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AWS Announces General Availability of Amazon Managed Streaming for Apache Kafka (Amazon MSK)

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Amazon MSK provides a fully managed, highly available, secure, and
compatible service for Apache Kafka

Vonage, Secureworks, Poshmark, Nutmeg, and Compass are among
customers and partners using Amazon MSK

SEATTLE–(BUSINESS WIRE)–Today, Amazon Web Services Inc., an Amazon.com company (NASDAQ: AMZN),
announced the general availability of Amazon MSK, a fully managed
service for Apache Kafka that makes it easy for developers to build and
run highly available, secure, and scalable applications based on Apache
Kafka without having to worry about managing the underlying
infrastructure. Amazon MSK is fully compatible with Apache Kafka,
enabling customers to easily migrate their on-premises or Amazon Elastic
Cloud Compute (Amazon EC2) clusters to Amazon MSK with no code changes.
There are no commitments or upfront investment required to run Amazon
MSK, and customers only pay for the capacity they use. To get started
with Amazon MSK visit https://aws.amazon.com/msk.

Customers use Apache Kafka to capture and analyze real-time data streams
from a range of sources, including IoT devices, website clickstreams,
financial systems, and database logs. While many customers chose to
self-manage their Apache Kafka clusters, they often spend a lot of time
and expense securing, scaling, patching, and ensuring high availability
for Apache Kafka and Apache ZooKeeper clusters, which Apache Kafka
depends on for resource management. Amazon MSK gives customers all of
the attributes of Apache Kafka combined with the availability, security,
and scalability of AWS. With just a few clicks, customers can create
Apache Kafka clusters designed for high availability that span multiple
Availability Zones (AZs). Amazon MSK continuously monitors underlying
server health, automatically replacing servers when they fail and
patching servers in need of updates. Amazon MSK also runs highly
available Apache ZooKeeper nodes at no additional cost. Amazon MSK
provides multiple levels of security for Apache Kafka clusters,
including VPC network isolation, AWS Identity and Access Management
(IAM) for AWS Application Programming Interface (API) authorization,
encryption at rest, encryption in-transit, TLS based certificate
authentication, and authorization using Apache Kafka access control
lists (ACLs). Customers can easily scale out cluster storage with a few
clicks in the AWS management console to meet changes in demand. Amazon
MSK is fully compatible with Apache Kafka, allowing customers to
continue to run applications built on Apache Kafka, use Apache Kafka
compatible tools and frameworks, and take advantage of new Apache Kafka
innovations, without having to change their code.

“Customers who are running Apache Kafka have told us they want to spend
less time managing infrastructure and more time building applications
based on real-time streaming data,” said Rajesh Sheth, General Manager
of Amazon MSK, AWS. “Amazon MSK gives these customers the ability to run
Apache Kafka without having to worry about managing the underlying
hardware, and it gives them an easy way to integrate their Apache Kafka
applications with other AWS services. With Amazon MSK, customers can
stand up Apache Kafka clusters in minutes instead of weeks, so they can
spend more time focusing on the applications that impact their
businesses.”

Customers start by creating a cluster in Amazon MSK today using the AWS
Console or the AWS CLI, and Apache Kafka clients can connect to a
cluster using Apache Kafka’s open-source APIs. Amazon MSK is available
in the US East (N. Virginia), US East (Ohio), US West (Oregon), EU
(Ireland), EU (London), EU (Frankfurt), EU (Paris), Asia Pacific
(Tokyo), Asia Pacific (Singapore), and Asia Pacific (Sydney), and will
expand to additional AWS Regions in the coming year.

Vonage is a global business cloud communications leader providing
integrated communications solutions that improve how business gets done
by enhancing a company’s customer and employee experience. Vonage uses
Apache Kafka for real-time communication between various micro-services.
“By using Amazon MSK, we reduced our maintenance overhead and built a
micro-services-based platform that enables businesses to collaborate
more productively and engage their customers more effectively,” said
Venkatesh Ennala, a software engineer with Vonage. “We can now set up
new Kafka clusters more quickly and scale these clusters as our demands
increase. Amazon MSK has removed the complexity of set up and
maintenance, allowing us to focus on what’s most important – building
innovative new capabilities for our customers.”

Secureworks (NASDAQ: SCWX) is a technology-driven cybersecurity leader
that protects organizations in the digitally connected world. “When
developing and launching our security analytics application, Secureworks
chose Amazon MSK service to accelerate time to market and reduce
infrastructure and management overhead,” said Wendy Thomas, Senior Vice
President of Business and Product Strategy at Secureworks. “This allowed
us to focus on innovation and our unique differentiators, helping
protect our customers from cyber threats.”

Poshmark is a leading social commerce platform for the next generation
of retailers and shoppers. “Through technology, our mission is to build
the world’s most connected shopping experience, while empowering people
to build thriving retail businesses. Amazon MSK has made it easy to
setup, maintain and scale Kafka clusters, enabling an end-to-end data
ingestion pipeline supported by a fully-managed service,” said Mahesh
Pasupuleti, Senior Director of Data Engineering at Poshmark. “As our
demands increase, we feel confident that we will be able to scale at
ease and expand our streaming ingestion pipelines for data enrichment
and real-time machine learning, providing an enhanced experience for our
customers.”

Nutmeg is Europe’s largest digital wealth manager, helping consumers to
grow their wealth and reach their financial goals by using cost
effective technology to boost returns. Nutmeg uses Apache Kafka to
underpin their journey towards an event driven architecture. “Since
adopting Amazon MSK, we’ve been able to significantly increase the
efficiency of our teams and reduce time spent maintaining our cluster,”
said Matt Gatrell, CTO of Nutmeg. “As our data requirements and use
cases grew, we started to experience considerable overhead and
complexity in managing our Kafka clusters. Amazon MSK has allowed us to
manage our clusters with confidence, spend less time verifying the
performance of the clusters, scale with ease, and focus more time on
innovating and building exciting real-time applications.”

Compass is a real estate technology company with a powerful end-to-end
platform that supports the entire buying and selling workflow. Compass
uses Apache Kafka to provide its agents with quick access to fresh and
accurate data from hundreds of real estate data sources nationwide.
“Streaming technology is an important part of what we do as a business,
but managing streaming technology involves a lot of heavy lifting by our
software developers,” said Joseph Sirosh, CTO of Compass. “Amazon MSK
has allowed us to eliminate a lot of this heavy lifting. By using Amazon
MSK we no longer need to spend effort on ensuring data durability,
cluster availability, and scalability, and can now focus on building
applications. Amazon MSK relieves our team from the burden of operating
and maintaining Kafka and at the same time, we experience less downtime
as our clusters are fully-managed.”

About Amazon Web Services

For 13 years, Amazon Web Services has been the world’s most
comprehensive and broadly adopted cloud platform. AWS offers over 165
fully featured services for compute, storage, databases, networking,
analytics, robotics, machine learning and artificial intelligence (AI),
Internet of Things (IoT), mobile, security, hybrid, virtual and
augmented reality (VR and AR), media, and application development,
deployment, and management from 66 Availability Zones (AZs) within 21
geographic regions, spanning the U.S., Australia, Brazil, Canada, China,
France, Germany, Hong Kong Special Administrative Region, India,
Ireland, Japan, Korea, Singapore, Sweden, and the UK. Millions of
customer—including the fastest-growing startups, largest enterprises,
and leading government agencies—trust AWS to power their infrastructure,
become more agile, and lower costs. To learn more about AWS, visit aws.amazon.com.

About Amazon

Amazon is guided by four principles: customer obsession rather than
competitor focus, passion for invention, commitment to operational
excellence, and long-term thinking. Customer reviews, 1-Click shopping,
personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle
Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa
are some of the products and services pioneered by Amazon. For more
information, visit amazon.com/about and
follow @AmazonNews.

Contacts

Amazon.com, Inc.
Media Hotline, 206-266-7180
Amazon-pr@amazon.com
www.amazon.com/pr

Cannabis

Sugarbud Announces Private Placement, Non-Dilutive Capital Equipment Financing and Rights Offering

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Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.WT) (“Sugarbud“) is pleased to announce a non-brokered private placement (the “Private Placement“) for gross proceeds of $925,000 and the execution of an agreement in respect of non-dilutive equipment financing arrangements (the “Capital Equipment Financing“). Sugarbud is also pleased to announce a rights offering (the “Rights Offering“) to holders of common shares (“Common Shares“) of Sugarbud as of November 25, 2019 (the “Record Date“) for proceeds of up to approximately $5.2 million.

“Despite very challenging market conditions, we continue to make good progress with our overall capital financing efforts to fuel our expansion and strengthen our balance sheet, stated Sugarbud CEO, John Kondrosky. We remain mindful of overall shareholder value and continue to approach our capital funding requirements in a measured and balanced manner. Combined with a strong insider lead Private Placement, significant non-dilutive Capital Equipment Financing and the planned Rights Offering, Sugarbud is well positioned to drive meaningful progress and sustainable growth heading into 2020″, added Mr. Kondrosky.

Pursuant to the Private Placement, Sugarbud will issue 18,500,000 units (“Units”) of Sugarbud at a price of $0.05 per Unit, for total proceeds of $925,000. Each Unit will be comprised of one Common Share and one Common Share purchase warrant (each, a “Warrant“). Each Warrant will entitle the holder to purchase one Common Share at a price of $0.10 for a period of two years from the date of issuance, subject to early expiry in the event that the 5-day volume weighted average trading price of the Common Shares (“VWAP“) equals or exceeds $0.125.

The Common Shares and Warrants will be subject to a four month hold period under applicable securities laws in Canada. The Private Placement is fully subscribed and committed and is expected to close on or before November 18, 2019, subject to customary closing conditions, including the approval of the TSX Venture Exchange (the “TSXV“).

Due to the participation of directors, officers and other insiders of Sugarbud, who are related parties of Sugarbud pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101“), the Private Placement will constitute a “related party transaction” within the meaning of MI 61-101. In its consideration and approval of the Private Placement, the board of directors of Sugarbud determined that the Private Placement was exempt from the formal valuation and minority approval requirements of MI 61-101 on the basis that the fair market value of the Private Placement to related parties did not exceed 25% of the market capitalization of Sugarbud, in accordance with Sections 5.5 and 5.7 of MI 61-101.

Pursuant to the Capital Equipment Financing, Sugarbud has the opportunity to utilize equipment financing to advance the final build out and full scale-up of two existing cultivation rooms and one new room.  Under the terms of the agreement, Grand HVAC will provide Sugarbud with $0.4 million in immediate vendor lease back funds for capital equipment already deployed at the Company’s cultivation facility in Stavely, Alberta (the “Stavely Facility“).  The agreement has a six-year term and includes the option to buyout the equipment.  The Capital Equipment Financing allows the Company to better utilize the collateral value associated with its Stavely Facility.

The Company is pursuing similar financing terms for the acquisition of additional HVAC, lighting and racking equipment associated with the final scale-up of the two licensed cultivation rooms Phase 1a and the first new cultivation room within Phase 1b.  Such lease financing would allow the Company to fund approximately 75% ($2.2 million) of the $3.0 million estimated costs associated with the buildout.   

Upon completion of this near-term capital expansion plan, Sugarbud estimates that it will have a dried cannabis production design capacity of approximately 4,150,550 – 5,836,800 grams annually. Sugarbud expects the final scale up of Phase 1a to be complete prior to starting their second harvest cycle in early Q1 2020 and the additional cultivation room in Phase 1b to be complete and fully licensed by Q3 of 2020.

Please click here to access and view an updated version of the Company’s corporate presentation.

Pursuant to the Rights Offering, each holder (“Eligible Holder“) of Common Shares as of the Record Date that is a resident in any province of territory of Canada (other than Québec) (the “Eligible Jurisdictions“) will receive one transferable right (each, a “Right“) for every Common Share held.  Every four Rights will entitle the holder to purchase one Unit at a price of $0.0550 until 4:00 p.m. (Calgary time) on the expiry date of December 20, 2019 (the “Expiry Date“), after which all outstanding Rights will terminate. Each Unit will be comprised of one Common Share and one Warrant. The Warrants issued pursuant to the Rights Offering will be on the same terms as those issued pursuant to the Private Placement, including early expiry upon the VWAP equaling or exceeding $0.125. Subscribers of Units under the Private Placement will have a right to participate in the Rights Offering with respect to any Common Shares acquired pursuant to the Private Placement.

There will be no additional subscription privilege and no standby commitment in respect of the Rights Offering. The completion of the Rights Offering will not be subject to Sugarbud receiving any minimum amount of subscriptions from Eligible Holders.

The Rights Offering will be made in the Eligible Jurisdictions and in such other jurisdictions where Sugarbud is eligible to make such offering. Details of the Rights Offering will be described in the rights offering circular (the “Rights Offering Circular“), which will be filed on Sugarbud’s profile on the SEDAR website on the Record Date.

Subject to the receipt of final approval from the TSXV, the Common Shares are expected to commence trading on the TSXV on an ex-Rights basis at the opening of business on November 22, 2019. This means that Common Shares purchased on or following November 22, 2019 will not be entitled to receive Rights under the Rights Offering. At that time, the Rights are expected to be posted for trading on a “when issued” basis on the TSXV under the symbol “SUGR.RT”. Trading of the Rights is expected to continue until 10:00 a.m. (Calgary time) on the Expiry Date.

All shareholders of Sugarbud as of the Record Date will be offered Rights. Accordingly, up to 94,349,114 Common Shares and up to 94,349,114 Warrants will be subscribed for under the Rights Offering. Only Eligible Holders will be issued and forwarded certificates representing the number of Rights they are entitled to (“Rights Certificates“).

Registered shareholders wishing to exercise their Rights must forward the completed Rights Certificates along with the applicable funds to the depositary for the Rights Offering, Computershare Trust Company of Canada, by 4:00 p.m. on the Expiry Date. Shareholders who own their Common Shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary.

The Rights Offering notice will be delivered to all shareholders of Sugarbud as of the Record Date. Rights Certificates will not be issued and forwarded to holders of Common Shares not resident in the Eligible Jurisdictions.

Completion of the Rights Offering is subject to receiving all necessary regulatory approvals, including, but not limited to, final approval from the TSXV.

Sugarbud will raise gross proceeds of up to approximately $5.2 million pursuant to the sale of Common Shares and Warrants under the Rights Offering, assuming 100% participation. Sugarbud will use the proceeds of the Private Placement, Capital Equipment Financing and Rights Offering to further develop its high capacity state-of-the-art vertical cannabis cultivation facility in Stavely, Alberta and for general working capital purposes.

 

SOURCE SugarBud Craft Growers Corp.

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Jushi Holdings Inc. Provides Shareholder Update and Reports Third Quarter 2019 Financial Results

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Jushi Holdings Inc. (“Jushi” or the “Company”) (NEO: JUSH.B) (OTCQX: JUSHF), a globally-focused, multi-state cannabis and hemp operator, today is providing a shareholder update and reporting its financial results for the third quarter ended September 30, 2019. All financial information is provided in U.S. dollars unless otherwise indicated.

“During the third quarter of 2019, we generated revenue of $3.6 million, an increase sequentially from $0.2 million, due primarily to commencement of retail operations in Pennsylvania and New York, and cultivation and manufacturing in Nevada. Additionally, we reported a net gain of $13.2 million in other income primarily from sale of our minority stake in Gloucester Street Capital resulting in net income of $4.2 million for the quarter,” stated Jim Cacioppo, CEO and Chairman of Jushi.

“In the five months since becoming a public company and the related financing, we have methodically invested our capital targeting attractive adult-use and limited license medical markets that today include PennsylvaniaVirginiaCaliforniaNew YorkNevadaOhio and Illinois. In Pennsylvania, for example, our BEYOND/HELLO™ brand has established a major footprint in a limited license medical state with five retail dispensaries operational today and at least one to two more projected before the end of the year with three to five more projected to open in the first half of 2020. We continue to explore further growth opportunities, increasing our applications pipeline to ten pending and over 30 planned application submissions in 2019 and 2020. The pipeline includes applications in existing states in which we operate such as California and New York as well as new markets that fit within our strategy such as FloridaGeorgiaIllinoisMichiganMissouri and New Jersey. Led by our team of industry, operations and finance experts, we remain confident in the opportunity ahead for our continued expansion,” concluded Mr. Cacioppo.

Key Developments for the Quarter Ending to Date:

  • PennsylvaniaDuring the quarter, the Company’s BEYOND/HELLO™ retail chain, which brings high-quality personalized marijuana treatments and products to patients, opened three new medical marijuana dispensaries in PhiladelphiaScranton and Johnstown, Pennsylvania. In September, Jushi signed a definitive agreement to acquire the majority ownership of Agape Total Health Care Inc (“Agape”), another Pennsylvania Dispensary Permittee. Agape plans to open three retail locations in the Philadelphia region, Reading and Pottsville. Between BEYOND/HELLOTM and Agape, the total retail locations could reach 15 in Pennsylvania a key east coast limited license medical market. We anticipate opening all 15 dispensaries by the end of 2020 in a steady progression throughout Q4 2019 and in each quarter of 2020.
  • Nevada: In July, the Company’s subsidiary Production Excellence, LLC (“Production Excellence”) received local City of North Las Vegas authorization to enter the greater Las Vegas, Nevada market under a management services agreement with Franklin Bioscience NV, LLC (“Franklin Bioscience Nevada”). Franklin Bioscience Nevada holds medical and adult‐use cannabis cultivation, processing and distribution licenses issued by the Nevada Department of Taxation and currently operates cultivation, production and distribution facilities in North Las Vegas, Nevada.
  • California: Through acquisitions and new license applications, Jushi currently expects to have four retail store openings in 2020 in four high income and well trafficked cities: San DiegoSanta BarbaraMalibu and Culver City. In each dispensary, the Company plans to offer delivery services subject to regulatory approvals. Of the four, the San Diego and Santa Barbara dispensaries are expected to be operational by Jushi in the first quarter of 2020.
  • VirginiaIn September, the Company completed the acquisition of the majority of the membership interests in Dalitso LLC, a Virginia-based pharmaceutical processor for medical cannabis extracts. Dalitso is currently one of only five applicants to receive conditional approval for a permit issued by the Virginia Board of Pharmacy to cultivate and process medical cannabis, and to dispense and deliver CBD oil and THC-A oil extracts in Virginia. Dalitso’s conditional approval is for the northeast region of Virginia, covering approximately 28.2% of the commonwealth’s total population.
  • New YorkIn October, Jushi closed the sale of its 16.5% ownership interest in Gloucester Street Capital, the parent company of Valley Agriceuticals, LLC, which holds one of ten New York medical cannabis licenses, to Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF). The approximate total market value of cash, short-term notes and securities received by Jushi for the sale of its 16.5% interest is approximately $15 million to $20 million (depending on the contingency payouts).
  • Applications: In July, Jushi’s wholly-owned subsidiary received approval from Culver City to move forward with submitting a CUP application for a retail and delivery permit. The Company has ten pending applications and has a planned pipeline of over 30 application submissions for 2020.
  • Significant Settlement: In October, the Company received $5 million cash pursuant to a confidential legal settlement.

Third Quarter 2019 Financial Highlights

Q3 2019

Q3 2018

%
change

Revenue

$3,588,233

$120,792

2871%

Gross profit

$1,548,199

$120,792

1182%

Net income (loss)

$4,156,317

$(2,329,915)

278%

Net income (loss) per share – basic

Net income (loss) per share – diluted

$0.05

$0.04

$(0.05)

$(0.05)

190%

176%

Financial Results for the Third Quarter Ended September 30, 2019

Revenue for the third quarter of 2019 increased 2871% to $3.6 million, compared to $0.1 million in the third quarter of 2018 due to revenue from operations.

Gross profit for the third quarter of 2019 was $1.5 million, resulting in gross margin of 43%, compared to $0.1 million for the third quarter of 2018. The increase over the prior year was primarily due to the increase in retail sales.

Net income for the third quarter of 2019 was $4.2 million, or $0.04 per diluted share, compared to a net loss of $2.3 million, or $0.05 per share, in the third quarter of 2018. During the quarter, the Company reported a gain on a financial asset of approximately $9.2 million and one-time other income of approximately $5 million.

Balance Sheet and Liquidity

The Company had cash of $26.8 million, short term investments of $1.3 million, total current assets of $59.5 million and current liabilities of $22.9 million as of September 30, 2019.  The Company had net working capital of $36.6 million.

In addition, Jushi expects to receive an additional $15 million – $20 million in cash, securities and cash earn-out from the sale of its 16.5% ownership interest in Gloucester Street Capital.

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Cannabis

Village Farms International Reports Third Quarter 2019 Financial Results – Canadian Cannabis JV, Pure Sunfarms, Achieves Fourth Consecutive Quarter of Positive EBITDA, All-In Cost of Production of C$0.63 per Gram, Gross Margin of 69% and EBITDA Margin of 56%

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Photo source: theemeraldmagazine.com

 

Village Farms International, Inc. (“Village Farms” or the “Company”) (TSX: VFF) (NASDAQ: VFF) today announced its financial results for the third quarter and nine-month period ended September 30, 2019.  All figures are in U.S. dollars unless otherwise indicated.

Village Farms’ Financial and Corporate Highlights for the Third Quarter Ended September 30, 2019
(All comparable figures are for the third quarter ended September 30, 2018)

  • Produce sales were US$38.3 million compared with US$39.7 million;
  • Net loss before tax of (US$6.5 million) and included the loss from Pure Sunfarms Corp. (“Pure Sunfarms”) of (US$0.9 million) (Village Farms’ share based on its 50% ownership).  This compares with a net loss before tax of (US$2.7 million);
  • Loss per share was (US$0.10) compared with loss per share of (US$0.04);
  • EBITDA loss was (US$2.4 million), including the positive contribution from Pure Sunfarms of US$5.0 million (C$6.6 million) (Village Farms’ 50% share).  This compares with an EBITDA loss of (US$2.0 million); and
  • Subsequent to quarter end, completed a bought deal offering of 3,059,000 common shares at a price of C$9.40 per share for aggregate gross proceeds to the Company of C$28,754,600.

Third Quarter Financial Results for Village Farms’ Canadian Cannabis Joint Venture, Pure Sunfarms
(There were are no comparable results for the third quarter ended September 30, 2018 as no production existed.)

  • Net sales (before Village Farms’ 50% share), which consisted entirely of dried cannabis sold predominantly to other licensed producers, were C$24.0 million (US$18.1 million).  Late in the third quarter, Pure Sunfarms began shipping branded packaged product to the Ontario Cannabis Store (“OCS”);
  • Sales for the third quarter did not include C$7.2 million that was invoiced to Emerald Health Therapeutics (see “Update on Pure Sunfarms’ Supply Agreement with Emerald Health Therapeutics” below);
  • Cost of goods sold (“all in cost”) per gram was C$0.63 (US$0.48) per gram;
  • Gross margin was 69%;
  • Selling, general and administrative expenses (before Village Farms’ 50% share) of C$3.7 million (US$2.8 million) or 12% of revenue;
  • Net loss (before Village Farms’ 50% share) of (C$2.4 million) ((US$1.8 million)) which included the non-cash impact of a net charge of (C$12.6 million) due to a change in value of the biological asset; and,
  • EBITDA (before Village Farms’ 50% share) was C$13.3 million (US$10.1 million), marking Pure Sunfarms’ fourth consecutive quarter of positive EBITDA and resulting in an EBITDA margin of 56%.

Recent Highlights for Village Farms’ Canadian Cannabis Joint Venture, Pure Sunfarms

  • Pure Sunfarms was the top performing brand of dried flower by both kilograms sold and dollar sales with the OCS in October 2019, achieving 16% market share (by kilograms sold).  Pure Sunfarms’ dried flower products outsold the second ranked dried flower brand’s products two to one (by kilograms sold).  In addition:
    • Pure Sunfarms’ Afghan Kush was the top selling dried flower product with the OCS in October;
    • Three of the seven top selling dried flower products with the OCS in October were Pure Sunfarms products

      Pure Sunfarms shipped its first order of branded dried cannabis products to the OCS in late September (followed by multiple reorders) following receipt from Health Canada on September 6, 2019 of the amendment to its license permitting it to sell and distribute packaged, branded dried cannabis products directly to provincial/territorial wholesalers and authorized private retailers in Canada;
  • In B.C., Pure Sunfarms’ sold out its first order to the BC Liquor Distribution Branch (“BCLDB”) (which has since re-ordered) in under three weeks to rank among the top ten brands by sales for all product categories in October.  Pure Sunfarms began selling branded, packaged dried cannabis products to the BCLDB in October following entry into a supply agreement in September;
  • Completed installation of extraction equipment (with processing capacity of 35,000 kilograms of biomass annually) in its new 65,000 square foot state-of-the-art processing center within the Delta 3 greenhouse facility in preparation for Cannabis 2.0. The processing centre has been designed for full GMP compliance and certification to allow for future exportation, and is expected to be operational as soon as possible, subject to Health Canada licensing and in-house calibration and testing;
  • Achieved full run-rate annual production of 75,000 kilograms of dried cannabis at its 1.1 million square foot Delta 3 greenhouse facility; and
  • Commenced conversion of the interior of its second 1.1 million square foot greenhouse operation, the Delta 2 greenhouse facility, for cannabis production, which is conservatively expected to double Pure Sunfarms’ annual output at full production to more than 150,000 kilograms.  Conversion of the Delta 2 greenhouse facility, which has been designed for full GMP compliance and certification to all for future exportation, remains on schedule, with cannabis production expected to commence during the second quarter of 2020 and the facility is expected to be operating at full run rate production by the end of 2020.  Pure Sunfarms has submitted to Health Canada its application for the initial Cultivation License for the Delta 2 greenhouse facility.

Recent Highlights for Village Farms’ U.S. Hemp/CBD Program

The Company’s joint ventures for outdoor hemp production and processing in the U.S. recently completed harvesting of approximately 625 acres of the approximately 870 acres of hemp planted in 2019, achieving an average yield of approximately 1,600 pounds per acre harvested, well in excess of its projections. The Company expects to commence sales of hemp biomass as early as the fourth quarter of 2019.

“We are pleased to report another quarter in which Pure Sunfarms continued to set the standard for performance as a best-in-class cannabis operation, which again drove strong financial performance,” said Michael DeGiglio, Chief Executive Officer, Village Farms.  “Pure Sunfarms’ achieved its fourth consecutive quarter of positive EBITDA, with an industry leading all-in cost of production of C$0.63, gross margin of 69% and EBITDA margin of 56%.  In the 12 months since adult-use cannabis was legalized in Canada in October 2018, Pure Sunfarms has already generated C$47 million in EBITDA, an especially impressive number given that its operations were ramping up throughout most of that period.”

“Pure Sunfarms is now proving itself as a leading cannabis brand, ranking as the number one selling dried flower brand by a wide margin with the Ontario Cannabis Store in October, and having the overall top selling dried flower product, as well as three of the seven top-selling dried flower product. We look forward to Pure Sunfarms building on this tremendous initial success as it launches its pre-rolled dried products, adds provincial supply agreements, starts its extraction operations online for the roll out of oils and other new product forms under Cannabis 2.0 in the first half of next year, and more than doubles its output, further supporting its low production costs.”

“Pure Sunfarms continues to execute very well on what is under its control.  Even as one of the largest Canadian adult-use cannabis suppliers by dollars sold, third quarter sales were constrained by the limited physical retail store infrastructure in Canada, as well as the C$7.2 million that could not be recognized. We built Pure Sunfarms, however, for profitability out of the gate, even in a commoditized environment, and it is one of the few and most profitable Canadian cannabis companies.  With industry-leading cost production and a brand and products that are clearly resonating with consumers, Pure Sunfarms remains well positioned to continue to be a dominant supplier as the Canadian adult-use cannabis market continues to develop and expand.”

“In our U.S. outdoor hemp program, we recently completed harvest of our 2019 crop, highlighted by yields that were well above our projections.  We remain on track to begin generating profitable hemp sales as early as the fourth quarter of this year.  Importantly, our first growing season has provided significant learnings that will be invaluable going forward.  In our greenhouse hemp program, we continue to work with Texas Department of Agriculture on the implementation of its hemp regulatory framework subject to the recently published US Department of Agriculture rules and are optimistic that licensing could commence in the first quarter of 2020.  As we did in Canada with Pure Sunfarms, we are building a rock-solid foundation of exceptional growing operations from which to aggressively pursue our objective to launch our own white-labelled and branded CBD products in 2020.”

“In our produce business, we continue to make steady progress in the transition of the production displaced for cannabis and hemp production to third-party growing partners, recently adding approximately 120 acres with partners in Mexico and Canada to bring the total to nearly 300 acres.  During this period of transition, we will continue to experience some impact on our financial results, more so in some quarters than others, which in the third quarter contributed to a net loss for the produce business of US$5.1 million.”

Update on Pure Sunfarms’ Supply Agreement with Emerald Health Therapeutics

Pursuant to the terms of a Supply Agreement that Pure Sunfarms has with Emerald Health, Emerald has an obligation to purchase 40% of Pure Sunfarms cannabis production at a fixed price, subject to the terms and conditions of the Supply Agreement. To the extent that Emerald does not fulfill its purchase obligation, Pure Sunfarms is able to sell that excess production to other parties in the open market. The Supply Agreement stipulates that Emerald is required to pay Pure Sunfarms the difference between the fixed price and the selling price realized from other parties.  During the quarter ended September 30, 2019, Emerald did not fulfill its purchase obligation and Pure Sunfarms sold the product on the open market to arm’s length parties at prices lower than the fixed price in the Supply Agreement. As a result, under the terms of the Supply Agreement, Pure Sunfarms billed Emerald for the difference which amounted to approximately C$7.2 million. On October 15, 2019, Emerald issued a press release that indicated they do not agree that they have any liability with respect to these amounts.

Under IFRS 15 – Revenue from contracts with customers (paragraph 9 (e))a customer needs to have an intent and ability to pay in order for a company to recognize revenue. Given that Emerald has issued a press release indicating that they do not agree that they have a liability with respect to these amounts, Pure Sunfarms has determined that all of the criteria under IFRS 15 to recognize this revenue were not met as Emerald has demonstrated that they do not have an intent to pay, and as a result has not recorded the revenue related to these amounts.

We understand that Emerald is in the process of investigating its liability to Pure Sunfarms.  If Emerald does not agree to the liability, Pure Sunfarms has reserved the right to take such actions as it considers necessary and appropriate to recover its losses from Emerald for non-payment of amounts owing under the Supply Agreement.   If Emerald were to agree to the liability in the future, such liability would be recognized in the revenue and profits of Pure Sunfarms, at such time in accordance with generally accepted accounting principles.

Summary Statutory Results
(in thousands of U.S. Dollars unless otherwise indicated)

For the three months
ended September 30,

For the Nine months
ended September 30,

2019

2018

2019

2018

Produce sales

$38,293

$39,684

$111,512

$111,213

Cost of sales

(38,866)

(36,862)

(114,711)

(103,915)

Selling, general and administrative expenses

(3,739)

(3,442)

(11,682)

(10,486)

Stock compensation expense

(868)

(190)

(3,190)

(447)

Change in biological asset (1)

(627)

(1,189)

(97)

(992)

Loss from operations

(5,807)

(1,999)

(18,168)

(4,627)

Interest expense, net

(393)

(618)

(1,503)

(1,906)

Foreign exchange gain (loss)

(183)

(73)

338

(87)

Other income, net

69

17

219

61

Share of income (loss) from joint ventures

(171)

(28)

17,939

(369)

Gain on disposal of assets

(8)

13,558

(Provision for) recovery of income taxes

1,421

712

81

1,513

Net income (loss)

(5,072)

(1,989)

12,464

(5,415)

Consolidated EBITDA (2)

2,383

897

8,256

1,394

Earnings (loss) per share – basic

($0.10)

($0.04)

$0.26

($0.12)

Earnings (loss) per share – diluted

($0.10)

($0.04)

$0.25

($0.12)

Summary Results Including Joint Ventures, on a Proportionate Basis

The following results reflect the Company’s proportionate share of the Pure Sunfarms joint venture operations, as this is the basis on which management bases its operating decisions and performance.  For a reconciliation to the results in accordance with International Financial Reporting Standards (“IFRS”) refer to the “Reconciliation of IFRS to Proportionate Results” as presented below and in Management’s Discussion & Analysis (“MD&A”).

(in thousands of U.S. Dollars unless otherwise indicated)

For the three months
ended September 30,

For the six months
ended September 30,

2019(3)

2018(3)

2019(3)

2018(3)

Consolidated sales

$47,335

$39,779

$138,076

$111,308

Cost of sales

(41,711)

(36,934)

(121,443)

($103,987)

Selling, general and administrative expenses

(5,376)

(3,756)

(14,860)

(11,302)

Change in biological asset (1)

(4,057)

(921)

6,873

(564)

Gain on disposal of assets

(8)

13,558

Net income (loss)

(5,072)

(1,989)

12,464

(5,415)

EBITDA(2)

$2,377

$897

$8,256

$1,394

Earning (loss) per share – basic

($0.10)

($0.04)

$0.26

($0.12)

Earning (loss) per share – diluted

($0.10)

($0.04)

$0.25

($0.12)

Notes:

(1)

Biological asset consists of the Company’s produce on the vines and Pure Sunfarms’ crop at the period end.  Details of the changes are described in note 5 of the Company’s interim condensed consolidated financial statements for the nine months ended September 30, 2019.

(2)

EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by IFRS.  Therefore, EBITDA may not be comparable to similar measures presented by other issuers.  See “Non-IFRS Measures”.  Management believes that EBITDA is a useful supplemental measure in evaluating the performance of the Company. Consolidated EBITDA includes the Company’s 50% interest in Pure Sunfarms, 65% interest in VFH and 60% (effective 63.25% with VFH interest) interest in AVGGH.

(3)

The consolidated financial results above reflect the proportionate share of the Company’s share of revenues and expenses from its joint venture operations, as this is the basis which management bases its operating decisions and performance evaluation.  IFRS does not allow for the inclusion of the joint venture on a proportionate basis.  These results include additional non-IFRS measures such as EBITDA.

The results are not generally accepted measures of financial performance under IFRS.  The Company’s method of calculating these financial performance measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies.  Refer to the MD&A for a reconciliation of these non-IFRS measures and proportionate results.

Financial Highlights
(All amounts in U.S. Dollars unless otherwise indicated.)

Cannabis

For the three months ended September 30, 2019.  There are no comparable results for the three months ended September 30, 2018 as no production existed.

The Company’s 50% share of net sales of Pure Sunfarms for the three months ended September 30, 2019 was $9,042.  Total Pure Sunfarms sales consisted of close to approximately 12,000 kilograms of flower and trim sold at an average selling price of over $1.50 per gram (C$2.00 per gram) during the three months ended September 30, 2019. Sales for the three months ended September 30, 2019 were predominantly to other licensed producers and do not include $5.4 million (C$7.2 million) invoiced to Emerald that was not able to be recognized as per the discussion above.

The Company’s 50% share of cost of sales of Pure Sunfarms for the three months ended September 30, 2019 was $2,845.

The Company’s 50% share of selling, general and administrative expenses of Pure Sunfarms for the three months ended September 30, 2019 was $1,415.

The Company’s 50% share of net loss for the three months ended September 30, 2019 was ($918) compared to ($28) for the three months ended September 30, 2018.  The net loss for the three months ended September 30, 2019 is due to a change in the biological asset of ($4.8 million).

The Company’s 50% share of EDITDA for the three months ended September 30, 2019 was $5,033 compared to ($12) for the three months ended September 30, 2018.

For the nine months ended September 30, 2019.  There are no comparable results for the nine months ended September 30, 2018 as no production existed

The Company’s 50% share of net sales of Pure Sunfarms for the nine months ended September 30, 2019 was $26,564.  Total Pure Sunfarms sales consisted of close to 24,600 kilograms of flower and trim during the nine months ended September 30, 2019, at an average sales price of approximately $2.15 per gram (C$2.85 per gram).

The Company’s 50% share of cost of sales of Pure Sunfarms for the nine months ended September 30, 2019 was $6,732 (based on total grams sold of close to 24,600 kilograms), or approximately $0.55 per gram (C$0.73 per gram).

The Company’s 50% share of selling, general and administrative expenses of Pure Sunfarms for the nine months ended September 30, 2019 was $2,808 and primarily consisted of personnel costs and Health Canada fees.

Income from operations for the Company’s 50% share of Pure Sunfarms was $22,658 for the nine months ended September 30, 2019.

The Company’s 50% share of net income for the nine months ended September 30, 2019 was $17,342 versus a loss of ($369) for the nine months ended September 30, 2018.

The Company’s 50% share of EBITDA for the nine months ended September 30, 2019 was $17,704 versus ($363) for the same period in 2018.

Produce

For the three months ended September 30, 2019 compared to the three months ended September 30, 2018.

Sales for the three months ended September 30, 2019 decreased by ($1,391), or (4%), to $38,293 from $39,684 for the three months ended September 30, 2018.  The decrease in sales is primarily due to a decrease in the Company’s product volume, as well as a decrease in supply partner revenue.

Cost of sales for the three months ended September 30, 2019 increased by $2,004, or 5%, to $38,866 from $36,862 for the three months ended September 30, 2018, primarily due to an increase in cost per pound from the Texas facilities, which is due to production issues that caused decreases in production.  The decrease in production for the crop causes an increase in cost per pound as most costs are fixed and, as production decreases, cost per pound increases.

For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

Sales for the nine months ended September 30, 2019 increased $299, or less than 1%, to $111,512 compared to $111,213 for the nine months ended September 30, 2018.   The increase in net sales is due to an increase in supply partner revenues of 12% over the comparable period in 2018 partially offset by a (14%) decrease in the Company’s production volume.  The decrease in the Company’s production volume is primarily due to a clean-out in one of Company’s facilities (which did not occur in the last three years) and ongoing virus pressure at the Company’s Texas facilities.

Cost of sales for the nine months ended September 30, 2019 increased $10,796, or 10%, to $114,711 from $103,915 for the nine months ended September 30, 2018, due to an increase in supply partner purchases of 12% and an increase in the cost per pound of the Company’s own grown product in Texas due to decreased pounds and higher labor costs, due to the higher utilization of hourly rate contract laborers versus Village Farms’ employees for the 2018/2019 crop as compared to the prior crop.

Consolidated EBITDA

EBITDA for the three months ended September 30, 2019 increased by $4,339 to $5,236 from $897 for the three months ended September 30, 2018. The increase is primarily as a result of an increase in the Company’s share of EDITDA from Pure Sunfarms of $7,886 partially offset by an increase in the loss from operations for the Company’s produce business.

EBITDA for the nine months ended September 30, 2019 increased $9,713 to $11,109 from $1,394 for the nine months ended September 30, 2018, primarily as a result of an increase in the Company’s share of income from Pure Sunfarms (Pure Sunfarms EBITDA – $20,558) partially offset by an increase in the loss from the Company’s produce business.

Non-IFRS Measures

References in this MD&A to “EBITDA” are to earnings before interest, taxes, depreciation, amortization, foreign currency exchange gains and losses on translation of long-term debt, unrealized gains on the changes in the value of derivative instruments, unrealized change in biological asset, stock compensation, and gains and losses on asset sales.  EBITDA is a cash flow measure that is not recognized under IFRS and does not have a standardized meaning prescribed by IFRS. Therefore, EBITDA may not be comparable to similar measures presented by other issuers. Investors are cautioned that EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as an indicator of the Company’s performance or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows. Management believes that EBITDA is an important measure in evaluating the historical performance of the Company.

Reconciliation of Net Income to EBITDA

The following table reflects a reconciliation of net income to EBITDA, as presented by the Company:

(in thousands of U.S. dollars)

For the three months
ended September 30, 

For the nine months
ended September 30,

2019

2018

2019

2018

Net income (loss)  

($5,072)

($1,989)

$12,464

($5,415)

Add:

Amortization

1,818

1,748

5,587

5,271

Foreign currency exchange loss (gain) 

183

73

(338)

87

Interest expense, net

393

618

1,503

1,906

Income taxes (recovery)

(1,421)

(712)

(81)

(1,513)

Stock based compensation

868

190

3,190

447

Change in biological asset

627

1,189

97

992

Change in biological asset for JV’s

3,430

(267)

(6,970)

(428)

Interest expense for JV’s

249

446

Amortization for JV’s

244

37

668

37

Foreign currency exchange loss (gain) for JV’s

(7)

10

(14)

10

Income taxes (recovery) from JV’s

1,057

5,262

Gain on disposal of assets

8

(13,558)

EBITDA

$2,377

$897

$8,256

$1,394

EBITDA for JV’s (See table below)

$4,806

($248)

$17,331

($750)

EBITDA excluding JVs(produce)

($2,429)

$1,145

($9,076)

$2,144

Breakout of JV’s EBITDA

(in thousands of U.S. dollars)

For the three months
ended September 30, 

For the nine months
ended September 30,

2019

2018

2019

2018

Pure Sunfarms EBITDA

$5,033

($248)

$17,704

($750)

VFH EBITDA

(204)

(330)

AVGGH EBITDA

(23)

(43)

Total JV’s EBITDA

$4,806

($248)

$17,331

($750)

Reconciliation of IFRS to Proportionate Results

The following tables are a reconciliation of the IFRS results to the proportionate results (which include the Company’s proportionate share of the Pure Sunfarms operations):

For the three months ended September 30, 2019

Produce

PSF(4)

Hemp(4)

Total

Sales

$38,293

$9,042

$-

$47,335

Cost of sales

(38,866)

(2,845)

(41,711)

Selling, general and administrative expenses

(3,739)

(1,415)

(222)

(5,376)

Stock compensation expense

(868)

(868)

Change in biological asset (5)

(627)

(4,765)

1,336

(4,056)

Other income (expense) net

(507)

(140)

(99)

(746)

(Provision for) recovery of income taxes

1,421

(794)

(268)

359

Net income (loss)

($4,901)

($918)

$747

($5,072)

EBITDA (6)

($2,422)

$5,033

($227)

$2,383

Earnings (loss) per share – basic

($0.10)

($0.02)

$0.02

($0.10)

Earnings (loss) per share – diluted

($0.10)

($0.01)

$0.01

($0.10)

For the three months ended September 30, 2018

Produce

PSF(4)

Hemp(4)

Total

Sales

$39,684

$95

$39,779

Cost of sales

(36,862)

(72)

(36,934)

Selling, general and administrative expenses

(3,442)

(314)

(3,756)

Stock compensation expense

(190)

(190)

Change in biological asset (5)

(1,189)

268

(921)

Other income (expense) net

(674)

(5)

(679)

Recovery of income taxes

712

712

Net income (loss)

($1,961)

($28)

($1,989)

EBITDA (6)

$1,145

($248)

$897

Earnings (loss) per share – basic

($0.03)

($0.01)

($0.04)

Earnings (loss) per share – diluted

($0.03)

($0.01)

($0.04)

For the nine months ended September 30, 2019

Produce

PSF(4)

Hemp(4)

Total

Sales

$111,512

$26,568

$138,076

Cost of sales

(114,711)

(6,732)

(121,443)

Selling, general and administrative expenses

(11,682)

(2,808)

(370)

(14,860)

Stock compensation expense

(3,190)

(3,190)

Change in biological asset (5)

(97)

5,634

1,336

6,873

Gain on disposal of assets

13,558

13,558

Other income (expense) net

(946)

(273)

(150)

(1,369)

(Provision for) recovery of for income taxes

81

(5,043)

(219)

(5,181)

Net income (loss)

($5,475)

$17,342

$597

$12,464

EBITDA (6)

($9,076)

$17,704

($373)

$8,256

Earnings (loss) per share – basic

($0.11)

$0.36

$0.01

$0.26

Earnings (loss) per share – diluted

($0.11)

$0.34

$0.01

$0.25

For the nine months ended September 30, 2018

Produce

PSF(4)

Hemp(4)

Total

Sales

$111,213

$95

$-

$111,308

Cost of sales

(103,915)

(72)

($103,987)

Selling, general and administrative expenses

(10,486)

(816)

(11,302)

Stock compensation expense

(447)

(447)

Change in biological asset (5)

(992)

428

(564)

(Gain) loss on sale of assets

Other income (expense) net

(1,932)

(5)

(1,937)

Recovery of income taxes

1,513

1,513

Net income (loss)

($5,046)

($369)

$-

($5,415)

EBITDA (6)

$2,149

($750)

$-

$1,394

Earnings (loss) per share – basic

($0.11)

($0.01)

$-

($0.12)

Earnings (loss) per share – diluted

($0.11)

($0.01)

$-

($0.12)

Notes:

(4)

The adjusted consolidated financial results have been adjusted to include the Company’s share of revenues and expenses from its Pure Sunfarms and Hemp joint ventures on a proportionate accounting basis, on which management bases its operating decisions and performance evaluation.  IFRS does not allow for the inclusion of the Joint Venture on a proportionate basis.  These results include additional non-IFRS measures such as EBITDA.

The adjusted results are not generally accepted measures of financial performance under IFRS.  The Company’s method of calculating these financial performance measures may differ from other companies and accordingly, they may not be comparable to measures used by other companies.  Refer to the MD&A for a reconciliation of these non-IFRS measures and adjusted results.

(5)

Biological asset consists of the Company’s produce on the vines and Pure Sunfarms’ crop at the period end.  Details of the changes are described in note 5 of the Company’s interim condensed consolidated financial statements for the nine months ended September 30, 2019.

(6)

EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by IFRS.  Therefore, EBITDA may not be comparable to similar measures presented by other issuers.  See “Non-IFRS Measures”.  Management believes that EBITDA is a useful supplemental measure in evaluating the performance of the Company. Consolidated EBITDA includes the Company’s 50% interest Pure Sunfarms, 65% interest in VFH and 60% (effective 63.25% with VFH interest) interest in AVGGH.

Conference Call

Village Farms’ management team will host a conference call Friday, November 15, 2019 at 8:30 a.m. ET to discuss its third quarter 2019 financial results.  Participants can access the conference call by telephone by dialing (647) 427-7450 or (888) 231-8191, or via the Internet at: https://bit.ly/2Wm7dxj.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay both by telephone and via the Internet beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial (416) 849-0833 or (855) 859-2056 and enter the passcode 4987345 followed by the pound key. The telephone replay will be available until Friday, November 22, 2019 at midnight (ET).  The conference call will also be archived on Village Farms’ website at http://villagefarms.com/investor-relations/investor-calls.

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