Plus Products Reports First Quarter 2021 Financial Results, Announces Transition of Chief Financial Officer
SAN MATEO, Calif., May 28, 2021 (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, 2021, 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.
The Company also announced today that Nathan Pearson, Chief Financial Officer, will be leaving the Company at the end of this month. The Company is pleased to announce that Tessa O’Dowd, who has served as the Company’s Controller for the last three years, has been appointed as the Company’s Chief Financial Officer.
Mr. Pearson has played a crucial role in our organization over the last two years, spearheading the effort that saw the Company reduce its cash consumption by 85% from 2019 to 2020.
Jake Heimark, Co-founder and CEO
We are grateful for Mr. Pearson’s service and contributions to the company. We are excited to have Ms. O’Dowd step into the role of CFO moving forward. Ms. O’Dowd has been with the Company since before the IPO and I trust her immensely with the responsibility of her new position.
Q1 2021 Financial Highlights
- Revenues: Net revenues were $2.5M in Q1 2021. As detailed in the release of the Company’s 2020 Audited Financials, net revenues during the first quarter were negatively impacted by a significant one-time accounting shift in which PLUS has moved to recognizing revenue at the time its products are sold to licensed retailers for all sales occurring through the Company’s new self-service distributor. Previously, the Company recognized revenue at the point in which inventory was transferred (sold) to its full-service distribution partners. The shift resulted in an effective delay in the time at which all sales of products through the Company’s new distributor are recognized relative to sales that occurred to its previous distribution partners.
- Gross Profits: Gross profits were $1.0M in Q1 2021. Gross profit margin in Q1 2021 grew to 41%, representing an increase year-over-year as compared to 35% in Q1 2020, and an increase quarter-over-quarter as compared to 30% in Q4 2020.
- Operating Profits (Losses): Operating losses were $(2.4)M in Q1 2021, representing a 15% increase year-over-year from $(2.1)M in Q1 2020, but a 29% improvement quarter-over-quarter from $(3.4)M in Q4 2020.
- Cash Balance: The Company reported $8.9M in cash and cash equivalents at March 31, 2021. As a result of the transition to its new self-service distribution partner, the Company invested an additional $1.5M into short-term working capital and other one-time cash outflows.
Q1 2021 Business Highlights
- In January 2021, the Company entered into an exclusive sales agreement with Elements of Green, a European e-commerce marketplace for hemp CBD products, to offer its products across the United Kingdom.
- Also in January 2021, the Company’s Sour Watermelon UPLIFT gummies were recognized as LeafLink’s best-selling cannabis edible in the California market and one of the five best-selling edible products across all active markets.¹
- In February 2021, the Company announced that it entered into a partnership with CannRx Biosciences, a leading Israeli cannabis firm in the boutique field of cannabis-based botanical medicine, to enhance the onset of the Company’s products.
- Also in February 2021, the Company announced a strategic shift to expand its sales team, internalize all account management, and transition to a self-service distribution partner in the California adult-use market.
- Also in February 2021, the Company announced that holders of the Company’s 8.00% unsecured convertible debentures due February 28, 2021 approved certain proposed amendments to the terms of the Debentures, including the extension of the maturity date from February 28, 2021, to February 28, 2024, and an increase in the coupon rate of from 8.00% to 12.00% per annum. Further details of the amendments to the debentures can be found in the Company’s press release dated February 25, 2021, available here.
- In March, 2021, the Company announced that Jennifer Tung would be leaving her roles as Chief Risk Officer and General Counsel, effective April 15, 2021. Ms. Tung remains a special advisor to the Board of Directors.
- Also in March, 2021, the Company announced a partnership with Eaze Technologies, one of California’s largest delivery marketplaces for legal cannabis, to launch a co-branded, limited-edition cannabis gummy.
Post-Period End Business Highlights
- In April, the Company announced the completion of the previously announced conversion of certain 12.00% secured debentures due February 28, 2024. Debentures in the aggregate principal amount of CAD$4,990,000 (4,990 Debentures) were converted into 5,252,631 Subordinate Voting Shares issued from treasury at a conversion price of CAD$0.95 per share. In addition, accrued interest up to the conversion date in the aggregate amount of CAD$118,096.66 was paid to the former holders of the Debentures subject to conversion.
- Also in April, the Company announced the launch of its PLUS Hash Gummies in concert with Biscotti Brands, a premium hash brand. The product is available for purchase in California for a limited time.
- Also in April, the Company announced that its amended debentures were approved for listing on the CSE under the symbol “PLUS.DB.A”.
“At PLUS, 2020 was centered around reducing our cash consumption and shifting from a single brand to a portfolio of brands. We believe that we were successful in achieving each of these objectives and that PLUS is well positioned to pursue its goals in 2021 and beyond. These include further cementing the Company’s status as a leading cannabis brand in its home market of California², which remains the largest cannabis market globally³, along with exploring potential new geographies into which the Company can expand.
“In February of this year, the Company announced an important transition to a leading self-service distributor, Nabis Distribution. Historically, the Company has partnered exclusively with full-service distributors, relying on a hybrid of both internal and external personnel to make up its sales force. Under this new self-service model, the sales cycle for every order will be owned from start to finish by a member of the PLUS team.
“To further facilitate the shift towards a self-service distribution model, we have invested in our internal sales force by expanding the team more than 75% since the start of Q4 2020. Despite the success we had in building the PLUS brand with our full-service partners, we have found the most effective way for us to achieve the broadest distribution of our products is to have a member of the PLUS team representing the Company at each and every interaction with our retail customers. This transition will make that a reality across the entire California market.
“With this strategic shift in our sales model complete, we believe PLUS is poised to further capitalize on the consumer brand foundation we have built in the California cannabis market. According to a Brightfield Brand Health Survey conducted in December 2020, 63% of our consumers say that PLUS is their favorite gummy brand; 42% of PLUS consumers have been using our products for over 1 year, compared to the next highest brand at 33%; 67% of PLUS consumers use the brand at least weekly; and 88% of PLUS consumers plan to buy our products again.
“Critically, in the first quarter, PLUS was successful in extending its debt obligations with holders of the Company’s Debentures. Originally due February 28th, 2021, debentureholders approved all proposed amendments, including an extension of the term until February 28th, 2024. Management believes that this 3-year extension, representing 150% of the original term, demonstrates long-term confidence from our investors and gives the Company the opportunity to create value for our shareholders as we continue to move forward.”
- According to Headset Insights PLUS is one of the three largest edibles brands in California since adult-use cannabis legalization
- Arcview | BDS Analytics – State of the Legal Markets 7th Edition
Conference Call Details
At 5:00 pm Eastern Time / 2:00 pm Pacific Time today (Friday, May 28, 2021) 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: 2654934
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/hxgzzmmm. 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 Tessa O’Dowd, Chief Financial Officer, will be conducting a question and answer session following the prepared remarks.
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.
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.