Plus Products Reports Audited 2018 4th Quarter and Year-End Financial Results
May 2, 2019 MJ Shareholders
Ryan Allway
May 2nd, 2019
News, Top News
Revenues of $8.4 million grew 681% over 2017 while total California cannabis sales declined 17% year-over-year in 2018.
SAN MATEO, Calif., May 01, 2019 (GLOBE NEWSWIRE) — Plus Products Inc. (CSE: PLUS) (OTCQB: PLPRF) (the “Company” or “Plus Products”), one of California’s top edible brands by market share according to BDS Analytics, today released its audited financials for the quarter ended and calendar year ended December 31, 2018 and reported in US$.
Revenue Highlights
Annual revenues soared to $8.4 million in 2018, 681% over 2017 revenues of $1.1 million. 4th quarter revenues reached a record $3.1 million, 31% higher than the 3rd quarter and 770% over the 4th quarter of 2017.
The revenue growth was driven by sales of Plus Products’ concentrated brand portfolio of four full-time SKUs and one rotating seasonal. In addition, the Company continued to increase its production capacity, which allowed its distributor to build up inventory to better service over 300 dispensary customers throughout California.
“We remain proud that PLUS had significant growth in both revenue and market share in a year where the greater legal California cannabis market shrank and underperformed expectations due to unclear regulations and an increase in underground market sales,” said Jake Heimark, co-founder & CEO of PLUS Products. “We look forward to greater regulation and increased enforcement in 2019 that will allow the legal industry to continue to prosper and help us continue on our mission of making cannabis safe and approachable for everyone.”
Financial Highlights
Among the other financial highlights from 2018:
- The Company’s unaudited cash balance climbed to $22.4 million at the end of 2018, up from $0.2 million at the end of 2017 and $11.1 million as of September 30, 2018, prior to the initial public offering in October.
- Net working capital was $22.4 million at December 31, 2018 compared to a deficit of $0.1 million the previous year-end. Liabilities at year-end 2018 were only $2.2 million.
- The Company raised $29.7 million in capital, net of capital raising costs, during 2018, including the initial public offering in October.
- Shareholder equity reached $25.7 million, 33 times the 2017 level of $0.8 million.
- Gross margins hit a record level of $0.4 million in Q4 2018 and topped $1.1 million for 2018, thanks to the increased capacity and streamlined operations at its Adelanto production facility opened at the start of 2018 to meet the demand of the adult use market in California.
- Plus Products invested heavily in building talent, market share, infrastructure and financial capacity for the prospects of future growth. Spending on operating expenses grew to $3.2 million in the 4th quarter with the hiring of key top management personnel, expenses in conjunction with the public offering and consulting fees pertaining to future operational and marketing efforts.
- Capital expenditures for purchases of equipment and leasehold improvements reached $1.4 million net in 2018. $0.8 million was also spent for obtaining the licenses and other assets with the acquisition of GOOD CO-OP inc. in December.
- The loss per adjusted uncompressed weighted average share climbed to $0.07 per share in the 4th quarter 2018, up from $0.05 per share in the 3rd quarter, totaling $0.23 per adjusted uncompressed weighted average share for 2018. The loss for 2018 was $2.9 million for the 4th quarter and $6.8 million for 2018.
The highlighted financial information should be read in connection with the summary financial information at the end of this press release together with the Company’s audited annual financials along with the MD&A (Management Discussion & Analysis) filed on www.sedar.com under the Plus Products Inc. profile.
Retail Data Highlights
According to BDS Analytics, the company’s retail sales in the fourth quarter were $10.53 million, an increase of 39.6% over the third quarter of 2018.
According to retail analytics firm Headset, the PLUS Uplift Sour Watermelon gummy was the top selling branded product of the more than 20,000 products sold across all cannabis categories in California in 2018. According to BDS Analytics, PLUS “Uplift” and PLUS “Restore” remained the #1 and #2 best-selling edible products in California. Although PLUS had strong growth in 2018, BDS Analytics also found that in 2018 there were 17% less legal sales in California cannabis sales than in 2017 as the California market struggled with licensing challenges, regulatory changes, taxes and new testing, labeling and packaging requirements.
PLUS Uplift was the top branded product of more than 20,000 products sold in California, according to Headset.
“We remain proud that PLUS had significant growth in both revenue and market share in a year where the greater legal California cannabis market shrank and underperformed expectations due to unclear regulations and an increase in underground market sales,” said Jake Heimark, co-founder & CEO of PLUS Products. “We look forward to greater regulation and increased enforcement in 2019 that will allow the legal industry to continue to prosper and help us continue on our mission of making cannabis safe and approachable for everyone.”
PLUS supports regulation in the cannabis industry and actively collaborates with regulators. The company recently rolled out child-resistant tins a year ahead of the California deadline, and it participated in the National Cannabis Roundtable with John Boehner as honorary chairman last month.
PLUS is a cannabis branded product manufacturer dedicated to making cannabis safe and approachable. The Company’s consolidated financials for the first quarter will be available prior to May 31, 2019.
About Plus Products
PLUS Products creates safe and delicious cannabis food products. PLUS’s mission is to make cannabis safe and approachable – that starts with high-quality products that deliver consistent experiences. The gummies are manufactured at PLUS’s own factory in Adelanto, CA, where dosage is tested twice internally and then tested twice again by an independent lab. PLUS is headquartered in San Mateo, CA with 60 employees.
For further information contact:
Investors:
Jessica Bornn
Director of Investor Relations
[email protected]
Tel +1 650.223.5478
Media:
Heidi Groshelle
Ingrid Marketing
[email protected]
Maggie Squires
Moxie Communications Group
[email protected]
The CSE does not accept responsibility for the adequacy or accuracy of this release.
The financial information included in this press release is not required for any regulatory purpose and is therefore provided solely for additional investor guidance. Where possible the information has been constructed by management from available audited or audit reviewed financial statements. Where no audited or audit reviewed information has been available, additional management accounting information has been utilized to construct the financial information.
Forward-Looking Statements
This news also release includes statements containing certain “forward-looking information” within the meaning of applicable securities law (“forward-looking statements”). 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 the execution of definitive agreements and the closing of the transaction.. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news 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 ability to retain key personal, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of our products, customer experience and retention, the continued development of adult-use sales channels, managements estimation of consumer demand in 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, and the possibility for changes in laws, rules, and regulations in the industry. 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.
SUMMARY FINANCIAL INFORMATION
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||
| 2018 | 2017 | 2018 | 2017 | ||
| Income (Loss) | $ | $ | $ | $ | |
| Revenues | 3,350,346 | 385,105 | 8,362,547 | 1,070,256 | |
| Gross Margin | 427,559 | (163,495) | 1,111,155 | (485,929) | |
| Operating and Other Expenses | 3,341,662 | 1,202,699 | 7,946,970 | 2,570,277 | |
| Net Income (Loss) | (2,914,103) | (1,366,124) | (6,835,815) | (3,056,206) | |
| Loss per uncompressed share | (0.07) | (0.08) | (0.23) | (0.22) | |
|
|
As at December 31, | ||||
| Balance Sheet | 2018 | 2017 | |||
| $ | $ | ||||
| Current Assets | 24,580,118 | 984,468 | |||
| Total Assets | 27,845,032 | 1,821,500 | |||
| Total Liabilities | 2,165,126 | 1,040,850 | |||
| Shareholder’s Equity (Deficit) | 25,679,906 | 780,650 | |||
| Three Months Ended | ||||
| 2018 Quarterly Results | Mar 31 | Jun 30 | Sep 30 | Dec 31 |
| $ | $ | $ | $ | |
| Revenues | 868,203 | 1,582,132 | 2,561,866 | 3,350,346 |
| Gross Margin | 69,410 | 228,684 | 385,502 | 427,559 |
| Results from Operations | (982,140) | (1,029,647) | (1,671,861) | (2,817,510) |
| Loss Before Income Taxes | (996,481) | (1,041,647) | (1,678,505) | (2,963,468) |
| Net Income (Loss) | (1,015,315) | (1,109,420) | (1,796,977) | (2,914,103) |
| Weighted Average Uncompressed Shares | 21,635,781 | 24,551,555 | 33,071,397 | 39,424,708 |
| Net Income (Loss) Per Uncompressed Share | (0.05) | (0.05) | (0.05) | (0.07) |
| Total Assets | 6,908,728 | 6,756,495 | 15,248,628 | 27,845,032 |
| Total Liabilities | 1,395,948 | 1,473,981 | 1,505,961 | 2,165,126 |
| Shareholder’s Equity | 5,512,780 | 5,282,514 | 13,742,667 | 25,679,906 |
PLUS PRODUCTS INC.
Consolidated Statements of Financial Position
(Expressed in U.S. Dollars)
| As at December 31, | |||
| 2018 | 2017 | ||
| $ | $ | ||
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 22,398,587 | 150,122 | |
| Trade receivables | 1,379,066 | 329,696 | |
| Inventory | 630,337 | 307,941 | |
| Prepaids | 172,128 | 81,000 | |
| Due from related party | – | 115,709 | |
| Total current assets | 24,580,118 | 984,468 | |
| Deposits | 586,354 | 20,649 | |
| Property and equipment | 1,875,401 | 816,383 | |
| Intangible assets | 741,863 | – | |
| Goodwill | 61,296 | – | |
| Total assets | 27,845,032 | 1,821,500 | |
| Liabilities and shareholders’ equity | |||
| Current liabilities | |||
| Accounts payable and accrued liabilities | 2,009,412 | 440,850 | |
| Income taxes payable | 155,714 | – | |
| Notes payable | – | 600,000 | |
| Total liabilities | 2,165,126 | 1,040,850 | |
| Shareholders’ equity | |||
| Share capital | 34,065,191 | 3,947,679 | |
| Reserves | 2,391,055 | 773,496 | |
| Deficit | (10,776,340) | (3,940,525) | |
| Total shareholders’ equity | 25,679,906 | 780,650 | |
| Total liabilities and shareholders’ equity | 27,845,032 | 1,821,500 | |
PLUS PRODUCTS INC.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in U.S. Dollars)
| Year ended December 31, | |||
| 2018 | 2017 | ||
| $ | $ | ||
| Revenue | 8,362,547 | 1,070,256 | |
| Cost of sales | 7,251,392 | 1,556,185 | |
| Gross margin | 1,111,155 | (485,929) | |
| Operating expenses | |||
| Advertising and promotion | 192,583 | 82,340 | |
| Amortization | 1,956 | 434 | |
| Consulting fees | 775,683 | 1,053,761 | |
| General and administrative | 772,761 | 228,137 | |
| Meals and travel expenses | 413,278 | 206,371 | |
| Professional fees | 2,071,338 | 299,922 | |
| Regulatory fees | 14,245 | 18,163 | |
| Research and development | 828 | 20,905 | |
| Salaries and benefits | 2,143,927 | 499,233 | |
| Share-based compensation | 1,225,714 | 56,520 | |
| Loss from operations | (6,501,158) | (2,951,715) | |
| Other items | |||
| Other (income) expense | (1,486) | 46,074 | |
| Interest expenses | 33,219 | 58,417 | |
| Loss on foreign exchange | 147,210 | – | |
| Loss before income taxes | (6,680,101) | (3,056,206) | |
| Income tax expense | 155,714 | – | |
| Loss and comprehensive loss for the year | (6,835,815) | (3,056,206) | |
PLUS PRODUCTS INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
| Year Ended December 31, | |||
| 2018 | 2017 | ||
| $ | $ | ||
| Cash flows used in operating activities | |||
| Loss for the year | (6,835,815) | (3,056,206) | |
| Non-cash items: | |||
| Depreciation | 447,195 | 23,927 | |
| Bad debt expenses | – | 46,074 | |
| Interest expenses | – | 58,417 | |
| Share-based compensation | 1,225,714 | 704,596 | |
| Changes in operating assets and liabilities | |||
| Trade receivables | (1,049,370) | (359,122) | |
| Prepaid and deposits | (617,380) | (58,609) | |
| Inventory | (322,396) | (272,901) | |
| Accounts payable and accrued liabilities | 1,543,679 | 357,074 | |
| Income tax payable | 155,714 | – | |
| Due to related party | 115,709 | (88,872 | |
| Net cash used in operating activities | (5,336,950) | (2,645,622) | |
| Cash flows used in investing activities | |||
| Purchase of property and equipment | (1,414,794) | (820,561) | |
| Purchase of Good Co-op, Inc. | (83,591) | – | |
| Net cash used in investing activities | (1,498,385) | (820,561) | |
| Cash flows provided by financing activities | |||
| Proceeds from issuance of loan payable | – | 200,000 | |
| Repayments of loan payable | (600,000) | (91,600) | |
| Proceeds from issuance of shares and warrant, net of share issuance costs | 29,685,000 | 3,251,479 | |
| Common shares repurchased | (1,200) | (12,000) | |
| Net cash provided by financing activities | 29,083,800 | 3,347,879 | |
| Change in cash and cash equivalents | 22,248,465 | (118,304) | |
| Cash and cash equivalents, beginning of the year | 150,122 | 268,426 | |
| Cash and cash equivalents, end of the year | 22,398,587 | 150,122 | |
Supplemental Disclosure:
The Company issued 357,464 Subordinate Shares with a value of $825,557 (2017 – $Nil) for the acquisition of the assets of GOOD CO-OP INC.
Photos accompanying this announcement are available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/b6a4f044-3632-4806-aec8-2deafc07f411
http://www.globenewswire.com/NewsRoom/AttachmentNg/514b4b3c-b872-4fbb-8283-194b26c4dde1
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.
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