Harborside Inc. Reports Second Quarter 2020 Economic Final results

green-leafed plant

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

Reports Powerful 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 Assessment Focused on Maximizing Shareholder Worth

OAKLAND, CA and TORONTO, Sept. 1, 2020 /PRNewswire/ – Harborside Inc. (“Harborside” or the “Corporation”) (CSE: HBOR), a California-focused, vertically integrated cannabis enterprise, right now reported its monetary outcomes 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 obtainable for download from the Company’s investor 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 Corporation announced right now 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 outcomes 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 general item mix we sell and improved the sell via of Harborside made merchandise on our shop shelves. We enter the second half of 2020 with sturdy momentum and appear to continue delivering higher-excellent merchandise to our prospects when driving sturdy worth creation for our shareholders.”

Strategic Assessment(two)

Harborside also announced right now that the Corporation has commenced a strategic evaluation of the small business and possibilities in the marketplace (the “Strategic Assessment”) to maximize shareholder worth like, prospective merger and acquisition possibilities, equity financings, and the prospective repurchase and financing of the Company’s farm operation in Salinas, California (the “Farm”), which has extremely favorable repurchase terms. The Corporation has not established a definitive timeline to total the Strategic Assessment, 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 Corporation as a outcome of the Strategic Assessment. The Corporation does not intend to comment additional with respect to the Strategic Assessment unless and till it determines that more disclosure is suitable 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 like excise taxes or biological asset adjustments

two.

Retail gross margin in Q1 2020 and Q2 2020 are slightly impacted by more expenditures on private 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 Location to particular of the Company’s retail retailers.

three.

Skilled Costs for the fourth quarter of 2019 include things like roughly $953,000 in one particular-time costs and accruals for legal matters

four.

Skilled Costs for Q2 2020 include things like roughly $977,000 in one particular-time fees relating to accounting audits and restatements for particular 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

In the course of Q2 2020, Harborside generated net retail income of roughly $ten.9 million and net wholesale income of roughly $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% raise year-more than-year. The five.three% year-more than-year raise in retail income was driven mostly by the Company’s enhanced merchandising and pricing initiatives which resulted in, amongst other factors, enhanced item mix, chosen pricing adjustments and larger sell-via of internally made merchandise. Across Harborside’s retail retailers in California, the Company’s branded merchandise represented involving seven and nine of the 20 top rated-promoting SKUs in Q2 2020. The roughly 142% year-more than-year raise in wholesale revenues was mostly due to enhanced harvest yields and production of premium flower, larger sales volumes and larger typical rates per pound at the Company’s Farm.

Retail gross margins have been roughly 51.two% for the quarter, reflecting a year-more than year improvement of roughly two.five% in spite of improved fees for security and staffing connected to COVID-19 and inventory losses that occurred for the duration of the civil unrest that occurred in the Bay Location. Wholesale gross margins have been roughly 46.eight% for the quarter, which was an improvement of roughly 52.two% year-more than-year.

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

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

Operating Earnings for Q2 2020 was roughly $.five million, compared to an operating loss of roughly $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 roughly $.six million, compared to a damaging EBITDA of roughly $1.7 million for Q2 2019, driven largely by enhanced operating efficiencies and headcount reductions across the Corporation. See “Non-IFRS Economic Measures, Reconciliation and Discussion.”

Liquidity and Money Balance(two)(three)

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

Conference Get in touch with Details

Harborside will host a conference contact Wednesday, September two, 2020, to go over the Q2 2020 outcomes. 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

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

For the newest news, activities, and media coverage, please pay a visit to the Harborside corporate 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 main dispensaries in the San Francisco Bay Location, 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 producing 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 right now holds cannabis licenses for retail, distribution, cultivation, nursery and manufacturing. Harborside is at present a publicly listed firm on the CSE trading beneath the ticker symbol “HBOR”. Extra info with regards to Harborside is obtainable 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 general monetary overall performance and are applied as an option to earnings or net revenue in some situations. EBITDA and/or Adjusted EBITDA are basically net revenue (loss) with interest, taxes, depreciation and amortization, non-money adjustments and other uncommon things added back. This measure can be applied to analyze and examine profitability amongst firms and industries, as it eliminates the effects of financing and capital expenditures. It is frequently applied 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 as a result may possibly not be comparable to related measures presented by other firms.

Gross Profit is the distinction involving income and price of goods sold. Gross Margin is the distinction involving income and price of goods sold divided by income, and is expressed as a percentage. Management believes these measures supplies 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 due to the fact management has evaluated the monetary outcomes each like and excluding the adjusted things and believes that the non-IFRS monetary measures presented give more viewpoint and insights when analyzing the core operating overall performance of the small business. The Corporation believes that these supplemental measures give 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 should really not be deemed superior to, as a substitute for, or as an option to, and should really be deemed 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 obtainable 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-Searching Details”.
  3. The monetary info integrated in this press release is neither audited nor reviewed. Exactly where feasible, the info has been constructed by management from obtainable audited or audit reviewed monetary statements. Exactly where no audited or audit reviewed info has been obtainable, more management accounting info has been utilized to construct monetary info.

Cautionary Note Relating to Forward-Searching Details

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 includes discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or overall performance (frequently but not normally utilizing phrases such as “expects”, or “does not anticipate”, “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 particular actions, events or outcomes “may possibly” or “could”, “would”, “could possibly” or “will” be taken to take place 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 Assessment, 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 Corporation at the time such statements have been produced. Actual future outcomes may possibly differ materially as forward- hunting statements involve recognized and unknown dangers, uncertainties and other aspects which may possibly bring about the actual outcomes, overall performance or achievements of the Corporation to materially differ from any future outcomes, overall performance or achievements expressed or implied by such forward-hunting statements. Such aspects, amongst other factors, include things like: management’s perceptions of the anticipated timeline in which the Strategic Assessment should really be completed and the outcomes of that evaluation the resumption of trading on the CSE implications of the COVID-19 pandemic on the Company’s operations fluctuations in basic macroeconomic circumstances fluctuations in securities markets expectations with regards to the size of the California cannabis industry and altering customer habits the capability of the Corporation to effectively obtain 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 merchandise in the State of California and employee relations. While the forward-hunting statements contained in this news release are primarily based upon what management of the Corporation believes, or believed at the time, to be affordable assumptions, the Corporation can not assure shareholders that actual outcomes will be constant with such forward-hunting statements, as there may possibly be other aspects that bring about outcomes not to be as anticipated, estimated or intended. Readers should really not spot undue reliance on the forward-hunting statements and info contained in this news release. The Corporation assumes no obligation to update the forward-hunting statements of beliefs, opinions, projections, or other aspects, should really they alter, except as essential by law.

The Corporation 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 Corporation operates permit such activities nonetheless, these activities are at present 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 “Threat Aspects” in the Listing Statement dated May perhaps 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 Market place 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-outcomes-301122036.html

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