SAN MATEO, Calif., May 28, 2020 (GLOBE NEWSWIRE) -- Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF) (the “Company” or “PLUS”), a cannabis branded products company in the U.S., today released its unaudited financial and operational results for the three months ended March 31, 2020, expressed in U.S. dollars. These filings are available for review on the Company’s SEDAR profile at www.sedar.com and on the Canadian Securities Exchange (the “CSE”) website at www.thecse.com.
Q1 2020 Financial Highlights
Q1 2020 Business Highlights
Management Commentary
“The start of this year came with a number of difficult decisions that were made in order to accelerate our path to cash flow generation,” stated Jake Heimark, Co-founder and CEO. “The changes we made helped to cut our cash consumption to less than a fifth of what it was last quarter and, critically, doing so did not undermine our core business which grew more than 35% quarter-over-quarter.
“Our first quarter financial results paint the picture of a much healthier business than previous quarters, but the work is far from done. In 2020, we are focused on leveraging our core capabilities to create capital-efficient growth through known distribution channels.
“To kick off this new strategic direction, we launched a second gummies brand, PLUS CBDRelief, mid-way through the first quarter. The new product line, which was developed with minimal capital investment and is designed to serve a subset of cannabis consumers not currently reached by the core PLUS brand, has already sold into over 175 licensed retailers.
“The rapid success of this initiative is a testament to both PLUS’s reputation for manufacturing innovative, high-quality products and the broad market reach we have built through years as a trusted leader in the California cannabis branded-products space.2
“The majority of our growth initiatives in 2020 will be centered around California. Despite experiencing some growing pains, we believe that California unequivocally remains the most valuable market for building a branded products company in cannabis. In 2019, the state made up 38% of the global adult-use market and is expected to remain 24% of that market through 2024.3
“With the two best-selling products in the state, and one of the largest brands in the California edibles market, we believe that we have established an exceptionally valuable position as a company.4 We are excited to take steps that we believe will continue to grow that position throughout the course of this year.
“In 2020, our strategic initiatives are built around three critical objectives: 1) ensuring the safety and health of our employees, customers, and partners during this pandemic; 2) establishing ourselves as the clear, long-term leader in California edibles; and 3) becoming a cash-flow positive business. We believe we are already executing on all three.”
Covid-19 Update
In March 2020, there was a global outbreak of COVID-19, which continues to rapidly evolve. The extent to which the virus may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence. The ultimate geographic spread of the disease; the duration of the outbreak; travel restrictions; social distancing; business closures or business disruptions; and the effectiveness of actions taken in the United States and other countries to contain and treat the disease all remain unknown.
While cannabis has been deemed an essential business throughout most of California, it is still too early to understand how COVID-19 will impact PLUS or the market as a whole. To date, the Company has not seen a sustained downside impact on consumer demand in its core California market and has been able to fulfill orders without interruption. The Company believes it is well prepared to respond to this crisis. Please visit plusproductsinc.com/coronavirus to see the actions PLUS is taking to respond to this unique challenge.
(1) According to proprietary research conducted through HJR Associates, a third-party firm contracted by the Company
(2) PLUS had the largest gummies brand and two best-selling cannabis products in California for 2018 and 2019 according to BDS Analytics
(3) According to Arcview | BDS Analytics - State of the Legal Markets 7th Edition
(4) According to BDS Analytics for 2019
Conference Call Details
At 5:00 pm Eastern Time / 2:00 pm Pacific Time today (Thursday, May 28, 2020) the Company will host a conference call and webcast to discuss the financial results and its recent corporate highlights.
Participant Dial-In Numbers:
Toll-Free: (866) 220-4156
Toll / International: (864) 663-5231
*Participants should request the Plus Products Earnings Call or provide conference ID: 4754548
Please dial-in or log-on to the webcast at least 10 minutes before the start of the call
The call will also be webcast at https://edge.media-server.com/mmc/p/3sdhitpx. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. Following the conclusion of the call, there will be an archived audio webcast of the conference call available for replay on the Company’s website at PlusProductsInc.com.
Jake Heimark, Co-founder and Chief Executive Officer, and Jon Paul, Chief Financial Officer, will be conducting a question and answer session following the prepared remarks.
About PLUS
PLUS is a cannabis and hemp food company focused on using nature to bring balance to consumers’ lives. PLUS’s mission is to make cannabis safe and approachable – that begins with high-quality products that deliver consistent consumer experiences. PLUS is headquartered in San Mateo, CA.
For further information contact:
Jake Heimark
CEO & Co-founder
ir@plusproducts.com
Investors:
Blake Brennan
Investor Relations
blake@plusproducts.com
Tel +1 213.282.6987
Media:
Megan Sekkas
Public Relations
megan@sekkas.com
Tel +310.279.6811
The CSE does not accept responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements:
This press release includes statements containing certain “forward-looking information” within the meaning of applicable securities law (each, a “forward-looking statement”). Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur and include, but are not limited to, statements relating to: the Company’s expectations with respect to the reductions in cash and cash equivalents to continue to be substantially lower than those incurred throughout 2019; the impact of the material changes announced in March 2020 on the business of the Company and the extent to which such changes will provide an accelerated path towards becoming cash flow generative and the continued efforts by the Company to establish itself as a leader in the California edibles market; the extent to which the Company will focus on leveraging core capabilities to create capital-efficient growth through known distribution channels; the extent to which California will remain the most valuable market for building a branded products company in cannabis; the extent to which the Company believes it will grow its position in the market throughout the course of this year; and the extent to which the Company’s strategic objectives in 2020 are built around three critical items, and the extent to which the Company is already executing on these three objectives.
These forward-looking statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this press release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, the success of the Company’s investments, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of the Company’s products, customer experience and retention, the continued development of adult-use sales channels, managements estimation of consumer demand in jurisdictions where the Company exports, expectations of future results and expenses, the availability of additional capital to complete capital projects and facilities improvements, the ability to expand and maintain distribution capabilities, the impact of competition, the ability of the Company to implement initiatives and the possibility for changes in laws, rules, and regulations in the industry.
Further, the duration and severity of the current COVID-19 pandemic may significantly impact or exacerbate some of the above-listed risks and uncertainties. Risks that may be further impacted by the COVID-19 pandemic relate to the Company’s operations and expansion, including the Company’s ability to grow its brand and sales and to maintain production levels in the event that the Company’s employees are restricted from accessing facilities for a significant period of time; to the Company’s ability to access capital and the level of borrowing costs; the Company’s ability service obligations under its debt securities and other debt or lease obligations; and the Company’s ability to comply with the covenants contained in the agreements that govern the Company’s existing indebtedness.
The transmission of COVID-19 and efforts to contain its spread have recently resulted in international, national and local border closings, travel restrictions, significant disruptions to business operations, supply chains and customer activity and demand (across all sectors), service cancellations, reductions and other changes, and quarantines, as well as considerable general concern and uncertainty.
The overall severity and duration of COVID-19-related adverse impacts on the Company’s business will depend on future developments that cannot currently be predicted. Even after the COVID-19 outbreak has subsided, the Company may continue to experience material adverse impacts to the businesses as a result of its global economic impact, including any related recession.
The Company is under no obligation and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Non-GAAP Measures:
Adjusted uncompressed weighted average shares outstanding and loss per share.
The Company has additionally determined the adjusted uncompressed weighted average shares outstanding and loss per share, basic and diluted. The Company believes these measures to be representative of loss and comprehensive loss on a per share basis; however, these performance measures have no standardized meaning. As such, there are likely to be differences in the method of computation when compared to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with GAAP, some investors use this information to evaluate the Company’s performance. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
PLUS PRODUCTS INC. Condensed Interim Consolidated Statements of Financial Position (Expressed in U.S. Dollars - Unaudited) | |||||
As at March 31, | As at December 31, | ||||
2020 | 2019 | ||||
$ | $ | ||||
Assets | |||||
Current | |||||
Cash and cash equivalents | 14,168,389 | 15,176,184 | |||
Trade receivables | 3,318,914 | 4,040,183 | |||
Prepaids and deposits | 907,322 | 1,262,269 | |||
Taxes recoverable | 112,377 | 112,377 | |||
Note receivable | 200,000 | 200,000 | |||
Inventory | 3,172,068 | 3,872,175 | |||
21,879,070 | 24,663,188 | ||||
Non-current | |||||
Prepaids and deposits | 833,328 | 789,521 | |||
Property and equipment | 3,227,046 | 3,703,597 | |||
Intangible assets | 84,109 | 98,665 | |||
Total assets | 26,023,553 | 29,254,971 | |||
Liabilities | |||||
Current | |||||
Accounts payable and accrued liabilities | 1,783,128 | 2,289,393 | |||
Income taxes payable | 16,990 | - | |||
Current portion of vehicle loans | 27,999 | 27,753 | |||
Current portion of lease liabilities | 297,633 | 284,588 | |||
2,125,750 | 2,601,734 | ||||
Non-current | |||||
Vehicle loans | 130,345 | 137,588 | |||
Lease liabilities | 949,019 | 1,028,218 | |||
Convertible debentures | 16,139,005 | 17,188,223 | |||
Total liabilities | 19,344,119 | 20,955,763 | |||
Shareholders' equity | |||||
Share capital | 41,720,119 | 41,782,711 | |||
Reserves | 7,778,271 | 7,884,184 | |||
Deficit | (44,069,521 | ) | (41,138,127 | ) | |
Accumulated other comprehensive loss | 1,250,565 | (229,560 | ) | ||
Total shareholders' equity | 6,679,434 | 8,299,208 | |||
Total liabilities and shareholders' equity | 26,023,553 | 29,254,971 |
PLUS PRODUCTS INC. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in U.S. Dollars, except number of shares - Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
$ | $ | |||||||
Revenue | 4,739,209 | 3,244,958 | ||||||
Cost of sales | 3,085,419 | 2,553,101 | ||||||
Gross margin | 1,653,790 | 691,857 | ||||||
Operating expenses | ||||||||
Advertising and promotion | 386,675 | 227,300 | ||||||
Depreciation and amortization | 25,319 | - | ||||||
Consulting fees | 171,841 | 694,483 | ||||||
General and administrative | 460,719 | 460,301 | ||||||
Meals and travel expenses | 131,944 | 198,560 | ||||||
Professional fees | 381,987 | 874,301 | ||||||
Regulatory fees | 15,552 | 3,336 | ||||||
Research and development | 7,473 | 5,987 | ||||||
Salaries and benefits | 1,743,710 | 1,055,688 | ||||||
Share-based compensation | 394,547 | 179,629 | ||||||
Loss from operations | (2,065,977 | ) | (3,007,728 | ) | ||||
Other (income) expense | ||||||||
Interest and other income | 1,490 | (609 | ) | |||||
Accretion finance income | (43,807 | ) | - | |||||
Accretion expense | 430,907 | 349,028 | ||||||
Interest expense | 423,057 | 171,268 | ||||||
Foreign exchange gain | 36,780 | (157,579 | ) | |||||
Loss before income taxes | (2,914,404 | ) | (3,369,836 | ) | ||||
Income tax expense | 16,990 | 75,024 | ||||||
Loss for the period | (2,931,394 | ) | (3,444,860 | ) | ||||
Currency translation adjustment | (1,480,125 | ) | - | |||||
Loss and comprehensive loss for the period | (1,451,269 | ) | (3,444,860 | ) | ||||
Basic and diluted | 33,822,501 | 24,880,328 | ||||||
Basic and diluted | (0.09 | ) | (0.14 | ) |