HempFusion Wellness Inc. (TSX:CBD.U) (OTCQX:CBDHF)
(FWB:8OO) (“HempFusion” or the “Company”), an industry leader
in full spectrum cannabidiol (CBD) hemp extract wellness products
and probiotics, today reported financial results for the first
quarter ended March 31, 2021. All dollars are stated in US
Dollars.
Q1-2021 Financial
Highlights
- Consolidated revenue increased 7.6% to $983,496 from $913,646
in Q4-2020
- DTC sales increased 59.3% to $244,255 from $153,305 in
Q4-2020
- B2B net revenue decreased 2.8% to $739,241 from 760,341 in
Q4-2020
- International sales increased to $75,994 from nil in
Q4-2020
- Gross profit of $280,205 or 28.5% of net revenue
- Operating expenses were $6,306,703, an increase of 42.9% from
$4,414,792 in Q1-2020, primarily attributed to IPO related expenses
as well as marketing and digital related expenses
- Strong cash position ending the quarter at $17,074,030
Q1-2021 Business
Highlights
- Completed a $17 million initial public offering (IPO) and
commenced trading on the Toronto Stock Exchange (the “TSX”),
becoming the first U.S.-based CBD and wellness products company to
list directly on the TSX (senior board).
- Became the No. 2 most recognized CBD brand in America according
to Brightfield Group
- As of the end of January 2021, NielsenIQ data rank HempFusion
as the No. 1 in product sales and units sold in one of the largest
food/drug/mass (“FDM”) retailers
- Successfully launched and continue to lead the category in the
fifth-largest retailer in the FDM channel
- E-Commerce success has shown a 62% increase in on-line traffic
with a significant increase in conversion including a shift from
16.8% on-line sales in Q4-2020 as a percent of net revenue to 24.8%
in Q1-2021
- The Company launched the Probulin store on Amazon and early
2021 traction is encouraging. Consolidated net revenue for the
three months ended March 31, 2021 increased 7.6%
quarter-over-quarter to $983,496 versus $913,646 in Q4-2020. Direct
to consumer (“DTC”) e-commerce net revenue increased 59.3%
reflecting increased marketing efforts, a targeted DTC team and
targeted digital promotions.
- Not only did sales increase for both Probulin and HempFusion
but the traffic has increased by 62% in Q1 2021 versus Q4 2020 with
a conversion rate increase for Probulin of 2.1% to 3.2% and current
conversion rate for HempFusion of 3.4%. E-commerce accounted for
24.8% of net revenue in the first quarter of 2021 versus 16.8% for
Q4, 2020. HempFusion's Probulin has seen 10% or greater
month-over-month growth since launching on Amazon.
- Officially launched Probulin on the world's largest e-commerce
platform, Alibaba's Tmall Global, with HempFusion CBD following in
a subsequent Q2 event
- Submitted dossier to the United Kingdom's Regulatory Food
Safety Agency
"With nearly all international business paused due to COVID
throughout 2020 and Q1 2021, and with slower than expected
reopenings, the Company still achieved an incremental QoQ growth of
7.6%. Now, with vaccine rollouts taking place across the country,
we are encouraged with reopening rates and excited that our sales,
which currently take place in approximately 75% brick-and-mortar
businesses, are beginning to reopen," commented Jason Mitchell,
N.D., HempFusion's Co-Founder and Chief Executive Officer.
"We remain committed to developing new revenue channels and have
entered additional countries including China, Ireland, and the
United Kingdom, and we are excited with subsequent quarterly events
in which new purchase orders were received, showing early signs of
the return of international business. These international POs have
the potential to drive millions in revenue. We are working
feverishly to accelerate sales through organic channels and the
continued pursuit of M&A opportunities; early indications have
Q2 shaping up to be our best quarter yet," continued Dr.
Mitchell.
Statements of Loss and Comprehensive Loss
The Below is from the
Unaudited Condensed Interim Financial Statements for the Three
Months Ended March 31, 2021 and 2020; Please Refer to the Complete
Report, Including the Notes, Other Statements and Other Contents
Therein.
Consolidated net revenue for the three months ended March 31,
2021 increased 7.6% quarter-over-quarter to $983,496 versus
$913,646 in Q4-2020, and DTC e-commerce net sales increased 59.3%
reflecting increased marketing efforts, a targeted DTC team, and
targeted digital promotions. Site traffic increased by 62%, and
conversion rates increased to 1.9%. DTC accounted for 24.8% of
total revenue in the first quarter of 2021 versus 16.8% for
Q4-2020.
Consolidated B2B net revenue decreased 2.8% to $739,241 from
$760,341 in Q4-2020 reflective of the above-referenced growth in
DTC and a decrease in conventional grocery.
International sales increased to $75,994 from nil showing a
return to normal from Q4-2020, and early indication of future
international orders accelerating and producing incremental
quarterly gains. HempFusion maintains a leadership position in
retailers across the United States, including the #1 in sales by
dollar volume and SKUs in one of the top five largest FDM channel
retailers.
Gross profit of $280,205 or 28.5% of net revenue is primarily
attributed to improvement in inventory and supply chain
management.
Operating expenses were $6,306,703, an increase of 42.9% from
$4,414,792 in Q4-2020, primarily attributed to IPO related
expenses, including D&O insurance and listing fees, as well as
marketing and digital expenses.
Balance Sheet | Cash Position
The Below is from the
Unaudited Condensed Interim Financial Statements for the Three
Months Ended March 31, 2021 and 2020; Please Refer to the Complete
Report, Including the Notes, Other Statements and Other Contents
Therein.
The Company ended Q1-2021 with a strong cash position of
$17,074,030 ensuring the capital requirements of the Company are
met, with ample room for strategic M&A. The Company incurred
$2,655,134 in general and administrative expenses and $3,651,569 in
sales and marketing expenses.
“In 2019, HempFusion (combined with Probulin on a pro forma
basis with respect to 2019) achieved net revenue of $4,627,544,
followed by $3,823,638 in 2020. The impact COVID has had on our
business is clear. We have adapted. It’s important to note we have
strategically bolstered the Company’s online presence with the help
of new channels such as Amazon for Probulin and Alibaba’s Tmall for
both brands. Our efforts have resulted in early traction and
success, as we continue to strengthen our foothold in the
direct-to-consumer CBD market. This quarter showed a strong DTC
sales increase of 59.3%. We expect this trend to continue as DTC
now accounts for 24.8% of total revenue in the first quarter of
2021 versus 16.8% for Q4-2020,” commented Dr. Mitchell.
Conference Call
Management of the Company will host a conference call to discuss
the Company's first quarter 2021 results at Monday, May 17, 2021 at
4:15 p.m., Eastern Time. To participate in the call, please dial
888-506-0062. For international callers, dial 973-528-0011. Use
Participant Code: 795055. To join the webcast:
https://www.webcaster4.com/Webcast/Page/2710/41342.
A replay will be available from the Investor Relations section
of HempFusion’s website at
HempFusion.com/corporate-information.
ABOUT HEMPFUSION
HempFusion is a leading health and wellness CBD Company
utilizing the power of whole-food hemp nutrition. HempFusion
distributes its family of brands, including HempFusion, Probulin
Probiotics, Biome Research, and HF Labs, to approximately 4,000
retail locations across all 50 states of the United States and
select international locations. Built on a foundation of regulatory
compliance and human safety, HempFusion’s diverse product portfolio
comprises 48 SKUs including tinctures, proprietary FDA Drug Listed
Over-The-Counter (OTC) Topicals, Doctor/Practitioner Lines and
more. With a strong focus on research and development, HempFusion
has an additional 30 products under development. HempFusion is a
board member of the US Hemp Roundtable, and HempFusion’s
wholly-owned subsidiary, Probulin Probiotics, is one of the
fastest-growing probiotics companies in the United States,
according to SPINs reported data. HempFusion’s CBD products are
based on a proprietary Whole Food Hemp Complex™ and are available
in-store or by visiting HempFusion online at www.hempfusion.com or
www.probulin.com.
Follow HempFusion on Twitter, Facebook and Instagram and
Probulin on Twitter, Facebook and Instagram.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements and
forward-looking information within the meaning of Canadian
securities legislation (collectively, “forward-looking
statements“) that relate to HempFusion’s current expectations
and views of future events. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always,
through the use of words or phrases such as “will likely result,”
“are expected to,” “expects,” “will continue,” “is anticipated,”
“anticipates,” “believes,” “estimated,” “intends,” “plans,”
“forecast,” “projection,” “strategy,” “objective” and “outlook”)
are not historical facts and may be forward-looking statements and
may involve estimates, assumptions and uncertainties which could
cause actual results or outcomes to differ materially from those
expressed in such forward-looking statements. No assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not
be unduly relied upon. These statements speak only as of the date
of this news release. In particular and without limitation, this
news release contains forward-looking statements relating to the
continued growth of the Company’s international business and
revenue, the Company’s plans to accelerate sales, DTC sales
expectations and the Company’s other plans, focus and
objectives.
Forward-looking statements are based on a number of assumptions
and are subject to a number of risks and uncertainties, many of
which are beyond HempFusion’s control, which could cause actual
results and events to differ materially from those that are
disclosed in or implied by such forward-looking statements. Such
risks and uncertainties include, but are not limited to, the impact
and progression of the COVID-19 pandemic and other factors set
forth under “Cautionary Note Regarding Forward-Looking Statements”
and “Risk Factors” in the annual information form of the Company
dated March 31, 2021 and available under the Company’s profile on
SEDAR at www.sedar.com. HempFusion undertakes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required by law. New factors emerge from time to time, and
it is not possible for HempFusion to predict all of them or assess
the impact of each such factor or the extent to which any factor,
or combination of factors, may cause results to differ materially
from those contained in any forward-looking statement. Any
forward-looking statements contained in this news release are
expressly qualified in their entirety by this cautionary
statement.
Neither the TSX nor its Regulation Services Provider (as that
term is defined in the policies of the TSX) accepts responsibility
for the adequacy or accuracy of this release.
HEMPFUSION WELLNESS INC Unaudited
Condensed Interim Consolidated Statements of Loss and Comprehensive
Loss (Express in US dollars)
For the three For the three months ended
months ended March 31, March 31,
2021
2020
$ $ Revenue, net of discounts
983,496
977,379
Cost of goods sold
703,291
944,756
Gross profit
280,205
32,623
Expenses General and administrative Note 14
2,655,134
2,176,528
Sales and marketing
3,651,569
2,238,264
Total expenses
6,306,703
4,414,792
Net loss from operations
(6,026,498
)
(4,382,169
)
Other (income) expenses Other (income)
(102,465
)
(65,268
)
Interest expense
4,783
7,582
Change in fair value of derivative liabilities Note 10
—
(64,387
)
Gain on derecognition of derivative liabilities
(70,809
)
—
Change in fair value of purchase consideration Note 4
(36,342
)
177,275
Total other (income) expenses
(204,833
)
55,202
Income tax (recovery) expense
—
—
Net loss and comprehensive loss
(5,821,665
)
(4,437,371
)
Loss per common share - basic and diluted
(0.05
)
(0.04
)
Weighted average number of common shares - basic and
diluted
116,351,760
99,699,196
HEMPFUSION WELLNESS INC.
Unaudited Condensed Interim Consolidated Statements of Financial
Position (Express in US dollars)
March 31, December 31,
2021
2020
$ $ (Audited)
ASSETS Current Cash
17,074,030
9,262,517
Trade receivables Note 5
341,026
457,058
Inventory Note 6
2,931,910
2,576,866
Prepayments Note 7
2,611,815
1,530,846
22,958,781
13,827,287
Property and equipment Note 8
309,975
303,162
Right-of-use-assets Note 9
211,003
225,589
Prepayments - non current Note 7
259,997
—
Total assets
23,739,756
14,356,038
LIABILITIES Current Accounts payable and accrued
liabilities
1,685,275
2,324,534
Derivative liabilities Note 10
—
13,975,514
Lease obligations Note 9
61,595
60,279
Purchase consideration payable Note 4
1,330,757
1,367,099
3,077,627
17,727,426
Non-current Lease obligations Note 9
149,408
165,310
Total liabilities
3,227,035
17,892,736
SHAREHOLDERS' EQUITY Share capital Note 10
57,383,871
45,002,867
Warrant reserve Note 10
17,412,878
1,572,556
Contributed surplus Notes 10 and 11
5,455,635
3,805,877
Accumulated deficit
(59,739,663
)
(53,917,998
)
Total equity
20,512,721
(3,536,698
)
Total liabilities and shareholders' equity
23,739,756
14,356,038
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210517005906/en/
Jason Mitchell, N.D. Chief Executive Officer and Director Email:
ir@hempfusion.com Phone: 416-803-5638
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