem's recreational brands will be the first products that consumers try when the legal market comes into effect.

"At the same time, we are actively pursuing supplier agreements with the highest-growth provinces for our adult-use products and brands. We are confident about the direction of these discussions and anticipate that our products and brands will achieve premium positioning within stores.

"Additionally, we are pursuing supplier agreements with private retail (both recreational and pharmacy) and strategic partnerships with value-add products, recognizing that the adult-use market will also be composed of dosage forms and products other than dried flower (for example, vape pens, concentrates and edibles).

"On behalf of the Emblem leadership team, we appreciate your continued confidence and support. We have a busy, yet exciting, year ahead of us, and we are unwaveringly committed to making Emblem one of Canada's top-performing LPs [licensed producers] for all of our shareholders.

"Nick Dean, president and chief executive officer


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