FORT LAUDERDALE, FL, May 20, 2019 (GLOBE NEWSWIRE) — VPR Brands LP VPRB, -0.25% a market leader specializing in vaporizers and accessories for essential oils, cannabis concentrates and extracts (CBD), as well as electronic cigarettes containing nicotine, announces its first quarter 2019 financial results, posting increased revenues and a narrowed net loss as compared to 2018.
In addition to increasing its quarterly revenues approximately 31% year over year to $1.3 million, the Company slightly lowered its net loss from approximately $149,000 in 2018 to approximately $138,000 in 2019. The company continues to maintain strong gross operating margins above 40% as well.
“2019 is off to a solid start so far and we are setting the company’s pace which will allow us to remain focused on sustainable manageable growth,” said Kevin Frija, CEO of VPR Brands, LP. “We continue to invest in inventory and new products to be able to keep up with increased demand.”
“I am very pleased with the increased sales performance we achieved in the first quarter of 2019 as we continue to fine tune our operational efficiencies,” commented Dan Hoff, COO of VPR Brands LP. “As our product portfolio is heavily weighted towards cannabis vapes and CBD products, we continue to benefit from the continued growth in those product categories.”
Results of Operations for the Three Months Ended March 31, 2019, Compared to the Three Months Ended March 31, 2018
Our revenue for the three months ended March 31, 2019, and 2018 was $1,318,049 and $1,001,162, respectively. The increase is a result of increased marketing and advertising efforts.
Cost of Sales
Cost of sales for the three months ended March 31, 2019, and 2018 was $779,027 and $534,457, respectively. Increase is a result of the increased sales during the current year. Gross margin decreased from 47% to 41% due to a higher mix of private labels sales.
Operating expenses for the three months ended March 31, 2019, were $564,605 as compared to $453,881 for the three months ended March 31, 2018. The increase in expenses is primarily due to increased marketing and advertising efforts.
Other Income (Expense)
Net other expenses decreased to $113,101 for the three months ended March 31, 2019, as compared to $162,244 for the three months ended March 31, 2018. Interest expense increased from $65,231 in 2018 to $113,101 in 2019 due to increased debt, which was offset by non-cash interest of $65,231 incurred in 2018 that was not incurred in 2019, and a loss on extinguishment of debt of $244,834 incurred in 2018, offset by a gain on derivative liabilities in 2018 of $147,821
Net loss for the three months ended March 31, 2019, was $138,684 compared to a net loss of $149,420 for the three months ended March 31, 2018.
Liquidity and Capital Resources
The Company used cash in operating activities of $705,866 for three months ended March 31, 2019, as compared to $55,931 used in three months ended March 31, 2018. The increased use of cash is primarily the result of an increase in accounts receivable of $174,837, an increase in inventory of $103,467, an increase in vendor deposits of $80,226, and a decrease in accounts payable of $227,685, offset by non-cash stock compensation of $34,723.
During the three months ended March 31, 2019, the Company received $1,000,000 of proceeds from the issuance of convertible debt, received $100,000 from the issuance of a note payable, and repaid $289,129 of principal on notes payable. During the three months ended March 31, 2018, the Company received $200,000 of proceeds from the issuance of notes payable and repaid $106,401 of principal on notes payable.
At March 31, 2019, and Dec. 31, 2018, we had total assets of $1,310,634 and $767,209, respectively. Assets primarily consist of the cash accounts held by the Company, inventory, vendor deposits, accounts receivable and a right-to-use asset. In 2019 the Company’s inventory was increased by approximately $103,000 as a result of additional purchases for new products, accounts receivable increased by approximately $151,000 from additional sales in the last part of the year, vendor deposits increased by $80,226, and we recorded a right-to-use asset of $63,356 as a result of implementing new lease accounting guidance effective Jan. 1, 2019.
At March 31, 2019, and Dec. 31, 2018, we had total liabilities of $1,998,088 and $1,350,702, respectively. The increase was primarily due to the issuance of convertible debt in 2019, offset by the repayment of existing notes payable and decrease in accounts payable, offset by the right to use obligation of $60,651.
The Company plans to pursue equity funding to expand its brand. Through equity funding and the current operations, including the acquisition of the Vapor line of business, the Company expects to meet its current capital needs. There can be no assurance that additional capital will be available to us, or that, if available, it will be on terms satisfactory to us. Any additional financing may involve dilution to our shareholders. In the alternative, additional funds may be provided from cash flow in excess of that needed to finance our day-to-day operations, although we may never generate this excess cash flow. If we do not raise additional capital or generate additional funds, implementation of our plans for expansion will be delayed. If necessary, we may withdraw from certain growth strategies to conserve cash for continued operations.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Although our sales are not segregated by brand or product category, our primary revenue source is from vaporization devices specifically created for use with medical cannabis and recreational marijuana as well as cannabidiols (CBD). These devices are specifically created for use with extract oils and concentrates which are vaped, providing optimal results and the best experience for patients and recreational users. Vaporizers are far more convenient and discrete compared to traditional cannabis use methods. These units are compact, easy to carry and concealable. Modern cannabis vaporizers do not emit distinct and lingering odors that are affiliated with traditional marijuana use. We believe that portable vaporizers is the fastest growing delivery mechanism for marijuana. Our team is currently working with other market leaders within cannabis growth and extraction to innovate and further educate the marketplace on its advantages.
About VPR Brands LP
VPR Brands is a technology company whose assets include issued U.S. and Chinese patents for atomization related products including technology for medical marijuana vaporizers and electronic cigarette products and components. The Company is also engaged in product development for the vapor or vaping market, including e-liquids, vaporizers and electronic cigarettes (also known as e-cigarettes) which are devices which deliver nicotine and or cannabis and cannabidiol (CBD) through atomization or vaping, and without smoke and other chemical constituents typically found in traditional products. For more information about VPR Brands, please visit the Company on the web at www.vprbrands.com.
This news release contains statements that involve expectations, plans or intentions, and other factors discussed from time to time in the Company’s Securities and Exchange Commission filings. These statements are forward-looking and are subject to risks and uncertainties so actual results may vary materially. The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.