It’s a sign of how difficult it is to be a CBD-only company. This week Plus Products Inc. (CSE: PLUS) (OTCQX: PLPRF) filed for the Canadian version of bankruptcy. According to Plus’ filing, it has secured court protection from its creditors under the Companies Creditors Arrangement Act or “CCAA”, in order to restructure its business and financial affairs. Plus Products has canceled its Annual General Meeting previously scheduled for September 14, 2021.
“Over the last year, we have continued to build PLUS into one of the strongest brands in cannabis,” said Jake Heimark, co-founder and Chief Executive Officer. “However, the slow rollout of legal dispensary licenses in California, and the structure of the California market have made it difficult for independent brands to remain competitive in this state. We continue to believe the strongest brands will come out of California, and I am confident that the outcome of these proceedings will result in a business that matches the strength of our brand for our employees, debtholders and shareholders.”
Trading in PLUS common shares and listed on the Canadian Securities Exchange and the OTC Markets Group has been halted pending the anticipated delisting of the Subordinate Voting Shares and the company’s securities from the CSE. A comeback hearing in respect of the relief granted pursuant to the Initial Order will be scheduled with the Court within ten days. Interested parties that wish to bring a motion at the Comeback Hearing are required to provide notice to the affected parties prior to the Comeback Hearing pursuant to the requirements as set forth in the Initial Order.
According to a company statement, Plus will be able to continue operating and pay normal expenses in the ordinary course of business. It will also move forward with the Board of Directors’ review of strategic alternatives, including the solicitation, development, and execution of any potential sale or other strategic transaction involving PLUS, whether in addition to, or as an alternative to, a CCAA plan of compromise or arrangement.
Plus gave no indication that it was in trouble last month when the company reported its earnings. While revenues hadn’t grown by a large amount, they had increased over last year and the company bragged that it was the most sales it had ever recorded in a quarter. Even the loss from operations had improved by 30% over the previous year.
At the time Heimark said, “We are happy to demonstrate that our revenues are back on the correct trajectory following the one-time accounting changes in Q1 2021. In Q2 2021, we had the highest revenues as a company thus far. We have been successful in our transition to a fulfillment-only distributor in California, and see that change reflected positively in this quarter’s results. In addition to the progress with our new distribution partner, we have continued to gain momentum with our fully-internalized sales team along with our special-edition and collaborative offerings.”