image credit: Oregon Dept. of Agr. (Flikr)

Robotics and AI Are Being Tapped by Cannabis Growers

 

Increasing market demand and challenges in farming cannabis crops have prompted farms to seek technological upgrades to improve cultivation. Introducing robotics and artificial intelligence (AI) in Cannabis cultivation is having a massive impact on its production processes.

Related to cultivation, the use of tech has improved output and quality in a number of ways. Firstly, the crops are healthier. It has also made planting, monitoring, and harvesting more efficient. Companies are also integrating high tech into other stages of the production processes, from seed to delivery and right through to methods of consumption.

 

Why AI is a Game-Changer

Despite the upfront costs, high-tech saves growers money and increases output. With more states legalizing the use of cannabis, farmers benefit from a consistent product and improved yield. According to the Grand View Research Report, the “growing legalization and the adoption of marijuana for the treatment of chronic diseases are the key factors driving the growth of the market”. Dependability is critical for growers. Farmers are reinvesting profits to introduce technology that will improve the production process and resultant crops in order to satisfy market demand.

One advantage of the technological invasion of cannabis farming is it provides solutions to the planting environment issues. One solution is well-monitored indoor farming; this avoids many of the challenges of outdoor farming. From environmental challenges to the risk of cross-pollination, choosing indoor farming controls many key factors in producing cannabis.

Getting the THC concentration, temperature, and other figures right are key parts of farming cannabis in a monitored, legal setting. While indoor farming addresses these issues, it is expensive to maintain. With artificial intelligence, the management system is simpler and less expensive using automated systems and monitoring. It also can also aid the detection of pests and other threats.

The stakes are high for growers. The current global market for cannabis is $20.5 billion. Grand View Research has predicted that the global market for cannabis will be worth $73.6 Billion by 2027. With healthier, more consistent crops produced in larger quantities, some of this demand can be met without equal land expansion.

 

Cannabis Companies Benefitting from AI

High tech has found its way into the marijuana industry from seed through distribution. Below are three interesting publicly traded companies and information on how they’re benefiting from technology.

Medicine Man Technologies, Inc., d/b/a Schwazze (OTCQX: SHWZ), is a growing vertically integrated cannabis company located in Colorado but planning to spread its wings into other states. They operate seed to sale with work ethics that integrates customer-centric thinking and data science to test, measure, and drive decisions and outcomes in every stage of the production chain. Their implementation of technology in improving their operations is driven by their belief in the full potential of cannabis.

Sugarmade, Inc. (OTCMKTS: SGMD) is a company that improves customer satisfaction by integrating technology in service delivery. The delivery of cannabis is made easier and faster for customers with their technological approaches. Sugarmade has a portfolio of brands, within the recreational cannabis industry and outside, these include SugarRush, Budcars, NUG Avenue, and CarryOutsupplies.com.

Stem Holdings, Inc., d/b/a Driven by Stem (OTCQX: STMH), is a farm-to-home cannabis company providing solutions through high-tech innovation. Their business model is customer-driven as they have their own AI-based app delivery businesses throughout California that are expanding into the mature Oregon market.

 

 

Take-Away

Corporate farming of any kind relies on high tech, and cannabis is having its own set of demands and challenges, whether it is indoor or outdoor. Cannabis companies are increasing their reliance on data science and high-tech solutions like artificial intelligence to survive and improve success. With automated processes and machine-controlled methods, cannabis production is keeping up with the exponential growth that is set to reach new heights.

 

Suggested Content:

Will Federal Law Regarding Cannabis be Changed?	Cannabis Customers Served by “Ice Cream Truck” Delivery Model

Schwazze CEO, Justin Dye, and CFO, Nancy Huber Roadshow Replay (Video)	Stem Holdings C-Suite Interview with Adam Berk

 

Source:

https://www.grandviewresearch.com/press-release/global-legal-marijuana-market

https://www.globenewswire.com/news-release/2021/02/18/2177949/0/en/The-Worldwide-Cannabis-Industry-is-Projected-to-Reach-90-4-Billion-by-2026.html.

 

 

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Esports Entertainment Group, Inc. Reports Fiscal 2021 Third Quarter Financial Results

 

• Third quarter Revenues of $5.4 Million, up 129% from previous quarter
• Driven by completion of Lucky Dino asset purchase on 1^st March
• Performance bolstered by launch of SportNation.com and Vie.bet on Maltese Gaming Authority license during the quarter
• Investment continued in building out Technology team and platform development as well as to achieve scale in back-office functions
• Cash Jumps $11.3Million in 3Q21, Ending the Quarter at $16.9 Million with No Debt

Newark, New Jersey–(Newsfile Corp. – May 17, 2021) – Esports Entertainment Group, Inc. (NASDAQ: GMBL) (the “Company” or “EEG”), a diversified operator of esports, igaming and traditional sports betting businesses with a global footprint, today announced financial results for its fiscal 2021 third quarter ended March 31, 2021.

Fiscal 2021 Third Quarter Financial Results Highlights

• Net revenue for 3Q21 of $5.4 million, up $5.4 million on 3Q20, (and up 129% as compared with 2Q21 net revenue of $2.4 million)
• Gross profit (Net revenue less Cost of revenue) for 3Q21 of $3.1 million, up $3.1 million on 3Q20, (and up 199% as compared with $1.0 million in 2Q21)
• Gross margin as a percentage of net sales in 3Q21 was 57.0%, (compared to 43.5% in 2Q21)
• Sales and Marketing expenses of $2.4 million in 3Q21, up from $0.1m in 3Q20 (and compared to $1.9 million in 2Q21)
• General and administrative expenses of $6.3 million in 3Q21, up from $0.5m in 3Q20 (and compared to $4.9 million in 2Q21)
• Operating loss of $5.6 million in 3Q21, up from a loss of $0.6m in 3Q20 (and improved by 3% from a loss of $5.8 million in 2Q21)
• Net loss of $12.4 million or $0.73 per basic common share in 4Q21, up from a net loss of $6.3m in 3Q20 or $1.02 per basic common share (and compared to a net loss of $7.3 million or $0.57 per basic common share in 2Q21)
• Adjusted EBITDA* of -$2.1 million in 3Q21, compared to adjusted EBITDA of -$0.5m in 3Q20, and 44% improved from -$3.8 million adjusted EBITDA in 2Q21
• Capital expenditures for 3Q21 of $0.7 million, up from $0.0m million in 3Q20 (and compared to $0.4m in 2Q21), as investment in Platform development continues
• Stockholders’ equity at the end of 3Q21 increased by $50.0 million or 438% to $61.4 million from $11.4 million at the end of Fiscal 2020.

Operational Highlights

• Completed asset purchase of Online Casino Operator Lucky Dino
• Completed acquisition of Esports Gaming League (EGL), a provider of live and online events and tournaments
• Closed $30 million registered direct offering priced at $15 per share
• Vie.bet and SportNation.com brands launched on Malta Gaming Authority license, enabling operations in 150 jurisdictions globally
• Filed New Jersey Gaming License Application
• Signed exclusive Esports Tournament Partnerships with several pro-Sports teams, including the Baltimore Ravens, New England Patriots and Denver Broncos

*Adjusted EBITDA is a non-GAAP financial measure. Reconciliation is provided in the tables of this press release.

Management’s Comments

Our first quarter results were mainly driven by our acquisition of Lucky Dino combined with organic growth coming from our existing brands of Sportnation , EGL and Vie.gg.

We continue to execute on our organic growth strategy as well as acquire additional strategic esports and igaming assets.

Our recently announced partnerships with blue-chip professional sports organizations, are strong endorsements of this strategy. The imminent close of the previously announced GG circuit/Helix acquisition, combined with the recently announced intention to acquire Holodeck Media, will enable us to exponentially expand our technology-driven esports wagering, tournament play and igaming focused entertainment company.

We remain committed to the previously communicated full year fiscal 2021 revenue guidance, of $18m, and the Fiscal 2022 revenue guidance of $70m.

Our future is bright and we are very excited to continue our rapid expansion and growth driven by our unique assets and market position.

Fiscal 2021 Third Quarter Financial Results

Net revenues were $5.4 million for the three months ended March 31, 2021, as compared to $0.0million for the three months ended March 31, 2020, and were up by 129% (+$3.0m) when compared net revenues of $2.4m during the three-month period ended December 31, 2020. 9 months year-to-date revenues through 31^st March, 2021 were $8.0m.

The quarter-on-quarter increase is primarily driven by the completion of the Lucky Dino Gaming Limited asset purchase on 1^st March 2021, aided by the launch of both SportNation.com and Vie.bet into new jurisdictions under its Malta Gaming Authority (MGA) license

With the acquisition of Lucky Dino Gaming, Unique Active Players (“UAPs”) in the month of March across iGaming brands, rose to above 40,000, with Average Revenue per Player surpassing $80.

Total operating expenses for the three months ended March 31, 2021 totaled $11.0 million, an increase from the $0.6 million recorded for the three months ended March 31, 2020, and up from $8.1 million in the three-month period ending December 31, 2020. The increase was primarily attributable to the increased payroll, stock compensation, marketing, legal and professional services fees related to increased business activity.

Total net loss for the three months ended March 31, 2021 was $12.4 million, up from a loss of $6.3m in the three-month period ended March 31, 2020. This was principally driven by increased Equity Based Compensation, Transaction related costs, Depreciation and Change in the Fair value of Warrant liabilities, totaling $7.4 million between them.

*Adjusted EBITDA for the three months ended March 31, 2021 was -$2.1 million, up from -$0.6m in the three-month period ended March 31, 2020, but improved on the -$3.8m adjusted EBITDA in the three-month period ended December 31, 2020.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles (GAAP), the Company uses adjusted EBITDA, a non-GAAP financial measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that it provides useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measure used by the Company in this press release may be different from the methods used by other companies.

We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense or benefit, depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, non-core litigation, settlement and related costs, remeasurement of warrant liabilities, and certain other non-recurring, non-cash or non-core items, as described in the reconciliation below.

Adjusted EBITDA excludes certain expenses that are required in accordance with U.S. GAAP because they are non-recurring items (for example, in the case of transaction-related costs), non-cash expenditures (for example, in the case of depreciation, amortization, and stock-based compensation), or are not related to our underlying business performance (for example, in the case of interest income and expense and litigation settlement and related costs).

Esports Entertainment Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

		March 31,			June 30,
		2021			2020
ASSETS
Current assets
Cash	$	16,880,683		$	12,353,307
Restricted cash		3,428,366			–
Accounts receivable, net		153,011			–
Receivables reserved for users		1,486,024			–
Loans receivable		2,000,000			–
Other receivables		920,115			–
Deposit on business acquisition		–			500,000
Prepaid expenses and other current assets		1,423,581			263,345
Total current assets		26,291,780			13,116,652
Equipment, net		80,904			8,041
Operating lease right-of-use asset		546,012			–
Intangible assets, net		27,810,029			2,000
Goodwill		16,992,199			–
Other non-current assets		1,290,353			6,833
TOTAL ASSETS	$	73,011,277		$	13,133,526
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	5,305,176		$	811,549
Liabilities to customers		3,218,798			–
Deferred revenue		145,091			–
Liabilities to be settled in stock		–			927,855
Notes payable – current		158,141			–
Operating lease liability – current		240,725			–
Contingent consideration		300,000			–
Total current liabilities		9,367,931			1,739,404
Notes payable		186,898			–
Deferred income taxes		1,729,138			–
Operating lease liability		322,205			–
TOTAL LIABILITIES		11,606,172			1,739,404
Commitments and contingencies (Note 13)
Stockholders’ equity
Preferred stock $0.001 par value; 10,000,000 shares authorized, none issued and
outstanding		–			–
Common stock $0.001 par value; 500,000,000 shares authorized, 20,166,740 and
11,233,223 shares issued and outstanding as of March 31, 2021 and June 30, 2020,
respectively		20,167			11,233
Additional paid-in capital		104,417,852			31,918,491
Accumulated deficit		(42,077,212	)		(20,535,602	)
Accumulated other comprehensive loss		(955,702	)		–
Total stockholders’ equity		61,405,105			11,394,122
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	73,011,277		$	13,133,526

 

Esports Entertainment Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

		Three Months Ended March 31,						Nine Months Ended March 31,
		2021			2020			2021			2020
Net revenue	$	5,398,708		$	–		$	7,983,293		$	–
Operating costs and expenses:
Cost of revenue		2,321,620			–			4,249,889			–
Sales and marketing		2,399,200			84,249			4,891,688			184,175
General and administrative		6,291,388			466,809			14,082,111			1,728,695
Total operating expenses		11,012,208			551,058			23,223,688			1,912,870
Operating loss		(5,613,500	)		(551,058	)		(15,240,395	)		(1,912,870	)
Other income (expense):
Interest expense		–			(23,479	)		–			(2,285,792	)
Net amortization of debt discount and premium on convertible debt		–			(674,946	)		–			(1,225,205	)
Change in fair value of derivative liabilities		–			(6,952,798	)		–			(5,865,451	)
Change in fair value of warrant liability		(5,358,313	)		–			(4,729,924	)		–
Change in fair value of contingent consideration		(1,305,804	)		–			(1,305,804	)		–
Loss on extinguishment of debt		–			–			–			(2,795,582	)
Gain on warrant exchange		–			1,894,418			–			1,894,418
Other non-operating income (loss)		(165,464	)		32			(265,486	)		(25,779	)
Loss before income taxes		(12,443,080	)		(6,307,831	)		(21,541,610	)		(12,216,261	)
Income tax		–			–			–			–
Net loss	$	(12,443,080	)	$	(6,307,831	)	$	(21,541,610	)	$	(12,216,261	)
Basic and diluted loss per common share	$	(0.73	)	$	(1.02	)	$	(1.54	)	$	(2.04	)
Weighted average number of common shares outstanding, basic and diluted		16,950,275			6,183,944			13,974,197			5,989,619

 

Adjusted EBITDA

The table below presents our Adjusted EBITDA reconciled to our net loss, the closest U.S. GAAP measure, for the periods indicated:

Esports Entertainment Group, Inc.

Adjusted EBITDA

Reconciliation to GAAP Results

		Three months ended March 31,						Nine months ended March 31,
		2021			2020			2021			2020
Net loss	$	(12,443,080	)	$	(6,307,830	)	$	(21,541,610	)	$	(12,216,261	)
Adjusted for:
Depreciation and amortization		882,951			2,486			1,687,161			18,013
Interest (income) expense, net		–			23,479			–			2,285,792
Stock-based compensation (1)		743,527			–			3,055,118			448,434
Transaction-related costs (2)		1,340,245			–			1,435,788			–
Litigation, settlement, and related costs (3)		508,689			–			508,689			–
Change in fair value of warrant liability		5,358,313			–			4,729,924			–
Change in fair value of contingent consideration		1,305,804			–			1,305,804			–
Loss on extinguishment of debt		–			–			–			2,795,582
Gain on warrant exchange		–			(1,894,418	)		–			(1,894,418	)
Net amortization of debt discount and premium on convertible debt		–			674,946			–			1,225,205
Change in fair value of derivative liabilities		–			6,952,798			–			5,865,451
Other non-operating costs		165,464			33			265,486			25,779
Adjusted EBITDA	$	(2,138,087	)	$	(548,506	)	$	(8,553,640	)	$	(1,446,423	)

 

(1) The amounts for the three months ended March 31, 2021 includes stock-based compensation expenses resulting from the issuance of equity awards to employees, non-employee directors and non-employee consultants for services.

(2) Includes transaction advisory, consulting, accounting and legal expenses for acquisition related activities

(3) Includes primarily external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.

 

Stem Holdings d/b/a Driven By Stem Reports Record Gross Revenue of $12.4 Million for CY21 First Quarter Results

 

BOCA RATON, Fla., May 18, 2021 /PRNewswire/ — Stem Holdings, Inc., d/b/a Driven By Stem (“Stem” or the “Company”), a leading omnichannel, vertically-integrated cannabis branded products and technology company with state-of-the-art cultivation, processing, extraction, retail, distribution, and delivery-as-a-service (DaaS) operations throughout the United States, today reported its financial results for the first calendar quarter ended March 31, 2021.

Highlights for the quarter ended March 31, 2021:

• Gross revenue increased to a record $12.4 million from $2.7 million for the three months ended March 31, 2020.
• Gross profit increase of 269% to $2.7 million as compared to $0.73 million for the comparable period in the previous year.
• Retail gross revenue comps +49.5% vs. 2020, with 2,614 transactions in one day on 4-20, the annual celebration day for cannabis.
• Budee™ DaaS revenues increased vs. three months ended March 31, 2020 in California and is poised to launch in Oregon in May, followed by Michigan in September.
• Cultivation yields increased 7.8% vs. three months ended March 31, 2020, and our retail footprint for our brands increased by 32%.
• Adjusted EBITDA of $1.7 million an increase from ($5.8 million) for the three months ended March 31, 2020 reflects ongoing operational improvements.
• Subsequent to the quarter end, the Company closed on a C$10.3 million public offering, previously announced December 14, 2020, led by Canaccord Genuity.

Operational Updates

• Budee™ delivery is poised to launch in Oregon in May 2021.
• New retail dispensary to open in September 2021 in Michigan.
• With retail opening in Michigan, Budee DaaS will launch for expanded state-wide market footprint by Labor Day, its third delivery state.
• Launch of Yerba Buena™ brand cannabis flower in California, the first expansion market for the brand.

Management Commentary 
“Our record sales and the beginning of the successful integration of Driven Deliveries Inc. (“Driven”) has positioned us for greater growth as we expand the footprint of our retail, delivery, and branded product operations in high-growth markets,” stated Adam Berk, CEO of the Company. “Full integration and streamlined execution and expansion of Driven’s technology will continue over the next six months, to be completed by the end of 2021. We are leveraging our combined strength by simultaneously increasing market share of our own retail operations, as well as our branded products,” he continued. “Our plans for expansion in Michigan both at retail and with Budee delivery by Labor Day, as well as our ongoing efforts in New York, bode well for accretive growth throughout 2021. We are excited about our progress and driving synergies for continued growth in 2022.”

Mr. Berk continued, “We have continued to strengthen our balance sheet and to add strong management talent to our team to ensure that we can manage our ‘Farm-to-Home™‘ strategy in all current and expanded markets. We also continue to improve gross margin and cash conversion as we continue to support our initiatives building shareholder value.”

Financing
On April 23, 2021, the Company closed a C$10.3 million public offering announced in December 2020 (the Offering”), of units of the Company (the “Units”) at a price of $.55 per Unit.  Each Unit was comprised of one share of common stock of the Company and one share purchase warrant of the Company (a “Warrant”). Each Warrant is exercisable at an exercise price of C$0.68 until April 23, 2023. The Offering was led by Canaccord Genuity Corp. The offering included a short-form prospectus and an effective S-1.

Expansion of Consumer Packaged Goods Business

• The Company’s Yerba Buena™ brand was launched in California, the first of our expansion markets for this top-shelf Oregon brand. It rapidly became the second-highest selling brand on our Budee platform covering 92% of consumers in the state, as well as at our Foothill Health and Wellness dispensary in Shingle Spring, CA.
• The Cannavore brand of edibles expanded from its original line of Salted Caramel Chews to new flavors for the holidays including the launching of Irish Cream on St. Patrick’s Day, and experienced gains in our distribution channels for those dispensaries carrying TJ’s Gardens and Yerba Buena flower. The brand will be launching a new line of calorie-free, zero-refined sugar THC-infused gummies later in June which are unique to the market, meeting demand for alternative candies to high-calorie, sugary products. They are gluten-free, vegan, and suitable for diabetics with a low glycemic index and are all natural.

Retail Business Development

• Comparable dispensary sales growth for the quarter was 49.5% vs. 2020, reaching a record of 2,614 transactions on 4-20, the annual celebration day for cannabis.
• The Company increased its retail footprint for its brands in other dispensaries by 32% as it drives market share in Oregon and Nevada. Additional distribution white space remains to further accelerate growth.
• Our Budee delivery business grew in the quarter vs. the three months ended March 31, 2020. This success includes adding over a dozen best-in-class brands in California during the quarter to enthuse consumers and increase on-line activation. This includes Premium Vape from Red, White and Bloom brands (CSE: RWB) (OTC: RWBYF); Caliva Flower, Deli Prerolls, Fund Uncle Prerolls, Yummi Karma, and Rehab by Yummi, and Chill Chocolates from The Parent Co. (NEO: GRAM.U) (OTCQX: GRAMF); Chong’s Cannabis; Dosist Pens, Tablets and Edibles; Kushy Punch Gummies; Loudpack Farms, and as mentioned, the Company’s Yerba Buena™ flower.

The Company continues its plans for accretive new product innovation with a queue of innovative products scheduled for launch throughout 2021. 

About Stem Holdings, Inc.
Stem is a leading omnichannel, vertically-integrated cannabis branded products and technology company with state-of-the-art cultivation, processing, extraction, retail, distribution, and delivery-as-a-service (DaaS) operations throughout the United States . Stem’s family of award-winning brands includes TJ’s Gardens™, TravisxJames™, and Yerba Buena™ flower and extracts; Cannavore™ edible confections; Doseology™ a CBD mass-market brand launching in 2021; as well as DaaS brands Budee™ and Ganjarunner™ through the acquisition of Driven Deliveries. Budee™ and Ganjarunner™ e-commerce platforms provide direct-to consumer proprietary logistics and an omnichannel UX (user experience)/CX (customer experience).

Forward-Looking Statements 
This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company’s current expectations.  When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release includes information relating to: (i) the implementation of the Company’s business plan; (ii) the expansion of Stem’s brands and products into other markets; (iii) expected improvements to productivity; (iv) the expected launch of new brands and products by Stem; and (v) expected full integration of Driven into the business of Stem. 

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following risks: risks associated with the implementation of the Company’s business plan and matters relating thereto, risks associated with the cannabis industry, competition, regulatory change, the need for additional financing, reliance on key personnel, the potential for conflicts of interest among certain officers or directors, insurance, intellectual property and reliable supply chains; and risks related to the Company and its business generally. Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date that statements are made, and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Investors are cautioned against attributing undue certainty to forward-looking statements.

Non-GAAP Measures
This news release contains references to certain measures that are not defined under a body of generally accepted accounting principles for publicly accountable entities in the United States, which is commonly referred to as “GAAP” or “U.S. GAAP”. For this purpose, a non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. These non-GAAP measures are not recognized measures under GAAP, do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement GAAP measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under U.S. GAAP.

The Company uses non-GAAP measures, including adjusted EBITDA to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on GAAP measures. The Company believes that investors, securities analysts and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period and assess the Company’s ability to meet its future debt service, capital expenditure and working capital requirements.

The term “adjusted EBITDA” consists of net (loss) income and excludes interest, taxes, depreciation, amortization, share-based compensation, impairment of assets, acquisition costs, legal settlement costs, restructuring charges, and adjustments for fair value of biological assets, warrant liabilities, and stock appreciation rights. The most directly comparable measure to adjusted EBITDA calculated in accordance with GAAP is net (loss) income.

For further information, please contact:
Media Contact: 
Mauria Betts 
STEM HOLDINGS, INC. 
Mauria@drivenbystem.com 971.319.0303

Investor Contact: 
Valter Pinto / Elizabeth Barker 
STEM@kcsa.com 
212.896.1254 / 212-896-1203 

SOURCE Stem Holdings, Inc.

 

Stem Holdings d/b/a Driven By Stem Reports Record Gross Revenue of $12.4 Million for CY21 First Quarter Results

 

BOCA RATON, Fla., May 18, 2021 /PRNewswire/ — Stem Holdings, Inc., d/b/a Driven By Stem (“Stem” or the “Company”), a leading omnichannel, vertically-integrated cannabis branded products and technology company with state-of-the-art cultivation, processing, extraction, retail, distribution, and delivery-as-a-service (DaaS) operations throughout the United States, today reported its financial results for the first calendar quarter ended March 31, 2021.

Highlights for the quarter ended March 31, 2021:

• Gross revenue increased to a record $12.4 million from $2.7 million for the three months ended March 31, 2020.
• Gross profit increase of 269% to $2.7 million as compared to $0.73 million for the comparable period in the previous year.
• Retail gross revenue comps +49.5% vs. 2020, with 2,614 transactions in one day on 4-20, the annual celebration day for cannabis.
• Budee™ DaaS revenues increased vs. three months ended March 31, 2020 in California and is poised to launch in Oregon in May, followed by Michigan in September.
• Cultivation yields increased 7.8% vs. three months ended March 31, 2020, and our retail footprint for our brands increased by 32%.
• Adjusted EBITDA of $1.7 million an increase from ($5.8 million) for the three months ended March 31, 2020 reflects ongoing operational improvements.
• Subsequent to the quarter end, the Company closed on a C$10.3 million public offering, previously announced December 14, 2020, led by Canaccord Genuity.

Operational Updates

• Budee™ delivery is poised to launch in Oregon in May 2021.
• New retail dispensary to open in September 2021 in Michigan.
• With retail opening in Michigan, Budee DaaS will launch for expanded state-wide market footprint by Labor Day, its third delivery state.
• Launch of Yerba Buena™ brand cannabis flower in California, the first expansion market for the brand.

Management Commentary 
“Our record sales and the beginning of the successful integration of Driven Deliveries Inc. (“Driven”) has positioned us for greater growth as we expand the footprint of our retail, delivery, and branded product operations in high-growth markets,” stated Adam Berk, CEO of the Company. “Full integration and streamlined execution and expansion of Driven’s technology will continue over the next six months, to be completed by the end of 2021. We are leveraging our combined strength by simultaneously increasing market share of our own retail operations, as well as our branded products,” he continued. “Our plans for expansion in Michigan both at retail and with Budee delivery by Labor Day, as well as our ongoing efforts in New York, bode well for accretive growth throughout 2021. We are excited about our progress and driving synergies for continued growth in 2022.”

Mr. Berk continued, “We have continued to strengthen our balance sheet and to add strong management talent to our team to ensure that we can manage our ‘Farm-to-Home™‘ strategy in all current and expanded markets. We also continue to improve gross margin and cash conversion as we continue to support our initiatives building shareholder value.”

Financing
On April 23, 2021, the Company closed a C$10.3 million public offering announced in December 2020 (the Offering”), of units of the Company (the “Units”) at a price of $.55 per Unit.  Each Unit was comprised of one share of common stock of the Company and one share purchase warrant of the Company (a “Warrant”). Each Warrant is exercisable at an exercise price of C$0.68 until April 23, 2023. The Offering was led by Canaccord Genuity Corp. The offering included a short-form prospectus and an effective S-1.

Expansion of Consumer Packaged Goods Business

• The Company’s Yerba Buena™ brand was launched in California, the first of our expansion markets for this top-shelf Oregon brand. It rapidly became the second-highest selling brand on our Budee platform covering 92% of consumers in the state, as well as at our Foothill Health and Wellness dispensary in Shingle Spring, CA.
• The Cannavore brand of edibles expanded from its original line of Salted Caramel Chews to new flavors for the holidays including the launching of Irish Cream on St. Patrick’s Day, and experienced gains in our distribution channels for those dispensaries carrying TJ’s Gardens and Yerba Buena flower. The brand will be launching a new line of calorie-free, zero-refined sugar THC-infused gummies later in June which are unique to the market, meeting demand for alternative candies to high-calorie, sugary products. They are gluten-free, vegan, and suitable for diabetics with a low glycemic index and are all natural.

Retail Business Development

• Comparable dispensary sales growth for the quarter was 49.5% vs. 2020, reaching a record of 2,614 transactions on 4-20, the annual celebration day for cannabis.
• The Company increased its retail footprint for its brands in other dispensaries by 32% as it drives market share in Oregon and Nevada. Additional distribution white space remains to further accelerate growth.
• Our Budee delivery business grew in the quarter vs. the three months ended March 31, 2020. This success includes adding over a dozen best-in-class brands in California during the quarter to enthuse consumers and increase on-line activation. This includes Premium Vape from Red, White and Bloom brands (CSE: RWB) (OTC: RWBYF); Caliva Flower, Deli Prerolls, Fund Uncle Prerolls, Yummi Karma, and Rehab by Yummi, and Chill Chocolates from The Parent Co. (NEO: GRAM.U) (OTCQX: GRAMF); Chong’s Cannabis; Dosist Pens, Tablets and Edibles; Kushy Punch Gummies; Loudpack Farms, and as mentioned, the Company’s Yerba Buena™ flower.

The Company continues its plans for accretive new product innovation with a queue of innovative products scheduled for launch throughout 2021. 

About Stem Holdings, Inc.
Stem is a leading omnichannel, vertically-integrated cannabis branded products and technology company with state-of-the-art cultivation, processing, extraction, retail, distribution, and delivery-as-a-service (DaaS) operations throughout the United States . Stem’s family of award-winning brands includes TJ’s Gardens™, TravisxJames™, and Yerba Buena™ flower and extracts; Cannavore™ edible confections; Doseology™ a CBD mass-market brand launching in 2021; as well as DaaS brands Budee™ and Ganjarunner™ through the acquisition of Driven Deliveries. Budee™ and Ganjarunner™ e-commerce platforms provide direct-to consumer proprietary logistics and an omnichannel UX (user experience)/CX (customer experience).

Forward-Looking Statements 
This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company’s current expectations.  When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release includes information relating to: (i) the implementation of the Company’s business plan; (ii) the expansion of Stem’s brands and products into other markets; (iii) expected improvements to productivity; (iv) the expected launch of new brands and products by Stem; and (v) expected full integration of Driven into the business of Stem. 

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following risks: risks associated with the implementation of the Company’s business plan and matters relating thereto, risks associated with the cannabis industry, competition, regulatory change, the need for additional financing, reliance on key personnel, the potential for conflicts of interest among certain officers or directors, insurance, intellectual property and reliable supply chains; and risks related to the Company and its business generally. Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date that statements are made, and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Investors are cautioned against attributing undue certainty to forward-looking statements.

Non-GAAP Measures
This news release contains references to certain measures that are not defined under a body of generally accepted accounting principles for publicly accountable entities in the United States, which is commonly referred to as “GAAP” or “U.S. GAAP”. For this purpose, a non-GAAP financial measure is generally defined as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measure. These non-GAAP measures are not recognized measures under GAAP, do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement GAAP measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under U.S. GAAP.

The Company uses non-GAAP measures, including adjusted EBITDA to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on GAAP measures. The Company believes that investors, securities analysts and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period and assess the Company’s ability to meet its future debt service, capital expenditure and working capital requirements.

The term “adjusted EBITDA” consists of net (loss) income and excludes interest, taxes, depreciation, amortization, share-based compensation, impairment of assets, acquisition costs, legal settlement costs, restructuring charges, and adjustments for fair value of biological assets, warrant liabilities, and stock appreciation rights. The most directly comparable measure to adjusted EBITDA calculated in accordance with GAAP is net (loss) income.

For further information, please contact:
Media Contact: 
Mauria Betts 
STEM HOLDINGS, INC. 
Mauria@drivenbystem.com 971.319.0303

Investor Contact: 
Valter Pinto / Elizabeth Barker 
STEM@kcsa.com 
212.896.1254 / 212-896-1203 

SOURCE Stem Holdings, Inc.

Tuesday, May 18, 2021

Esports Entertainment Group, Inc. (GMBL)
Odds On Favorite

Esports Entertainment Group Inc is a development-stage online gambling company focused purely on esports. The company’s principal business operations include design, develop and test wagering systems.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Better-than-expected Q3 results. Total company revenues of $5.4 million was 10% better than our $4.9 million estimate, which benefited from one month of Lucky Dino, a $2.3 million revenue contribution in the quarter. Gross profit margins were surprisingly strong at 57% versus our 44% estimate, which accounted for gross profit to be 45% above our estimate. Adjusted EBITDA was a loss of $2.1 million, which was roughly $1 million better than our $3.1 million loss estimate.


Favorable operating momentum.  The company reiterated its guidance for $18 million in fiscal 2021 revenue and $70 million for full fiscal year 2022. This implies $10 million in fiscal Q4 2021 revenue, in line with our estimates. Notably, the company anticipates that its new burn rate has decreased from $900,000 per month to $600,000 per month, better than our Q4 2021 expectation of $700,000 …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Monday, May 17, 2021

Schwazze (SHWZ)
Laying the Groundwork; Solid First Quarter

Medicine Man Technologies, Inc. is now operating under its new trade name, Schwazze. Schwazze is executing its strategy to become a leading vertically integrated cannabis holding company with a portfolio consisting of top-tier licensed brands spanning cultivation, extraction, infused-product manufacturing, dispensary operations, consulting, and a nutrient line. Schwazze leadership includes Colorado cannabis leaders with proven expertise in product and business development as well as top-tier executives from Fortune 500 companies. As a leading platform for vertical integration, Schwazze is strengthening the operational efficiency of the cannabis industry in Colorado and beyond, promoting sustainable growth and increased access to capital, while delivering best-quality service and products to the end consumer. The corporate entity continues to be named Medicine Man Technologies, Inc.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q21 Results. Revenue totaled $19.3 million, up from $3.2 million last year, driven by the acquisitions. Pro forma revenue was estimated at $26.8 million. Adjusted EBITDA for the quarter was $5.8 million. Schwazze recorded a net loss of $3.6 million, or $0.09 per share compared to a loss of $1.4 million, or $0.03 per share, last year. Schwazze also reported positive CFFO of $1.7 million, up from a loss of $2.5 million last year.


Operating Metrics Improving.  Same store sales of the thirteen Star Buds dispensaries when compared to last year, prior to taking ownership of the assets, were $18.8M up 38%. Average basket size was $58.79, up 19.5%, and recorded customer visits were 319,800, up 15.8%. GM increased to 37.5% from 32.9% last year and was 48.9% after adjusting for a one-time purchase accounting charge …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

image credit: Elsa Olofsson (Flickr)

Federal Law Questions Still Loom for the Cannabis Industry

 

Marijuana or non-hemp cannabis is still federally classified as a Schedule I drug under the Controlled Substances Act. Since 1970, federal laws have contended that cannabis has no medical use and a high potential for abuse. Even today, cultivating, distributing, and possessing marijuana is still a violation of federal drug laws. What does this mean for the cannabis industry, investors in cannabis companies, and those states that have rewritten their state laws to include medical and/or recreational marijuana?

 

DEA Position

The Drug Enforcement Administration (DEA) oversees the enforcement of federal marijuana laws. The DEA doesn’t write laws, they just enforce them.  With more states legalizing medical and recreational use, the federal laws concerning cannabis have been given a backseat by the DEA. This “looking the other way” has only occurred within the past few years. As states changed their marijuana laws, the DEA pursued federal enforcement actions against medical marijuana cultivators and distributors. These enforcements were upheld by the United States Supreme Court’s decision in Gonzales v. Raich, which held that even businesses that were fully compliant with state regulations risked prosecution for federal offenses. The court’s ruling on the matter makes it clear the DEA, under federal law, has the authority to prosecute cannabis businesses. The DEA has not been doing so.

 

Source:
DEA.gov

 

With even more states rewriting their laws to allow marijuana (Arizona, New York, New Jersey) they do so knowing, they are in direct conflict with the overriding federal statutes. This places a number of parties in awkward positions. These groups include medical and recreational users. They also include related businesses — from sellers of seed to growers to those that distribute the products. The situation also strains the rights or freedoms of states to make their own laws and the federal government to enforce clear statutes.  The banking system, on which most industries depend for resources, has not risked adding cannabis to the businesses they serve.

 

Perfectly Unclear Guidance

The federal government has incrementally been moving toward non-intervention in states. Back in 2009, the Obama administration instructed federal prosecutors to look at not pursuing the prosecution of individuals who distributed marijuana as long as they did so in accordance with state medical marijuana laws. This directive is known as the “Cole Memo.”

In August 2013, the U.S. Department of Justice announced an update to their marijuana enforcement policy. It stated that although marijuana remains illegal federally, the Department of Justice expected states that have legalized marijuana to create “strong, state-based enforcement efforts. With this announcement, they said they will defer the right to challenge their legalization laws at this time.” It should not be ignored that the  Department of Justice also said that it reserved the right to challenge states any time it felt it appropriate.  In 2018, the murky legal field became less assured as former Attorney General Jeff Sessions issued a Marijuana Enforcement Memorandum that rescinded the Cole Memo (under Obama) and permitted federal prosecutors to determine the way in which to prioritize enforcement of federal marijuana laws. Attorney General Sessions instructed U.S. Attorneys to “weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.”

 

 

 

 

Questions Loom the Cannabis Industry

The ongoing state of uncertainty, knowing that federal law, as written, is quite clear, while state laws may be permissive, it’s also a quagmire for young cannabis businesses. Compliance with regulations and the forced use of cash as banks won’t allow their fintech solutions at dispensaries is a strain on the entire industry.

To address the uncertainty in what most presume will eventually fall on the side of federal legalization, a bill to protect banks that service state-legal cannabis businesses from being penalized under federal regulations was reintroduced in the Senate in April. A third of the 100 Senators have signed on as cosponsors. This follows a refiling of the Secure and Fair Enforcement (SAFE) Banking Act in the House. That bill passed with bipartisan support in 2019 as a standalone bill and again as part of two COVID-19 relief bills. The House bill has more than 100 members listed as cosponsors.

 

SAFE Banking

The SAFE Banking Act would allow financial institutions to service cannabis businesses without the fear of federal penalties. Banks and credit unions would no longer fear doing business with the growing industry. This should create a strong tailwind for those doing business, particularly retailers.

 

Take-Away

The movement toward “normalizing” the businesses of medical and recreational marijuana appears to be moving forward. One large sticking point is that it is not legal under federal law and is still classified as a Schedule I illegal substance.

There is a high level of support from lawmakers that are working to make life easier for businesses in legal states; however, there is nothing on the docket in the immediate future that would prevent marijuana companies or users from being federal outlaws.

 

Suggested Reading:

Cannabis Customers Served by “Ice Cream Truck” Delivery Model	Medical Cannabis Stock Performance vs. Recreational Company Performance

The Future of Cannabis Crosses Many Industries	Stem Holdings, Inc. CEO, Adam Berk – C-Suite

 

 

Schwazze (SHWZ) Virtual Road Show – Today May 17 @ 1:00pm EDT Join Schwazze CEO Justin Dye and CFO Nancy Huber for this exclusive corporate presentation, followed by a Q & A session moderated by Joe Gomes, Noble’s senior research analyst, featuring questions taken from the audience. Registration is free and open to all investors, at any level. Register Now  |  View All Upcoming Road Shows

 

Sources:

https://www.congress.gov/bill/116th-congress/house-bill/1595/text

https://www.fennemorelaw.com/insights

DEA.gov

https://www.justice.gov/opa/pr/justice-department-issues-memo-marijuana-enforcement

https://www.fennemorelaw.com/insights

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image credit: Pexels/Cottonbro

Delivery as a Service Business Model is Serving Marijuana Customers

 

The “stay at home” mindset that was adopted over the past year has forever altered the way in which we work, visit with others, and shop. It was necessary to embrace other options for a while. But, even when the temporary lifestyle changes we made became no longer necessary, many of the alternatives continue to be common methods of doing business, visiting others, and buying goods.

 

Delivery as a Service

Ecommerce was particularly relied upon by those that might otherwise have run to the store for clothes, home furnishings, electronic upgrades, etc. Curbside Pick-up saw a massive increase in new customers and adoption by many businesses that had never considered it.

As part of this larger shift in consumer buying methods, the delivery as a service (DaaS) business has grown dramatically. DaaS consumers are now getting on-demand delivery of everything from groceries to prepared meals, liquor, and anything else that a retailer can provide in this way. It’s a great add-on service for anyone who sells retail products, home goods, groceries, prepared food, even alcohol. Today, even traditional sellers such as Apple, Walmart, Publix Supermarkets, and 7-11 are offering delivery options to their customers. The convenience will keep customers using the services long after there are any pandemic-related restrictions. In fact, the practice is expected to grow.

 

DaaS and Cannabis

Over the past few years, cannabis has been quickly losing its stigma. CBD oil is legal in all 50 states, medical marijuana is legal in 36 states, and recreational use is permitted in 17 of the 50 U.S. states. This growth in usage and acceptance has been taking the once illicit product and taken it more mainstream and overt.

Companies involved in cannabis products know that the potential growth of the industry is huge, and also that competition to survive and thrive as the industry matures requires adopting successful methods proven by other industries. This has come to include local delivery with cars standing-by and stocked with product, and also pick-and-pack orders from retailers.

STEM Holdings (DBA, Driven by STEM, ticker STMH) is involved in the cultivation and retail sale of marijuana. As part of their multichannel approach to sales, they have built a “farm to home” model. The CEO of Driven by STEM, Adam Berk, met virtually with Noble Capital Markets Senior Analyst, Joe Gomes, for a C-Suite interview released this week. Adam discussed his company, the impact of Covid, a recent acquisition, and plans to expand the company’s AI informed “ice cream truck” model of delivery.

In the recorded interview, the STEM Holdings CEO was asked about their acquisition of a cannabis delivery service and what the plans are for their non-brick and mortar retail outlets. Adam explained that “Easy, convenient accessible ecommerce delivery makes sense whether your buying toothpaste, toilet paper, or cannabis.” Berk discussed this portion of their business model by saying,”…it’s important to be an omnichannel retailer, it’s important to make delivery to homes. Buy behavior has completely changed for every consumer, and we just don’t see that going back.”

 

Take-Away

The Stem Holding C-Suite interview offers insight into how technology is changing how consumers select and receive products and how individuals can be better served – DaaS is not going to disappear. The discussion, of course, also covers the cannabis industry and how Stem is finding new ways to better their product and the customer experience, it’s well worth watching.

You can view the entire video by clicking on the first link below.

 

Suggested Content:

Stem Holdings, Inc. CEO, Adam Berk – C-Suite	Medicine Man Technologies, Inc. CEO Justin Dye

Artificial Intelligence Investment Opportunities	Medical Cannabis Companies vs. Recreational Cannabis

 

Sources:

https://www.sciencedirect.com/science/article/pii/S2352146520303641#:~:text=Delivery%20as%20a%20Service%20(DaaS,in%20the%20on%2Ddemand%20economy.&text=It%20contributes%20to%20a%20future%20scenario%20of%20urban%20logistics%20business%20models.

https://www.channelchek.com/channelcast-detail/220

 

 

Schwazze (SHWZ) Virtual Road Show – Monday May 17 @ 1:00pm EDT Join Schwazze CEO Justin Dye and CFO Nancy Huber for this exclusive corporate presentation, followed by a Q & A session moderated by Joe Gomes, Noble’s senior research analyst, featuring questions taken from the audience. Registration is free and open to all investors, at any level. Register Now  |  View All Upcoming Road Shows

 

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Thursday, May 13, 2021

FAT Brands Inc. (FAT)
Momentum Continues to Build

FAT Brands Inc is a multi-brand restaurant franchising company. It develops, markets, and acquires predominantly fast casual restaurant concepts. The company provides turkey burgers, chicken Sandwiches, chicken tenders, burgers, ribs, wrap sandwiches, and others. Its brand portfolio comprises Fatburger, Buffalo’s Cafe and Express, and Ponderosa and Bonanza. The company’s overall footprint covers nearly 32 countries. Fatburger generates maximum revenue for the company.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q21 Results. Fat Brands reported 1Q21 revenue of $6.6 million, compared to $4.4 million in 1Q20. The increased revenue was driven by royalties, which rose to $4.9 million in the quarter from $3.3 million in 1Q20. Cost and expenses were impacted by increased compensation and legal expenses, which combined with higher interest expense, resulted in a reported loss for the quarter of $2.4 million, or $0.20 per share, compared to a loss of $2.4, or $0.20 per share last year. We had projected revenue of $6.75 million and a net loss of $675,000, or $0.06 per share.


Sales Trends Improving.  The first quarter saw a continuation of improving sales trends off COVID lows. System-wide sales were $114.4 million in the quarter, up from $47.7 million in 2Q20, and $84.9 million in 1Q20. Average weekly sales hit nearly $19 million for the month of April, up from $18.1 million in March and $8.7 million in the year ago April. Third party delivery sales rose 70% in 1Q21 …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

PLBY Group Reports First Quarter 2021 Financial Results

First Quarter 2021 Revenue Up 34% Year-Over-Year to $42.7 Million

LOS ANGELES, May 12, 2021 (GLOBE NEWSWIRE) — PLBY Group, Inc. (NASDAQ: PLBY) (“PLBY Group” or the “Company”), a leading pleasure and leisure lifestyle company and owner of Playboy, one of the most recognizable and iconic brands in the world, today provided financial results for the first quarter ended March 31, 2021.

Ben Kohn, Chief Executive Officer of PLBY Group, stated, “Our strong first quarter financial performance reflects the exciting growth potential of our direct-to-consumer business, which experienced triple digit revenue growth year-over-year as we successfully increased merchandising, cross-selling, and influencer marketing programs. I’m especially pleased with our results considering we continue to experience short-term, industry-wide supply chain disruptions leading to out-of-stocks on select items.”

Mr. Kohn continued, “We’re also thrilled by the recent performance of our first NFT art drop, a symbol of the infinite product experiences we can build off the back of our iconic flagship brand and rich archive. We are in the early innings of unlocking the tremendous potential of our intellectual property and global fan base and remain focused on investing today in opportunities to drive superior long-term growth and deliver substantial long-term value for our shareholders.”

First
Quarter 2021 Financial Highlights

• Revenue grew 34% year-over-year to $42.7 million, driven by 114% growth in direct-to-consumer revenue in the comparable period.
• Net loss was $5.0 million, largely due to a $13.8 million year-over-year increase in selling and administrative expenses as the Company incurred $6.3 million of non-recurring items related to the closing of its recent business combination, including a $2.7 million increase in stock-based compensation expense. Additionally, the Company had increased costs related to M&A transaction expenses, ongoing costs attributable to acquired businesses, and expenses associated with being a newly public company.
• Adjusted EBITDA was $6.7 million and was burdened by an additional $1.5 million of one-time expenses related to M&A transaction expenses, severance, and COVID testing at the Company’s fulfillment center, none of which were added back to arrive at adjusted EBITDA.

Webcast
Details
The Company will host a webcast at 5:00 p.m. Eastern Time on May 12, 2021 to discuss first quarter 2021 results. Participants may access the live webcast on the PLBY Group, Inc. Investor Relations website at https://www.plbygroup.com/investors.

About
PLBY Group, Inc.
PLBY Group connects consumers around the world with products, services, and experiences to help them look good, feel good, and have fun. PLBY Group serves consumers in four major categories: Sexual Wellness, Style & Apparel, Gaming & Lifestyle, and Beauty & Grooming. PLBY Group’s flagship consumer brand, Playboy, is one of the most recognizable, iconic brands in the world, driving billions of dollars in consumer spending annually across 180 countries. Learn more at http://www.plbygroup.com.

Forward-Looking
Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ from their expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance, growth plans and anticipated financial impacts of the business combination and the Lovers acquisition.

These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from those discussed in the forward-looking statements. Factors that may cause such differences include, but are not limited to: (1) the impact of COVID-19 pandemic on the Company’s business; (2) the inability to maintain the listing of the Company’s shares of common stock on Nasdaq; (3) the risk that the business combination, recent acquisitions or any proposed transactions disrupt the Company’s current plans and operations, including the risk that the Company does not complete any such proposed transactions or achieve the expected benefit from them; (4) the ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition, the ability of the Company to grow and manage growth profitably, and retain its key employees; (5) costs related to the business combination; (6) changes in applicable laws or regulations; (7) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (8) risks relating to the uncertainty of the projected financial information of the Company; (9) risks related to the organic and inorganic growth of the Company’s business and the timing of expected business milestones; and (10) other risks and uncertainties indicated from time to time in the Company’s annual report on Form 10-K, including those under “Risk Factors” therein, and in the Company’s other filings with the Securities and Exchange Commission. The Company cautions that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements, which speak only as of the date which they were made. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based.

Contact:
Investors: 
investors@plbygroup.com
Media: 
press@plbygroup.com