December 03, 2018 08:00 AM Eastern Standard Time
PHOENIX–(BUSINESS WIRE)–The Q3 2018 financial and operation results are for the reverse takeover (“RTO”) acquirer of Harvest Health & Recreation, Inc., which is referred to as the Harvest Enterprises Group of Companies (the “Company” or “Harvest”). Harvest is one of the largest multi-state vertically integrated operators in the cannabis industry. The Harvest team brings broad operational expertise in real estate, legislation, permitting, zoning and retail sales. The Company has been successful in winning licensure in non-competitive and competitive application processes throughout the country, winning many licenses across the states in which it operates or is expanding into. Harvest’s ability to navigate complex regulatory pathways that are different in each state, as well as extensive research into each market the Company enters, are key tenets to its success. Harvest has won licenses in every state in which it has applied, underscoring a high success rate.
Financial Highlights for the Third Quarter Ended September 30, 2018
Financial Highlights for the Nine Months Ended September 30, 2018
Capital Markets, Financing Activities and Growth Strategy
Retail Footprint Expansion
Balance Sheet and Liquidity
As of September 30, 2018, the Company had $28 million of cash and cash equivalents.
The company has raised nearly $290 million this year: approximately $50 million of convertible debentures, which converted into common stock when Harvest completed the RTO, approximately $20 million of senior debt, and over $218 million of equity issuances.
In the third quarter of this year, the Company issued approximately $50 million of convertible debentures. These debentures converted into common stock upon close of the RTO on November 14, 2018.
On November 14, 2018, the Company received gross proceeds of over $218 million from the completion of its brokered private placement.
In conjunction with the RTO, Harvest has entered into a Letter Credit Agreement to borrow $20 million for a period of three years at an interest rate that is equal to Bank of Nova Scotia Prime plus 10.3% per annum.
(1) See “Non-IFRS Financial and Performance Measures” below for more information regarding Harvest’s use of Non-IFRS financial measures.
About Harvest Health & Recreation, Inc.
Harvest Health & Recreation, Inc. is one of the first consistently profitable, vertically integrated cannabis companies with one of the largest footprints in the U.S. Harvest’s complete vertical solution includes industry-leading cultivation, manufacturing, and retail facilities, construction, real estate, technology and operational expertise — leveraging in-house legal, HR and marketing teams, along with proven experts in writing and winning state-based applications. The company has 425 employees with proven experience, expertise and knowledge of in-house best practices that are drawn upon whenever Harvest enters new markets. Harvest’s executive team is comprised of leaders in finance, compliance, real estate and operations. Since its founding in 2011, Harvest has grown its footprint every year and now has licenses in 11 states, with planned expansion into additional states by 2020. Harvest shares timely updates and releases as part of its regular course of business with the media and the interested public. For more information, visit: https://www.harvestinc.com/.
Non-IFRS Financial and Performance Measures
In this press release, Harvest refers to certain non-IFRS financial measures such as Adjusted EBITDA, being Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) less certain non-cash equity compensation expense, including one-time transaction fees and all other non-cash items. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers.
Adjusted EBITDA gain for the three-month period of $3.2 million is calculated as the Company’s income from operations of $1.8 million, plus depreciation and amortization of $0.3 million, and RTO of $1.1 million. For the nine-month period, adjusted EBITDA gain of $7.6 million is calculated as the Company’s income from operations of $5.1 million, plus depreciation and amortization of $1.1 million, and RTO of $1.4 million.
Forward Looking Information
Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. These statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements in this news release include, but are not limited to, information concerning the ability of the Company to successfully achieve business objectives, and expectations for other economic, business, and/or competitive factors. Those assumptions and factors are based on information currently available to the Company. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: the ability of the Company to develop the Company’s brand and meet its growth objectives, the ability of the Company to complete acquisitions that are accretive to the Company’s revenue, the ability of the Company to obtain and/or maintain licenses to operate in the jurisdictions in which it operates or in which it expects or plans to operate. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Readers should not place undue reliance on forward-looking statements and forward-looking information. The forward-looking information contained in this release is made as of the date hereof and the Company assumes no obligation to update or revise any forward-looking statements or forward-looking information that are incorporated by reference herein, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The foregoing statements expressly qualify any forward-looking information contained herein. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.
Powerplant Global Strategies
Alex Howe, Managing Director
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