Planet 13 Announces Second Quarter 2020 Financial Results

  • 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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