Source: Mimi’s Rock Corp.
TORONTO, November 28, 2019 – Mimi’s Rock Corp. (TSXV:MIMI) “The Company”, an online dietary supplement and wellness company operating the Dr. Tobias brand, today announced its financial results for the quarter ended September 30, 2019.
- On September 5, 2019, the Company announced it had entered into binding agreements to acquire two additional businesses. Agreements to acquire All Natural Advice Ltd. (‘All Natural’) and Maritime Naturals Ltd. (‘Maritime Naturals’) are expected to be completed shortly. All Natural is the #1 Skin Care Seller on Amazon Canada for the past 4 years. Mimi’s Rock will acquire all of the issued and outstanding shares of each of All Natural and Maritime Naturals for an aggregate purchase price of approximately $9.6 million. The acquisition of these accretive businesses will add approximately $5.5 million of combined revenue and $1.6 million of EBITDA. Closing for both acquisitions is scheduled for December 10, 2019.
- On September 24, 2019, the Company announced (further to the joint venture announcement of July 8, 2019) the execution of a definitive agreement with three-time world heavyweight champion Lennox Lewis to develop and commercialize a new line of branded nutritional supplements. The co-branded supplements will focus on men’s health and wellness and will feature products such as a Men’s Multipack Vitamin. Products will be sold exclusively online.
- On November 13, 2019, the Company announced the launch of its Dr. Tobias line of dietary supplements in Canada. Initially, Dr Tobias will be launching the brand’s top-rated Omega 3 Fish Oil, known to support cardiovascular health, cognitive health and brain function, and its Multivitamin, a product which promotes eye, skin, membrane, and immune function and fosters strong bones and teeth. These product launches have been made available on Amazon.ca and on the e-commerce platform drtobias.com.
- On November 27, 2019, the Company announced that the TSX Venture Exchange has accepted the Company’s notice to implement a normal course issuer bid (‘NCIB’) to purchase, for cancellation, up to 3,029,109 of its common shares, representing approximately 10% of the Company’s ‘public float’. Management of the Company believes that the Shares have been trading in a price range which does not adequately reflect their value and that the purchase of the Shares under the NCIB is in the best interests of the Company, a desirable use of its available cash, and will enhance shareholder value in general.
Dave Kohler, CEO of Mimi’s Rock commented, ‘We are excited to be launching multiple new products and categories in new markets. These, coupled with the pending acquisition of All Natural and Maritime Naturals, give us access to new revenue streams and offer diversification from the single-market roots of the organization. As we continue to execute our strategies, these markets should contribute significantly to our growth’.
Results of Operations.
For the three months ended September 30, 2019, the Company incurred a net loss of $243,156 compared to a net loss of $759,537 for the three months ended September 30, 2018. For the three months ended September 30, 2019, EBITDA was $626,540, compared to EBITDA of $216,887 for the three months ended September 30, 2018. Adjusted EBITDA, which excludes non-cash share based compensation expense, investment income, listing expenses and acquisition costs, was $902,776, compared to Adjusted EBITDA of $1,530,973 for the same period in the prior year. For the nine months ended September 30, 2019, the Company incurred a net loss of $1,091,290 ($0.03 per share), compared to a net loss of $759,537 ($0.05 per share) for the nine month period ended September 30, 2018. EBITDA for the nine months ended September 30, 2019 was $2,184,461, compared to $216,887 EBITDA for the same period in the prior year. Adjusted EBITDA was $3,603,413 for the nine months ended September 30, 2019, compared to $1,530,973 for the same period in 2018.
The Company reported a net loss for the three and nine months ended September 30, 2019 primarily due to one- time costs related to its reverse takeover and public listing expenses as part of the Qualifying Transaction completed in May 2019, as well as non-cash share-based compensation expense. Tax expense in the nine month period was also higher than normal due to derecognition of tax loss carryforwards in Germany as a result of the reverse acquisition.
Revenues for the three months ended September 30, 2019 were $8,755,114 compared to revenues of $8,522,950 for the three month period ended September 30, 2018. Revenues represent sales of nutraceutical products in the U.S. market. Gross margin for the three months ended September 30, 2019 was $6,114,962 (70%) compared to $5,553,930 (65%) for the three month period ended September 30, 2018. Gross margin ratios have improved over the comparative period as the Company works with its supplier to obtain better pricing and efficiencies. Revenues were $27,692,245 for the nine months ended September 30, 2019 compared to revenues of $8,522,950 for the nine months ended September 30, 2018. Revenues reported in the current and prior year primarily represent revenues from the DTI business, which began to accrue to the Company from July 13, 2018, the date of acquisition. Revenues from the core business have remained strong with some seasonality. The Company has begun to add additional sales channels through the launch of its own e-commerce site and sales to other e- commerce outlets. Going forward, growth is expected to come from launch of product sales in additional geographic regions as well as other online portals.
The Company continues to adapt and further its brand strategy. Online advertising in the period was increased with a focus on brand awareness and customer loyalty. Sales from its own e-commerce site, drtobias.com, as well through additional online retail outlets continued to grow, however, a majority of revenue continues to be generated on the Amazon.com platform.
The Company incurred selling and marketing expenses of $4,014,971, or approximately 46% of revenue, for the three months ended September 30, 2019, compared to $3,300,945, or 39% of revenue, for the three months ended September 30, 2018. Advertising spend in the third quarter of 2019 was increased with a deliberate focus on attracting longer term repeat customers. While the brand continues to generate strong repeat sales, investments are also being made attract new-to-brand customers. While this type of ad spend does not necessarily translate to immediate revenue, it is important to the overall brand growth strategy. Sales and marketing expenses for the period consist primarily of fulfillment costs related to delivering products to customers, direct online advertising placements, costs related to marketing the Dr. Tobias brand and other promotional and awareness initiatives. The Company will continue to actively monitor its selling and marketing expenses, particularly those directly related to advertising and expects that these will vary in relation to sales revenues going forward as advertising spend is optimized relative to competitive conditions.
General and administrative expenses for the three months ended September 30, 2019 were $1,197,215, compared to $722,012 for the same period in 2018. General and administrative expenses consist primarily of salaries and benefits, professional fees, occupancy costs and insurance. General and administrative expenses in the 2019 period are higher than the same period in 2018 primarily due to higher overall staff levels and considerably more operational activity. Share based compensation expense for the three months ended September 30, 2019 was $123,747 compared to $326,685 for the three months ended September 30, 2018. Share based compensation expense in 2018 was considerably higher due to initial vesting of original employee grants. Share based compensation expense relates to awards under the Company’s incentive stock option plan and is based on the estimated number of awards that will eventually vest using the Black-Scholes option pricing model.
On May 27, 2019, the Company completed its Qualifying Transaction pursuant to an amalgamation agreement between the Company and Mimi’s Rock Inc. The Qualifying Transaction constituted a reverse take-over (‘RTO’) for accounting purposes, as former MRI shareholders hold a majority of outstanding shares in the Company, the Board of Directors is comprised of MRI Board members and the senior management of MRI became senior management of the Company. Listing expenses related to the acquisition and reverse takeover transaction were $786,138, compared to $nil for the same period in the prior year. Listing expenses consistprimarily of legal, accounting and other professional fees associated with the reverse takeover and amalgamation, as well as non-cash costs related to equity instruments issued for the acquisition.
Interest and financing costs of $426,409 were incurred during the three months ended September 30, 2019, compared to $447,076 for the three months ended September 30, 2018. Interest and financing expenses in the 2019 period include approximately $183,543 (2018: $137,106) in non-cash charges related to amortization of expenses incurred in securing the Company’s senior secured loan.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
About Mimi’s Rock Corp.:
Mimi’s Rock Corp. is an online dietary supplement and wellness company operating under the Dr. Tobias brand. The brand features over 30 products including the top selling colon cleansing product and the #1 selling Omega 3 Fish Oil on Amazon.com. Mimi’s Rock currently serves customers in the United States and has rapid growth plans to expand into other markets. For more information, visit Mimisrock.com.
This news release includes “forward-looking information,” as such term is defined in applicable securities laws. Forward-looking information includes, without limitation, Mimi’s Rock Corp.’s business and business results, goals or outlook, risks associated with financial results and stability, development projects such as those referenced herein, sales to foreign jurisdictions, engineering and construction, production (including control over costs, quality, quantity and timeliness of delivery), foreign currency and exchange rates, maintaining adequate working capital and raising further capital on acceptable terms or at all, and other similar statements concerning anticipated future events, conditions or results that are not historical facts. These statements reflect management’s current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. The Company cautions that all forward looking information is inherently uncertain and that actual performance may be affected by a number of material factors, many of which are beyond the Company’s control. Accordingly, actual future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. All statements are made as of the date of this news release and represent the Company’s judgement as of the date of this new release, and the Company is under no obligation to update or alter any forward-looking information.
Please Visit Mimisrock.com or Sedar.com for recent Mimi’s Rock Corp. filings.
For further information, please contact Mimi’s Rock Corp. at:
David Kohler, CEO