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CST: 05/12/2019 09:08:49   

Plus Products Reports Audited 2018 4th Quarter and Year-End Financial Results

217 Days ago

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
ir@plusproducts.com
Tel +1 650.223.5478

Media:
Heidi Groshelle
Ingrid Marketing
heidi@ingridmarketing.com

Maggie Squires
Moxie Communications Group
plus@moxiegrouppr.com

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

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