Jushi Holdings Inc 8-K, filed Aug 29, 2022
Jushi Holdings Inc. (JUSH)
About this 8-K
Jushi Holdings Inc filed this 8-K on August 29, 2022.
Items reported
- Item 2.02: Financial results
- Item 4.02: Earlier financial statements no longer reliable
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
On August 29, 2022, Jushi Holdings Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2022. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The Company also intends to file unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022 with the applicable Canadian securities regulatory authorities on August 29, 2022 in accordance with applicable Canadian securities laws, which may be accessed at www.sedar.com. The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022 contained in the Company’s press release and to be filed with the Canadian securities regulatory authorities have not been audited or reviewed by the Company’s independent registered public accounting firm, remains subject to change, and should not be considered final until the Company files its second quarter 2022 Quarterly Report on Form 10-Q.
The information contained in this Item 2.02, including Exhibit 99.1, is furnished only, is not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such a filing, except as expressly set forth by specific reference in that filing.
In connection with the preparation of the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022, the Company’s management identified errors in its previously issued unaudited condensed consolidated balance sheet as of March 31, 2022 resulting in the understatement of certain non-current assets and associated accruals. In addition, management identified errors in the unaudited condensed consolidated statement of cash flows for three months ended March 31, 2022. Such errors resulted in the understatement of net cash flows used in operating activities, the overstatement of net cash flows used in investing activities, and the understatement of net cash flows provided by financing activities during the three months ended March 31, 2022. Company management believes such errors did not impact the cash balance as of March 31, 2022 and further believes there is no net change in cash flows during the three months then ended.
On August 28, 2022, the Company’s Audit Committee concluded, after discussion with the Company’s management and its advisors, that the Company’s previously issued unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022 (“First Quarter 2022 Interim Financial Statements”) were materially misstated due to such errors. As a result, the Company’s First Quarter 2022 Interim Financial Statements should no longer be relied upon. Similarly, any previously issued or filed reports, registration statements, press releases, earnings releases and investor presentations or other communications describing the Company's First Quarter 2022 Interim Financial Statements should no longer be relied upon.
The Company will, as soon as practicable, make the appropriate adjustments, which will include restated unaudited condensed consolidated financial statements and any other appropriate revisions.
The Company believes that such errors will not materially impact the unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2022.
As previously disclosed and in light of the errors described above, material weaknesses existed in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective. The Company is still evaluating these matters and expects that further information regarding such material weaknesses and the Company’s intended remediation efforts will be described in more detail in its upcoming Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022.
The Company’s management and Audit Committee have discussed the matters disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with Marcum LLP, its independent registered public accounting firm. The unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2022, referred to herein or elsewhere, have not been audited or reviewed by the Company’s independent registered public accounting firm.
On August 25, 2022, the Board of Directors approved the award of stock options to purchase 500,000 of the Company’s Subordinate Voting Shares to our Chief Operations Officer, Leonardo Garcia-Berg, under the Company’s existing 2019 Equity Incentive Plan. The stock options will have an exercise price of the greater of the closing price of the Company’s Subordinate Voting Shares as reported by the Canadian Stock Exchange on August 31, 2022, or the prior trading day.
On August 29, 2022, the Registrant posted an investor presentation complementary to its scheduled second quarter 2022 earnings conference call on its website and filed a copy of such presentation with the applicable securities regulatory authorities in Canada and otherwise in accordance with applicable Canadian securities laws. A copy of the investor presentation is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
The information contained in this Item 7.01, including Exhibit 99.2, is furnished only, is not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such a filing, except as expressly set forth by specific reference in that filing.
| 99.1 | Press Release dated August 29, 2022 | |||
| 99.2 | Investor Presentation | |||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Forward-Looking Statements
This Current Report on Form 8-K contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation as well as statements that may constitute "forward-looking statements" within the meaning of within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, contained in this Current Report on Form 8-K are forward-looking statements. Words such as “expect,” “will,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “potential” and similar expressions also identify forward-looking statements. Forward-looking statements include statements regarding expected filings, materiality or significance and effects of the reclassification errors on current or prior period financial statements, and any anticipated conclusions of the Company, the Audit Committee or the Company’s management related thereto.
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results, as well as our expectations regarding materiality or significance, the restatement’s quantitative effects, the effectiveness of our disclosure controls and procedures, and our deficiencies in internal control over financial reporting to differ materially from those in the forward-looking statements. These factors include the risk that additional information may arise prior to the expected filing with the Securities and Exchange Commission and Canadian securities regulators with the restated condensed consolidated interim financial statements, the preparation of our restated condensed consolidated interim financial statements or other subsequent events that would require us to make additional adjustments, as well as inherent limitations in internal controls over financial reporting.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JUSHI HOLDINGS INC. | ||
| Date: August 29, 2022 | By: | /s/ Jon Barack |
| Jon Barack | ||
| President and Interim Chief Financial Officer | ||
EXHIBIT 99.1
Jushi Holdings Inc. Reports Second Quarter 2022 Financial Results and Announces Non-Reliance on Previously Issued First Quarter 2022 Financial Statements
Second Quarter 2022 Revenue Growth of 52.4% YoY and 17.6% QoQ to $72.8 million
Completed NuLeaf Acquisition and Expanded Vertically Integrated Footprint in Nevada
Established Fifth Vertically Integrated State-Level Operation in Ohio with Medical Dispensary License Win
BOCA RATON, Fla., Aug. 29, 2022 (GLOBE NEWSWIRE) -- Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, announced its financial results for the second quarter 2022 (“Q2 2022”) ended June 30, 2022. The Company became a U.S. reporting company effective August 12, 2022. All financial information is provided in U.S. dollars unless otherwise indicated and are prepared under U.S. Generally Accepted Accounting Principles (“GAAP”).
Second Quarter 2022 Highlights
- Total revenue of $72.8 million, an increase of 52.4% year-over-year and 17.6% as compared to the quarter ended March 31, 2022 (“Q1 2022”)
- Retail revenue increased 16.1% to $67.3 million and wholesale revenue increased 42.1% to $5.5 million, as compared to Q1 2022
- Gross profit of $26.7 million, an increase of 17.2% year-over-year and 39.5% as compared to Q1 2022
- Adjusted gross profit of $27.8 million, an increase of 19.1% year-over-year and 12.3% as compared to Q1 2022
- Net Income of $12.1 million
- Adjusted EBITDA of $0.5 million
- Cash and cash equivalents were $43.2 million as of the quarter end
Second Quarter 2022 Operational Highlights
- Expanded the Company’s vertically integrated footprint in Nevada with the completion of the NuLeaf, Inc. (“NuLeaf”) acquisition, adding a 27,000 sq. ft. cultivation facility, a 13,000 sq. ft. processing facility, and three adult-use and medical retail dispensaries in the state
- Opened the 32nd and 33rd retail locations nationwide, marking the Company’s third Beyond Hello™ location in California and fourth dispensary in Nevada
- Awarded a provisional medical marijuana dispensary license in the Cincinnati Tri-State Area of Ohio, establishing the Company’s fifth vertically integrated state-level operation
- Debuted two new product lines in Pennsylvania under the Company’s brand The Lab™, including a line of solventless live rosin extracts and a line of hydrocarbon extracts, comprised of high-quality vapes and concentrates
Recent Developments
- Transitioned from IFRS to U.S. GAAP reporting as a result of becoming a U.S. reporting issuer as of August 12, 2022
- Opened the 34th retail location nationwide and third Beyond Hello™ dispensary in Alexandria, Virginia
- Opening the 35th retail location nationwide and fourth Beyond Hello™ dispensary in Fairfax, Virginia on August 31, 2022
Management Commentary
“We are pleased to report solid second quarter top-line growth and improved sequential profitability, a strong indication that our strategy, capital investments and cost savings initiatives are building a strong foundation on which we can continue to execute, despite the challenging macroeconomic environment,” said Jim Cacioppo, Chief Executive Officer, Chairman and Founder of Jushi Holdings Inc. “The development of our footprint in Nevada, including the addition of NuLeaf’s high-quality assets, were meaningful contributors to our retail performance in the second quarter."
Mr. Cacioppo continued, “In the second quarter, we completed the first phase of construction of the cultivation portion of our grower-processor facilities in Pennsylvania and Virginia. In these two very important markets for Jushi, we are focused on expanding production, improving the sell-through rate of our own-branded products at our Beyond HelloTM stores and building-out our wholesale business. We are also focused on diversifying our product portfolio, including the introduction of many new strains, along with hydro-carbon products and Live Rosin vapes and concentrates that will allow us to differentiate our product offering, while continuing to meet consumer demand."
“Our team has done a commendable job navigating through these challenging market conditions. I am confident that our strong foundation and cost discipline will ensure we maintain our momentum into the second half of the year. We are excited about what lies ahead for Jushi and believe we are well-positioned to capitalize on the industry opportunity and drive long-term value for our shareholders," concluded Mr. Cacioppo.
Use of Non-GAAP Financial Information
We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. For further information regarding these non-GAAP measures, including the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please refer to the financial tables below, as well as the “Reconciliation of Non-GAAP Financial Measures” section of this press release.
Financial Results for the Second Quarter 2022
The following is a tabular summary and commentary of revenue, gross profit, adjusted gross profit, net income (loss), and net income (loss) per share for the three month periods ended June 30, 2022, March 31, 2022, and June 30, 2021.
($ in millions, except per share amounts)
| Quarter Ended June 30, 2022 | Quarter Ended March 31, 2022 | % Change | Quarter Ended June 30, 2022 | Quarter Ended June 30, 2021 | % Change | |||||||||||
| Revenue | $ | 72.8 | $ | 61.9 | 17.6 | % | $ | 72.8 | $ | 47.7 | 52.4 | % | ||||
| Gross profit | 26.7 | 19.1 | 39.5 | % | 26.7 | 22.8 | 17.2 | % | ||||||||
| Adjusted gross profit | 27.8 | 24.8 | 12.3 | % | 27.8 | 23.4 | 19.1 | % | ||||||||
| Net income (loss) | 12.1 | (19.8 | ) | 12.1 | 3.6 | |||||||||||
| Net income (loss) per share - basic | $ | 0.06 | $ | (0.11 | ) | $ | 0.06 | $ | 0.02 | |||||||
| Net loss per share - diluted | $ | (0.15 | ) | $ | (0.16 | ) | $ | (0.15 | ) | $ | (0.09 | ) | ||||
Revenue in Q2 2022 increased 52.4% to $72.8 million as compared to $47.7 million in the second quarter of 2021 (“Q2 2021”), driven by the Company’s acquisitions in Nevada and Massachusetts, and new Beyond Hello™ store openings in Pennsylvania and Virginia. Revenue increased 17.6% to $72.8 million from $61.9 million in Q1 2022. The 17.6% increase in revenue was primarily driven by the acquisitions in Nevada in the first half of 2022, including contributions from four new state dispensaries, increased retail and wholesale activity in Massachusetts, and growth in retail sales in Illinois and Virginia.
Gross profit in Q2 2022 was $26.7 million, or 36.7% of revenue, compared to $19.1 million, or 30.9% of revenue in Q1 2022. Adjusted gross profit in Q2 2022 was $27.8 million, or 38.3% of revenue, compared to $24.8 million, or 40.0% of revenue in Q1 2022. Adjusted gross margin was negatively impacted by the under absorption of fixed costs at the Company's grower-processor facilities as the wholesale business scales and increased promotional activity of Jushi branded products in Pennsylvania.
Operating expenses in Q2 2002 were $38.7 million, or 53.3% of revenue, compared to $37.3 million, or 60.3% of revenue in Q1 2022. The 703 basis point improvement in operating expenses as a percentage of revenue was primarily driven by managing labor and staffing expenses across the organization and lower share based compensation.
Q2 2022 net income was $12.1 million, or $0.06 per basic share and net loss of $0.15 per diluted share, compared to net income of $3.6 million, or $0.02 per basic share and net loss of $0.09 per diluted share, in Q2 2021. The net loss of $0.15 per diluted share in Q2 2022 was primarily due to the dilutive impact of the outstanding warrant derivative liability.
Adjusted EBITDA in Q2 2022 was $0.5 million, an increase of $1.4 million as compared to $(0.9) million in Q1 2022 and a decrease of $4.1 million compared to $4.6 million in Q2 2021. Adjusted EBITDA expansion was slowed by infrastructure and headcount investments at our grower processors that continue to have a transitional impact as the Company scales and slower-than-expected growth of wholesale operations.
Balance Sheet and Liquidity
As of June 30, 2022, the Company had approximately $43.2 million of cash and cash equivalents. The Company paid approximately $14 million in capital expenditures during Q2 2022. For the balance of the year, we expect capital expenditures to be in the range of $15 to 25 million, prior to any potential tenant improvement reimbursements or financings, for a total of $55 to $65 million for the full year 2022, subject to market conditions and regulatory changes. As of June 30, 2022, the Company had approximately $200 million in principal amount of total debt, excluding leases and property, plant, and equipment financing obligations. As of August 29, 2022, the Company’s Acquisition Facility had $60 million of available capacity, including the $25 million accordion feature. As of August 29, 2022, the Company’s issued and outstanding shares were 195,989,084 and its fully diluted shares outstanding were 290,921,762.
Outlook
Mr. Cacioppo commented, “Moving into the second half of the year, we are revising our fourth quarter 2022 annualized revenue to be between $320 to $350 million, with a low double digit Adjusted EBITDA margin. At the retail level, we expect to open three additional Beyond Hello™ stores in the next four months, including two locations in Virginia and one in Ohio. We are also moving an underperforming store in Pennsylvania. Moreover, we will continue work on adding additional operational grow rooms and expanding production at our grower-processor facilities as we look to increase the sell-through rate of our own branded products through our network of retail stores, along with pursuing wholesale opportunities.”
Mr. Cacioppo concluded, “By the end of 2022, we expect to operate 37 retail locations and approximately 330,000 sq. ft. of cultivation and processing capabilities, including 100,000 sq. ft. of canopy. As always, we are fiercely committed to generating return on investment for our shareholders, and I look forward to reporting on the meaningful strides we expect to make as we continue to strengthen our business through the remainder of 2022.”
Non-Reliance on Previously Issued First Quarter 2022 Financial Statements
In connection with the preparation of the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022, the Company's management identified errors in its previously issued unaudited condensed balance sheet as of March 31, 2022, resulting in the understatement of certain non-current assets and associated accruals. In addition, management identified errors in the unaudited condensed consolidated statement of cash flows for three months ended March 31, 2022. Such errors resulted in the understatement of net cash flows used in operating activities, the overstatement of net cash flows used in investing activities, and the understatement of net cash flows provided by financing activities during the three months ended March 31, 2022. The Company believes such errors did not impact the cash balance as of March 31, 2022, and further believes there is no net change in cash flows during the three months then ended. The Company also believes that such errors will not materially impact the unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2022.
As a result, the Company will be required to restate its unaudited condensed interim consolidated financial statements for the Quarter Ended March 31, 2022, filed in Canada on the System for Electronic Document Analysis and Retrieval (“SEDAR”) on May 27, 2022, as amended on June 24, 2022.
On August 28, 2022, the Company’s Audit Committee concluded, after discussion with the Company’s management and its advisors, that the Company’s previously issued unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022 (“First Quarter 2022 Interim Financial Statements “) were materially misstated due to such errors. As a result, the Company’s First Quarter 2022 Interim Financial Statements should no longer be relied upon. Similarly, any previously issued or filed reports, registration statements, press releases, earnings releases and investor presentations or other communications describing the Company's First Quarter 2022 Interim Financial Statements should no longer be relied upon.
The Company will, as soon as practicable, make the appropriate adjustments, which will include restated consolidated financial statements and any other appropriate revisions.
Conference Call and Webcast Information
The Company will host a conference call to discuss its financial results for the second quarter 2022 at 9:00 a.m. ET today, Monday, August 29, 2022.
| Event: | Second Quarter 2022 Financial Results Conference Call |
| Date: | Monday, August 29, 2022 |
| Time: | 9:00 a.m. Eastern Time |
| Live Call: | 1-866-374-5140 (U.S. Toll-Free) / 1-866-455-3403 (Canada Toll-Free) |
| Conference ID: | 53845580# |
| Webcast: | Register |
For interested individuals unable to join the conference call, a webcast of the call will be available for one year following the conference call and can be accessed via webcast on Jushi’s Investor Relations website.
About Jushi Holdings Inc.
We are a vertically integrated cannabis company led by an industry-leading management team. In the United States, Jushi is focused on building a multi-state portfolio of branded cannabis assets through opportunistic acquisitions, distressed workouts, and competitive applications. Jushi strives to maximize shareholder value while delivering high-quality products across all levels of the cannabis ecosystem. For more information, visit jushico.com or our social media channels, Instagram, Facebook, Twitter and LinkedIn.
Forward-Looking Information and Statements
This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation as well as statements that may constitute "forward-looking statements" within the meaning of within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, contained in this press release, including statements regarding our strategy, future operations, intended expansion of our retail operations and production capacity, intended expansion of our cultivation facilities, future financial position, projected costs, prospects, plans and objectives of management, including without limitation Q4 2022 annualized guidance, as well as expected filings, materiality or significance and effects of errors on current or prior period financial statements, and any anticipated conclusions of the Company, the Audit Committee or the Company’s management related thereto, are forward-looking statements. These forward-looking statements are based on Jushi’s current expectations and beliefs concerning future developments and their potential effects. As a result, actual results could differ materially from those expressed by such forward-looking statements and such statements should not be relied upon. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans,” “expects” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,” or variations of such words and phrases or may contain statements that certain actions, events or results “may,” “could,” “would,” “might” or “will be taken,” “will continue,” “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include but are not limited to, information concerning the expectations regarding Jushi, or the ability of Jushi to successfully achieve business objectives, and expectations for other economic, business, and/or competitive factors. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including risks related to the ability of Jushi to successfully and/or timely achieve business objectives, including with regulatory bodies, employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws; compliance with extensive government regulation, the risk that additional information may arise prior to the completion of restated condensed consolidated interim financial statements or other subsequent events that would require us to make additional adjustments, as well as other risks, uncertainties and other cautionary statements in the Company’s public filings with the applicable securities regulatory authorities on the SEC’s website at www.sec.gov and on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected.
Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.
For further information, please contact:
Investor Relations Contact:
Michael Perlman
Executive Vice President of Investor Relations
561-281-0247
investors@jushico.com
Media Contact:
Ellen Mellody
570-209-2947
ellen@mattio.com
The financial results contained herein are the responsibility of management and have not been reviewed by the Company’s independent registered public accounting firm, remains subject to change, and should not be considered final until the Company files its second quarter 2022 Quarterly Report on Form 10-Q.
JUSHI HOLDINGS INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(in thousands of U.S. dollars, except share and per share amounts)
| Three Months Ended June 30, 2022 | Three Months Ended March 31, 2022 | Three Months Ended June 30, 2021 | |||||||||
| (unaudited) | |||||||||||
| REVENUE, NET | $ | 72,757 | $ | 61,888 | $ | 47,744 | |||||
| COST OF GOODS SOLD | (46,089 | ) | (42,776 | ) | (24,982 | ) | |||||
| GROSS PROFIT | $ | 26,668 | $ | 19,112 | $ | 22,762 | |||||
| OPERATING EXPENSES | $ | 38,745 | $ | 37,308 | $ | 26,357 | |||||
| LOSS FROM OPERATIONS | $ | (12,077 | ) | $ | (18,196 | ) | $ | (3,595 | ) | ||
| OTHER INCOME (EXPENSE): | |||||||||||
| Interest expense, net | $ | (10,947 | ) | $ | (10,116 | ) | $ | (6,868 | ) | ||
| Fair value gains (losses) on derivatives | 42,572 | 14,309 | 21,098 | ||||||||
| Other, net | 228 | (703 | ) | (487 | ) | ||||||
| Total other income (expense), net | $ | 31,853 | $ | 3,490 | $ | 13,743 | |||||
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | $ | 19,776 | $ | (14,706 | ) | $ | 10,148 | ||||
| Provision for income taxes | $ | (7,710 | ) | $ | (5,051 | ) | $ | (6,711 | ) | ||
| NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) | $ | 12,066 | $ | (19,757 | ) | $ | 3,437 | ||||
| Net loss attributable to non-controlling interests | $ | — | $ | — | $ | (190 | ) | ||||
| NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JUSHI SHAREHOLDERS | $ | 12,066 | $ | (19,757 | ) | $ | 3,627 | ||||
| EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - BASIC | $ | 0.06 | $ | (0.11 | ) | $ | 0.02 | ||||
| Weighted average shares outstanding - basic | 190,870,572 | 183,226,027 | 163,512,333 | ||||||||
| EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO JUSHI SHAREHOLDERS - DILUTED | $ | (0.15 | ) | $ | (0.16 | ) | $ | (0.09 | ) | ||
| Weighted average shares outstanding - diluted | 205,697,153 | 207,838,906 | 196,541,225 | ||||||||
JUSHI HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share amounts)
| June 30, 2022 (unaudited) | December 31, 2021 | ||||
| ASSETS | |||||
| Current assets | $ | 97,272 | $ | 154,356 | |
| Non-current assets | 610,586 | 494,785 | |||
| Total assets | $ | 707,858 | $ | 649,141 | |
| LIABILITIES AND EQUITY | |||||
| Current liabilities | $ | 156,576 | $ | 83,926 | |
| Non-current liabilities | 327,186 | 384,232 | |||
| Total liabilities | $ | 483,762 | $ | 468,158 | |
| Total equity | $ | 224,096 | $ | 180,983 | |
| Total liabilities and equity | $ | 707,858 | $ | 649,141 | |
JUSHI HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. dollars)
| Six Months Ended June 30, | |||||||
| 2022 | 2021 | ||||||
| (unaudited) | |||||||
| Net cash flows used in operating activities | $ | (27,738 | ) | $ | (13,137 | ) | |
| Net cash flows used in investing activities | (61,741 | ) | (43,391 | ) | |||
| Net cash flows provided by financing activities | 38,041 | 91,684 | |||||
| Effect of currency translation on cash and cash equivalents | (238 | ) | (132 | ) | |||
| NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | $ | (51,676 | ) | $ | 35,024 | ||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 95,487 | 85,857 | |||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | $ | 43,811 | $ | 120,881 | |||
JUSHI HOLDINGS INC.
Reconciliation of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA and Adjusted Gross Profit
In addition to providing financial measurements based on GAAP, the Company provides additional financial metrics that are not prepared in accordance with GAAP. Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Company’s financial performance. These non-GAAP financial measures are EBITDA, Adjusted EBITDA and Adjusted Gross Profit (defined below). Management believes that these non-GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. As there are no standardized methods of calculating these non-GAAP measures, the Company’s methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similar measures used by others, thus limiting their usefulness. Accordingly, these non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
EBITDA, Adjusted EBITDA and Adjusted Gross Profit are financial measures that are not defined under GAAP. Management defines EBITDA as net income (loss), or “earnings”, before interest, income taxes, depreciation and amortization. Management defines Adjusted EBITDA as EBITDA before: (i) non-cash share-based compensation expense and other one-time charges; (ii) inventory-related adjustments; (iii) fair value changes in derivatives; (iv) other income/expense items (v) transaction costs; and (vi) start-up costs. These financial measures are metrics that have been adjusted from the GAAP net income (loss) measure in an effort to provide readers with a normalized metric in making comparisons more meaningful across the cannabis industry, as well as to remove non-recurring, irregular and one-time items that may otherwise distort the GAAP net income measure. Other companies in the Corporation’s industry may calculate this measure differently, limiting their usefulness as comparative measures. Management defines Adjusted Gross Profit as gross profit, as reported, adjusted to exclude certain inventory-related adjustments and start-up costs (within cost of goods sold).
JUSHI HOLDINGS INC.
UNAUDITED RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(in thousands of U.S. dollars)
| Three Months Ended June 30, 2022 | Three Months Ended March 31, 2022 | Three Months Ended June 30, 2021 | |||||||||
| NET INCOME (LOSS)(1) | $ | 12,066 | $ | (19,757 | ) | $ | 3,437 | ||||
| Income tax expense | 7,710 | 5,051 | 6,711 | ||||||||
| Interest expense, net | 10,947 | 10,116 | 6,868 | ||||||||
| Depreciation and amortization(2) | 4,355 | 3,248 | 1,478 | ||||||||
| EBITDA (Non-GAAP) | $ | 35,078 | $ | (1,342 | ) | $ | 18,494 | ||||
| Non-cash share-based compensation and other one-time charges(3) | 4,800 | 7,159 | 4,573 | ||||||||
| Inventory-related adjustments(4) | 436 | 3,742 | — | ||||||||
| Fair value changes in derivatives | (42,572 | ) | (14,309 | ) | (21,098 | ) | |||||
| Other (income) expense items(5) | (1,096 | ) | 380 | 558 | |||||||
| Start-up costs(6) | 991 | 2,715 | 1,199 | ||||||||
| Transaction costs(7) | 2,885 | 780 | 870 | ||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 522 | $ | (875 | ) | $ | 4,596 | ||||
(1) Net income (loss) includes amounts attributable to non-controlling interests.
(2) Includes amounts that are included in cost of goods sold and in operating expenses.
(3) Includes: (i) non-cash share-based compensation expense for the period; and (ii) severance costs.
(4) Includes: (i) inventory step-up on business combinations; (ii) inventory recall reserves; and (iii) reserves for discontinued products. The inventory step-up on business combinations relate to the fair value write-up on inventory acquired on the business acquisition date and then sold subsequent to the acquisition date. The inventory recall reserves relate to the estimated impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates. The ban was lifted in June 2022.
(5) Includes: (i) remeasurement of contingent consideration related to acquisitions; (ii) losses (gains) on investments and financial assets; and (iii) losses (gains) on legal settlements.
(6) Expansion and start-up costs incurred in order to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations of each new location.
(7) Transaction costs include: (i) registration statement costs such as professional fees and other costs relating to our SEC registration; and (ii) acquisition and deal costs.
JUSHI HOLDINGS INC.
UNAUDITED RECONCILIATION OF GROSS PROFIT TO ADJUSTED GROSS PROFIT
(in thousands of U.S. dollars)
| Three Months Ended June 30, 2022 | Three Months Ended March 31, 2022 | Three Months Ended June 30, 2021 | ||||||
| Gross profit | $ | 26,668 | $ | 19,112 | $ | 22,762 | ||
| Inventory-related adjustments(1) | 436 | 3,742 | — | |||||
| Start-up costs (within COGS)(2) | 734 | 1,930 | 605 | |||||
| Adjusted gross profit | $ | 27,838 | $ | 24,784 | $ | 23,367 | ||
(1) Includes: (i) inventory step-up on business combinations; (ii) inventory recall reserves; and (iii) reserves for discontinued products. The inventory step-up on business combinations relate to the fair value write-up on inventory acquired on the business acquisition date and then sold subsequent to the acquisition date. The inventory recall reserves relate to the potential impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates. The ban was lifted in June 2022.
(2) Expansion and start-up costs incurred in order to prepare a location for its intended use. Start-up costs are expensed as incurred and are not indicative of ongoing operations of each new location.
Exhibit 99.2
Jushi Holdings Inc. Q2 2022 Earnings Presentation
Cautionary Statement Regarding Forward - Looking Statements 2 This presentation contains certain "forward - looking information" within the meaning of applicable Canadian securities legislation as well as statements that may constitute "forward - looking statements" within the meaning of within the meaning of the Private Securities Litigation Reform Act of 1995 , Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended . All statements, other than statements of historical facts, contained in this presentation, including statements regarding our strategy, future operations, intended expansion of our retail operations and production capacity, intended expansion of our cultivation facilities, future financial position, projected costs, prospects, plans and objectives of management, including without limitation Q 4 2022 annualized guidance, are forward - looking statements . These forward - looking statements are based on Jushi’s current expectations and beliefs concerning future developments and their potential effects . As a result, actual results could differ materially from those expressed by such forward - looking statements and such statements should not be relied upon . Generally, such forward - looking information or forward - looking statements can be identified by the use of forward - looking terminology such as “plans,” “expects” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,” or variations of such words and phrases or may contain statements that certain actions, events or results “may,” “could,” “would,” “might” or “will be taken,” “will continue,” “will occur” or “will be achieved” . The forward - looking information and forward - looking statements contained herein may include but are not limited to, information concerning the expectations regarding Jushi, or the ability of Jushi to successfully achieve business objectives, and expectations for other economic, business, and/or competitive factors . Many factors could cause actual future events to differ materially from the forward - looking statements in this presentation, including risks related to the ability of Jushi to successfully and/or timely achieve business objectives, including with regulatory bodies, employees, suppliers, customers and competitors ; changes in general economic, business and political conditions, including changes in the financial markets ; changes in applicable laws ; and compliance with extensive government regulation, as well as other risks, uncertainties and other cautionary statements in the Company’s public filings with the applicable securities regulatory authorities on the SEC’s website at www . sec . gov and on SEDAR at www . sedar . com . Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward - looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected . Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward - looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward - looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements . The forward - looking information and forward - looking statements contained in this presentation are made as of the date of this presentation, and the Company does not undertake to update any forward - looking information and/or forward - looking statements that are contained or referenced herein, except in accordance with applicable securities laws . All subsequent written and oral forward - looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice .
Jim Cacioppo Chief Executive Officer
Financial Highlights Operational Achievements Financial Performance Agenda Outlook Q&A 4
Solid Q2 Top - line Revenue Growth and Improved Sequential Profitability US$ Millions, prepared under U.S. GAAP 5 $61.9 $72.8 +17.6% Q2 2022 Q1 2022 Revenue *See Disclaimers for the definition of Adjusted EBITDA and “Reconciliation of Non - GAAP Financial Measures” at the end of this pr esentation $(0.9) $0.5 Adjusted EBITDA* Q2 2022 Q1 2022 +1.4MM
Improved Sell - Through Rate of Jushi Branded Product 6 • Significant profitability driver in the coming quarters • Sell - through rate improvement of 770 basis points to 21% vs. 14% in Q1 2022 • Flower and vape products in Pennsylvania reaching 40% of weekly sold units Jushi Brand Penetration
Continued Headway on Cost Savings Measures Retail • Optimized labor model in alignment with market activity and demand • Addition of Labor Analyst to maintain increased oversight, tracking, and reporting at all levels • Vendor and product rationalization has resulted in strategic pricing and promotion opportunities and working to improve margins at the store level Grower - Processor Facilities • New grow rooms in PA & VA to come online in the second half of 2022 • Increased productivity levels across the supply chain with improvements in genetic diversity, quality and yield • Cost efficiencies expected to result in higher margins for Jushi branded products as quality and diversity improves Corporate Staffing • Built out executive and senior management team, including an EVP of Wholesale Operations 7
Broadened Vertically Integrated Footprint in Nevada with Completion of NuLeaf Acquisition • 27,000 sq. ft. cultivation facility in Sparks, NV • 13,000 sq. ft. processing facility in Reno, NV • Four operating dispensaries , three in Las Vegas in Clark County, and one in Incline Village, Lake Tahoe NuLeaf Dispensaries (3) Beyond Hello Nevada (1) NuLeaf Cultivation Facility NuLeaf Processing Facility Grower - Processor Facility NV 8
Scranton, PA Grower - Processor Phase 1 of Cultivation Expansion Completed: VA & PA Expansion Projects Manassas, VA Grower - Processor 9
Scranton, PA 10
Manassas, VA Lakeville, MA Alexandria, VA
Established Fifth Vertically Integrated State - Level Operation in Ohio 12 PA Verticall y - Integrated Footprint CA NV CO IL OH PA VA FL M A Processing Facility Cultivation Facility Designated Area of Retail License Owned Land for Possible Cultivation Expansion Opening in Q4: Beyond Hello Ρ Cincinnati Tri - State Area Near - Term Priorities: • Establish retail presence • Drive sell - through of own branded products • Expand wholesale business • Diversify product offering • Explore retail M&A opportunities Awarded provisional medical retail license designated for Clermont County, Ohio
13 Expanded West Coast Retail Network Palm Springs, CA Grover Beach, CA Alexandria, VA Palm Springs, CA 13
Debuted Two New Innovative Product Lines Live Resin & Live Rosin Extract Products Now Available in PA Coming Soon to MA, NV, & VA More differentiated products coming to select markets in H2 2022 and 2023 14 Now Available in NV, OH, & VA Coming Soon to MA
Jon Barack President, Interim Chief Financial Officer 15
Q2 2022 Financial Performance $ 61.9 $72.8 Q1'22 Q2'22 Revenue $47.7 $ 72.8 Q2'21 Q2'22 +52.4% US$ Millions, prepared under U.S. GAAP The year - over - year increase in revenue of 52 . 4 % in Q 1 ’ 22 was primarily attributable to the acquisitions in Massachusetts and Nevada, and new Beyond Hello Œ store openings in Pennsylvania and Virginia . The sequential increase in revenue of 17 . 6 % was primarily driven by the Nevada acquisitions in the first half of the year, an increase in wholesale and retail activity in Massachusetts, and retail sales growth in Illinois and Virginia . +17.6 % 16
Q2 2022 Financial Performance $19.1 $26.7 Q1'22 Q2'22 Gross Profit $37.3 $38.7 Q1'22 Q2'22 Operating Expenses $(0.9) $0.5 Q1'22 Q2'22 Adj. EBITDA* 30.9% 36.7% US$ Millions, prepared under U.S. GAAP 53.0% 60.3% 17 *See Disclaimers for the definition of Adjusted EBITDA and “Reconciliation of Non - GAAP Financial Measures” at the end of this pr esentation
Liquidity *A s of June 30, 2022, includes cash, cash equivalents and short - term investments **As of June 30 , 2022 , excluding leases and property, plant and equipment financing obligations (Amounts in millions) $100mm Acquisition Facility • Available capacity is $35MM • Ability to increase capacity by up to $25MM through an accordion feature Capital Expenditures • $14MM for Q2 2022 • H2 2022 range of $15MM to $25MM Cash* Total Debt** Net Debt Subordinate Voting Shares Outstanding Fully Diluted Shares Outstanding $43.2 $200.0 $156.8 195,989,084 290,921,762 August 29, 2022 June 30, 2022 18
Outlook
Revenue and Adj. EBITDA* Outlook $17MM $10MM $81MM $209MM $320 - $350MM 2019A 2020A 2021A Q4 2022 Annualized Revenue Adj. EBITDA *See Disclaimers for the definition of Adjusted EBITDA at the end of this presentation. **Adjusted EBITDA for 2019 through 2021 was presented on a Non - IFRS basis. Q4 2022 Annualized Adjusted EBITDA is presented on a Non - GAAP basis. 2022 Outlook 20 Low Double Digit Adj. EBITDA Margin
Disclaimers JUSHI HOLDINGS INC. Reconciliation of Non - GAAP Financial Measures EBITDA, Adjusted EBITDA and Adjusted Gross Profit In addition to providing financial measurements based on GAAP, the Company provides additional financial metrics that are not prepared in accordance with GAAP . Management uses non - GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Company’s financial performance . These non - GAAP financial measures are EBITDA, Adjusted EBITDA and Adjusted Gross Profit (defined below) . Management believes that these non - GAAP financial measures reflect the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies . As there are no standardized methods of calculating these non - GAAP measures, the Company’s methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similar measures used by others, thus limiting their usefulness . Accordingly, these non - GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP . EBITDA, Adjusted EBITDA and Adjusted Gross Profit are financial measures that are not defined under GAAP . Management defines EBITDA as net income (loss), or “earnings”, before interest, income taxes, depreciation and amortization . Management defines Adjusted EBITDA as EBITDA before : ( i ) non - cash share - based compensation expense and other one - time charges ; (ii) inventory - related adjustments ; (iii) fair value changes in derivatives ; (iv) other income/expense items (v) transaction costs ; and (vi) start - up costs . These financial measures are metrics that have been adjusted from the GAAP net income (loss) measure in an effort to provide readers with a normalized metric in making comparisons more meaningful across the cannabis industry, as well as to remove non - recurring, irregular and one - time items that may otherwise distort the GAAP net income measure . Other companies in the Corporation’s industry may calculate this measure differently, limiting their usefulness as comparative measures . Management defines Adjusted Gross Profit as gross profit, as reported, adjusted to exclude certain inventory - related adjustments and start - up costs (within cost of goods sold) . 21
Adjusted EBITDA Reconciliation 22 (1) Net income (loss) includes amounts attributable to non - controlling interests. (2) Includes amounts that are included in cost of goods sold and in operating expenses. (3) Includes: ( i ) non - cash share - based compensation expense for the period; and (ii) severance costs. (4) Includes: ( i ) inventory step - up on business combinations; (ii) inventory recall reserves; and (iii) reserves for discontinued products. The inventory step - up on business combinations relate to the fair value write - up on inventory acquired on the business acquisition date and then sold subsequent to the acquisition date. The inventory recall reserves relate to the estimated impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates. The ban was l ift ed in June 2022. (5) Includes: ( i ) remeasurement of contingent consideration related to acquisitions; (ii) losses (gains) on investments and financial assets; an d (iii) losses (gains) on legal settlements. (6) Expansion and start - up costs incurred in order to prepare a location for its intended use. Start - up costs are expensed as incurr ed and are not indicative of ongoing operations of each new location. (7) Transaction costs include: ( i ) registration statement costs such as professional fees and other costs relating to our SEC registration; and (ii) acquisiti on and deal costs. JUSHI HOLDINGS INC. UNAUDITED RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (in thousands of U.S. dollars) Three Months Ended June 30, 2022 Three Months Ended March 31, 2022 Three Months Ended June 30, 2021 NET INCOME (LOSS) (1) $ 12,066 $ (19,757) $ 3,437 Income tax expense 7,710 5,051 6,711 Interest expense, net 10,947 10,116 6,868 Depreciation and amortization (2) 4,355 3,248 1,478 EBITDA (Non-GAAP) $ 35,078 $ (1,342) $ 18,494 Non-cash share-based compensation and other one-time charges (3) 4,800 7,159 4,573 Inventory-related adjustments (4) 436 3,742 — Fair value changes in derivatives (42,572) (14,309) (21,098) Other (income) expense items (5) (1,096) 380 558 Start-up costs (6) 991 2,715 1,199 Transaction costs (7) 2,885 780 870 Adjusted EBITDA (Non-GAAP) $ 522 $ (875) $ 4,596
Adjusted Gross Profit Reconciliation 23 (1) Includes: ( i ) inventory step - up on business combinations; (ii) inventory recall reserves; and (iii) reserves for discontinued products. The inventory step - up on business combinations relate to the fair value write - up on inventory acquired on the business acquisition date and then sold subsequent to the acquisition da te. The inventory recall reserves relate to the potential impact of the Pennsylvania Department of Health recall and ban of vape products containing certain cannabis concentrates. The ba n was lifted in June 2022. (2) Expansion and start - up costs incurred in order to prepare a location for its intended use. Start - up costs are expensed as incurr ed and are not indicative of ongoing operations of each new location. JUSHI HOLDINGS INC. UNAUDITED RECONCILIATION OF GROSS PROFIT TO ADJUSTED GROSS PROFIT (in thousands of U.S. dollars) Three Months Ended June 30, 2022 Three Months Ended March 31, 2022 Three Months Ended June 30, 2021 Gross profit $ 26,668 $ 19,112 $ 22,762 Inventory-related adjustments (1) 436 3,742 — Start-up costs (within COGS) (2) 734 1,930 605 Adjusted gross profit $ 27,838 $ 24,784 $ 23,367
Q&A
Disclaimers NO OFFERS This presentation does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities of the Company in any jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction . The securities of the Company described herein have not been and will not be registered under the United States federal or state securities laws and may not be offered or sold in the United States, or to, or for the account or benefit of,
“U . S . Persons” as such term is defined in Regulation S under the United States Securities Act of 1933 , as amended (the “U . S . Securities Act”), unless an exemption from registration is available . Prospective investors will be required to represent, among other things, that they meet the requirements of an available exemption from the registration requirements of the U . S . Securities Act and are familiar with and understand the terms of the offering and have all requisite authority to make such investment . IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED . THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES OR ANY CANADIAN PROVINCIAL SECURITIES REGULATOR PASSED ON THE ACCURACY OR ADEQUACY OF THIS PRESENTATION . ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE . THIRD PARTY INFORMATION This presentation may include market and industry data which was obtained from various publicly available sources and other sources believed by the Company to be true . Although the Company believes it to be reliable, the Company has not independently verified any of the data from third - party sources referred to in this presentation or analyzed or verified the underlying reports relied upon or referred to by such sources, or ascertained the underlying assumptions relied upon by such sources . The Company does not make any representation as to the accuracy of such information . TARGET AUDIENCE This presentation is only addressed to those persons, which have been explicitly determined by the Company as recipients . The Company did not and will not authorize any third parties to distribute this presentation or make it available to persons not determined by the Company or to the public . Any unauthorized distribution or disclosure will constitute an infringement of the concluded non - disclosure agreement and the Company reserves the right to take further legal action in such cases . No action has been (or will be) taken by the Company that would permit the possession or distribution of this presentation . Persons into whose possession this presentation may come are required to inform themselves of and observe any corresponding restrictions . The Company does not accept any responsibility for any violation by any person of any such restrictions . REGULATORY Potential investors are aware that the cannabis market is highly regulated, and that various permits and authorizations are n ece ssary for the import, distribution, sale or other business activities related to medicinal cannabis. The respective regulations can be subject to change, which might affect the permits required. This presentation does not intend t o a dvertise the products of the Company. Any reference to the products serves only the information of potential investors and shall not incite the purchase of the products. TAXATION Prospective investors should be aware that the purchase of securities of the Company or any entity related thereto may have t ax consequences both in Canada and the United States. Each prospective investor is strongly encouraged to consult its own tax advisor concerning any purchase of securities of the Company or any entity related thereto and the holdin g a nd disposition of any such securities. This presentation does not address the tax consequences of the purchase, ownership or disposition of any such securities. COPYRIGHT All brands and trademarks mentioned in this presentation and possibly protected by third parties are subject without restrict ion to the provisions of the applicable trademark law and the ownership rights of the respective registered owners. The mere fact that a trademark is mentioned should not lead to the conclusion that it is not protected by the rights of third parties. The copyright for published objects created by the Company remains solely with the Company. Any duplication or use of objects such as diagrams, sounds or texts in other electronic or printed publications is not permit ted without the Company's agreement. CURRENCY All references to $ or “dollar” in this presentation are references to USD, unless otherwise indicated. 25