Twenty Questions with Jake Heimark, CEO of Plus Products Inc.
First of all; I wish to thank Mr. Jake Heimark, for taking the time to answer these Plus Products investor questions. Here is a list of questions complied from our readers as well as investors; current and potential.
We had an overwhelming response to the Q&A post asking for questions. Below is a list of the top 20 questions for you.
Good morning Jake, it has been almost 1 year since Plus has listed.
Q. You mentioned Coke and Disney have built great companies around a single product, and that Plus has a plan to implement that same strategy. What product categories present an opportunity for Plus?
Our signature gummies will always represent the core of our product portfolio, as the largest market segment within edibles. However, we are very excited about our recently launched Mints which already represent a full 5% of that market according to BDS analytics.
Q. Are more products being developed? Can you give us a hint of what we may see in the near future from Plus Products? Entry into the pet CBD market?
Pet CBD is certainly an interesting market, but we are going to stick to humans for now. We are in the process of developing a chocolate bites product that we expect will hit the market in the first half of 2020.
Q. Referral traffic from Casper to Plus is impressive (approx. 26% traffic is referral from Casper). Casper is currently sold out of the CBD gummies; was the demand higher than expected, or had you started with a limited supply? How would you see this progressing in the next year?
We were very excited by how well the launch partnership with Casper went. I think it was driven by a combination of both factors. We look forward to pursuing more innovative relationships similar to the one with Casper over the next year and beyond.
Q. You purchased Good Coop in December; how is your integration going and when will we see revenues included in your quarterly reports?
The members of their team have been contributing to our core business since the end of last year, and the chocolate bites product mentioned above will be a spin-off of the baked goods product they built their company around.
Q. PLUS positioned itself as the Edibles leader in California, there are many top tier LPs (Curaleaf, Trulieve, Dixie Brands, The Green Organic Dutchman etc.) that have expressed interest to go into edibles & beverages sector. How would PLUS stay competitive to compete with top tier LPs?
While many of the large LPs have large market caps and some have strong balance sheets, PLUS has spent years understanding how to manufacture precisely dosed & great tasting edibles – and no amount of money can substitute for those learnings. We believe the quality of our products will continue to win out as more competition enters the market.
Q. Adding Marc Seguin as your Chief Revenue Officer is a great addition to your line-up. With a man of his calibre on the team; can you tell us how big this is for Plus Products, and how significant his stature is to bringing your winning formula to the national scene?
We are extremely excited to have Marc on board. As the former President & CMO of Popchips he brings executive level knowledge of the CPG space that is quite rare in cannabis today. His experience only becomes more relevant as we continue to pursue wholesale CBD retailers and as the THC market continues to trend towards traditional CPG.
Q You have an option to purchase Emerald Bay Wellness LLC, your largest supplier of Cannabis oil. How much of a priority is this option for the near future?
We chose not to exercise the option, but maintain a close relationship with EBW as our top supplier.
Q. Are you currently in talks with potential partners in other states? How many stores are your products in by state and national?
We are constantly exploring partnership opportunities for multi-state expansion, and are also in discussions with Canadian partners. Our dispensary presence is 360 in CA & 12 in Nevada (and growing!).
Q. What SKUs and how many addresses do you have in Nevada? What other states is Plus looking to enter with its THC Products?
We initially launched into CA with our 3 core gummy SKUs (which include the #1 & #2 of the best selling products in CA according to BDS Analytics over the last 12 months). As mentioned – we are in 12 dispensaries today in Nevada and expect to continuing rolling out across Las Vegas and the rest of the state. We have targeted Michigan, Massachusetts, and Illinois as key markets moving forward.
Q. What plans do you have for international expansion? Is Canada in the works now that edibles are legal?
We see Canada as a key THC market and Europe as a key CBD market.
Q. PLUS’ current footprint is in California which is one of the largest cannabis markets in the US. To expand outside California /US will enable and help Plus to gain higher market share & Market Cap. What factors would you consider before you expand in new markets?
As you may have seen, we just recently entered Nevada and the National Hemp CBD market. We look at a number of factors: market size, regulatory environment, entry strategy, and right to win (why should we expect to do well in a market).
Q. Do other markets have the same challenges as California presents? Or is each market unique?
I would say a little bit of both. Due to regulations and different cultural implications, each market has its own nuances, which is very important to understand as you work to expand a brand nationally. Jumping into a new market, assuming it will be exactly the same as CA or NV, could lead to wasted management time and capital. We look at the success we have had as a blueprint for new markets, but not a simple ‘copy and paste.’
Q. With the new national exposure of your hemp CBD products, what do you see as your biggest obstacle?
Hemp CBD is a hyper competitive space. We put launch partnerships in place that help us cut through that competition and get our brand in the hands of consumers. Continuing to be innovative while executing the fundamentals of DTC and wholesale will be critical to our success.
Q. John Legend singer, songwriter, actor, and philanthropist is now on board as an ambassador/spokesperson for Plus Products CBD, John was attracted to Plus by your strong family values; please tell us how these values have helped set the standard for Plus Products.
Regardless of hard assets like cash, licenses, facilities, etc. a company is ultimately built on its people. Without strong values its difficult to build teams that are truly committed to the long-term wellbeing of an organization. PLUS brings the unique combination of the principles of a family run organization with the oversight and governance of a public
Q. How have you been able to capitalize and ultimately monetize this new relationship with Mr Legend?
The press we received at the launch event was fantastic and we are continuing to work with Mr. Legend and his team on ways to support the CBD industry and our brand specifically. Ultimately the legitimacy that he brings to our brand is invaluable in a space as nascent as ours.
Q. Plus has an incredibly low float of just $53M shares. Will it be a priority for Plus Products to keep the share count this low? What’s the current Cash position?
Protecting our shareholders from unnecessary dilution is always a key factor when considering raising capital as an organization.
Q. Gross margin has been an improving trend to the latest quarter of 21%, high GP Margin is crucial to stay competitive and to be able to sustain the business operation on rising cost environment. Would you be able to share your view on PLUS’ targeted GP margin within your next 2 – 3 years?
We do not provide forward guidance, but traditional CPG companies typically have a 40-60% GP margin and we believe that is a realistic target for our organization as we mature and the power of brands within the industry grows.
Q. Jake, do you foresee a path to positive cash flow by Feb 2021 to repay convertible notes in the event that the share price is below $6.50/ CN and the holders choose not to convert?
The industry is rapidly transitioning from a focus on ‘growth at all costs’ to ‘growth with a clear path to profitability’ and we are hyper aware of that. We believe that by Q1 of 2021 our business will be in a position to either repay the debt through a financing or a restructuring.
Responses in this post may containing certain “forward-looking information” within the meaning of applicable securities law (each, a “forward-looking statement”). Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. These forward-looking statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout responses in this post. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, the success of the Company’s investments, the ability to retain key personnel, the ability to continue investing in infrastructure to support growth, the ability to obtain financing on acceptable terms, the continued quality of the Company’s products, customer experience and retention, the continued development of adult-use sales channels, managements estimation of consumer demand in in jurisdictions where the Company exports, expectations of future results and expenses, the availability of additional capital to complete capital projects and facilities improvements, the ability to expand and maintain distribution capabilities, the impact of competition, the ability of the Company to implement initiatives and the possibility for changes in laws, rules, and regulations in the industry. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Once again Jake I would like to thank you and your team for taking the time for answering our questions.
We look forward to watching Plus Products’ in the upcoming future.
Rob Armstrong, Sock Drawer Investor
֊ Plus products is a client of Sock Drawer Investor ֊
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