Abacus Health Products, Inc., an Ontariocorporation, today released the financial results of its operating subsidiary, Abacus Health Products, Inc., a Delawarecorporation, for the 12-month period ending December 31, 2018, being a period completed prior to the closing of the Company’s reverse takeover transaction with Abacus U.S. completed on January 29, 2019. All amounts are in U.S. dollars, unless otherwise noted.
Financial and Operating Summary
- Company completed its RTO transaction with Abacus U.S. on January 29, 2019.
- Subordinate voting shares of the Company began trading on the Canadian Securities Exchange (CSE) under the Symbol ABCS on January 30, 2019.
- Revenue of Abacus U.S. for the full year 2018 was $8.5 million, an increase of 232% over the same 12-month period in 2017.
- CBD CLINIC™, a line of topical pain relief medications sold only to professional practitioners, continued its strong growth in 2018, with revenue of $8.4 million, an increase of 232% over the same 12-month period in 2017.
- CBDMEDIC™, sold to consumers via retail chains and its e-commerce platform, launched towards the end of 2018 and added new advanced skincare and treatment products to the line in 2019.
- First CBDMEDIC™ purchase order from a major U.S. retail chain was announced in February 2019 with new purchase orders received in April 2019.
- Revenue of Abacus U.S. for the fourth quarter 2018 was $2.9 million representing sequential growth of 43% over the prior quarter.
- CAD$30 million bought deal offering announced in April 2019 expected to close in May 2019 subject to regulatory approvals.
- Expects to release first quarter 2019 results on or about May 30, 2019 and hold an investor conference call the following day.
“Our focus in 2018 was to build a strong foundation for our CBD CLINIC and CBDMEDIC brands,” said Perry Antelman, CEO. “With strong momentum of CBD CLINIC™ through 2018 and into 2019 and the purchase orders we have received for CBDMEDIC from national retailers in 2019, both brands are well positioned for growth and success.”
In 2018, Abacus U.S. derived its revenues primarily from sales of its CBD CLINIC product line, which is sold to professional practitioners through a distributor network as well as through an e-commerce platform.
Revenue of Abacus U.S. for the fourth quarter and year ended 2018 was $2.9 million and $8.5 million respectively, which represents an increase of approximately $1.7 million and $5.9 million respectively, for the fourth quarter and year ended 2017. The increase in revenue was primarily driven by an increase in sales to distributors that sold the Company’s CBD CLINIC™ products in the chiropractic and massage therapist markets.
Abacus launched CBDMEDIC, sold to consumers via retail chains and its e-commerce platform, towards the end of 2018. In 2019, the Company added new advanced skincare and treatment products to the line and began receiving retail purchase orders in the first quarter of 2019. Abacus expects to begin recognizing revenues in CBDMEDIC in the first quarter of 2019 as it begins fulfilling the terms of its purchase orders. Revenues for subsequent quarters in 2019 are expected to increase further, reflecting full financial reporting periods where CBDMEDIC products will be in retail stores.
Gross profit of Abacus U.S. for the year ended December 31, 2018 was approximately $5.1 million representing a gross margin of 59.2%, an increase from 51.5% for the year ended 2017.
Net cash flows provided by operating activities of Abacus U.S. was $829,390 for the year ended 2018, an increase of $858,967 compared to a net use of $29,577 for the year ended 2017. The increase in cash provided by operating activities was primarily due to an increase in sales volume and an increase in trade payables.
Cash provided by financing activities of Abacus U.S. was $2,738,118 for the year ended 2018 primarily due to the net proceeds received from issuance of convertible notes.
Net cash used in investing activities of Abacus U.S. was $98,020 for the year ended 2018 compared to $Nil for the year ended 2017.
On January 29, 2019, the Company completed, pursuant to an agreement and plan of merger, its RTO with Abacus U.S. Prior to the closing of the RTO, the Company was a largely inactive mineral exploration company.
In the second quarter of 2019, Abacus announced a CAD$30 million bought deal offering, which is expected to close in May 2019 subject to receipt of regulatory approvals. Abacus intends to use the net proceeds of the offering to accelerate the Company’s marketing and sales programs to, among other purposes, seek to increase the number of retail store locations carrying CBDMEDIC products to over 10,000. A preliminary prospectus containing important information relating to the securities offered under the offering has been filed with securities commissions or similar authorities in all of the provinces of Canada, except Québec. The preliminary prospectus is still subject to completion or amendment. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued.
Abacus expects to release first quarter 2019 results on or about May 30, 2019 and intends to conduct an investor conference call the following day.