EastWest Bioscience Reports Third Quarter 2019 Financial Results

VANCOUVER, BC / July 4th, 2019 / EastWest Bioscience (the “Company” or “EastWest”) (TSX.V: EAST) expands on its vision, strategy, and outlook for the future and comments on its 3Q financial results for the three months ended April 30, 2019.

“US Approval was a tremendous achievement this quarter,” explains Rodney Gelineau, CEO of EastWest Bioscience. “The team has continued to develop our product pipeline, with the initial production of our Chanvre Hemp Shampoo and Conditioner and the introduction of four additional pet treats into the Canadian Market. With the addition of the four additional pet treat products, Happy’Cat, Play’n’Dog, Quick’Cat and Chill’Dog, the Company anticipates the US market for its nationally available Hemp based pet treats to quickly overtake Canadian demand.”

“The US Market is now within our sights.  Eastwest concluded its Joint Venture agreement with Azema Sciences, allowing it to start the production of CBD from its Kentucky facility, for its line of consumer products. Ensuring feed stock supply and stability is essential to ensure that we can fulfill expected demand for our products in the United States.”

Quarter Highlights

– February 2019, the Company announced the first shipment of its premium granola-style hemp seed and fruit snack bars under its Earth’s Menu food product brand. Chewy Goodness, Unapologetically Delicious snack bars, formulated in three delicious and nutritious flavours – Omega Apple, Omega Cranberry and Blueberry Raisin – all Kosher and Peanut free. The first products are shipped into EastWest’s two warehouse facilities with retail purchase orders already in the pipeline.

– February 2019, the Company announced the manufacturing of the first two products of its newest line of hemp-based products being introduced in 2019. The Company’s HempBeauti Shampoo and Conditioner are the first of a series of premium ultra-clean body care products under the ChanvreHemp brand line. HempBeauti Shampoo and Conditioner were in stores early May 2019.

– February 2019, the Company announced Ms. Ciska Asriel has been appointed Chief Operating Officer of the Company.

– March 2019, the Company announced it had received several new purchase orders for its hemp-based consumer goods from global retailer The TJX Companies, Inc (NYSE: TJX), the leading mass retailer of apparel and home fashions in the U.S. and worldwide

– March 2019, the Company announced that it had received its first order from Natural Pet Distributors (“NPD”) (www.naturalpetdistributors.com) one of its major eastern Canadian pet distribution partners. In accordance with its overall execution strategy to increase retail distribution of its family of products in 2019, Natural Pet Distributors provides a significant partnership for EastWest providing distribution into independent and major chains of pet channels in Canada. Representing over 550 pet retails stores in Southern Ontario and Quebec, Natural Pet Distributor’s customer base is a deep and important combination of several independent retailer networks, including some of the largest and fastest growing pet store chains in Canada, such as Global Pet Foods, Pet Valu, and Ren’s Pets Depot.

– April 2019, the Company announced that it is had completed the sale of 2,283,168 units of the Corporation (“Units“) at a price of $0.15 per Unit for aggregate gross proceeds of $342,475. Each Unit consists of one common share in the capital of the Corporation (“Common Share“) and one-half of one share purchase warrant, with each whole warrant (“Warrant“) entitling the holder thereof to purchase an additional Common Share at an exercise price of $0.20 per share for a period of two years from the date of its issuance.

– April 2019, the Company announced that the TSX Venture Exchange gave EastWest Bioscience Inc. the green light to sell its products containing CBD in Kentucky, USA. Until then, because of rules imposed by the TSX due to legal uncertainty regarding business operations involving any products derived from hemp, the Company was restricted from doing business in the USA. Now, with the TSX-V lifting those restrictions, the Company is free to manufacture and sell its CBD infused products under both US Federal and Kentucky State Law.

– April 2019, the Company announced the appointment of two new independent Directors, Paul Mandl and Jeff Bierman, to the Board. Both of these new board members will help to ensure the Company is well-equipped to efficiently execute its expansion into the US and EU.

– April 2019, the Company announced the incorporation of EastWest Science USA (EastWest USA), a wholly owned operational subsidiary focused on CBD consumer products, manufacturing, production and distribution based in Marion County Kentucky, the heart of hemp growing and processing in the USA.

– April 2019, the Company announced four additional products to its Natural Pet Science line, both in Canada and the USA, with CBD included in the USA destined products and which will be marketed to CBD permitted jurisdictions. With the addition of four additional pet treat products, Happy’Cat, Play’n’Dog, Quick’Cat and Chill’Dog, the Company anticipates the US market for its nationally available Hemp based treats to quickly overtake Canadian demand.

– April 2019, the Company announced that on April 29, 2019 they signed an LOI with Azema Sciences Inc. (“Azema” or “Azema Sciences”) to Joint Venture on a preferred supply and distribution agreement for bulk CBD and finished CBD products throughout the US and Globally.  EastWest entered into a joint venture with Azema, securing for EastWest first rights on Azema’s output of bulk CBD and finished CBD products. EastWest Science USA (“EastWest USA”), EastWest’s US operating division, will be the preferred distributor for Azema’s finished goods.  The Definitive Agreement was signed on June 20, 2019.

Financial highlights

• Overall Company revenue of $699,991 compared with previous period of $1,044 for the three months ended April 30th, 2019.
  • Overall Company manufacturing and distribution revenue of $478,692.
  • Overall Company royalty revenue of $124,408.
  • Overall Company revenue of $96,891 by way of pass through lease arrangements.
• Gross margins were $109,304 or 22.8% for the three months ended.
• Net Loss of $828,045 compared with previous period of $635,774 during the three months ended April 30th, 2019.

• • Cash loss of $703,041
  • Amortization of $17,004
  • Rent (recovery) and Utilities non-cash $108,000

• Current Ratio is 2.09:1 with Current Assets covering Current Liabilities by $939,447.
• Buyout of Aquila on Valley for 100% ownership of NPNs and manufacturing operations.
• Non interest-bearing payment terms over time on consideration for Sangsters.

In the near term, the Company anticipates continued top-line revenue growth as it develops and releases new products and moves forward with expansion into the USA and the EU.

“Our hemp-based products are already unique, and we continue to gain shelf space,” explains Gelineau. “With the infusion of CBD into our existing products, we anticipate a significant competitive advantage. Additionally, EastWest is working on several joint ventures which will allow the Company to fully realize assets and generate additional revenues for the EastWest group of companies.”