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Harvest One 05/03/2020

Harvest One provides update on strategic review and financial results for half year ended 31 December 2019

MMJ Group Holdings Limited (ASX:MMJ) (“MMJ”), an Australian-listed company that specialises in managing a portfolio of investments along the cannabis value-chain, is pleased to advise that one of its largest investments, Harvest One Cannabis Inc. (“HVT”) (TSX-V: HVT; OTCQX: HRVOF), has announced:

  1. its financial and operating results for the six months ended 31 December 2019; and
  2. progress of its initiatives to restructure its operations as announced in November 2019.

HVT is a global consumer packaged goods company that develops and distributes premium health, wellness, and selfcare products to patients and consumers in regulated markets around the world with a specific focus on sleep, anxiety and pain. MMJ is the largest shareholder holding 26% of HVT.

Significant progress on implementation of operational restructure

Since November 2019, HVT has undertaken a number of initiatives which are expected to contribute to a 30% reduction in selling, general and administrative (“SG&A”) expenses on an annualized basis. These initiatives include:

(i) an overall reduction in workforce by over 20%;

(ii) a comprehensive salary reduction program at the senior management level;

(iii) the downsizing and consolidation of corporate offices; and

(iv) the implementation of remote workforce programs. These cost reduction efforts have already positively impacted cash SG&A expenses in the December 2019 quarter. HVT expects cash operating overheads expenses to continue to decrease throughout the remainder of the 2020 fiscal year1.

In February 2020, Harvest One announced the divestment its 19.99% interest in Burb Cannabis Corp. (“Burb”), a private cannabis retailer based in British Columbia for cash proceeds of CAD1.5m. Harvest One has also entered into a contract to sell its interest in its 398-acre site in Lillooet, British Columbia (the “Lillooet Property”) for cash consideration of CAD0.8m. The transaction is expected to close on March 31, 2020.

Harvest One continues to evaluate opportunities to realise surplus assets and raise additional debt and equity capital which is required to realise its business plan. HVT also advised that it is in discussions to divest its 50.1% interest in the Greenbelt Greenhouse facility located in Hamilton, Ontario, which would provide additional capital and allow HVT to focus on the growth of its core businesses in Cannabis 2.0, product branding and international distribution.

MMJ is holding discussions with HVT on the potential extension of the date of the repayment of the CAD2m secured loan which is currently repayable on 10 March 2020.

A copy of the HVT announcement can be found here.

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