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Automotive Properties REIT Reports 2018 Fourth Quarter and Year-End Financial Results

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Automotive Properties Real Estate Investment Trust (TSX: APR.UN) (“Automotive Properties REIT” or the “REIT”) today announced its financial results for the fourth quarter (“Q4 2018”) and year ended December 31, 2018 (“2018”).

Q4 2018 Highlights

  • Property rental revenue was $13.7 million, an increase of 26.6% from the fourth quarter of 2017 (“Q4 2017”);
  • Net Operating Income1 (“NOI”) was $11.5 million, an increase of 25.1% from Q4 2017;
  • Total and Same Property Cash NOI1 were $10.8 million and $8.4 million, respectively, representing increases of 27.5% and 1.3%, respectively, from Q4 2017;
  • Net Income was $13.7 million, compared to $6.6 million in Q4 2017;
  • Funds from Operations1 (“FFO”) increased 16.8% to $7.3 million, from $6.2 million in Q4 2017. FFO1 per unit of the REIT (“Unit”) was $0.234 (diluted), compared to $0.237 (diluted) in Q4 2017;
  • Adjusted Funds from Operations1 (“AFFO”) increased 20.5% to $6.8 million, from $5.6 million in Q4 2017. AFFO1 per Unit was $0.219 (diluted), up from $0.215 (diluted) in Q4 2017;
  • Acquisition of the Brimell Toyota dealership property in Toronto from a third-party vendor for a purchase price of $26.0 million;
  • Acquisition of a portfolio of properties located in Ottawa and Kingston, Ontario from a privately-held automotive dealership group for a purchase price of $101.4 million; and
  • The REIT paid monthly cash distributions of $0.067 per Unit, resulting in total distributions paid of approximately $6.0 million, representing an AFFO payout ratio1 of approximately 91.8%.

2018 Highlights

  • Property rental revenue was $48.3 million, an increase of 15.4% from the year ended December 31, 2017 (“2017”);
  • NOI1 increased 14.9% to $40.7 million compared to the prior year;
  • FFO1 increased 8.5% to $27.2 million, from $25.1 million in 2017. FFO1 per Unit was $0.987 (diluted), compared to $0.974 (diluted) in 2017;
  • AFFO1 increased 10.5% to $25.0 million, from $22.7 million in 2017. AFFO1 per Unit was $0.906 (diluted), up from $0.879 (diluted) in 2017;
  • The REIT paid distributions totaling $0.804 per Unit, resulting in total distributions paid of approximately $21.9 million, representing an AFFO payout ratio1 of approximately 88.7%.
  • The REIT completed approximately $209 million in acquisitions and ended the year with 54 income-producing commercial properties comprising 2.0 million square feet of gross leasable area, compared with 39 properties comprising 1.4 million square feet at year-end 2017; and
  • The REIT continued to diversify its tenant base, adding three new dealership groups as tenants, resulting in the Dilawri Group representing approximately 64% of the REIT’s total GLA at year-end, compared to approximately 88% as at December 31, 2017.

“We continued to deliver on our growth and diversification strategy in 2018. We completed approximately $127 million in acquisitions in the fourth quarter and a total of approximately $209 million for the year. We added three new dealership group tenants to our portfolio and generated strong growth in revenue, NOI, FFO and AFFO,” said Milton Lamb, CEO of Automotive Properties REIT. “Through these acquisitions, we expanded our tenant base and market presence and increased our automotive brand representation. Looking ahead, we are well positioned to continue driving value for our unitholders.”

1 NOI, Cash NOI, Same Property Cash NOI, FFO, AFFO, Debt to GBV, FFO Payout Ratio, AFFO Payout Ratio, and ACFO (as defined below) are non-IFRS financial measures. See “Non-IFRS Financial Measures” in this news release. References to “Same Property” correspond to properties that the REIT owned in Q4 2017 and 2017, thus removing the impact of acquisitions.

Financial Results Summary

Three months ended 
December 31,

Twelve months ended 
December 31,

2018

2017

Change

2018

2017

Change

($000s, except per Unit amounts)

Rental revenue (1)

$13,741

$10,856

26.6%

$48,254

$41,803

15.4%

NOI

11,493

9,188

25.1%

40,745

35,452

14.9%

Cash NOI

10,805

8,475

27.5%

37,835

32,522

16.3%

Same Property Cash NOI (1)

8,436

8,326

1.3%

30,743

30,326

1.4%

Net Income (2)

13,666

6,594

107.2%

39,150

26,249

49.1%

FFO

7,274

6,228

16.8%

27,247

25,110

8.5%

AFFO

6,796

5,642

20.5%

25,028

22,657

10.5%

Distributions per Unit

$0.201

$0.201

$0.804

$0.804

FFO per Unit – basic (3)

0.235

0.238

-0.003

0.991

0.976

0.015

FFO per Unit – diluted (4)

0.234

0.237

-0.003

0.987

0.974

0.013

AFFO per Unit – basic (3) 

0.220

0.216

0.004

0.911

0.881

0.030

AFFO per Unit – diluted (4)   

0.219

0.215

0.004

0.906

0.879

0.027

Ratios (%)

FFO payout ratio

85.9%

84.8%

1.1%

81.5%

82.5%

-1.0%

AFFO payout ratio

91.8%

93.5%

-1.7%

88.7%

91.5%

-2.8%

Debt to GBV

54.7%

48.5%

6.2%

54.7%

48.5%

6.2%

(1)

Rental revenue is based on rents from leases entered into with tenants, all of which are triple-net leases and include recoverable realty taxes and straight-line adjustments. Same Property Cash NOI is based on rental revenue for the same asset base having consistent gross leasable area in both periods.

(2)

The increase in Net Income for Q4 2018 includes changes in the fair value adjustments for interest rate swaps, the Class B limited partnership units of Automotive Properties Limited Partnership (“Class B LP Units”), and investment properties. Please refer to the consolidated financial statements of the REIT and notes thereto.

(3)

FFO per Unit and AFFO per Unit – basic is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding Units and Class B LP Units. The total weighted average number of Units outstanding (including Class B LP Units) – basic for Q4 2018 and 2018 was 30,898,283 and 27,483,193 respectively.

(4)

FFO per Unit and AFFO per Unit – diluted is calculated by dividing the total FFO and AFFO by the amount of the total weighted average number of outstanding Units, Class B LP Units, deferred units (“DUs”) and income deferred units (“IDUs”) granted to certain independent trustees and management of the REIT. The total weighted average number of Units outstanding (including Class B LP Units, DUs and IDUs) on a fully diluted basis for Q4 2018 and 2018 was 31,057,609 and 27,617,646 respectively.

Rental revenue was $13.7 million in Q4 2018 and $48.3 million in 2018, representing increases of 26.6% and 15.4%, respectively, from Q4 2017 and 2017. Increased rental revenue in both periods reflects growth from properties acquired subsequent to 2017 and contractual annual rent increases across a significant portion of the REIT’s portfolio.

Property costs were $2.2 million in Q4 2018 and $7.5 million in 2018, compared to $1.7 million and $6.4 million, respectively, in Q4 2017 and 2017. The increases in property costs in both periods were attributable to the properties acquired subsequent to 2017. Property costs as a percentage of revenue increased from 15.4% in Q4 2017 to 16.4% in Q4 2018, and from 15.2% in 2017 to 15.6% in 2018. The increases in both periods were primarily due to higher realty tax payments in respect of the properties acquired subsequent to 2017. These costs are recoverable from the applicable tenants pursuant to the terms of the applicable triple-net leases.

Total and Same Property Cash NOI totaled $10.8 million and $8.4 million, respectively, representing increases of 27.5% and 1.3%, respectively, as compared to Q4 2017. For 2018, Total and Same Property Cash NOI were $37.8 million and $30.7 million, respectively, representing increases of 16.3% and 1.4%, respectively, as compared to 2017. The quarterly and annual increases in Cash NOI were primarily attributable to the properties acquired subsequent to 2017. The growth in quarterly and annual Same Property Cash NOI reflects annual contractual rent increases across a significant portion of the REIT’s portfolio.

Net Income increased to $13.7 million in Q4 2018 and $39.2 million in 2018, compared to $6.6 million in Q4 2017 and $26.2 million in 2017. The quarterly and annual increases were primarily due to the growth in NOI and the change in fair value adjustments for Class B LP Units, partially offset by the change in the fair value adjustments for interest rate swaps and investment properties, higher interest expense and other financing charges, and general and administrative expenses.

FFO was $7.3 million in Q4 2018 and $27.2 million in 2018, representing increases of 16.8% and 8.5%, respectively, from Q4 2017 and 2017. The increases in both periods were primarily due to the impact of the properties acquired subsequent to 2017. On a per Unit basis, Q4 2018 FFO was $0.234 (diluted), compared to $0.237 (diluted) in Q4 2017, while 2018 FFO was $0.987 (diluted), compared to $0.974 (diluted) in 2017. The per Unit decline in Q4 2018 was primarily attributable to the dilutive effect of the REIT’s equity offering in October 2018. The per Unit increase in 2018 was primarily due to the impact of the properties acquired subsequent to 2017.

AFFO was $6.8 million in Q4 2018 and $25.0 million in 2018, representing increases of 20.5% and 10.5%, respectively, from the comparable prior-year periods. On a per Unit basis, Q4 2018 AFFO was $0.219 (diluted), compared to $0.215(diluted) in Q4 2017, while 2018 AFFO was $0.906 (diluted), compared to $0.879 (diluted) in 2017. The increases in AFFO and AFFO per Unit in both periods were primarily attributable to the impact of the properties acquired subsequent to 2017.

Adjusted Cash Flow from Operations1 (“ACFO”) for Q4 2018 and 2018 increased to $6.6 million and $25.7 million, respectively, compared to $5.9 million and $22.6 million, respectively, in Q4 2017 and 2017. The quarterly and annual increases in ACFO were primarily due to the impact of the properties acquired subsequent to 2017. The ACFO payout ratio was 97.4% in Q4 2018 and 86.8% in 2018, compared to 89.4% and 91.6% in Q4 2017 and 2017, respectively. The higher ACFO payout ratio for Q4 2018 reflects the REIT’s equity offering in October 2018. The lower ACFO payout ratio for 2018 was attributable to the properties acquired subsequent to 2017.

Cash Distributions
The REIT is currently paying monthly cash distributions of $0.067 per Unit, representing $0.804 per Unit on an annualized basis. For Q4 2018, the REIT paid total distributions of $6.0 million to unitholders, or $0.201 per Unit, representing an AFFO payout ratio of 91.8%. For 2018, the REIT paid total distributions of $21.9 million to unitholders, or $0.804 per Unit, representing an AFFO payout ratio of 88.7%. The lower AFFO payout ratios for Q4 2018 and 2018 were primarily attributable to the impact of the properties acquired subsequent to 2017.

Units Outstanding
As at December 31, 2018, there were 21,796,552 Units and 9,933,253 Class B LP Units outstanding.

Financial Statements 
The REIT’s audited consolidated financial statements and related Management’s Discussion & Analysis (“MD&A”) for the year ended December 31, 2018 are available on the REIT’s website at www.automotivepropertiesreit.ca and on SEDAR at www.sedar.com.

Conference Call
Management of the REIT will host a conference call for analysts and investors on Friday, March 22, 2019 at 10:00 a.m. (ET). The dial-in numbers for the conference call are (416) 764-8609 or (888) 390-0605. A live and archived webcast of the call will be accessible via the REIT’s website www.automotivepropertiesreit.ca.

To access a replay of the conference call, dial (416) 764-8677 or (888) 390-0541, passcode: 133034. The replay will be available until March 29, 2019.

 

SOURCE Automotive Properties Real Estate Investment Trust

Blockchain

eToroX Adds Dash, USDC, USDT and 5 New Stablecoins

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eToroX, the blockchain subsidiary of global investment platform eToro, has added five new fiat stablecoins, a new cryptoasset, two further established stablecoins and a crypto-commodity pair, signalling its rapid growth, having only launched only six months ago. There are now 26 tradable assets available on the exchange.

The new assets announced today are:

  • Turkish Lira (TRYX), Polish Zloty (PLNX), South African Rand (ZARX), Hong Kong Dollar (HKDX), and Singapore Dollar (SGDX)
  • Peer-to-peer cryptoasset, Dash
  • Circle’s USDC and Tether’s USDT stablecoins
  • GOLDX/BTC pairing

eToroX is committed to supporting the needs of algo traders seeking to diversify into cryptoassets on a secure and regulated platform. These new additions also demonstrate eToroX’s focus on Asian markets.

Doron Rosenblum, Managing Director of eToroX commented, “We see the addition of USDC and USDT as a way for eToroX to further meet the needs of professional and institutional algo traders, particularly in the Asian markets. Adding five new stablecoins, plus the addition of the Dash cryptoasset, demonstrates our ongoing commitment to bridge the gap between the world of blockchain and traditional financial markets.”

GoldX – the tokenized gold stablecoin – is now available as a base currency for a trading as a pair with Bitcoin (GOLDX/BTC). Increasingly, bitcoin is being compared with gold as a store of value. Gold is viewed as a safe haven asset, and bitcoin is increasingly being referred to as ‘digital gold’.

Rosenblum continued: “Our Gold/Bitcoin pair provides a means to trade between the old and the new stores of value, making Gold/BTC an extremely special and interesting combination.

With today’s new additions, eToroX has added a total of 96 trading pairs since its inception in April this year, and currently offers seventeen eToroX stablecoins in addition to USDC and USDT.

The pairs include: USDEX/ZARX, ZARX/JPYX, EURX/PLNX, USDEX/PLNXUSDEX/HKDXUSDEX/TRYXUSDEX/SGDXETH-USDTXRP-USDTLTC-USDTBCH-USDTXLM-USDTEOS-USDTTRX-USDTBTC-USDCETH-USDCXRP-USDCLTC-USDCBCH-USDCXLM-USDCEOS-USDC, and TRX-USDC.

As eToroX continues to open up the world of trading on the blockchain, more trading pairs will be announced. eToroX will also be adding additional cryptoassets and stablecoins to the exchange in the coming months.

 

SOURCE eToro

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Ucommune Hosts 4th World INS Conference in Beijing, Releases Future Trends White Paper

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Ucommune Releases Future Trends White Paper

 

Ucommune, China’s largest co-working community operator, recently hosted the 4th World INS Conference in Beijing, China. Designed to facilitate information exchange and cooperation in the innovation economy, this year’s conference brought together thousands of entrepreneurs and thought leaders around the theme “The Future of Co-inventing”, echoing Ucommune’s three core values, “Innovation, Network and Share”.

The conference welcomed over 50 experts, scholars, industry leaders, investment institutions, entrepreneurial innovators to discuss a range of trending topics spanning from smart living solutions to innovation and business growth.

“As China’s largest co-working operator, it is our responsibility to connect people and facilitate the exchange of ideas to drive innovation,” said Dr Daqing Mao, Founder and Chairman of Ucommune. “Now in its fourth year, the INS World Conference brings together the most brilliant minds from across the country to create and share. Enriched with the spirit of innovation, sharing and connection, this conference looks at how future technology trends, creative ideas and cultural developments are transforming our daily life and work.”

During the conference, Ucommune announced the findings of their annual “The Future of Co-inventing: Report on Future Trends in 2019” white paper, providing valuable academic insights for data analysts, economic observers and political researchers. The 96-page report includes data from 76 data sets and ten cities to examine how artificial intelligence will shape future homes, public spaces, and businesses across nine scenarios and industries: blockchain technology; 6G; connected family healthcare systems; VR applications; autonomous driving and facial recognition.

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Neptune Reports Fiscal 2020 Second Quarter Results

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Neptune Wellness Solutions Inc. (“Neptune” or the “Corporation”) (NASDAQ: NEPT) (TSX: NEPT), today announced its financial and operating results for the three-month period ended September 30, 2019. All amounts are in thousands of Canadian dollars except specified otherwise.

Second Quarter Financial and Corporate Highlights:

  • Total revenues for the three-month period ended September 30, 2019 amounted to $6,512, representing an increase of $2,151 or 49% over the first quarter ended June 30, 2019 and a decrease of $559 or 8% compared to $7,071 for the three-month period ended September 30, 2018.
  • Revenues from the Cannabis segment reached $1,220, an increase of $1,182 sequentially from the three-month period ended June 30, 2019. Neptune started the commercial operations of its Cannabis segment in March 2019 and hence had no revenues in the prior year period ended September 30, 2018.
  • Revenues from the Nutraceutical segment for the three-month period ended September 30, 2019 amounted to $5,149, representing an increase of 20% sequentially, over the first quarter ended June 30, 2019 and a decrease of $1,922 or 27% compared to $7,071 for the three-month period ended September 30, 2018. The decrease in revenues was attributable to timing of orders of our nutrition business.
  • Net loss for the three-month period ended September 30, 2019 amounted to $20,775 compared to $3,050 for the three-month period ended September 30, 2018, an increase of $17,725. The increase is mainly attributable to an increase in stock-based compensation expense, depreciation and amortization and to accretion expense on contingent consideration combined with a lower Adjusted EBITDA1.
  • Adjusted EBITDA1 decreased by $3,353 for the three-month period ended September 30, 2019 to ($4,581) compared to the three-month period ended September 30, 2018. The decrease in Adjusted EBITDA1 is mainly attributable to investments made in the cannabis segment to grow the workforce in anticipation of increased sales volume as well as an increase in salaries and benefits at the corporate level.
  • On July 24, 2019, Neptune completed the acquisition of the assets of SugarLeaf. Neptune paid an initial consideration for SugarLeaf of $23.7 million (US$18.1 million), a combination of $15.8 million (US$12 million) in cash and 7.9 million (US$6.1 million) or 1,587,301 in common shares.
  • On August 14, 2019, Neptune announced the creation of Neptune Ventures, a strategic investment arm and technology incubator which is expected to stimulate innovation and partnerships in the cannabis and wellness industries.
  • On August 22, 2019, Neptune announced the addition of two new members to its team to support the company’s rapid growth. Neptune appointed Stephen Lijoi, as Vice-President Operations and José Dominguez as Cannabis Sommelier and Formulation Specialist.
  • In August 2019, Neptune appointed Mr. Philippe Trudeau to its Board of Directors. Mr. Trudeau is a visionary leader with extensive experience in consumer goods. Mr. Trudeau spent 25 years at Trudeau Corporation, a consumer products company marketed in more than 70 countries, where he held many key positions including president from 2010 to 2018.

Subsequent to Quarter-end

  • On October 4, 2019, Neptune announced a new strategic partnership with American Media LLC (“American Media”) which will provide US$12 million in advertising and creative services to Neptune to support the marketing and commercialization of Neptune’s consumer-facing brands in the U.S. Neptune will issue 3,000,000 warrants to AMI, each warrant allowing the holder to purchase one common share of Neptune at an exercise price of US$8.00 per share and with a 5-year expiration date.
  • On October 17, 2019, Neptune announced that it entered into an agreement to provide extraction services to a large U.S.-based farming services operation. Under the contract terms, Neptune will receive hemp biomass to be processed and transformed into crude oil extracts. The 2-year agreement could reach a total value in excess of US$20 million.
  • On October 17, 2019, the Corporation announced the appointment of Brett DuBose as Vice-President of Sales for the U.S. Region. Brett has more than 20 years of sales experience, most recently with Lonza Consumer Health and Nutrition where he was Associate Director Sales, for the Eastern U.S and Canada.
  • On November 11, 2019, Neptune announced that it has entered into a definitive agreement with International Flavors & Fragrances Inc. (NYSE: IFF) to co-develop hemp-derived CBD products for the mass retail and health & wellness markets. Under this strategic product development partnership, IFF will leverage its intellectual property (IP) for taste, scent, nutrition, and ingredients to provide essential oils and product development resources. Neptune will leverage its proprietary cold ethanol extraction processes and formulation IP to deliver high quality, full and broad-spectrum extracts for the development, manufacture and commercialization of hemp-derived products, infused with essential oils, for the cosmetics, personal care and home care markets. The initial launch will include a variety of topical products across the aromatherapy category, a market estimated at approximately $3 billion annually. Neptune will issue 2,000,000 warrants to IFF, each warrant allowing the holder to purchase one common share of Neptune at an exercise price of US $12.00 per share and with a 5-year expiration date.

“We have a strong opportunity in the consumer market, and in recent months I have been focused on developing our B2B and B2C strategy for the U.S. market. According to most estimates, the U.S. hemp-derived CBD market is expected to exceed US$20 billion at retail in the next five years. This market size is roughly three to four times larger than the expected size of the Canadian cannabis market and represents our largest opportunity today. The collaboration agreement with IFF and the American Media partnership will help raise the awareness of our CBD brand, Forest Remedies™. We expect to introduce our first consumer products at retail locations and online with rollout commencing in the first half of CY2020,” stated Michael Cammarata, CEO of Neptune.

“We achieved a significant milestone in mid October when we completed our Phase II capacity expansion. This additional capacity will alleviate our constraints in the near-term and help accelerate the company’s revenue growth in the cannabis segment. However, the start-up of our ethanol process has been longer than initially expected which has delayed the full ramp-up by one month to the end of December. With regards to our CO2 operations, we have been running seven days a week since the end of July and we are pleased with our yields and quality of extracts.” Said Stephen Lijoi, VP Operations.

“I believe we have created a very solid foundation to grow our company with a well capitalized balance sheet. Moreover, we are at an inflection point in terms of profitability. The dynamics of the legal cannabis and hemp extraction markets remain favorable with a scarcity of biomass extraction capacity in both Canada and the U.S., which should lead to continued sustained demand for our extraction services. We expect our revenue growth to accelerate for the remainder of the FY2020 based on the strong demand witnessed for extraction services. Lastly, we have a comprehensive strategy based on geographic diversification, and a wide scope of value-added services, as well as unique and distinctive products,” concluded Mr. Cammarata.

Financial Results

Total revenues reached $6,512 for the three-month ended September 30, 2019, down versus last year’s revenues of $7,071. The majority of the revenues during the quarter were generated in the Nutraceutical segment. The decline in total revenues was attributable to timing of orders of our nutrition business.

For the three-month ended September 30, 2019, Adjusted EBITDA1 was a loss of $4,581 compared with a loss of $1,228 last year. The increased Adjusted EBITDA1 loss is due to investments made in the cannabis segment to grow the workforce in anticipation of increased sales volume as well as an increase in salaries and benefits at the corporate level. The decrease can also be explained by an increase in litigation legal fees and additional SG&A coming from SugarLeaf.

Neptune reported a net loss of $20,775 for the three-month ended September 30, 2019, an increase compared to a net loss of $3,050 last year. The increase in net loss is mainly attributable to an increase in stock-based compensation expense, depreciation and amortization and accretion expense recognized on contingent consideration as well as for the same reasons as stated in the Adjusted EBITDA1 section above.

Cash and cash equivalents were $24,399 as of September 30, 2019.  On November 6, 2019, Neptune closed a revolving line of credit with a large Canadian financial institution for an amount of $5 million to support the nutraceutical segment.

Management Update

This summer Neptune initiated a search process to hire a new CFO. This process is well underway and the Corporation’s new CFO is expected to be announced in the coming months. Following the departure of Mario ParadisClaudie Lauzon has been appointed interim CFO of the Company. Ms. Lauzon is the Corporate Controller of Neptune and has been employed by the Corporation for 10 years.

Official Launch of the Forest Remedies Brand

Our CBD consumer brand, Forest Remedies™, was acquired along with the purchase of SugarLeaf Labs. Initially, Forest Remedies™ was used to gain consumer insights on CBD finished product forms. Since its beginning in the fall of 2018, the brand has gained traction locally. The increasing demand for high quality hemp-derived products has led Neptune to recently rebrand Forest Remedies™ to appeal to a wider audience. Forest Remedies™ offers finished products such as tinctures, balms, massage oils, soft gels, and pet soothers. Additional products are currently in development. Forest Remedies™ products will continue to be available online (www.forestremedies.com) and could enter mass market retailers in calendar 2020. With innovation and a focus on quality, Neptune is confident in its ability to successfully grow the Forest Remedies™ brand. The company will deploy a marketing campaign and will be launching a new online platform in early calendar 2020.

Research and Development Initiatives

Neptune is undergoing and/or planning 10 research and clinical studies to further elucidate the benefits of its MaxSimil omega-3 licensed technology. Among the several initiatives underway is a clinical study that is a follow-up on a successful nonclinical study to determine if MaxSimil fish oil, when used as a carrier oil, can increase the absorption of cannabinoids in humans. In another study Neptune will try to establish if our proprietary formulation of MaxSimil fish oil and CBD can help with occasional anxiety from everyday life events. We also have an upcoming clinical study which will look at the use of our proprietary formulation of MaxSimil fish oil and CBD for workout recovery to determine if athletes will benefit from its use. This builds on the findings of our mitochondrial activity and inflammation resolution studies. We have increased our clinical activity because of the benefits we see in combining our omega-3 formulations with cannabinoids and have increased the size of our R&D team accordingly.

Outlook

“We continue to see strong demand for extraction services in Canada. We have provided extraction services to five clients in Canada and expect to continue to diversify our client base in the coming months. While the ramp-up of our phase II ethanol extraction is slower than originally anticipated, once running at full capacity by the end of December, this custom-built specialized equipment should provide Neptune with low operational costs,” said Stephen Lijoi, VP Operations at Neptune.

The construction of our Phase IIIa is ongoing and is being adapted to our customers’ needs and changes in the Canadian Federal and Provincial regulatory requirements for Cannabis 2.0. This process is expected to be completed before fiscal year-end, subject to Health Canada approval. The expansion of our packaging capabilities is tracking as planned along with the installation of security measures for our warehouse to comply with Health Canada’s requirements. We expect to send a license amendment to Health Canada for the certification of those areas early in calendar 2020.

The next few months will be very active at Neptune. We have several projects ongoing in Canada such as obtaining our organic certification, applying for our sales license and further down the road, seeking our EU GMP certification. These future catalysts should help the company accelerate its revenue growth in Canada.

Our U.S. operations are scaling up as planned and our facility in North Carolina should reach a processing capacity of 1,500,000 kg of biomass annually by the end of December, as expected. The recent changes implemented by the USDA are expected to increase the cultivation of hemp in the US and could translate into increased demand for biomass extraction in the coming years. The recent client wins are an endorsement of our ability to provide superior extraction services. Our talent pool continues to grow with the addition of key personnel such as a VP Sales – U.S. Region and a Head – Quality Assurance both of which should help support additional growth.

 

SOURCE Neptune Wellness Solutions Inc.

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