Enrollment continues in RECONNECT, a confirmatory pivotal Phase 3 trial of Zygel in patients with Fragile X syndrome (FXS); topline results expected second-half 2023

$55.9 million in cash and cash equivalents at September 30, 2022; Cash runway into first quarter 2024

DEVON, Pa., Nov. 14, 2022 (GLOBE NEWSWIRE) — Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE), the leader in innovative pharmaceutically-produced transdermal cannabinoid therapies for orphan neuropsychiatric disorders, today reported financial results for the third quarter ended September 30, 2022, and provided an overview of recent operational highlights and a pipeline update.

“Enrollment in our confirmatory pivotal Phase 3 RECONNECT trial continues, and we expect topline results in the second half of 2023,” said Armando Anido, Chairman and Chief Executive Officer of Zynerba. “With a cash runway into the first quarter of 2024, we remain well-positioned on achieving our goal of bringing Zygel to market as the first FDA approved treatment option for the significant unmet medical need that affects FXS patients and their families.”

Operational Highlights and Pipeline Update

Zygel in Fragile X Syndrome (FXS)

• The Company continues to expect topline results from RECONNECT, a confirmatory pivotal Phase 3 trial of Zygel in patients with FXS, in the second half of 2023. The Company believes that the results from RECONNECT, if positive, will be sufficient to support the submission of a New Drug Application (NDA) for Zygel in patients with FXS.
• In October 2022 the Company announced that the U.S. Patent and Trademark Office (USPTO) issued a patent titled “Treatment of Fragile X Syndrome With Cannabidiol,” which includes claims directed to methods of treating Fragile X syndrome with cannabidiol. This new patent, which expires in 2038, is part of an expanding international intellectual property portfolio covering the Company’s transdermal cannabidiol product candidate, Zygel. (Press Release)

Zygel in 22q11.2 Deletion Syndrome (22q)

• Based on the positive Phase 2 INSPIRE trial data announced in June 2022 (Press Release), the Company requested and has been granted an initial meeting with the U.S. Food and Drug Administration (FDA) before the end of 2022 to obtain feedback on the Phase 2 data and regulatory pathway for Zygel in patients with 22q. The Company currently plans to initiate a Phase 3 program in children and adolescents with 22q following topline results from RECONNECT.
• In November 2022, the Company announced that the USPTO issued a patent titled “Treatment of 22q11.2 Deletion Syndrome With Cannabidiol,” which includes claims directed to methods of treating one or more behavioral symptoms of 22q with cannabidiol, and expires in 2040. (Press Release)
• The Company presented data at The Society for the Study of Behavioural Phenotypes (SSBP) 24^th International Research Symposium in September 2022 and the 2022 National Organization for Rare Disorders (NORD) Rare Diseases and Orphan Products Breakthrough Summit in October 2022 from the first 14-week treatment period of the Phase 2 INSPIRE trial. These data suggest a positive risk-benefit profile for Zygel in improving anxiety-related and behavioral symptoms in children and adolescents with 22q. Statistically significant improvements from baseline were seen in the Pediatric Anxiety Rating Scale (PARS-R), the total score and all five subscales of the Anxiety, Depression and Mood Scale (ADAMS) and all five subscales of the Aberrant Behavior Checklist – Community (ABC-C). In addition, the majority of patients showed clinically meaningful improvements as demonstrated by the Clinical Global Impression – Improvement (CGI-I). Zygel was shown to be well tolerated, and the safety profile was consistent with previously released data from other Zygel clinical trials. (Posters).

Third Quarter 2022 Financial Results

Research and development expenses were $5.0 million for the third quarter of 2022, including stock-based compensation of $0.5 million. General and administrative expenses were $3.5 million in the third quarter of 2022, including stock-based compensation expense of $0.6 million. Net loss for the third quarter of 2022 was $8.7 million, with basic and diluted loss per share of $(0.20).

Financial Outlook

As of September 30, 2022, cash and cash equivalents were $55.9 million, compared to $67.8 million as of December 31, 2021.

On May 11, 2021, the Company entered into a Controlled Equity Offering^SM Sales Agreement (2021 Sales Agreement), with Cantor Fitzgerald & Co., Canaccord Genuity, LLC, H.C. Wainwright & Co. LLC and Ladenburg Thalmann & Co. Inc., as sales agents, pursuant to which the Company may sell, from time to time, up to $75.0 million of its common stock. In the third quarter of 2022, the Company sold and issued 2,579,346 shares of its common stock under the 2021 Sales Agreement in the open market resulting in gross proceeds of $3.2 million and net proceeds of $3.0 million, after deducting commissions and offering expenses.

On July 21, 2022, the Company entered into a Purchase Agreement and registration rights agreement for up to $20 million with Lincoln Park Capital Fund, LLC (LPC), a Chicago-based institutional investor. In the third quarter of 2022, the Company sold and issued 200,000 shares of its common stock under the 2022 Purchase Agreement with LPC in the open market resulting in gross proceeds of $0.2 million and net proceeds of $0.1 million, after deducting offering expenses.

Management believes that the Company’s cash and cash equivalents are sufficient to fund operations and capital requirements into the first quarter of 2024. Top-line results from the Company’s confirmatory pivotal Phase 3 RECONNECT trial of Zygel in patients with FXS are expected in the second half of 2023.

About Zygel

Zygel is the first and only pharmaceutically-manufactured cannabidiol formulated as a patent-protected permeation-enhanced clear gel, designed to provide controlled drug delivery into the bloodstream transdermally (i.e. through the skin). Recent studies suggest that cannabidiol may modulate the endocannabinoid system and improve certain behavioral symptoms associated with neuropsychiatric conditions. Zygel is an investigational drug product in development for the potential treatment of behavioral symptoms associated with Fragile X syndrome (FXS), 22q11.2 deletion syndrome (22q) and autism spectrum disorder (ASD). The Company has received orphan drug designation for cannabidiol, the active ingredient in Zygel, from the FDA and the European Commission in the treatment of FXS and from the FDA for the treatment of 22q. Additionally, Zygel has been designated a Fast Track development program for treatment of behavioral symptoms of FXS.

About Zynerba Pharmaceuticals, Inc.

Zynerba Pharmaceuticals is the leader in innovative pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders. We are committed to improving the lives of patients and their families living with severe, chronic health conditions including Fragile X syndrome, 22q11.2 deletion syndrome and autism spectrum disorder. Learn more at www.zynerba.com and follow us on Twitter at @ZynerbaPharma.

Cautionary Note on Forward-Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. We may, in some cases, use terms such as “predicts,” “believes,” “potential,” “proposed,” “continue,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “could,” “might,” “will,” “should” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Such statements are subject to numerous important factors, risks and uncertainties that may cause actual events or results to differ materially from the Company’s current expectations. Management’s expectations and, therefore, any forward-looking statements in this press release could also be affected by risks and uncertainties relating to a number of other factors, including the following: the Company’s cash and cash equivalents may not be sufficient to support its operating plan for as long as anticipated; the Company’s expectations, projections and estimates regarding expenses, future revenue, capital requirements, incentive and other tax credit eligibility, collectability and timing, and availability of and the need for additional financing; the Company’s ability to obtain additional funding to support its clinical development programs; the results, cost and timing of the Company’s clinical development programs, including any delays to such clinical trials relating to enrollment or site initiation; clinical results for the Company’s product candidates may not be replicated or continue to occur in additional trials and may not otherwise support further development in a specified indication or at all; actions or advice of the U.S. Food and Drug Administration and foreign regulatory agencies may affect the design, initiation, timing, continuation and/or progress of clinical trials or result in the need for additional clinical trials; the Company’s ability to obtain and maintain regulatory approval for its product candidates, and the labeling under any such approval; the Company’s reliance on third parties to assist in conducting pre-clinical and clinical trials for its product candidates; delays, interruptions or failures in the manufacture and supply of the Company’s product candidates the Company’s ability to commercialize its product candidates; the size and growth potential of the markets for the Company’s product candidates, and the Company’s ability to service those markets; the Company’s ability to develop sales and marketing capabilities, whether alone or with potential future collaborators; the rate and degree of market acceptance of the Company’s product candidates; the Company’s expectations regarding its ability to obtain and adequately maintain sufficient intellectual property protection for its product candidates; the extent to which health epidemics and other outbreaks of communicable diseases, including COVID-19, could disrupt our operations or adversely affect our business and financial conditions; and the extent to which inflation or global instability, including political instability, may disrupt our business operations or our financial condition. This list is not exhaustive and these and other risks are described in the Company’s periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission and available at www.sec.gov. Any forward-looking statements that the Company makes in this press release speak only as of the date of this press release. The Company assumes no obligation to update forward-looking statements whether as a result of new information, future events or otherwise, after the date of this press release.

ZYNERBA PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

ZYNERBA PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS

Zynerba Contacts

Jim Fickenscher, CFO and VP Corporate Development
Zynerba Pharmaceuticals
484.581.7483
[email protected]

Peter Vozzo
ICR Westwicke
Office: 443.213.0505
Cell: 443.377.4767
[email protected]

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

VANCOUVER, BC, Nov. 4, 2022 /CNW/ – YourWay Cannabis Brands Inc. (CSE: YOUR) (OTC: YOURF) (FSE: HOB) (the “Company” or “YourWay“), a consumer-centric House of Brands committed to redefining the way consumers and cannabis brands interact, is providing an operational update, including initiatives being taken to address the management cease trade order (the “MCTO“), the delays in releasing the Company’s audited annual financial statements for the year ended December 31, 2021 (the “2021 Annual Financial Statements“), details of the Company’s newly appointed leadership team, and the Company’s expansion plans in Arizona.

“There has been significant change and evolution in our business over the past twelve months,” said Acting Chief Executive Officer, Jakob Ripshtein. “We have overhauled the organization from top to bottom, driven by a strategic corporate transformation and renewed corporate vision.”

The transformation began with a corporate rebrand in December 2021 from Hollister Biosciences Inc. to YourWay Cannabis Brands Inc. This update was tied directly to the Company’s revamped strategic commitment to creating intuitive brands, releasing thoughtful products, and working intentionally to create a House of Brands that caters to every moment in a consumer’s life.

The Company is working with the auditors to finalize the 2021 Annual Financial Statements and the related management’s discussion and analysis. Due to a combination of factors, including (i) the complexity associated with a change of the Company’s auditors, which took effect on December 6, 2021; and (ii) changes in the management personnel of the Company, the Company is requiring additional time to support the auditors in finalizing the 2021 Annual Financial Statements. We expect to release our 2021 Annual Financial Statements by the end of 2022. Over the past few months, the Company has instituted enhanced financial and operational controls to improve  accuracy, efficiency and reporting compliance.

In addition to the work being done to finalize the 2021 Annual Financial Statements, the board of directors of the Company (the “Board“) resolved to demand repayment of all amounts advanced, which total approximately US$166,325 to Ionic Brands Corp. (“Ionic) pursuant to a demand promissory note dated May 20, 2022 (the “Ionic Promissory Note“). YourWay has provided notice to Ionic of its demand for repayment, but the funds have not yet been returned.

Throughout the year, there have been several adjustments to the leadership team and the Board to oversee the strategic corporate transformation of the Company. Recently, Jacob Cohen resigned as Chief Executive Officer of the Company to focus on his operational role as President of Arizona Operations. Mr. Cohen has extensive hands-on experience in the Arizona cannabis sector, and the Arizona marketplace continues to be a focus of YourWay’s sales and marketing efforts.

The Arizona cannabis marketplace is in flux, and since recreational marijuana sales launched in 2022, the Arizona medicinal market has seen a downturn. The Arizona Department of Health Services has reported a steady decline in the Arizona medicinal market^.[1]

This shift in the Arizona market has altered the focus of the Company’s retail customers, and YourWay’s sales team is adapting to satisfy the shift from the medicinal market to the new demand for recreational cannabis products. The Company is making an effort to balance out its portfolio by introducing several established brands to the Arizona marketplace. For example, Old Pal is a well-known and in-demand cannabis brand that has continued to be a strong performer since the Company began Arizona production and shipment in May of 2022. YourWay’s exclusive multi-year licensing agreement to manufacture, produce, promote, distribute, and sell certain Old Pal-branded cannabis products in Arizona, including whole flower, pre-ground flower, pre-rolls, and distillate cartridges in association with the Old Pal brand, has allowed YourWay to capitalize on the shift in demand in the Arizona market.

Additionally, in February of 2022, YourWay signed an exclusive agreement with AIRO, one of the top-selling cannabis brands across multiple markets, including Nevada, Colorado, Illinois, Maryland and Washington. AIRO is currently available in more than 1,300 dispensaries across the United States and Puerto Rico. Expanding the AIRO offerings is currently under consideration by the Company, and under the terms of the exclusive multi-year licensing agreement entered into between YourWay and AIRO, YourWay has exclusive right and license to manufacture, produce, promote, distribute, and sell certain popular AIRO products in Arizona, including the AIROPro®, AIROSport, and AIROX®, featuring formulations from AIRO’s Strain Series, Artisan Series, and Live Flower Series, plus additional products.

In addition to balancing our portfolio of brands, the Company has made a conscious effort to rationalize existing product SKUs, including price adjustments when appropriate and eliminating non-profitable products. In the past, a large portion of revenue was derived from non-branded bulk distillate and extracted products. Maintaining a reasonable margin within this category has been a challenge, and most related sales have now ceased. Although we expect an impact on total sales revenue based on the termination of this category, this will allow for an increased focus on the YourWay core strategic objective of creating value with its own brands, partner brands and select retailer control brands. The Company will continue to monitor opportunities in the bulk category and maintains the optionality to reactivate this category should business or market conditions change.

YourWay has experienced operational challenges which have hampered the Company’s ability to satisfy some of its contractual arrangements to provide services and generate revenue. While the Company reports cannabis-related revenue and expenditures due to financial reporting requirements under International Financial Reporting Standards, the Company does not have any cannabis licenses itself and, accordingly, is reliant upon third-party license holders, which has limited the Company’s sell-through capabilities during 2022. An ongoing focus by the Company is to address operational challenges, and there are signs of improvement in that area.

While the rapidly expanding recreational Arizona cannabis market provides many growth opportunities for the Company, it also presents an influx of competitor brands across the state. Throughout 2022 all wholesale product prices have decreased. The drop in the high-end market of the Arizona indoor flower price has dipped below those of California, with the breadth of quality and pricing adding to the complexity of retailing in the Arizona cannabis market.[2]^,[3] To combat this influx of competitors, the Company’s growth strategy includes expanding the Venom Extracts brand, which has been part of the Arizona cannabis market since 2017 and as such, has developed significant brand awareness and loyalty amongst legacy cannabis users. Venom Extracts is positioned as an affordable cannabis brand with a following of consumers who exhibit a tendency for repeat purchases. Plans are in place for several line extensions to the Venom Extracts brand, including pre-rolls and infused pre-rolls.

With COVID-19 restrictions eliminated for most of the hospitality and travel industries across the United States, many states, including Arizona, are seeing a significant increase in tourists. Increased tourist traffic to the state will provide an opportunity to market cannabis brands to visitors who may or may not have readily available legal cannabis for sale in their home state.

Labor force participation in Arizona still remains below pre-pandemic rates and continues to be an issue for many industries in Arizona.[4] Delays in securing the appropriate labor contingent and licensing delays have impacted the Company’s ability to bring the Cottonwood facility (the “Facility“) online. Based on the delays and current state of the market, the Company is strategically reviewing options related to the Facility. The substantial increase in the supply of raw materials with attractive quality and wholesale price points as a result of new facilities coming online throughout the state creates additional optionality for the Company.

About YourWay Cannabis Brands

YourWay is a publicly traded, multi-state and consumer-centric House of Brands committed to redefining the way consumers and cannabis brands interact, with sales and operations in Arizona, California, Oregon and Washington. By building their own brands, partnering with others, and supporting retail partners control brand strategy, they are dedicated to expanding their reach; remolding the cannabis industry and ultimately redefining consumers and cannabis brands interact.

YourWay aims to connect with the cannabis consumer on a deeper level, utilizing decades of brand-building expertise and an integral understanding of the customer experience to create an intuitive suite of branded products that closely aligns with consumer need states. The YourWay portfolio is an all-encompassing house of brands designed to create a sense of belonging for every cannabis consumer regardless of their relationship with the plant. Please visit www.yourwaycannabis.com or follow on Twitter at @yourwaycannabis for the latest news and information about YourWay and its brands.

Website:  www.yourwaycannabis.com

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:

This news release includes certain “forward-looking information” as defined under applicable Canadian securities legislation, including statements regarding the plans, intentions, beliefs, and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding: the Company’s intentions to finalize the 2021 Annual Financial Statements by the end of 2022; the impact of the Company’s enhanced financial and operational controls; the Company’s expansion plans for the Arizona cannabis market; the repayment of the Ionic Promissory Note; the Company’s continued focus on sales and marketing efforts in the Arizona marketplace; the impact of the decline in the Arizona medicinal cannabis market; the Company’s efforts to introduce established brands to the Arizona marketplace; the expansion of the AIRO offerings in the Arizona cannabis market; the expected impact on the Company’s total sales revenue as a result of the termination of non-branded bulk distillate and extracted products; the Company’s increased focus on its strategic objective of creating value with its own brands, partner brands and select retailer control brands; the Company’s continued efforts to monitor opportunities in the bulk category in order to maintain optionality to reactivate the category if needed;  the complexity of retailing in the Arizona cannabis market; the Company’s strategy to expand the Venom brand; the expected increase in demand as a result of Arizona’s increasing tourist traffic; the  increasing tourist traffic in Arizona; the Company’s options regarding the Facility; additional optionality for the Company as a result of increased supply of raw materials with attractive quality and wholesale price points; and expectations for other economic, business, and/or competitive factors. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information.

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance, or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the timing for filing the Annual Filings and the Interim Filings; regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; the impact of COVID-19; and the risk factors set out in the Company’s annual information form dated August 28, 2020, filed with Canadian securities regulators and available on the Company’s profile on SEDAR at www.sedar.com.

The Company, through several of its subsidiaries, is indirectly involved in the manufacture, possession, use, sale, and distribution of cannabis in the recreational and medicinal cannabis marketplace in the United States. Local state laws where the Company operates permit such activities however, investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable United States federal money laundering legislation.

While the approach to enforcement of such laws by the federal government in the United States has trended toward nonenforcement against individuals and businesses that comply with recreational and medicinal cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve the Company of liability under United States federal law, nor will it provide a defense to any federal proceeding which may be brought against the Company. The enforcement of federal laws in the United States is a significant risk to the business of the Company and any proceedings brought against the Company thereunder may adversely affect the Company’s operations and financial performance.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

TORONTO, May 11, 2022–(BUSINESS WIRE)–Heritage Cannabis Holdings Corp. (CSE: CANN) (OTCQX: HERTF) (“Heritage” or the “Company“), today announced its financial results as at and for the twelve months ended October 31, 2021 (“FY 2021“). All figures are in Canadian dollars unless otherwise noted.

“Heritage’s revenue grew over 100% for the year and almost 40% from Q3/21 to Q4/21, which was the higher end of the previously provided guidance. Our ability to facilitate this growth while integrating our acquisitions, expand our distribution and launch numerous new products including into the flower vertical is an outstanding result given the continued turbulence in the cannabis markets,” commented David Schwede, CEO of Heritage. “While our results were impacted by several one-time cost adjustments, we believe we have been able to make a number of improvements which we expect will allow us to show positive results in the coming quarters as we move to cash flow positive territory. The combination of our launch into both the flower and pre-roll categories combined with our incumbent product offering has created a very strong platform. We are building a strong and sustainable business in a nascent industry and with our solid business practices and product and brand innovations we are focused on positive cash flow as a priority.”

Selected Financial Highlights

Selected financial highlights for the three and twelve-month periods ended October 31, 2021 and 2020 include the following:

2021 Financial Highlights

• For the year ended October 31, 2021, the Company reported gross revenue of $18,676,958, an increase of $9,419,888 as compared to gross revenue of $9,257,070 for the year ended October 31, 2020 representing an increase of over 100%. The increase in gross revenue was primarily the result of increased product launches and established product offerings across the provinces as a result of the Premium 5 acquisition. The launch and continued demand for our RAD brand coupled with SKU expansion has been the driving factor for our revenue growth.
• Cost of sales for the year ended October 31, 2021, was $13,492,997, an increase of $6,836,877, compared to $6,656,120 for the year ended October 31, 2020. Excluding the year-end adjustments in the current quarter, cost of sales declined to 63% of gross revenue compared to 103% of gross revenue for the same period ending October 31, 2020 after excluding the recovery of the accounts payable from a vendor. The improvement over the course of the year was due to strategic biomass purchasing, continued operational improvements and improved commercial strategies.
• For the year ended October 31, 2021, the Company recorded a comprehensive loss of $57,685,532 or $0.08 loss per share compared to a comprehensive loss of $8,596,759 or $0.02 per share for the year ended October 31, 2020. The increase in losses during these periods was attributable to three primary factors, all of which are non-cash related. In accordance with the accounting policies, the Company recorded an impairment of intangibles and goodwill of $36,337,826, an unrealized loss on contingent consideration payable of $3,514,865 as a result of year-end revaluation and a loss on debt extinguishment of $1,361,338 as a result of the long-term debt facility extension. Also, the prior year was positively impacted by $936,329 of government funding for COVID-19, which was recorded as a reduction of corresponding expenses.
• For the year ended October 31, 2021, the Company increased its total assets by $14,356,257 to $97,788,065 from $83,431,808 for the year ended October 31, 2020. The increase was primarily driven by three primary factors, intangible assets and goodwill increasing by $39,318,897 as a result of the Premium 5 acquisition, an increase in inventory of $10,898,876 year over year as a result of stronger revenues and accounts receivable increasing by $3,709,517 year over year in response to increased provincial sales. The increase was partially offset by an impairment of $33,700,000 recognized on goodwill as a result of the Company’s performance of its annual impairment test on goodwill and related cash generating unit at October 31, 2021.

Q4 2021 Financial Highlights

• The Company reported gross revenue of $7,132,942 for the three-month period ended October 31, 2021, an increase of $5,632,192 compared to the gross revenue of $1,500,750 for the three-month period ended October 31, 2020 representing an increase of over 450%. The increase in gross revenue was due to the continued increasing orders from the provincial boards.
• Cost of sales for the three-month period ended October 31, 2021 was $7,329,654, an increase of $7,306,711, compared to $22,943 for the three-month period ended October 31, 2020. The current quarter was negatively impacted by two primary factors, the first was a one-time event resulting from year-end adjusting entries as a result of a fair value increase in Premium 5 inventories resulting from the acquisition and inventories consumed during the year for $1,153,034. The second factor was an increase in costing for the year of approximately $600,000 which was applied to the quarter. The results for the three months ended October 31, 2020 were positively impacted by a recovery of accounts payable from a vendor of $2,879,718. Excluding the recovery in 2020 and the year-end adjustments in the current period, cost of sales improved to 78% of gross revenue compared to 193% of gross revenue for the same period ending October 31, 2020. The improvement was a result of improved operational efficiency and product sales mix.
• For the three-month period ended October 31, 2021, the Company recorded a comprehensive loss of $42,685,990 or $0.06 loss per share compared to a comprehensive loss of $4,745,405 or $0.01 loss per share for the three-month period ended October 31, 2020. The increase in losses during this period was attributable to the above mentioned three primary factors, all of which are non-cash related.

Q4 2021 Growth, Operational, and Corporate Highlights

• The continued growth in the fourth quarter is a direct result of the Company’s introduction of innovative products and expanded distribution channels. While top-line growth is a focus, the Company remains focused on increasing margins and cost containment.
• Vape products have been a key driver in recent sales growth initiatives with sales hitting consecutive records in 2021. Heritage offers vape products under four of its brands (Premium 5, RAD, Purefarma, and Pura Vida) and has been proactively managing its offerings to stay price competitive in all segments, while also delivering innovative products and new flavour profiles to keep up with consumer demands, reaching #9 in Canadian Vape Sales during the fourth quarter, and as a result RAD becoming the #2 brand in British Columbia.¹ Heritage also achieved the second largest vape supplier to New Brunswick with a 12% market share².
• in September 2021, Heritage launched a private label program (the “Private Label Program”) that pairs leading cannabis brands with Heritage’s extraction expertise. Heritage’s first agreement under this private label program was with High Tide Inc. to manufacture its “Cabana Cannabis Co” branded shatter for distribution in Ontario, Manitoba, Saskatchewan, and Alberta.
• During the quarter, Heritage announced changes to its board of directors (the “Board”) and appointment of a new Chief Executive Officer (“CEO”). Donald Ziraldo resigned from the Board and his position as Chair for personal reasons and to pursue other business initiatives. Clinton Sharples assumed the position as chair of the Board, and in conjunction with this, Mr. Sharples stepped down as President and CEO of the Company. The Board appointed David Schwede as his successor in the role of President and CEO. Mr. Schwede originally joined Heritage as President of Recreational following the acquisition of Premium 5. Max Gerard, a Partner at Merida, resigned as director from the Board and retained a position as an advisor to the Board. Merida, a large strategic shareholder in Heritage, maintains an active role in the Company and continues to support the advancement of Heritage’s Canadian and U.S. strategy. In Mr. Gerard’s place, Mr. Schwede was appointed as a director of the Board.
• Heritage entered into a three-year exclusive intellectual property licensing and royalty agreement (the “Licensing Agreement”) with Avicanna Inc. (“Avicanna”), a biopharmaceutical company focused on the development, manufacturing, and commercialization of plant-derived cannabinoid-based products. The Licensing Agreement is for the commercialization of a number of Avicanna’s advanced CBD-based topical products under Heritage’s medical cannabis brands (the “Branded Products”) targeting patients registered to purchase medical cannabis in Canada. The Branded Products were launched late 2021 through Heritage’s extensive medical sales channels in Canada
• Heritage entered into a joint venture sales and processing agreement with Noble Growth Corp. (“Noble”), a cannabis cultivator focused on creating beneficial strains that contain sought after cannabinoid, flavonoid, and terpene profiles for both recreational and medical usage. Under the Agreement, Noble produces some of their highly sought-after cultivars for Heritage to strategically expand its presence in the premium dried flower markets across the nation under the RAD Reefer Reserve and Pura Vida Legacy brands. Noble currently houses over 300+ Pheno hunted genetics in tissue culture boasting high THC and Terpene levels and rare genetics that customers are looking for.
• Heritage executed a term sheet with Merida Capital Partners IV LP and its affiliates for up to USD$1.5 million in senior unsecured convertible promissory notes to fund the Company’s entry into the state of Missouri, in accordance with Heritage’s relationship with 3Fifteen entered into on May 4, 2021. Subsequently Heritage entered into a Note and Warrant Purchase Agreement, dated October 18, 2021, pursuant to which Merida Fund III and Merida Fund IV loaned the Company an aggregate amount of USD$1,500,000. The USD$1.5 million was disbursed in four tranches from October 18, 2021 through December 31, 2021. On closing, the Company issued a promissory note to Merida Fund III (the “Note”) for a principal amount of USD$660,000 (the “Principal Amount”), set to mature on October 18, 2023. The Note has an interest rate of 15%, which shall be paid in common shares of the Company (the “Common Shares” and such shares issuable as interest payment, the “Interest Shares”).
• In order to further support Heritage’s growing business, it entered into an amended non-revolving loan agreement (the “Amended Loan Agreement”) with BJK Holdings Ltd. (“BJK”), improving the terms of its existing loan with BJK entered into on March 29, 2021, and further supporting its growing business. Under the terms of the Amended Loan Agreement, the original loan amount of $7.0 million was increased to $7.175 million, and its maturity date was extended from September 29, 2022 to February 1, 2023 (the “Increased Initial Loan”). In connection with this Increased Initial Loan, the Company paid a one-time extension fee (the “Extension Fee”) of $175,000 to BJK on October 12, 2021 (the “Closing Date”). Additionally, pursuant to the Amended Loan Agreement, BJK advanced $2.6 million to the Company on the Closing Date, at the Royal Bank of Canada prime lending rate plus 1.25% per annum, adjusted automatically with each quoted or published change in rate, until the entire Loan is repaid on February 1, 2023 (the “Additional Loan”). This Additional Loan was advanced to help fund the Company’s capital asset acquisitions and general corporate purposes. To further support the Company’s operations and growth, a revolving line of credit (the “Line of Credit”) was established, up to a maximum of $5.0 million, with an interest rate of 18% per annum, calculated daily and payable monthly. In total, through the Increased Initial Loan, the Additional Loan, and the Line of Credit (collectively, the “Loan”), the Company has access to a total of $14.775 million through its Amended Loan Agreement with BJK. Accordingly, on the Closing Date, the Company granted to BJK a promissory note in the principal amount of $14.775 million together with interest, to represent the amount to be repaid on or before February 1, 2023. If the Company repays the Loan in its entirety on or before October 1, 2022, BJK will repay the Extension Fee to the Company.

Financial Statements
The consolidated financial statements of the Company as at and for the three and twelve month periods ended October 31, 2021 and accompanying management’s discussion and analysis have been filed with the securities regulators and are available on SEDAR at www.sedar.com under the Company’s issuer profile.

About Heritage Cannabis Holdings Corp.
Heritage Cannabis is a leading cannabis company offering innovative products to both the medical and recreational legal cannabis markets in Canada and the U.S., operating under two licensed manufacturing facilities in Canada. The company has an extensive portfolio of high-quality cannabis products under the brands Purefarma, Pura Vida, RAD, Premium 5, feelgood., the CB4 suite of medical products in Canada and ArthroCBD in the U.S.

ON BEHALF OF THE BOARD OF DIRECTORS OF HERITAGE CANNABIS HOLDINGS CORP.

“David Schwede”
David Schwede
CEO

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. 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 contained herein may include, but is not limited to, assumptions related to cash flow and capital resources, and expectations related to the supply and manufacturing agreements, the intended expansion of the Company, and partnerships and Joint Venture Partnerships.

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to several risks including, without limitation, the risks discussed under the heading “Risks and Uncertainties” in the Company’s annual management discussion and analysis for the year ended October 31, 2021, and dated May 10, 2022. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. 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 are expressly qualified in their entirety by this notice.

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¹ Headset Data
² Headset Data

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

DALLAS, August 16, 2021–(BUSINESS WIRE)–Generation Hemp, Inc., a Dallas/Fort Worth based midstream hemp company (OTCQB: GENH) and its wholly-owned subsidiary, GENH Halcyon Acquisition, LLC (collectively the “Company”), today provided an operational update concerning new contracts recently awarded for its drying, cleaning, stripping, storage operations and other services based in western Kentucky.

Last year, the company processed over 7 million pounds of wet hemp biomass which was received from a combination of farmers and corporate clientele. This generated approximately $3.0 million in revenue. Based upon contracts awarded to-date to GENH Halcyon, revenues are now on a trajectory to significantly increase from last year’s revenue for the ensuing twelve months. The projected growth is a result, in part, to our recent tolling and processing contracts disclosed in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 13, 2021. This projected growth does not include any benefit from the Company’s previously discussed plan to enter the hemp animal bedding space under our brands – Rowdy Rooster and Kentucky Gold, with which we intend to target small and large animal bedding markets. Hemp animal bedding has been proven in several university studies as well as by testimonials from consumers to be a healthier and preferred alternative to traditional animal bedding materials.

Generation Hemp Chairman and CEO, Gary C. Evans commented, “Despite the downturn experienced by many businesses active in the hemp space last year due to an oversupply of product which depressed both distillate and isolate prices, our Company has been able to weather the storm and garner new business. Some of this new business has been captured due to many of our competitors not surviving the most recent downturn. Additionally, we have been able to attract new business and supply from farmers two and three states away from our facility in Kentucky, which significantly adds to our projections and business plan. We are told by our customers that the reason for bringing their product so many miles away from their farms to our processing facility has to do with the quality of the end product we produce, which enhances their ultimate price, and the high degree of customer service our employees have been providing.”

About Generation Hemp, Inc.

Generation Hemp, Inc. is a Dallas/Fort Worth based hemp company that operates in the midstream sector. With operations in Hopkinsville, Kentucky and Denver, Colorado, the company uses its proprietary technology to dry, clean, process and store hemp. In addition, Generation Hemp also owns and leases real estate to companies that need seed storage facilities located within the greater Denver area.

Forward Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates,” “projects”, “forecasts”, “proposes”, “should”, “likely” or similar expressions, indicates a forward-looking statement. These statements and all the projections in this press release are subject to risks and uncertainties and are based on the beliefs and assumptions of management, and information currently available to management. The actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. The identification in this press release of factors that may affect the company’s future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive.

Contacts

Melissa M. Pagen
Generation Hemp, Inc.
Phone: (310) 628-2062
Email: [email protected]