Harvest One Reports Third Quarter Financial Results

Published: June 3, 2019

Harvest One Cannabis Inc. announced the release of its financial and operating results for the three and nine months ended March 31, 2019.

Third Quarter Highlights

  • Harvest One achieved net revenue of $3.0 million and $8.4 million for the three and nine months ended March 31, 2019, respectively, representing a 9,058% and 3,877% increase from the same periods in 2018; 

  • Harvest One entered into a definitive arrangement agreement to acquire 100% of the issued and outstanding common shares of Delivra Corp. (“Delivra”);

  • Harvest One acquired a majority interest in Greenbelt Greenhouse Ltd. (“Greenbelt”), which allows the Company to control significant production to supply infused formulations of existing brands and new products under development by the Company;

  • Harvest One’s common shares were approved for trading on the OTCQX under the symbol “HRVOF” and commenced trading on January 7, 2019;

  • United Greeneries entered into a supply agreement with Canada’s largest retail pharmacy chain Shoppers Drug Mart (“Shoppers”) to supply Satipharm branded medical cannabis products and completed its first shipment to Shoppers in March 2019;

  • Satipharm entered into a distribution agreement with the medicinal cannabis wholesaler and distributor Health House International Pty Ltd. (“Health House”) for distribution of CBD Gelpell® Capsules throughout AustraliaNew Zealand and Asia;

  • Satipharm re-launched European sales of its recently reformulated CBD Gelpell® capsules; and

  • Dream Water entered into supply agreements with major retailers Walmart US and Kroger, received the NSF International Certified for Sport® designation, and launched its new packaging.

Grant Froese, CEO of Harvest One, said, “We are very pleased with our continued progress throughout the quarter. United Greeneries maintained strong recreational sales as we continue to build out capacity in our Mission Road and Lucky Lake facilities. Satipharm commenced selling our CBD Gelpell® capsules online in the UK and Europe. Dream Water posted solid revenues and continues to add key accounts to its already extensive retail distribution network. The initial load ins from these new accounts will be reflected in our fiscal Q4 revenues.”

Mr. Froese continued, “Harvest One’s third quarter financial results were impacted by the prior quarter’s initial load ins in preparation for the legalization of recreational cannabis consumption. During the third quarter, we achieved increasing harvests as we continue to enhance existing facilities and build out new capacity. In preparation for the roll out of value-added products later this year, we also allocated a portion of our inventory accordingly for extraction and future R&D. The impact of these value-added products will be reflected in the financial results in future quarters. Most importantly, we continue to execute on our strategy of being a leading health, wellness, and self-care company.”

Summary of Key Financial Results

Three months ended March 31

Nine months ended March 31

Select Financial Information

2019

2018

2019

2018

($000’s, except share and per share amounts)

$

$(1)

$

$(1)

Net revenue

3,023

33

8,444

212

Gross profit

207

1,145

1,913

824

Expenses

5,308

2,509

16,059

6,571

Loss from operations

(5,101)

(1,365)

(14,146)

(5,746)

Net loss

(5,131)

(2,425)

(14,258)

(7,655)

Net loss per share – basic and diluted

(0.03)

(0.02)

(0.08)

(0.07)

Weighted average number of common shares

182,215,534

139,021,262

177,789,938

105,949,749

Adjusted EBITDA(2)

(3,302)

(2,172)

(9,681)

(5,749)

(1)   Certain expenses for the three and nine months ended March 31, 2018 were reclassified as described in note 2(d) in Harvest One’s Q3 2019 consolidated financial statements.

(2)   Adjusted EBITDA is a non-GAAP measure defined as loss from operations before interest, taxes, depreciation and amortization adjusted for additional fair value items and other non-cash items, and reconciled in Harvest One’s Q3 2019 MD&A. 

Outlook

United Greeneries continues to expand its indoor growing capacity to meet our target of 20,000 kg annually. This additional capacity, when online, will increase the Company’s supply in order to meet existing customer demand for its premium-quality craft indoor grown flower. The Company plans to reach its targeted 20,000 kg annual capacity through: (1) completion of our Lucky Lake Facility coming online in the fourth quarter of calendar 2019; (2) the Mission Road Facility modular expansion, also scheduled for completion in the fourth quarter of calendar 2019; and (3) entering into offtake agreements for the remaining capacity.

As a component of the Company’s product development strategy, we will conduct R&D for the next phase of legalization and support the expansion of our product lines including additional health and wellness products, beverages, vape pens, and nutraceuticals using cannabis oil derivative products. Furthermore, the investment in the Greenbelt greenhouse and its 42,000 square foot headhouse provides an ideal location for the Company to add additional capacity to support its extraction and processing strategy.

In the third quarter of calendar 2019 Satipharm expects to expand its product offering with the introduction of new cannabis-infused medical and nutraceutical products currently under formulation. Dream Water is also formulating a CBD-infused version of its product line which it intends to launch throughout its distribution channels in regulated markets in Canada and the US as regulations permit.