Planet 13 Announces Record Third Quarter 2020 Financial Results

Topic:

Q3 2020 Revenue of $22.8 million; Adjusted EBITDA of $6.2 million

All figures are reported in United States dollars ($) unless otherwise indicated

LAS VEGAS, NV / ACCESSWIRE / November 24, 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 nine-month period ended September 30, 2020. Planet 13's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS").

Larry Scheffler, Co-CEO of Planet 13 said, "Our performance in the third quarter exceeded expectations - leading to our highest quarter of sales ever. Despite being impacted by the ongoing global pandemic and our Las Vegas SuperStore only at 50% capacity, we achieved 36% higher revenue compared to pre-COVID quarters. This is a testament to the strength of Planet 13's business model and the success of the operational improvements we put in place to ensure our ability to serve local customers. As Las Vegas returns to normal and the economy recovers, we will undertake further strategic initiatives to grow revenue at the SuperStore and increase our sales to local customers in Las Vegas."

"In the third quarter, our in-house brands contributed 25% to SuperStore revenue - continuing to be one of the most recognized and fastest-growing segments within the Planet 13 portfolio. In the wholesale market we saw increasing sales month over month throughout the quarter and continuing into October. Building on this momentum, we continue to invest in cultivation with our recently announced acquisition of a 45,000 square foot facility in Las Vegas, better positioning us to supply wholesale and retail sales within the state," commented Bob Groesbeck, Co-CEO. "We are excited to leverage our knowledge and experience from Nevada to California, with the opening of our new dispensary in Santa Ana in 2021 - the world's second largest dispensary. Planet 13 is well capitalized, and we look forward to executing on future expansion into other major growth markets."

Financial Highlights - Q3 - 2020

Operating Results

All comparisons below are to the quarter ended September 30, 2019, unless otherwise noted

Revenues were $22.8 million as compared to $16.7 million, an increase of 36.5%
Gross profit before biological adjustments was $13.0 million or 56.9% as compared to $9.9 million or 59.1%, an increase of 31.4%
Operating expenses, excluding non-cash compensation expense and depreciation and amortization, was $7.2 million as compared to $6.7 million, an increase of 7.9%
Net income before taxes of $3.4 million as compared to a net income of $0.3 million
Net income of $0.2 million as compared to a net loss of $1.7 million
Adjusted EBITDA of $6.2 million as compared to Adjusted EBITDA of $3.4 million

Balance Sheet

All comparisons below are to December 31, 2019, unless otherwise noted

Cash of $56.8 million as compared to $12.8 million
Total assets of $125.5 million as compared to $62.9 million
Total liabilities of $39.3 million as compared to $21.6 million

Q3 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 Nine Months Ended September 30, 2020 (the "MD&A").

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.
On September 10, 2020, Planet 13 announced closing of a CDN$23 million bought deal public offering.
On October 13, 2020, Planet 13 announced the addition of non-cannabis retail space to the Las Vegas SuperStore.
On October 19, 2020, Planet 13 announced expanding the dispensary floor of the Las Vegas SuperStore.
On October 19, 2020, Planet 13 announced a CDN$20 million bought deal public offering.
On October 20, 2020, Planet 13 announced an upsize to bought deal public offering to CDN$25 million.
On November 5, 2020, Planet 13 announced the closing of a CDN$28.8 million bought deal public offering.
On November 20, 2020, Planet 13 announced opening the Medizin dispensary.

Results of Operations (Summary)

The following tables set forth consolidated statements of financial information for the three-month and nine-month periods ending September 30, 2020 and September 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 September 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						NV Cannabis Ops			Consolidated
	Three Months			Three Months			Three Months						Nine Months			Nine Months			Nine Months
	Ended			Ended			Ended			Percentage			Ended			Ended			Ended			Percentage
	Sep-30-2020			Sep-30-2020			Sep-30-2019			Change			Sep-30-2020			Sep-30-2020			Sep-30-2019			Change
EBITDA
Profit (loss) before taxes		4,811,541			3,371,829			251,122			1242.7	%		5,124,677			389,503			1,457,619			(73.3	%)
Add back:
Biological asset adjustments		504,069			504,069			52,291			864.0	%		225,294			225,294			129,101			74.5	%
Non-cash share based payments		-			569,227			2,016,803			(71.8	%)		-			2,006,067			3,128,417			(35.9	%)
Depreciation and amortization		1,076,774			1,076,774			680,056			58.3	%		3,103,847			3,103,847			1,945,186			59.6	%
Depreciation included in COGS		406,322			406,322			157,297			158.3	%		819,579			819,579			286,987			185.6	%
Interest and non-operating expense (income)		264,542			264,542			211,298			25.2	%		1,041,745			1,041,745			625,674			66.5	%

EBITDA		7,063,248			6,192,763			3,368,867			83.8	%		10,315,142			7,586,035			7,572,984			(0.2	%)
Margin		31.0	%		27.2	%		20.2	%					20.5	%		15.1	%		16.1	%


*Expressed in USD$*	Three Months			Three Months
	Ended			Ended			Percentage
	Sep-30-2020			Sep-30-2019			Change
Revenue
Revenues, net of discounts		22,797,338			16,696,932			36.5	%
Cost of Goods Sold		(9,821,561	)		(6,820,706	)		44.0	%
Gross Profit, Before Biological Asset Adjustment		12,975,777			9,876,226			31.4	%
Gross Profit Margin %		56.9	%		59.1	%
Realized fair value amounts included in COGS		(961,235	)		(562,461	)		70.9	%
Unrealized fair value gain on growth of biological assets		457,166			510,170			(10.4	%)
Gross profit		12,471,708			9,823,935			27.0	%
Gross Profit Margin %		54.7	%		58.8	%

Expenses
General and Administrative		6,198,121			4,902,355			26.4	%
Sales and Marketing		991,215			1,762,301			(43.8	%)
Depreciation and Amortization		1,076,774			680,056			58.3	%
Share based payments		569,227			2,016,803			(71.8	%)
Total Expenses		8,835,337			9,361,515			(5.6	%)

Income (Loss) From Operations		3,636,371			462,420			686.4	%

Other (Income) Expense:
Interest Expense, net		438,687			314,389			39.5	%
Realized Foreign Exchange gain (loss)		-			(6,203	)		(100.0	%)
Other expense (income)		(174,145	)		(96,888	)		79.7	%
Total Other Expense (Income)		264,542			211,298			25.2	%

Income (loss) for the period before tax		3,371,829			251,122			1242.7	%
Provision for income tax (current and deferred)		3,010,880			1,973,475			52.6	%
Income (Loss) for the period		360,949			(1,722,353)			(121.0	%)

Other Comprehensive Income (Loss)
Items that may be reclassified subsequently to profit/loss
Foreign exchange translation adjustment		(152,313	)		28,932
Net Comprehensive Income (Loss) for the period		208,636			(1,693,421)
Income (Loss) per share for the period
Basic and fully diluted loss per share	$	0.00		$	(0.01)

Weighted Average Number of Shares Outstanding
Basic and fully diluted		162,536,424			135,503,007

Outstanding Shares

As of November 24, 2020, the Company had 121,987,683 common shares and 55,232,940 class A convertible, restricted voting shares issued and outstanding for a total of 177,220,623 shares outstanding. There were 333,840 options issued and outstanding of which all have fully vested. There were 11,743,904 warrants outstanding and 1,764,250 RSU's outstanding of which nil RSUs had fully vested as at the date of this MD&A.

Conference Call

Planet 13 will host a conference call on Tuesday, November 24, 2020 at 5:00 p.m. EST to discuss its third 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: November 24, 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: 38726
Listen to webcast: https://bit.ly/358WpIA

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
[email protected]
(416) 519-2156 ext. 2230

Bob Groesbeck and Larry Scheffler
Co-Chief Executive Officers
[email protected]

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, Planet 13's first California location and the timeline for opening of the Santa Ana dispensary.

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 and California 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 California; 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
	September 30,			December 31,
	2020			2019
Assets
Current Assets
Cash	$	56,760,860		$	12,814,712
HST receivable		63,860			16,544
Inventories (Note 5)		7,721,586			5,474,004
Biological assets (Note 6)		1,370,090			514,526
Prepaid expenses and other current assets (Note 10)		2,153,334			3,694,272
Total Current Assets		68,069,730			22,514,058

Property and equipment (Note 7)		31,638,285			30,211,154
Licenses (Note 8)		6,215,073			-
Right of use assets (Note 9)		18,520,944			9,478,733
Long-term deposits and other assets		1,031,352			694,601
		57,405,654			40,384,488
Total Assets	$	125,475,384		$	62,898,546

Liabilities
Current Liabilities
Accounts payable (Note 16)	$	2,095,692		$	864,260
Accrued expenses		3,026,090			1,910,046
Income taxes payable		12,356,301			7,015,606
Notes payable - current portion (Note 11)		884,000			884,000
Total Current Liabilities		18,362,083			10,673,912

Long -term lease liabilities (Note 12)		20,437,005			10,522,377
Other long-term liabilities		28,000			28,000
Deferred tax liability		467,486			379,665
		20,932,491			10,930,042
Total Liabilities		39,294,574			21,603,954

Shareholders' Equity
Share capital (Note 13)		101,809,657			51,986,849
Restricted share units (Note 13)		2,719,357			4,119,485
Warrants (Note 13)		7,753,818			5,961,091
Option reserve (Note 13)		311,401			399,439
Accumulated other comprehensive loss		(812,650	)		(607,707	)
Deficit		(25,600,773	)		(20,564,565	)
Total Shareholders' Equity		86,180,810			41,294,592
Total Liabilities and Shareholders' Equity	$	125,475,384		$	62,898,546

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)


*Expressed in United States Dollars*	Three months			Three months
	Ended			Ended
	September 30,			September 30,
	2020			2019
Revenue
Revenues, net of discounts	$	22,797,338		$	16,696,932
Cost of Goods Sold		(9,821,561	)		(6,820,706	)
Gross Profit before fair value asset adjustment		12,975,777			9,876,226
Realized fair value amounts included in inventory sold		(961,235	)		(562,461	)
Unrealized fair value gain on growth of biological assets		457,166			510,170
Gross Profit		12,471,708			9,823,935

Expenses
General and Administrative (Note 14)		6,198,121			4,902,355
Sales and Marketing		991,215			1,762,301
Depreciation and Amortization (Note 7 & 9)		1,076,774			680,056
Share-Based Compensation Expense (Note 13 and Note 16)		569,227			2,016,803
Total Expenses		8,835,337			9,361,515

Income (Loss) From Operations		3,636,371			462,420

Other Expense:
Interest expense, net		438,687			314,389
Realized foreign exchange loss		-			(6,203	)
Other income		(174,145	)		(96,888	)
Total Other Expense		264,542			211,298

Income (Loss) before income taxes		3,371,829			251,122
Provision for tax - current		2,620,603			2,172,429
Provision for tax - deferred		390,277			(198,954	)
Income (Loss) for the Period	$	360,949		$	(1,722,353)

Other Comprehensive Income

Foreign exchange translation gain (loss)		(152,313	)		28,932
Net Comprehensive Income (Loss) for the Period	$	208,636		$	(1,693,421)

Income (Loss) per share for the Period
Basic and diluted Income (loss) per share	$	0.00		$	(0.01)

Weighted Average Number of Common Shares Outstanding
Basic and Diluted		162,536,424			135,503,007

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


*Expressed in United States Dollars*	Nine Months			Nine Months
	Ended			Ended
	September 30,			September 30,
	2020			2019
Operating activities
Net loss for the period	$	(5,036,208	)	$	(4,081,165	)
Add (deduct) non-cash items:
Share based payments (Note 13)		2,006,067			3,128,417
Depreciation and amortization (Note 7 & 9)		4,451,334			2,417,847
Deferred tax liability		87,821			(198,954	)
Deferred tax asset		-			-
Realized fair value amounts included in inventory sold		-			(759,856	)
Non-cash interest expense on ROU Liabilities (Note 12)		1,769,500			-

Net change in non-cash working capital
HST receivable		(47,316	)		77,473
Inventories (Note 5)		(2,247,582	)		422,949
Biological assets (Note 6)		(855,564	)		380,263
Prepaid expenses and other assets (Note 10)		1,540,938			(3,226,185	)
Long term deposits and other assets		(336,751	)		(85,000	)
Accounts payable		1,231,431			2,832,431
Accrued expenses		1,116,045			559,030
Income tax payable		5,340,695			5,737,738
Other liabilities		-			407,593
Cash flow provided by operating activities		9,020,410			7,612,581

Investing activities
Purchase of property, plant and equipment (Note 7)		(3,101,240	)		(12,682,554	)
Purchase of license (Note 8)		(1,053,353	)		-
Cash flow used in investing activities		(4,154,593)			(12,682,554)

Financing activities
Issuance of shares on warrant and option exercises (Note 13)		16,941,543			3,965,736
Issuance of shares and warrants on financings		23,807,651			-
Payment on lease liabilities		(1,463,920	)		(50,614	)
Cash flow provided by financing activities		39,285,274			3,915,122

Net increase in cash		44,151,091			(1,154,851)
Cash at beginning of the period		12,814,712			19,364,086
Effect of foreign exchange on cash		(204,943	)		(106,122	)
Cash at end of the period	$	56,760,860		$	18,103,113