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Planet 13 Announces Second Quarter 2020 Financial Results

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  • Q2 2020 Revenue of $10.8 million; EBITDA loss of $0.7 million

  • July 2020 & August revenue of $15.1 million1

All figures are reported in United States dollars ($) unless otherwise indicated

LAS VEGAS, NV / ACCESSWIRE / August 31, 2020 / Planet 13 Holdings Inc. (CSE:PLTH) (OTCQB:PLNHF) ("Planet 13" or the "Company"), a leading vertically-integrated Nevada cannabis company, today announced its financial results for the three-month and six-month period ended June 30, 2020. Planet 13's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS").

Larry Scheffler, Co-CEO of Planet 13 commented, "Q2 was a challenging environment for all Nevada businesses. I'm pleased with the way the team worked under these conditions to add new customers and preserve capital. As the State has reopened, we've seen an incredible pickup in our business, with July and August being our highest months of sales to date. The SuperStore is seeing increased customer conversion and higher tickets, while our delivery team is servicing local customers and providing approximately 15% of our sales compared to less than 1% pre-COVID."

Bob Groesbeck, Co-CEO added, "Our brands are performing well at the SuperStore, up from 14% in Q4 2019 to 28.5% of sales in Q2 2020. This number will continue to increase now that we have expanded cultivation to supply our popular Medizin line. We are also seeing initial success in the wholesale market, which we began supplying in June. Our products are now available in 33 dispensaries in Nevada, and we have multiple SKUs in the top 10 of their respective categories; edibles, concentrates, and beverages2. Planet 13 has resumed its growth trajectory. In July and August we've generated our highest revenue ever, over $7 million per month. We are set to build on this momentum reopening our Medizin dispensary shortly and Santa Ana in 2021. I'm incredibly excited about what the future holds for Planet 13."

1August revenue is for the first 30 days of the month

2https://www.headset.io/

Financial Highlights - Q2 - 2020

Operating Results

All comparisons below are to the quarter ended June 30, 2019, unless otherwise noted

  • Revenues were $10.8 million as compared to $16.5 million, a decrease of 34.9%

  • Gross profit before biological adjustments was $4.7 million or 43.8% as compared to $9.7 million or 58.7%, a decrease of 51.5%

  • Operating expenses, excluding non-cash compensation expense, were $5.8 million as compared to $7.1 million, a decrease of 18.5%

  • Net loss before taxes of $3.3 million as compared to a net income of $1.1 million

  • Net loss of $4.0 million as compared to a net loss of $0.9 million

  • Adjusted EBITDA loss of $0.7 million as compared to Adjusted EBITDA of $2.7 million

Balance Sheet

All comparisons below are to December 31, 2019, unless otherwise noted

  • Cash of $22.7 million as compared to $12.8 million

  • Total assets of $81.9 million as compared to $62.9 million

  • Total liabilities of $30.9 million as compared to $21.6 million

Q2 Highlights and Recent Developments

For a more comprehensive overview of these highlights and recent developments, please refer to Planet 13's Management's Discussion and Analysis of the Financial Condition and Results of Operations for the Three Months and Six Months Ended June 30, 2020 (the "MD&A").

  • On April 13, 2020, Planet 13 announced termination of the Santa Ana acquisition.

  • On April 17, 2020, Planet 13 announced the renegotiation of the Santa Ana acquisition.

  • On May 21, 2020, Planet 13 announced the acquisition of a dispensary license and the close of the Santa Ana acquisition.

  • On June 15, 2020, Planet 13 announced a CDN$10 million bought deal public offering.

  • On July 3, 2020, Planet 13 announced closing of a CDN$11.5 million bought deal public offering.

  • On July 17, 2020, Planet 13 announced an acquisition of 45,000 square feet of indoor cultivation.

  • On August 10, 2020, Planet 13 was awarded a Nevada dispensary license.

  • On August 20, 2020, Planet 13 announced a CDN$15 million bought deal public offering.

  • On August 21, 2020, Planet 13 announced an upsize to bought deal public offering to CDN$20 million.

Results of Operations (Summary)

The following tables set forth consolidated statements of financial information for the three-month and six-month periods ending June 30, 2020 and June 30, 2019. For further information regarding the Company's financial results for these periods, please refer to the Company's interim financial statements for the period ended June 30, 2020 together with the MD&A, available on Planet 13's issuer profile on SEDAR at www.sedar.com and the Company's website https://www.planet13holdings.com.

Adjusted EBITDA

NV Cannabis Ops

Consolidated

Consolidated

Three Months

Three Months

Three Months

Ended

Ended

Ended

Percentage

Jun-30-2020

Jun-30-2020

Jun-30-2019

Change

EBITDA

Profit (loss) before taxes

(2,425,120

)

(3,286,823

)

1,064,222

(408.8

%)

Add back:

Biological asset adjustments

(44,356

)

(44,356

)

89,519

(149.5

%)

Non-cash share based payments

-

626,017

539,262

16.1

%

Depreciation and amortization

1,040,065

1,040,065

668,041

55.7

%

Depreciation included in COGS

406,322

406,322

157,297

158.3

%

Interest and non-operating expense (income)

568,154

568,154

213,115

166.6

%

EBITDA

(454,935

)

(690,621

)

2,731,456

(125.3

%)

Margin

(4.2

%)

(6.4

%)

16.5

%

Expressed in USD$

Three Months

Three Months

Ended

Ended

Percentage

Jun-30-2020

Jun-30-2019

Change

Revenue

Revenues, net of discounts

10,760,996

16,521,717

(34.9

%)

Cost of Goods Sold

(6,051,963

)

(6,826,598

)

(11.3

%)

Gross Profit, Before Biological Asset Adjustment

4,709,033

9,695,119

(51.4

%)

Gross Profit Margin %

43.8

%

58.7

%

Realized fair value amounts included in COGS

(327,997

)

102,919

(418.7

%)

Unrealized fair value gain on growth of biological assets

372,353

(192,438

)

(293.5

%)

Gross profit

4,753,389

9,605,600

(50.5

%)

Gross Profit Margin %

44.2

%

58.1

%

Expenses

General and Administrative

5,559,623

5,476,208

1.5

%

Sales and Marketing

246,353

1,644,752

(85.0

%)

Depreciation and Amortization

1,040,065

668,041

55.7

%

Share based payments

626,017

539,262

16.1

%

Total Expenses

7,472,058

8,328,263

(10.3

%)

Income (Loss) From Operations

(2,718,669)

1,277,337

(312.8

%)

Other (Income) Expense:

Interest Expense, net

572,257

372,456

53.6

%

Realized Foreign Exchange gain (loss)

-

2,337

(100.0

%)

Other expense (income)

(4,103

)

(161,678

)

(97.5

%)

Total Other Expense (Income)

568,154

213,115

166.6

%

Income (loss) for the period before tax

(3,286,823)

1,064,222

(408.8

%)

Provision for income tax (current and deferred)

701,272

1,999,690

(64.9

%)

(Loss) for the period

(3,988,095)

(935,468)

326.3

%

Other Comprehensive Income (Loss)

Items that may be reclassified subsequently to profit/loss

Foreign exchange translation adjustment

(83,699

)

(82,316

)

Net Comprehensive (Loss) for the period

(4,071,794)

(1,017,784)

(Loss) per share for the period

Basic and fully diluted loss per share

$

(0.03)

$

(0.01)

Weighted Average Number of Shares Outstanding

Basic and fully diluted

143,947,783

133,533,681

Outstanding Shares

As of August 30, 2020, the Company had 104,104,733 common shares and 59,173,872 class A convertible, restricted voting shares issued and outstanding for a total of 163,278,605 shares outstanding. There were 433,840 options issued and outstanding of which all have fully vested. There were 5,430,332 warrants outstanding and 1,764,250 RSU's outstanding of which nil RSUs had fully vested as of August 30, 2020.

Conference Call

Planet 13 will host a conference call on Monday, August 31, 2020 at 5:00 p.m. EST to discuss its second quarter financial results and provide investors with key business highlights. The call will be chaired by Bob Groesbeck, Co-CEO, Larry Scheffler, Co-CEO, and Dennis Logan, CFO.

CONFERENCE CALL DETAILS

Date: August 31, 2020 | Time: 5:00 p.m. EST
Participant Dial-in: Toll Free 877-407-8035 or International 201-689-8035
Replay Dial-in: Toll Free 877-481-4010 or International 919-882-2331
(Available for 2 weeks)
Reference Number: 36624
Listen to webcast: https://bit.ly/3h6DVfA

Financial Measures

There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The Company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization) is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles and is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

For further inquiries, please contact:

LodeRock Advisors Inc., Planet 13 Investor Relations
mark.kuindersma@loderockadvisors.com
(416) 519-2156 ext. 2230

Bob Groesbeck and Larry Scheffler
Co-Chief Executive Officers
ir@planet13lasvegas.com

About Planet 13
Planet 13 (www.planet13holdings.com) is a vertically integrated cannabis company based in Nevada, with award-winning cultivation, production and dispensary operations in Las Vegas - the entertainment capital of the world. Planet 13's mission is to build a recognizable global brand known for world-class dispensary operations and a creator of innovative cannabis products. Planet 13's shares trade on the Canadian Stock Exchange (CSE) under the symbol PLTH and OTCQX under the symbol PLNHF.

Cautionary Note Regarding Forward-Looking Information

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward looking-statements relate to, among other things, future expansion plans.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: final regulatory and other approvals or consents; risks associated with COVID-19 and other infectious diseases presenting as major health issues; fluctuations in general macroeconomic conditions; fluctuations in securities markets; expectations regarding the size of the Nevada cannabis market and changing consumer habits; the ability of the Company to successfully achieve its business objectives; plans for expansion; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; and the presence of laws and regulations that may impose restrictions on cultivation, production, distribution and sale of cannabis and cannabis related products in the State of Nevada; and employee relations. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational and medicinal cannabis marketplace in the United States through licensed subsidiary entities in states that have legalized marijuana operations, however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company's business, including COVID-19, are contained under the heading "Risk Factors" and elsewhere in the Company's annual information form dated April 13, 2020 filed on its issuer profile on SEDAR at www.sedar.com.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Expressed in United States Dollars

As at

As at

June 30,

December 31,

2020

2019

Assets

Current Assets

Cash

$

22,724,824

$

12,814,712

HST receivable

110,192

16,544

Inventories (Note 5)

5,775,633

5,474,004

Biological assets (Note 6)

699,850

514,526

Prepaid expenses and other current assets (Note 10)

1,723,608

3,694,272

Total Current Assets

31,034,107

22,514,058

Property and equipment (Note 7)

30,053,518

30,211,154

Licenses (Note 8)

5,607,238

-

Right of use assets (Note 9)

13,555,904

9,478,733

Deferred tax asset

28,779

-

Long-term deposits and other assets

1,189,318

694,601

50,434,757

40,384,488

Total Assets

$

81,468,864

$

62,898,546

Liabilities

Current Liabilities

Accounts payable

$

2,516,299

$

864,260

Accrued expenses

2,210,801

1,910,046

Income taxes payable

9,838,881

7,015,606

Notes payable - current portion (Note 11)

884,000

884,000

Total Current Liabilities

15,449,981

10,673,912

Long -term lease liabilities (Note 12)

15,060,344

10,522,377

Other long-term liabilities

28,000

28,000

Deferred tax liability

-

379,665

15,088,344

10,930,042

Total Liabilities

30,538,325

21,603,954

Shareholders' Equity

Share capital (Note 13)

69,411,212

51,986,849

Restricted share units (Note 13)

3,397,735

4,119,485

Warrants (Note 13)

4,367,973

5,961,091

Option reserve (Note 13)

375,678

399,439

Accumulated other comprehensive loss

(660,337

)

(607,707

)

Deficit

(25,961,722

)

(20,564,565

)

Total Shareholders' Equity

50,930,539

41,294,592

Total Liabilities and Shareholders' Equity

$

81,468,864

$

62,898,546

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE
INCOME (LOSS)

Expressed in United States Dollars

Three months

Three months

Ended

Ended

June 30,

June 30,

2020

2019

Revenue

Revenues, net of discounts

$

10,760,996

$

16,521,717

Cost of Goods Sold

(6,051,963

)

(6,826,598

)

Gross Profit before fair value asset adjustment

4,709,033

9,695,119

Realized fair value amounts included in inventory sold

(327,997

)

102,919

Unrealized fair value gain on growth of biological assets

372,353

(192,438

)

Gross Profit

4,753,389

9,605,600

Expenses

General and Administrative (Note 14)

5,559,623

5,476,208

Sales and Marketing

246,353

1,644,752

Depreciation and Amortization (Note 7 & 9)

1,040,065

668,041

Share-Based Compensation Expense (Note 13)

626,017

539,262

Total Expenses

7,472,058

8,328,263

Income (Loss) From Operations

(2,718,669)

1,277,337

Other Expense:

Interest expense, net

572,257

372,456

Realized foreign exchange loss

-

2,337

Other income

(4,103

)

(161,678

)

Total Other Expense

568,154

213,115

Income (Loss) before income taxes

(3,286,823)

1,064,222

Provision for tax - current

866,710

1,999,690

Provision for tax - deferred

(165,438

)

-

Loss for the Period

$

(3,988,095)

$

(935,468)

Other Comprehensive Income

Foreign exchange translation gain (loss)

(83,699

)

(82,316

)

Net Comprehensive Loss for the Period

$

(4,071,794)

$

(1,017,784)

Loss per share for the Period

Basic and diluted loss per share

$

(0.03)

$

(0.01)

Weighted Average Number of Common Shares Outstanding

Basic and Diluted

143,947,783

133,533,681

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Expressed in United States Dollars

Six Months

Six Months

Ended

Ended

June 30,

June 30,

2020

2019

Operating activities

Net loss for the period

$

(5,397,157

)

$

(2,358,812

)

Add (deduct) non-cash items:

Share based payments (Note 13)

1,436,840

1,224,131

Depreciation and amortization (Note 7 & 9)

2,846,655

1,580,761

Deferred tax liability

(379,665

)

(284,491

)

Deferred tax asset

(28,779

)

-

Realized fair value amounts included in inventory sold

-

(102,919

)

Unrealized fair value gain on growth of biological assets

-

192,438

Non-cash interest expense on ROU Liabilities

1,075,663

-

Net change in non-cash working capital

HST receivable

(93,648

)

(78,597

)

Inventories (Note 5)

(301,629

)

(11,150

)

Biological assets (Note 6)

(185,324

)

(89,519

)

Prepaid expenses and other assets (Note 10)

1,970,664

(2,780,552

)

Long term deposits and other assets

(494,717

)

(70,000

)

Accounts payable

1,652,038

1,510,420

Accrued expenses

300,756

256,246

Income tax payable

2,823,275

3,849,799

Cash flow provided by operating activities

5,224,972

2,837,755

Investing activities

Purchase of property, plant and equipment (Note 7)

(2,352,575

)

(5,946,852

)

Purchase of license (Note 8)

(1,153,407

)

-

Cash flow used in investing activities

(3,505,982)

(5,946,852)

Financing activities

Issuance of shares on warrant and option exercises (Note 13)

9,195,063

3,744,711

Payment on lease liabilities

(951,311

)

(15,934

)

Cash flow provided by financing activities

8,243,752

3,728,777

Net increase in cash

9,962,742

619,680

Cash at beginning of the period

12,814,712

19,364,086

Effect of foreign exchange on cash

(52,630

)

(26,436

)

Cash at end of the period

$

22,724,824

$

19,957,330

SOURCE: Planet 13 Holdings Inc.



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