Press Release – Indiva Reports Second Quarter Fiscal 2019 Results
Not for distribution to U.S. Newswire Services or for dissemination in the United States. Indiva Reports Second Quarter Fiscal 2019 Results LONDON, Ontario – August 29, 2019: Indiva Limited (the “Company” or “Indiva”) (TSXV:NDVA) (OTCQX:NDVAF) today announced its financial and operating results for the second quarter ending June 30, 2019. All figures are reported in Canadian dollars ($), unless otherwise indicated. Indiva’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). For a more comprehensive overview of the corporate and financial highlights presented in this press release, please refer to Indiva’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and six month periods ended June 30, 2019, and the Company’s Condensed Consolidated Interim Financial Statements for the three and six month periods ended June 30, 2019, which are filed on SEDAR and available on the Company’s website www.indiva.com. KEY OPERATING RESULTS AND HIGHLIGHTS FROM Q2 2019 Net revenues totaled $173,500 versus nil in Q2 2018, and $241,369 in Q1 2019. This was due to lower deliveries to the Ontario Cannabis Store (OCS) as a result of regulatory delays. Gross margin, excluding fair-value adjustments, greatly improved to $46,286 or 27% of net sales versus a loss in Q1 2019 of $163,966. This was mostly due to lower input costs and improved processing efficiencies. Net loss increased to $2.3 million from $2.1 million in Q2 2018, but declined sequentially from a loss of $3.6 million in Q1 2019. This was as a result of improved cost control and lower one-time expenses. Total assets decreased to $30.2 million from $35.8 million at the end of fiscal year 2018 due to losses from operations as Indiva continued to scale up its production. Cash and cash equivalents available totaled $3.9 million compared to $19.6 million at the end of fiscal year This was due primarily to the acquisition of the production facility and the capital expenditures associated with its retrofit and expansion. INDIVATM pre-rolls continued to perform well with strains consistently placing in the top 10 in Ontario, both through online sales and on a wholesale basis. PRODUCTION AND DISTRIBUTION EXPANSION In January 2019, Indiva engaged Lucid Lab Group to design, construct and commission an ethanol- based extraction operation at its facility in London, Ontario. Indiva expects to complete construction of its manufacturing, processing and refinement space in Q4 2019. Indiva expects that the extractor will process 70 tonnes of biomass resulting in more than 4 million grams of distillate. Indiva expects that the anticipated output from its future extraction operations will meet the Company’s needs and the Company intends to continue to partner with Canadian licensed producers to provide extraction, refinement and manufacturing services. The commencement of extraction operations at Indiva’s facility is subject to Health Canada approval. On May 31, 2019, three additional grow rooms and three additional processing rooms received the necessary licences from Health Canada. This capacity expansion is expected to increase dry flower output to more than 1,000 kg. Two of the newly-licensed rooms were populated by quarter end and the third was populated in early July 2019. The Company anticipates that these rooms will be harvested during Q3 2019. Pending Health Canada approval, new fully-built rooms, including three additional grow rooms and two additional processing rooms, are expected to be brought online in Q3 2019. On July 24, 2019, Indiva announced that it was approved to distribute dry flower, pre-rolls and capsules to Quebec enabling access to more than 17 million potential of-age consumers. Indiva anticipates that it will deliver its first shipment to the Société québécoise du cannabis (SQDC) in Q4 2019. On August 7, 2019, Indiva announced that it entered into a definitive agreement to provide extraction services to TerrAscend. Under the terms of the agreement, TerrAscend commits to providing a minimum of 800 kg per year of dry flower to Indiva for extraction. Upon receipt of an amendment to the Company’s licence to permit the sale of cannabis oils, Indiva will deliver tinctures and capsules to the adult-use recreational market through the OCS and SQDC, and direct-to-patient in the medical market. “I am pleased with the solid foundation that we have built as we look ahead towards the legalization of edibles and derivative products in Canada,” Niel Marotta, Indiva’s President and Chief Executive Officer said. “Our strategic focus has always been on delivering exceptional cannabis and cannabis-infused products, as laws permit. Since our inception, we have secured partnerships and established joint ventures to gain exclusive access in Canada to formulations from award-winning U.S. brands like BhangTM and RubyTM. Our results from the second quarter show improved and positive gross margins, and incremental licensed capacity, which came online in late Q2 2019. Going forward, we believe that this additional capacity will drive significant sequential and year-over-year revenue growth. Indiva remains 100% committed to operating within the rules of the Cannabis Act as we patiently await our licence amendments. Our recent announcement to provide extraction services to TerrAscend is an example of our focus on being a provider of premium cannabis products and a partner to our fellow licensed producers. Finally, as we look ahead to Cannabis 2.0, Indiva is perfectly positioned to lead. As we receive the necessary licences, we expect to deliver safe, high-quality edibles and derivatives that make a mark on Canada’s cannabis industry.” SELECT FINANCIAL INFORMATION SIX MONTHS ENDED JUNE 30, 2019 OPERATING AND FINANCIAL METRICS FOR Q2 FISCAL 2019 Q2 2019 net revenue of $173,500 primarily represented sales from approximately 25 kg of pre- rolls compared to net revenue of $241,369 on sales of 36 kg of pre-rolls in Q1 2019. Net revenue was nil in Q2 For the first six months of 2019, net revenue totaled $492,415 versus nil in the first six months of 2018. In Q2 2019, INDIVA™ pre-rolls consistently placed in the top ten for sales in Ontario, both on a wholesale basis and online. Regulatory delays constraining additional capacity, as well as timing issues related to shipment […]
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