Plus Products Achieves Record Quarterly Sales, Reports

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.

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