Plus Products Reports Audited 2018 4 th Quarter and Year-end financial results
Revenues of $8.4 million grew 681% over 2017 while total California cannabis sales declined 17% year-over-year in 2018.
San Mateo, CA – May 1, 2019 -- Plus Products Inc. (CSE: PLUS) (OTCQB: PLPRF) (the “Company” or “Plus Products”), one of California’s top edible brands by market share according to BDS Analytics, today released its audited financials for the quarter ended and calendar year ended December 31, 2018 and reported in US$.
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.
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
ir@plusproducts.com
Tel +1 650.223.5478
Media:
Heidi Groshelle
Ingrid Marketing
heidi@ingridmarketing.com
Maggie Squires
Moxie Communications Group
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.
About Plus Products
PLUS 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
ir@plusproducts.com
Tel +1 650.223.5478
Media:
Heidi Groshelle
Ingrid Marketing
Tel +1 415.307.1380
The CSE does not accept responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
This news release contains statements and information that, to the extent that they are not historical fact, constitute "forward-looking information" within the meaning of applicable securities legislation. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information. Accordingly, readers should not place undue reliance on any such forward-looking information. Further, any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time, and it is not possible for the Company's management to predict all of such factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company does not undertake any obligation to update any forward-looking information to reflect information, events, results, circumstances or otherwise after the date hereof or to reflect the occurrence of unanticipated events, except as required by law including securities laws.