Harborside Inc. Reports Second Quarter 2020 Economic Final results

green-leafed plant

Generates Gross Income of $16.1 Million and Continued Good Adjusted EBITDA (1)

Reports Robust Combined Gross Margin of 49.eight%(1) Driven by Enhanced Harvest Yields and Larger Wholesale Volumes

Trading of the Company’s Shares Anticipated to Resume on or About September two, 2020

Announces Strategic Evaluation Focused on Maximizing Shareholder Worth

OAKLAND, CA and TORONTO, Sept. 1, 2020 /PRNewswire/ – Harborside Inc. (“Harborside” or the “Business”) (CSE: HBOR), a California-focused, vertically integrated cannabis enterprise, nowadays reported its monetary final results for the period ending June 30, 2020 (“Q2 2020”). The Q2 2020 monetary statements and corresponding management’s discussion and evaluation (collectively the “Q2 Filings”) are readily available for download from the Company’s investor web site, investharborside.com, and on the Company’s SEDAR profile. Unless otherwise indicated, all dollar amounts in this press release are in U.S. dollars.

Harborside Inc. Logo (CNW Group/Harborside Inc.)

In addition, the Business announced nowadays that it is coordinating with the Canadian Securities Exchange (“CSE”) with respect to reinstatement of trading on the CSE and, topic to meeting the needs of the CSE, trading is anticipated to resume on or about Wednesday, September two, 2020.

Management Commentary

“Our second quarter final results are a reflection of the improvements we started implementing earlier this year, which have permitted us to leverage the strength of our operations to accelerate our path to profitability,” mentioned Peter Bilodeau, Chairman and interim Chief Executive Officer. “We will continue to concentrate on each our cultivation and retail level initiatives, which have enhanced the all round item mix we sell and enhanced the sell by means of of Harborside created items on our retailer shelves. We enter the second half of 2020 with sturdy momentum and appear to continue delivering higher-good quality items to our clients when driving sturdy worth creation for our shareholders.”

Strategic Evaluation(two)

Harborside also announced nowadays that the Business has commenced a strategic assessment of the small business and possibilities in the marketplace (the “Strategic Evaluation”) to maximize shareholder worth which includes, possible merger and acquisition possibilities, equity financings, and the possible repurchase and financing of the Company’s farm operation in Salinas, California (the “Farm”), which has extremely favorable repurchase terms. The Business has not established a definitive timeline to total the Strategic Evaluation, and no choices connected to any strategic option has been reached at this time. There can be no assurance as to what, if any, option could possibly be pursued by the Business as a outcome of the Strategic Evaluation. The Business does not intend to comment additional with respect to the Strategic Evaluation unless and till it determines that more disclosure is proper in the situations and in accordance with the needs of applicable securities laws.

Q2 2020 Economic Final results and Highlights (two)(three)

Q2 2020 Economic Summary

Q2 2020

Q1 2020

Q4 2019

Q2 2019

Retail Revenues

$ten,940,143

$ten,181,471

$9,511,221

$ten,387,178

Wholesale Revenues(1)

five,208,439

$four,456,775

$two,185,701

$two,153,200

Total Income

$16,148,582

$14,638,246

$11,696,922

$12,540,378

Retail Gross Profit

$five,601,565

$five,219,890

$four,903,947

$five,053,897

Wholesale Gross Profit(1)

$two,435,952

$787,964

($1,373,186)

($115,890)

Total Gross Profit(1)

$eight,037,517

$six,007,854

$three,530,761

$four,938,007

Retail Gross Margin(two)(five)

51.two %

51.three %

51.six %

48.7 %

Wholesale Gross Margin(1)(five)

46.eight %

17.7 %

(62.eight)%

(five.four)%

Total Gross Margin(five)

49.eight%

41.%

30.two%

39.four%

G&ampA/Skilled Costs(three),(four)

$six,764,781

$five,786,573

$7,621,971

$9,862,468

Adjusted EBITDA(five)

$642,025

$431,562

$(two,796,178)

($1,699,995)

NOTES:

1.

Not which includes excise taxes or biological asset adjustments

two.

Retail gross margin in Q1 2020 and Q2 2020 are slightly impacted by more expenditures on individual protective gear and other security measures due to the COVID-19 pandemic. Retail gross margin in Q2 2020 also incorporates more spend for the Company’s front line workers and expenditures relating to the impacts of the riots/looting in the Bay Region to specific of the Company’s retail retailers.

three.

Skilled Costs for the fourth quarter of 2019 incorporate about $953,000 in one particular-time costs and accruals for legal matters

four.

Skilled Costs for Q2 2020 incorporate about $977,000 in one particular-time fees relating to accounting audits and restatements for specific of the Company’s earlier monetary statements.

five.

This is a non-IFRS reporting measure. For a reconciliation of this to the nearest IFRS measure, see “Use of Non-IFRS Measures” and “Non-IFRS Measures” in the Company’s management discussion and evaluation for June 30, 2020.

Q2 2020 Economic Summary

For the duration of Q2 2020, Harborside generated net retail income of about $ten.9 million and net wholesale income of about $five.two million, compared to $ten.four million and $two.two million respectively for the period ending June 30, 2019 (“Q2 2019”), for a total gross income of $16.1 million in Q2 2020, compared to $12.five million in Q2 2019, a 28.eight% improve year-more than-year. The five.three% year-more than-year improve in retail income was driven mainly by the Company’s enhanced merchandising and pricing initiatives which resulted in, amongst other factors, enhanced item mix, chosen pricing alterations and larger sell-by means of of internally created items. Across Harborside’s retail retailers in California, the Company’s branded items represented involving seven and nine of the 20 major-promoting SKUs in Q2 2020. The about 142% year-more than-year improve in wholesale revenues was mainly due to enhanced harvest yields and production of premium flower, larger sales volumes and larger typical costs per pound at the Company’s Farm.

Retail gross margins had been about 51.two% for the quarter, reflecting a year-more than year improvement of about two.five% regardless of enhanced fees for security and staffing connected to COVID-19 and inventory losses that occurred in the course of the civil unrest that occurred in the Bay Region. Wholesale gross margins had been about 46.eight% for the quarter, which was an improvement of about 52.two% year-more than-year.

All round gross profit(1) for Q2 2020 was about $7.six million, resulting in a 49.7% all round gross margin(1), as compared to about $four.25 million and 35.% in Q2 2019. Year-more than-year gross margin(1) improvements had been mainly due to enhanced item mix and pricing at retail, combined with larger cultivation yields and larger promoting costs at wholesale.

Total operating expenditures for Q2 2020 had been about $7.1 million, compared to about $ten.eight million in Q2 2019. The 34.two% year-more than-year lower in operating expenditures is mainly connected to a lower in skilled costs of $two.7 million, which was primarily due to the one particular-time fees incurred in the course of Q2 2019 connected to the reverse takeover transaction of the Business. The all round lower in skilled costs was lowered by about $977,000 in one particular-time skilled costs incurred in Q2 2020 connected to the audit and restatement of prior year financials. In Q2 2020, the Business also seasoned a lower in basic and administrative expenditures of $.three million a lower in share-primarily based compensation of $.9 million, which incorporated the reversal of share-primarily based compensation connected to forfeitures of solutions upon the departure of specific former staff and, create-downs of receivables, investments and advances of $.two million in the course of the period.

Operating Earnings for Q2 2020 was about $.five million, compared to an operating loss of about $six.six million for Q2 2019. Net Loss and extensive loss was $1.7 million, compared to a net loss and extensive loss of $six.1 million in Q2 2019, a 72.1% improvement on a year-more than-year basis.

Adjusted EBITDA(1) for Q2 2020 was about $.six million, compared to a adverse EBITDA of about $1.7 million for Q2 2019, driven largely by enhanced operating efficiencies and headcount reductions across the Business. See “Non-IFRS Economic Measures, Reconciliation and Discussion.”

Liquidity and Money Balance(two)(three)

As of June 30, 2020, Harborside had about $13.six million in money. The projected improve in money balance due to the fact the initially quarter of 2020 incorporated a delay in payment of about $1.six million of sales taxes that are due to the state of California. Payment of these taxes was postponed by the state as component of their COVID-19 small business relief plan and the funds are now anticipated to be remitted by the finish of October 2020.

Conference Contact Info

Harborside will host a conference contact Wednesday, September two, 2020, to go over the Q2 2020 final results. Peter Bilodeau, Interim Chief Executive Officer, and Tom DiGiovanni, Chief Economic Officer will host the contact beginning at ten:00 a.m. Eastern time. A query and answer session will stick to management’s presentation.

Date:

Wednesday, September two, 2020

Time:

ten:00 a.m. Eastern Time

Dial-In Quantity:

1 (888) 664-6392

Conference ID:

49474728

Webcast:

Click Right here to Access

Replay:

(855) 859-2056 or (404) 537-3406

Replay Code: 474728

Accessible till 11:30 p.m. Eastern Time Wednesday, September 16, 2020

For the most current news, activities, and media coverage, please stop by the Harborside corporate web site at www.investharborside.com or connect with us on LinkedIn, Facebook, and Twitter.

About Harborside: Harborside Inc. is one particular of the oldest and most respected cannabis retailers in California, operating 3 of the significant dispensaries in the San Francisco Bay Region, a dispensary in the Palm Springs location outfitted with Southern California’s only cannabis drive-thru window, a dispensary in Oregon and a cultivation/production facility in Salinas, California. Harborside has played an instrumental function in generating cannabis protected and accessible to a broad and diverse neighborhood of California buyers. Co-founded by Steve DeAngelo and dress wedding in 2006, Harborside was awarded one particular of the initially six healthcare cannabis licenses granted in the United States and nowadays holds cannabis licenses for retail, distribution, cultivation, nursery and manufacturing. Harborside is at the moment a publicly listed organization on the CSE trading beneath the ticker symbol “HBOR”. Extra info with regards to Harborside is readily available beneath Harborside’s SEDAR profile at www.sedar.com.

Non-IFRS Measures, Reconciliation and Discussion

This press release may possibly include references to “EBITDA”, “Adjusted EBITDA”, “Gross Profit”, and “Gross Margin”, which are non-IFRS monetary measures.

EBITDA and Adjusted EBITDA are measures of the Company’s all round monetary overall performance and are utilized as an option to earnings or net revenue in some situations. EBITDA and/or Adjusted EBITDA are primarily net revenue (loss) with interest, taxes, depreciation and amortization, non-money adjustments and other uncommon products added back. This measure can be utilized to analyze and evaluate profitability amongst businesses and industries, as it eliminates the effects of financing and capital expenditures. It is generally utilized in valuation ratios and can be compared to enterprise worth and income. This measure does not have any standardized which means according to IFRS and thus may possibly not be comparable to equivalent measures presented by other businesses.

Gross Profit is the distinction involving income and expense of goods sold. Gross Margin is the distinction involving income and expense of goods sold divided by income, and is expressed as a percentage. Management believes these measures gives helpful info as it represents the worth of incremental sales.

There are no comparable IFRS monetary measures presented in Harborside’s monetary statements. Reconciliations of the supplemental non-IFRS measures are presented in the Company’s management’s discussion and evaluation for June 30, 2020. These non-IFRS monetary measures are presented for the reason that management has evaluated the monetary final results each which includes and excluding the adjusted products and believes that the non-IFRS monetary measures presented present more viewpoint and insights when analyzing the core operating overall performance of the small business. The Business believes that these supplemental measures present info which is helpful to shareholders and investors in understanding our overall performance and may possibly help in the evaluation of the Company’s small business relative to that of its peers.

These non-IFRS monetary measures must not be thought of superior to, as a substitute for, or as an option to, and must be thought of in conjunction with, the IFRS monetary measures presented in the Company’s monetary statements. For extra info, please see “Use of Non-IFRS Measures” and “Non-IFRS Measures” in the Company’s management’s discussion and evaluation for June 30, 2020, which is readily available beneath the Company’s profile on www.sedar.com.

Notes:

  1. This is a non-IFRS reporting measure. For a reconciliation of this to the nearest IFRS measure, see “Use of Non-IFRS Measures” and “Non-IFRS Measures” in the Company’s management discussion and evaluation for June 30, 2020.
  2. This is forward-hunting info and primarily based on a quantity of assumptions. See “Cautionary Note Relating to Forward-Hunting Info”.
  3. The monetary info incorporated in this press release is neither audited nor reviewed. Exactly where probable, the info has been constructed by management from readily available audited or audit reviewed monetary statements. Exactly where no audited or audit reviewed info has been readily available, more management accounting info has been utilized to construct monetary info.

Cautionary Note Relating to Forward-Hunting Info

This news release includes “forward-hunting info” and “forward-hunting statements” (collectively, “forward-hunting statements”) inside the which means of the applicable Canadian securities legislation. All statements, other than statements of historical reality, are forward-hunting statements and are primarily based on expectations, estimates and projections as at the date of this news release. Any statement that requires discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or overall performance (generally but not usually making use of phrases such as “expects”, or “does not count on”, “is anticipated”, “anticipates” or “does not anticipate”, “plans”, “price range”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that specific actions, events or final results “may possibly” or “could”, “would”, “could possibly” or “will” be taken to happen or be accomplished) are not statements of historical reality and may possibly be forward-hunting statements. In this news release, forward-hunting statements relate to, amongst other factors, the Strategic Evaluation, the resumption of trading on the CSE, and the info beneath the headings “Q2 2020 Economic Final results and Highlights” and “Liquidity and Money Balance”

These forward-hunting statements are primarily based on affordable assumptions and estimates of management of the Business at the time such statements had been produced. Actual future final results may possibly differ materially as forward- hunting statements involve recognized and unknown dangers, uncertainties and other components which may possibly lead to the actual final results, overall performance or achievements of the Business to materially differ from any future final results, overall performance or achievements expressed or implied by such forward-hunting statements. Such components, amongst other factors, incorporate: management’s perceptions of the anticipated timeline in which the Strategic Evaluation must be completed and the final results of that assessment the resumption of trading on the CSE implications of the COVID-19 pandemic on the Company’s operations fluctuations in basic macroeconomic situations fluctuations in securities markets expectations with regards to the size of the California cannabis market place and altering customer habits the potential of the Business to effectively accomplish its small business objectives plans for expansion political and social uncertainties inability to get sufficient insurance coverage to cover dangers and hazards and the presence of laws and regulations that may possibly impose restrictions on cultivation, production, distribution and sale of cannabis and cannabis connected items in the State of California and employee relations. Even though the forward-hunting statements contained in this news release are primarily based upon what management of the Business believes, or believed at the time, to be affordable assumptions, the Business can not assure shareholders that actual final results will be constant with such forward-hunting statements, as there may possibly be other components that lead to final results not to be as anticipated, estimated or intended. Readers must not location undue reliance on the forward-hunting statements and info contained in this news release. The Business assumes no obligation to update the forward-hunting statements of beliefs, opinions, projections, or other components, must they transform, except as needed by law.

The Business is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational and medicinal cannabis marketplace in the United States. Regional state laws exactly where the Business operates permit such activities nonetheless, these activities are at the moment illegal beneath United States federal law. Extra info with regards to this and other dangers and uncertainties relating to the Company’s small business are contained beneath the heading “Danger Aspects” in the Listing Statement dated Could 30, 2019 and management’s discussion and evaluation for the period ended June 30, 2020, filed beneath the Company’s profile on SEDAR at www.sedar.com.

The CSE has neither authorized nor disapproved the contents of this news release. Neither the CSE nor its Industry Regulator (as that term is defined in the policies of the CSE) accepts duty for the adequacy or accuracy of this release.

Cision View original content material to download multimedia:http://www.prnewswire.com/news-releases/harborside-inc-reports-second-quarter-2020-monetary-final results-301122036.html

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