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Plus Products Achieves Record Quarterly Sales, Reports Second Quarter 2021 Financial Results

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SAN MATEO, Calif., Aug. 04, 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 June 30, 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.

Q2 2021 Financial Highlights

  • Revenues: Net revenues increased 12% year-over-year in the three months ended June 30, 2021 to $4.83M, as compared to $4.33M for the three months ended June 30, 2020. Net revenues during the period represent the most sales by the Company in a single quarter. During the period, the Company leveraged the benefits of a self-service distribution partner in California and expanded product offering to increase sales. The Company continues to sell its products in the Nevada THC market and nationwide across its hemp-derived CBD lines.

  • Gross Profits: Gross profits in Q2 2021 increased 24% year-over-year to $1.94M as compared to 1.57M in Q2 2020. The increase was due, in part, to greater sales volume combined with operating efficiencies and productivity improvements in the California production facility. Gross profit margin for the period increased year-over year to 40%, as compared to 36% in Q2 2020.

  • Operating Profits (Losses): The loss from operations was $0.95M in Q2 2021 as compared to $1.36M in Q2 2020, an improvement of 30% year-over-year. In Q2 2021, the Company more efficiently leveraged advertising, promotion and consulting fees to support the business, while also reducing professional fees.

  • Cash Balance: The Company reported $6.69M in cash and cash equivalents at June 30, 2021. This cash balance has also been adjusted to reflect the Company’s semi-annual interest payment of $0.87M occurring at the end of the period.

Q2 2021 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.

  • Also in April, the Company announced that its amended debentures were approved for listing on the CSE under the symbol “PLUS.DB.A”.

  • In June, the Company announced the re-launch of its best-selling limited edition gummies for Pride 2021, with a portion of proceeds from each tin sold being donated to the Transgender, Gender-Variant and Intersex Justice Project.

  • Also in June, the company announced it had filed an Early Warning Report as required by National Instrument 62-103 on behalf of Matt Schmidt regarding his holdings in the Company in connection with an acquisition of Class B Common Shares issued pursuant to Restricted Stock Units awarded to Mr. Schmidt.

  • Also in June, the Company announced the resignation of Director Matt Schmidt.

Post-Period End Business Highlights

  • In July, the Company announced the release of a second batch of its limited edition PLUS Hash Gummies, made in concert with Biscotti Brands, a premium hash brand, following substantial consumer and retailer demand for the initial product release.

Management Commentary

“We are happy to demonstrate that our revenues are back on the correct trajectory following the one-time accounting changes in Q1 2021. In Q2 2021, we had the highest revenues as a company thus far. We have been successful in our transition to a fulfillment-only distributor in California, and see that change reflected positively in this quarter's results. In addition to the progress with our new distribution partner, we have continued to gain momentum with our fully-internalized sales team along with our special-edition and collaborative offerings,” stated Jake Heimark, Co-founder and CEO.

“PLUS continues to believe that California is the most strategically valuable market to build a cannabis brand. Not only is California the largest legal Cannabis market in the world today, but more importantly still retains the most growth potential of any market in the U.S. The adult-use market in California is expected to grow significantly over the next three years. With a projected market size of 6.4 billion dollars in 2025, California is expected to be over twice as large as the next largest U.S. market.1

“We look forward to expanding and solidifying our position as one of the strongest brands2 in a California market that we believe will be instrumental in shaping the long term winners in the national and international cannabis market.”

  1. BDS Analytics Forecast – February 2021 (Colorado - $2.7B)

  2. According to PLUS’s – Brightfield Brand Health Survey – Wave 2: December 2020; N=1,535 CA edible consumers PLUS had the highest unaided brand awareness among edible users in California.

Conference Call Details

At 6:00 pm Eastern Time / 3:00 pm Pacific Time today (August 4, 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: 7684223

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/9riujrjb. 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.

About PLUS

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.

For further information contact:

Jake Heimark
CEO & Co-founder
ir@plusproducts.com

Investors:

Cole Stewart
Investor Relations
cole@plusproducts.com
Tel +1 778.231.6324

Media:

plus@mattio.com
Mattio Communications

The CSE does not accept responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements:

This press release includes statements containing certain “forward-looking information” within the meaning of applicable securities law (each, a “forward-looking statement”). 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, statements relating to: the extent to which revenues are back on the correct trajectory following the one-time accounting changes in Q1 2021 that appeared to show slowing sales for PLUS; the extent to which PLUS has been successful in its transition to a fulfillment-only distributor, and has seen that change reflected positively in this quarter's results; the extent to which, if at all, PLUS has continued to gain momentum with our fully-internalized sales team along with our special-edition and collaborative offerings; the growth of the California market relative to other legal cannabis markets in the U.S, the extent to which, if at all, PLUS continues expanding and solidifying its position as one of the strongest brands2 in a California market that PLUS believes will be instrumental in shaping the long term winners in the national and international cannabis market.

Further, the duration and severity of the current COVID-19 pandemic may significantly impact or exacerbate some of the above-listed risks and uncertainties. Risks that may be further impacted by the COVID-19 pandemic relate to the Company’s operations and expansion, including the Company’s ability to grow its brand and sales and to maintain production levels in the event that the Company’s employees are restricted from accessing facilities for a significant period of time; to the Company’s ability to access capital and the level of borrowing costs; the Company’s ability service obligations under its debt securities and other debt or lease obligations; and the Company’s ability to comply with the covenants contained in the agreements that govern the Company’s existing indebtedness.

The transmission of COVID-19 and efforts to contain its spread have resulted in international, national and local border closings, travel restrictions, significant disruptions to business operations, supply chains and customer activity and demand (across all sectors), service cancellations, reductions and other changes, and quarantines, as well as considerable general concern and uncertainty.

The overall severity and duration of COVID-19-related adverse impacts on the Company’s business will depend on future developments which cannot currently be predicted, including directives of government and public health authorities, the speed at which suppliers and distributors can return to full production, the status of labor availability and the ability to staff the Company’s operations and facilities. Even after the COVID-19 outbreak has subsided, the Company may continue to experience material adverse impacts to the businesses as a result of its global economic impact, including any related recession.

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.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in U.S. Dollars - Unaudited)

As at June 30,

As at December 31,

Note

2021

2020

$

$

Assets

Current

Cash and cash equivalents

6,690,743

11,578,213

Trade receivables

2,380,833

1,932,986

Prepaids and deposits

5

514,085

290,076

Taxes recoverable

108,098

108,098

Note receivable

6

98,479

145,520

Inventory

7

3,215,424

2,225,331

13,007,662

16,280,224

Non-current

Prepaids and deposits

5

902,473

867,495

Property and equipment

8

2,040,954

2,188,784

Intangible assets

9

11,329

40,441

Deferred tax asset

1,671,525

2,109,704

Total assets

17,633,943

21,486,648

Liabilities

Current

Accounts payable and accrued liabilities

10

1,617,099

1,304,848

Current portion of vehicle loans

33,165

28,751

Current portion of lease liabilities

11

261,921

242,125

Current portion of convertible debentures

12

-

19,331,949

1,912,185

20,907,673

Non-current

Vehicle loans

89,989

108,688

Lease liabilities

11

284,196

420,305

Convertible debentures

12

13,788,970

-

Total liabilities

16,075,340

21,436,666

Shareholders' equity

Share capital

13

46,002,042

41,962,392

Reserves

13

12,493,490

9,362,064

Deficit

(55,804,169

)

(50,594,383

)

Accumulated other comprehensive loss

(1,132,760

)

(680,091

)

Total shareholders' equity

1,558,603

49,982

Total liabilities and shareholders' equity

17,633,943

21,486,648

Nature of operations and going concern (Note 1)
Commitments (Note 19)

Approved on behalf of the Board of Directors on August 4, 2021:

"Craig Heimark"

"Jacob Heimark "

Director

Director

The accompanying notes are an integral part of these condensed interim consolidated financial statements.


PLUS PRODUCTS INC.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

(Expressed in U.S. Dollars, except number of shares - Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

Note

2021

2020

2021

2020

$

$

$

$

Revenue

4,832,431

4,326,094

7,376,113

9,065,303

Cost of sales

2,888,918

2,757,737

4,385,480

5,843,156

Gross margin

1,943,513

1,568,357

2,990,633

3,222,147

Operating expenses

Advertising and promotion

449,898

171,207

796,330

557,882

Depreciation and amortization

8,9

24,241

25,318

48,743

50,637

Consulting fees

225,869

122,746

448,724

294,587

General and administrative

352,420

382,806

664,101

843,525

Meals and travel expenses

70,096

5,951

101,421

137,895

Professional fees

183,766

415,248

611,328

797,235

Regulatory fees (recovery)

412

(1,517

)

2,209

14,035

Research and development

3,825

11,819

7,727

19,292

Salaries and benefits

1,486,054

1,411,071

2,955,831

3,154,781

Provision for expected credit losses

27,716

-

27,716

-

Share-based compensation

13(f)(h)

71,209

381,960

652,677

776,507

Loss from operations

(951,993

)

(1,358,252

)

(3,326,174

)

(3,424,229

)

Other (income) expense

Interest and other income

(12,877

)

(23,165

)

(99,861

)

(21,675

)

Accretion finance income

(19,273

)

(42,673

)

(44,562

)

(86,480

)

Accretion expense

12

205,584

410,001

558,083

840,908

Interest expense

695,009

403,459

1,011,943

826,516

Foreign exchange loss (gain)

524

23,881

(2,794

)

60,661

Gain on lease termination

-

(12,900

)

-

(12,900

)

Impairment of property and equipment

-

10,765

-

10,765

Loss before income taxes

(1,820,960

)

(2,127,620

)

(4,748,983

)

(5,042,024

)

Income tax (recovery) expense

480,830

(1,681,718

)

460,803

(1,664,728

)

Loss for the period

(2,301,790

)

(445,902

)

(5,209,786

)

(3,377,296

)

Currency translation adjustment

194,444

671,973

452,669

(808,152

)

Loss and comprehensive loss for the period

(2,496,234

)

(1,117,875

)

(5,662,455

)

(2,569,144

)

Weighted average shares outstanding:

Basic and diluted

55,310,217

34,778,568

52,246,889

34,300,535

Loss per share:

Basic and diluted

(0.04

)

(0.01

)

(0.10

)

(0.10

)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.