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HempFusion CBD Quarter 1 Report, Q 2 Coming Up Soon.

HempFusion CBD Reports Q1, 2021 Financial Results
T.CBD.U | May 17, 2021
HempFusion Wellness Inc. (TSX: CBD.U) (OTCQX: CBDHF) (FWB:8OO) (“HempFusion” or the “Company”), an industry leader in full-spectrum cannabidiol (CBD) hemp extract wellness products and probiotics, today reported financial results for the first quarter ended March 31, 2021. All dollars are stated in US Dollars.

Q1-2021 Financial Highlights

Consolidated revenue increased 7.6% to $983,496 from $913,646 in Q4-2020
DTC sales increased 59.3% to $244,255 from $153,305 in Q4-2020
International sales increased to $75,994 from nil in Q4-2020
Gross profit of $280,205 or 28.5% of net revenue
Operating expenses were $6,306,703, an increase of 42.9% from $4,414,792 in Q1-2020, primarily attributed to IPO related expenses as well as marketing and digital related expenses
Strong cash position ending the quarter at $17,074,030
Q1-2021 Business Highlights


Completed a $17 million initial public offering (IPO) and commenced trading on the Toronto Stock Exchange (the “TSX”), becoming the first U.S.-based CBD and wellness products company to list directly on the TSX (senior board).
Became the No. 2 most recognized CBD brand in America according to Brightfield Group
As of the end of January 2021, NielsenIQ data rank HempFusion as the No. 1 in product sales and units sold in one of the largest food/drug/mass (“FDM”) retailers




E-Commerce success has shown a 62% increase in online traffic with a significant increase in conversion including a shift from 16.8% online sales in Q4-2020 as a percent of net revenue to 24.8% in Q1-2021


The Company launched the Probulin store on Amazon and early 2021 traction is encouraging. Consolidated net revenue for the three months ended March 31, 2021 increased 7.6% quarter-over-quarter to $983,496 versus $913,646 in Q4-2020. Direct to consumer (“DTC”) e-commerce net revenue increased 59.3% reflecting increased marketing efforts, a targeted DTC team and targeted digital promotions.


Not only did sales increase for both Probulin and HempFusion but the traffic has increased by 62% in Q1 2021 versus Q4 2020 with a conversion rate increase for Probulin of 2.1% to 3.2% and a current conversion rate for HempFusion of 3.4%. E-commerce accounted for 24.8% of net revenue in the first quarter of 2021 versus 16.8% for Q4, 2020. HempFusion's Probulin has seen 10% or greater month-over-month growth since launching on Amazon .


Officially launched Probulin on the world's largest e-commerce platform, Alibaba's Tmall Global, with HempFusion CBD following in a subsequent Q2 event!

Submitted dossier to the United Kingdom's Regulatory Food Safety Agency
"With nearly all international business paused due to COVID throughout 2020 and Q1 2021, and with slower than expected reopenings, the Company still achieved an incremental QoQ growth of 7.6% . Now, with vaccine rollouts taking place across the country, we are encouraged with reopening rates and excited that our sales, which currently take place in approximately 75% brick-and-mortar businesses, are beginning to reopen," commented Jason Mitchell, N.D., HempFusion's Co-Founder and Chief Executive Officer.

"We remain committed to developing new revenue channels and have entered additional countries including China, Ireland, and the United Kingdom, and we are excited with subsequent quarterly events in which new purchase orders were received, showing early signs of the return of international business. These international POs have the potential to drive millions in revenue. We are working feverishly to accelerate sales through organic channels and the continued pursuit of M&A opportunities; early indications have Q2 shaping up to be our best quarter yet," continued Dr. Mitchell.

Statements of Loss and Comprehensive Loss

The Below is from the Unaudited Condensed Interim Financial Statements for the Three Months Ended March 31, 2021 and 2020; Please Refer to the Complete Report, Including the Notes, Other Statements and Other Contents Therein.

Consolidated net revenue for the three months ended March 31, 2021 increased 7.6% quarter-over-quarter to $983,496 versus $913,646 in Q4-2020, and DTC e-commerce net sales increased 59.3% reflecting increased marketing efforts, a targeted DTC team, and targeted digital promotions. Site traffic increased by 62%, and conversion rates increased to 1.9%. DTC accounted for 24.8% of total revenue in the first quarter of 2021 versus 16.8% for Q4-2020.


International sales increased to $75,994 from nil showing a return to normal from Q4-2020, and early indication of future international orders accelerating and producing incremental quarterly gains. H empFusion maintains a leadership position in retailers across the United States, including the #1 in sales by dollar volume and SKUs in one of the top five largest FDM channel retailers.

Gross profit of $280,205 or 28.5% of net revenue is primarily attributed to improvement in inventory and supply chain management.

Operating expenses were $6,306,703, an increase of 42.9% from $4,414,792 in Q4-2020, primarily attributed to IPO related expenses, including D&O insurance and listing fees, as well as marketing and digital expenses.

Balance Sheet | Cash Position

The Below is from the Unaudited Condensed Interim Financial Statements for the Three Months Ended March 31, 2021 and 2020; Please Refer to the Complete Report, Including the Notes, Other Statements and Other Contents Therein.

The Company ended Q1-2021 with a strong cash position of $17,074,030 ensuring the capital requirements of the Company are met, with ample room for strategic M&A. The Company incurred $2,655,134 in general and administrative expenses and $3,651,569 in sales and marketing expenses.

“In 2019, HempFusion (combined with Probulin on a pro forma basis with respect to 2019) achieved net revenue of $4,627,544, followed by $3,823,638 in 2020. The impact COVID has had on our business is clear. We have adapted. It’s important to note we have strategically bolstered the Company’s online presence with the help of new channels such as Amazon for Probulin and Alibaba’s Tmall for both brands. Our efforts have resulted in early traction and success, as we continue to strengthen our foothold in the direct-to-consumer CBD market. This quarter showed a strong DTC sales increase of 59.3%. We expect this trend to continue as DTC now accounts for 24.8% of total revenue in the first quarter of 2021 versus 16.8% for Q4-2020,” commented Dr. Mitchell.

Conference Call

Management of the Company will host a conference call to discuss the Company's first quarter 2021 results at Monday, May 17, 2021 at 4:15 p.m., Eastern Time. To participate in the call, please dial 888-506-0062. For international callers, dial 973-528-0011. Use Participant Code: 795055. To join the webcast: https://www.webcaster4.com/Webcast/Page/2710/41342 .

A replay will be available from the Investor Relations section of HempFusion’s website at HempFusion.com/corporate-information .

ABOUT HEMPFUSION

HempFusion is a leading health and wellness CBD Company utilizing the power of whole-food hemp nutrition. HempFusion distributes its family of brands, including HempFusion, Probulin Probiotics, Biome Research, and HF Labs, to approximately 4,000 retail locations across all 50 states of the United States and select international locations. Built on a foundation of regulatory compliance and human safety, HempFusion’s diverse product portfolio comprises 48 SKUs including tinctures, proprietary FDA Drug Listed Over-The-Counter (OTC) Topicals, Doctor/Practitioner Lines and more. With a strong focus on research and development, HempFusion has an additional 30 products under development. HempFusion is a board member of the US Hemp Roundtable, and HempFusion’s wholly-owned subsidiary, Probulin Probiotics, is one of the fastest-growing probiotics companies in the United States, according to SPINs reported data. HempFusion’s CBD products are based on a proprietary Whole Food Hemp Complex™ and are available in-store or by visiting HempFusion online at www.hempfusion.com or www.probulin.com .

Follow HempFusion on Twitter , Facebook and Instagram and Probulin on Twitter , Facebook and Instagram .