Achieves Record Revenue, Record Gross Margin and Positive Adjusted EBITDA

LONDON, ON

,

Aug. 24, 2021

/PRNewswire/ – Indiva Limited (the ”

Company

” or ”

Indiva

“) (TSXV: NDVA) (OTCQX: NDVAF), the leading Canadian producer of cannabis edibles, is pleased to announce its financial and operating results for the second quarter of fiscal 2021 ended

June 30, 2021

. All figures are reported in Canadian dollars ($), unless otherwise indicated. Indiva’s financial statements are prepared in accordance with International Financial Reporting Standards (”

IFRS

“). For a more comprehensive overview of the corporate and financial highlights presented in this press release, please refer to Indiva’s

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended

June 30, 2021


, and the Company’s

Condensed


Consolidated Interim Financial Statements for the Three and Six Months Ended

June 30, 2021

and 2020,

which are filed on SEDAR and available on the Company’s website,

www.indiva.com

.

“We are delighted to report record net revenue, record gross profit and positive adjusted EBITDA for the second quarter of 2021.  Indiva continued to grow its market share organically in the second quarter, and this strength has continued through July, driven by new SKU introduction, including

Wana Quick

fast-acting gummies and Bhang Cookies and Cream chocolate,” said

Niel Marotta

, President and Chief Executive Officer of Indiva. “Becoming a top 10 ranked LP nationally by dollar share and top three measured by units, and doing so by driving organic growth rather than through acquisition, is a testament to the talent, dedication and hard work of the entire Indiva team.  Looking forward to the second half of 2021, we expect to see continued revenue growth driven by new product introductions, including multi-pack Wana gummies and cookies from Slow Ride Bakery, marking Indiva’s first introduction of baked goods into the market.  We also expect to see continued margin expansion throughout 2021, driven by lower distillate costs and continued improvement in operating efficiencies. Indiva is hitting its stride, and we intend to continue to drive profitable organic growth by delivering best-in-class cannabis products to of-age Canadians.”

HIGHLIGHTS

Quarterly Performance

• Gross revenue in Q2 2021 was a record
  
  $9.87 million
  
  representing a 249% increase year-over-year from Q2 2020, and a 44% sequential increase from Q1 2021. Year-to-date, gross revenue increased 229% year over year to
  
  $16.74 million
  
  .
  
• Net revenue in Q1 2021 was a record
  
  $9.08 million
  
  representing a 255% increase year-over-year from Q2 2020, and a 46% sequential increase from Q1 2021, driven primarily by increased sales of category leading edibles, including Wana Sour Gummies and Bhang Chocolate. Year-to-date, net revenue increased 235% year over year to
  
  $15.3 million
  
  , surpassing total net revenue for the entire fiscal year of 2020.
  
• Net revenue from edible products grew to
  
  $8.43 million
  
  , up 445% from
  
  $1.54 million
  
  in the prior year period and up 52% from
  
  $5.53 million
  
  in Q1 2021. Edible product sales represent 93% of net revenue in Q2 2021.
  
• Gross profit before fair value adjustments and impairments, improved by 160% sequentially to a record
  
  $3.08 million
  
  , and increased to a record 34.0% of net revenue, versus 19% in Q1 2021 and 0.8% in Q2 2020. The improvement in gross margin resulted from the Company benefitting significantly from lower distillate costs. Year-to-date, gross profit increased to
  
  $4.27 million
  
  , or 28% of net revenue, versus nil in the corresponding period last year.
  
• In Q2 2021, Indiva sold products containing 52 million milligrams of distillate, the active ingredient in edible products, which represents a 73% increase when compared to the 30 million milligrams in product sold in Q1 2021. Average distillate cost was
  
  $0.02
  
  per mg in Q2 2021 versus
  
  $0.038
  
  per mg in the previous quarter, representing a 47% sequential decline in the cost of this key input. The Company expects gross margins to continue to improve in the second half of 2021, due to significant declines in realized distillate costs, in addition to improved operating efficiencies from increased output.
  
• Impairment charges in the quarter totaled
  
  $0.29 million
  
  , including the disposal of product that did not meet the Company’s quality standards, disposal of aged inventory and obsolete packaging.
  
• Operating expenses in the quarter increased by 40% to
  
  $3.09 million
  
  sequentially versus Q1 2021, and increased by 106% year-over-year versus Q2 2020, primarily due to higher marketing and sales commissions driven by higher sales volumes, and higher public company costs. Year-to-date, operating expenses increased by 76% to
  
  $5.3 million
  
  .
  
• Operating expenses as a percentage of net revenue in Q2 2021 declined to 34% in Q2 2021 versus 36% in Q1 2021 and 59% in Q2 2020 respectively. The Company expects operating expenses to continue to decline as a percentage of net revenue as the year progresses.
  
• Indiva achieved positive adjusted EBITDA in Q2 2021 of
  
  $0.54 million
  
  versus a loss of
  
  $0.52 million
  
  in Q1 2021 and a loss of
  
  $1.0 million
  
  in Q2 2020, driven by higher revenue and higher gross profit, offset by higher operating expenses. Year-to-date, adjusted EBITDA was nil, versus a loss of
  
  $2.17 million
  
  in the corresponding period last year.
  
• Comprehensive net loss was
  
  $1.42 million
  
  for the quarter and included one-time expenses and non-cash charges totaling
  
  $1.0 million
  
  . Net loss per share was
  
  $0.01
  
  versus
  
  $0.03
  
  in Q2 2020. Excluding these charges, comprehensive loss in the quarter declined to
  
  $0.42 million
  
  versus a loss of
  
  $1.92 million
  
  in Q2 2020.

• Cash balance stood at
  
  $3.4 million
  
  , and working capital stood at
  
  $5.21 million
  
  at
  
  June 30, 2021
  
  .

Q2 2021 Market Share Hits New Record

• Sell through data from Hifyre for the second quarter of 2021 continues to show strong sales of Indiva edible products. With 50% share of sales in the second quarter, up from 46% in the first quarter of 2021, Indiva continues to expand its lead in the #1 market share position in the edibles category. Market share increased in the second quarter across all provinces versus Q1 2021:
• 
  Ontario
  
  #1 with 48% market share.
  
• 
  Alberta
  
  #1 with 59% market share.
  
• 
  British Columbia
  
  #1 with 50% market share.
  
• 
  Saskatchewan
  
  #1 with 32% market share.
  
• 
  Manitoba
  
  #1 with 53% market share.
  
• Wana Sour Gummies led the edibles category with 38% total category share.
  
• Bhang
  
  ^®
  
  led the chocolate category, with Bhang
  
  ^®
  
  Milk Chocolate remaining the top selling chocolate edible SKU nationally.
  
• Product ranking in Q2 2021 showed the top seven SKUs are Wana™ Sour Gummies (led by Strawberry-Lemonade) and eight of the Top 10 SKUs are from Indiva.
  
• Based on Hifyre data from
  
  British Columbia
  
  ,
  
  Alberta
  
  ,
  
  Ontario
  
  ,
  
  Manitoba
  
  and
  
  Saskatchewan
  
  , the edibles category improved in Q2 2021 to a record
  
  $35.64 million
  
  in retail sales versus
  
  $29.6 million
  
  in Q1 2021.
  
• Headset data for
  
  June 2021
  
  showed seven of the top nine edible products in
  
  Ontario
  
  were Indiva products.

Operational Highlights for the Second Quarter Fiscal 2021

• Bhang Milk Chocolate was the highest velocity product in
  
  Ontario
  
  , according to OCS data published for their fiscal year ended
  
  March 31, 2021
  
  , selling more units than any other SKU. Bhang Dark Chocolate was the 6
  
  ^th
  
  highest velocity SKU.
  
• Bhang Cookies and Cream and Bhang Caramel Mocha Milk Chocolate became available nationally. Bhang Cookies and Cream quickly became a top seller amongst all Bhang chocolate SKUs.
  
• Indiva expanded its distribution of
  
  Wana Quick
  
  fast-acting gummies to six provinces and one territory. In addition,
  
  Wana Quick
  
  became available in the medical channel through the Medical Cannabis by Shoppers platform.
  
• Indiva introduced additional premium strains under the Artisan Batch brand, most of which are limited time offers as per the brand ethos.
  
• Indiva introduced a bubble hash concentrate product into the Province of
  
  Quebec
  
  .
  
• Indiva made its first deliveries of Bhang Chocolate, Wana Sour Gummies and Artisan Batch flower to the province of
  
  Newfoundland
  
  .

Events Subsequent to Quarter End

• In
  
  August 2021
  
  , Indiva introduced three new Cookie SKUs from Slow Ride Bakery to the
  
  Ontario
  
  market, marking Indiva’s first baked goods introduced in the edibles category. Initial sell-in has been very strong. In the coming months, Indiva expects to broaden its baked goods product offering from Slow Ride and widen its distribution of Slow Ride Cookies coast-to-coast.
  
• Indiva introduced new high-potency, craft grown cultivars to the Canadian market under its Artisan Batch brand, including Unicorn Sherbert by KRFT, Cereal Milk by KRFT and Sticky Larry by Stinky Greens. The Company expects to introduce more exciting and unique cultivars from
  
  Canada’s
  
  best craft cultivators in the coming months.

Outlook

• The Company expects sequential and year-over-year revenue growth and margin improvement to continue in the second half of 2021, as a result of new product introduction, lower distillate costs and improved operating efficiencies.
  
• Indiva expects to introduce over 20 new SKUs, including seasonal baked good SKUs, in the second half of 2021.
  
• Indiva also expects to continue to introduce additional craft cannabis flower SKUs under the Artisan Batch brand. Artisan Batch puts special focus on bringing Canadians the best dry flower from craft growers. Special attention is paid to high THC potency, robust terpene content, premium buds and fresh harvest dates.

OPERATING AND FINANCIAL RESULTS FOR THE THREE AND SIX MONTHS ENDED

JUNE 30, 2021

AND 2020

Operating Expenses

Quarterly Results

COVID-19

Government and private entities are still assessing the present and future effects of the COVID-19 pandemic. Indiva has continued to operate with enhanced health and safety protocols in place to protect its employees. The Company continues to assess the customer, supply chain, and staffing implications of COVID-19 and is committed to making continuous adjustments to minimize disruption and impact. Indiva will remain proactive in its response to the pandemic and compliant with any and all provincial and/or federal policy enacted to protect Canadians.

CONFERENCE CALL

The Company will host a conference call to discuss its results on

Tuesday, August 24, 2021

at

8:30am EST

. Interested participants can join by dialing 416-764-8658 or 1-888-886-7786. The conference ID is 09955484.

A recording of the conference call will be available for replay following the call.  To access the recording please dial 416-764-8691 or 1-877-674-6060. The replay ID is 955484#.  The recording will remain available until

Thursday September 30, 2021

.

ABOUT INDIVA

Indiva sets the standard for quality and innovation in cannabis. As a Canadian licensed producer, Indiva produces and distributes award-winning cannabis products nationally, including Bhang

^®

Chocolate, Wana

™

Sour Gummies, Slow Ride Bakery Cookies, Jewels Chewable Tablets, Ruby

^®

Cannabis Sugar, Sapphire™ Cannabis Salt, as well as capsules, pre-rolls and premium flower under the INDIVA and Artisan Batch brands. Click here to connect with Indiva on

LinkedIn

,

Instagram

,

Twitter

and

Facebook

, and

here to find more information on the Company and its products.

DISCLAIMER AND READER ADVISORY

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the contents of this press release and neither of the foregoing entities accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this press release.

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the parties’ current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to the Company’s future operations, future product offerings and compliance with applicable regulations. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the parties. The material factors and assumptions include the parties being able to maintain the necessary regulatory and other third parties’ approvals and licensing and other risks associated with regulated entities in the cannabis industry. The forward-looking information contained in this release is made as of the date hereof and the parties are not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in

the United States

. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within

the United States

or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. Not for distribution to U.S. Newswire Services or for dissemination in

the United States

. Any failure to comply with this restriction may constitute a violation of U.S. Securities laws.

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SOURCE Indiva Limited