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Earlier this week, California-based Plus Products filed a preliminary prospectus, seeking to raise up to $15 Million. PI Financial and Canaccord Genuity are the lead underwriters for this offering and the company plans to list its shares on the Canadian Securities Exchange.
Plus Products will be conducting an initial public offering on the CSE and we are very excited by this opportunity. The edibles manufacturer and distributor has been executing flawlessly and has six infused edibles SKUs that are currently being sold in more than 200 licensed dispensaries and through delivery services such as Eaze.
2018 has been a major year for Plus Products and we recommend keeping an eye on this one. During the first half of the year, the company has generated $2.45 million in sales. In 2017, Plus generated $1.07 million in revenue and the growth has been very impressive.
Plus Products is well capitalized and well positioned to gain market share in California. In 2018, the company has raised more than $15 million and plans to use almost 40% of the capital raised to expand capacity.
A California Focused Cannabis Company
Plus Products has been using the capital to fund growth initiatives and to expand its reach. We are favorable on these growth initiatives and will monitor how the team continues to execute. The company is led by a strong management team that has a proven track record of success and this is a very important aspect of the story.
Plus is led by a management team that continues to execute and has the company positioned to capitalize on what will be a major opportunity. While many companies have expanded their focus to new markets, Plus remains laser focused on California and we think this is the right move.
While other markets are tempting, none are as big as California. Also, once Plus proves to be successful in California, the company can easily expand into new markets. When it comes to a strategic location, Plus is located in a market that is second-to-none and we think the company is positioned to capitalize on a cannabis boom in California.
Plus offers a product that is meant for users that are looking for a low dose and we find this to be very appealing. Plus’ gummy product has been rising in the ranks and according to BDS Analytics, is the fourth most popular edible in all of California.
An Attractively Valued Opportunity
The recent financing was completed at a valuation of approx. $25 million (pre-money) and we think the continued execution warrants a much higher valuation. When compared to a company like CannaRoyalty, which has a market cap that is above $300 million, Plus trades at 1.7x revenue. This is significant and leaves massive room for upside.
If you look at Nutritional High International Inc. (EAT.CN), which is much less developed when compared to Plus, the market cap is close to $100 million. Plus has a very attractive valuation and fundamentals continue to improve. This is an opportunity that cannot be ignored.
We think Plus represents one of the most exciting new opportunities and cannabis investors need to keep an eye on this one. The strong and improving fundamentals, leading management team and attractive valuation make this a company that cannot be missed.
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