SEATTLE, April 17, 2023 (GLOBE NEWSWIRE) -- Pervasip Corp. (OTCPK: PVSP) (“Pervasip” or the “Company”), a developer of companies and technologies in high value emerging markets, today announced the filing of its unaudited financial statements for its 1st Quarter ended February 28, 2023.
Key Highlights
- Completed transition of 35,000sf cultivation facility to further rationalize its WA State business, moving from negative operating margins to net positive contribution of $25,000 monthly.
- Reduced weekly cash repayments for debt service from $40,625 to $33,224, freeing up almost $30,000 monthly to deploy to operating needs and expansion opportunities.
- While Q1 (December, January, February) are traditionally the lowest revenue months of the year and the market contraction continued through January 2023, the Company realized only a small reduction in revenues compared to Q1 2022. Q1 revenues declined 4.9% sequentially and 2% from a year ago. However, the company realized a 24% reduction in SGA expenses for the same period a year ago, a direct result of its continuing restructuring efforts toward profitability.
- The company continued to right size its cultivation operations to better align with current retail sales with a 43% reduction in inventory values from the same period a year ago.
- 25% reduction of personnel year over year (“YOY”), largely a result of infrastructure and technology upgrade implements over the last twelve months.
- While Retail gross margin decreased due to continuing price pressure in the overly competitive retail space, the market appears to be correcting with wholesale gross margin up 9.5% YOY.
- The company also realized gross margin gains for certain retail products, with its margin for vape cartridges increasing 3% YOY.
| Weighted Avg Product Price $/g | Price Change % | |||||
| 2022 | Q1 '23 | |||||
| Retail Flower | $ | 2.90 | $ | 2.56 | -11.6 | % |
| Wholesale Flower | $ | 1.32 | $ | 1.46 | 11.0 | % |
| Carts | $ | 9.76 | $ | 9.60 | -1.7 | % |
| Wax | $ | 6.46 | $ | 4.42 | -31.5 | % |
| Cost per gram, retail vs wholesale | Gross Profit | Gross Margin % | ||||||||||
| 2022 CPG | Q1 '23 | 2022 GP | Q1 GP | 2022 GM | Q1 GM | |||||||
| Retail Flower | $ | 1.81 | $ | 1.81 | $ | 1.09 | $ | 0.75 | 37.6 | % | 29.4 | % |
| Wholesale Flower | $ | 1.29 | $ | 1.29 | $ | 0.03 | $ | 0.17 | 2.3 | % | 11.9 | % |
| Carts | $ | 6.43 | $ | 6.43 | $ | 3.33 | $ | 3.17 | 34.1 | % | 33.0 | % |
| Wax | $ | 2.57 | $ | 2.57 | $ | 3.89 | $ | 1.85 | 60.2 | % | 41.9 | % |
The Company’s contraction in gross margin was mostly due to retail price reductions, general production cost increases and partially offset by a material increase in wholesale margins. March and April have seen price strengthening across all categories, providing a positive outlook for Q2 as we see a general strengthening in the west coast markets due to the beginning of a diminishing bulk flower supply which will last through 2023 and into 2024.
“We continue executing our strategic plan which will lead to a spin-off of Artizen Corporation after completion of our financial audit which is on track for early May. Part of that plan is to focus on making our Washington State business financially profitable, expanding into other markets and revenue categories as evidenced by our launching of the Artizen Nano business and the acquisition of Slurped,” said German Burtscher, Pervasip’s president and chief executive officer. “In addition, we are getting ready to announce several new initiatives during the second quarter that include expansion into a couple of exciting legal states, brand extensions and distribution agreements.”
Burtscher concluded: “While the current market is not yet recognizing the value of our 2 businesses post spin-off, as I mentioned before, we believe today more strongly than ever that the new Artizen Corporation will justify a value exceeding $50 million. With the post spin-off reduction of the current Series K shares from 85% to 25% in the remaining Pervasip business, current common shareholders of record at the spin-off date will be handsomely rewarded.”
Pervasip Corporation
Pervasip Corp., a developer of companies and technologies in high value emerging markets, owns Artizen Corporation and its subsidiary, Zen Asset Management LLC, a diversified asset management company founded to acquire, develop, and support companies and technologies in the cannabis industry. ZAM’s existing clients operate four licensed cannabis cultivation and one processing facility in Washington. Most of the biomass produced by these independent cultivators has been sold historically under the Artizen™ brand, including all-time top selling products in flower in Washington state. Additional information on Artizen-branded products is available online at www.artizencannabis.com. Pervasip additionally owns 5% of KRTL Biotech, Inc., a developer of biotechnologies with a focus on pharmaceutical applications of cannabinol and psilocybin. Additional information on KRTL is available online at www.krtlbiotech.com. Additional information on Pervasip can be found at www.pervasip.net
Forward-Looking Statements
This news release contains statements and information that, to the extent that they are not historical fact, may constitute “forward-looking information” within the meaning of applicable securities legislation. Forward-looking information may include financial and other projections, as well as statements regarding future plans, objectives, or economic performance, or the assumption underlying any of the foregoing. In some cases, forward-looking statements can be identified by terms such as may, would, could, will, likely, except, anticipate, believe, intend, plan, forecast, project, estimate, outlook, or the negative thereof or other similar expressions concerning matters that are not historical facts. Examples of such statements include, but are not limited to, statements with respect to the objectives and business plans of the Company; ability to realize benefits from its recent corporate appointments; ability to retain its key personnel; the intention to grow the Company’s business and operations; the competitive conditions of the industries in which the Company operates; and laws and any amendments thereto applicable to the Company. Forward-looking information is based on the assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. The material factors and assumptions used to develop the forward-looking information contained in this news release include, but are not limited to, key personnel and qualified employees continuing their involvement with the Company; and the Company’s ability to secure financing on reasonable terms. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information, including, without limitation, risks relating to the future business plans of the Company; risks that the Company will not be able to retain its key personnel; risks that the Company will not be able to secure financing on reasonable terms or at all, as well as all of the other risks as described in the Company’s periodic disclosure statements. Accordingly, readers should not place undue reliance on any such forward-looking information. Further, any forward-looking information speaks only as of the date on which such statement is made. New factors emerge from time to time, and it is not possible for the Company’s management to predict all of such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information. The Company does not undertake any obligation to update any forward-looking information to reflect information or events after the date on which it is made or to reflect the occurrence of unanticipated events, except as required by law, including securities laws.
For further information, please contact:
Investor Relations: PACIFIC CAPITAL MARKETS LLC
Investor Contact(s): Drew S. Phillips & Colin Gibson
Contact phone: 858.308.5835 pacificcapitalmarketsllc@gmail.com
