Mene Inc. Reports Financial Results for Second Quarter 2019

TORONTO--()--Menē Inc. (TSX-V:MENE) (US:MENEF) (“Menē” or the “Company”), an online 24 karat investment jewelry brand, today announced financial results for the second quarter ended June 30, 2019 (“Q2 2019”). All amounts are expressed in Canadian dollars unless otherwise noted.

FINANCIAL HIGHLIGHTS:

  • IFRS Revenue of $2.5 million, a $1.1 million (76%) increase year-over-year (“YoY”). Non-IFRS Adjusted Revenue of $2.6 million, an increase of 38% YoY.
  • IFRS Gross Profit of $0.6 million, an increase of $0.4 million (162%) YoY.
  • Gross Profit Margin expanded by 8%, from 16% in Q2 2018 to 24% in Q2 2019.
  • Reduced Net Loss by 42% from $1.2 million in Q2 2018 to $0.67 million, the lowest since the Company began selling its products to customers in January 2018.
  • Non-IFRS Adjusted Loss reduced by $0.2 million (24%) YoY to $0.58 million,
  • Sold 5,613 units of jewelry through 5,167 customer orders, an increase of 2,693 (92%) units and 2,778 orders (116%) respectively compared to Q2 2018.
  • Gold Weight Sold increased by 11.7 kilograms (58%) and Platinum Weight Sold increased by 6.8 kilograms (204%) from Q2 2018.
  • Strong Tangible Common Equity of $18.2 million, with $10.3 million in cash and cash equivalents and $19.3 million in short-term investments as of June 30, 2019. Tangible Common Equity increased by 2% Quarter-over-Quarter (“QoQ”), demonstrating the Company’s ability to access cash to grow the business and its high-margin and low fixed-cost business model.
  • IFRS inventory value was $14,939,991, and Non-IFRS inventory value was $15,777,150 using spot metal prices at June 30, 2019.

OPERATIONAL HIGHLIGHTS:

  • Introduced 85 new product designs during the quarter.
  • Cumulative units of jewelry sold reached 34,585 in the quarter.
  • Inventory Level of 255 Gold Equivalent Kilograms, an increase of 95% YoY.
  • Goldmoney increased equity stake in Menē through the reduction of debt owed by Menē to Goldmoney.

IFRS Consolidated Income
Statement Data &
Key Performance Indicators
(KPIs) 5

FY 2019

FY 2018

July 11, 2017
to December
31, 2017 6

Q2

Q1

Q4

Q3

Q2

Q1

Revenue (CAD)

2,456,930

2,733,596

3,510,374

1,985,711

1,392,867

1,038,947

63,909

Gross profit (CAD)

600,719

678,814

983,840

208,408

229,461

170,486

12,143

Gross profit (%)

24%

25%

28%

10%

16%

16%

19%

Net loss

(672,664)

(1,107,752)

(2,664,975)

(1,644,097)

(1,164,185)

(1,494,104)

(915,812)

Total comprehensive loss

(868,787)

(1,166,288)

(2,681,362)

(1,691,124)

(919,106)

(1,348,026)

(1,702,048)

Non-IFRS Adjusted Revenue (CAD) 1

2,601,569

2,914,297

3,948,113

2,346,622

1,891,608

1,162,777

67,114

Non-IFRS Adjusted Gross Profit (CAD) 2

636,083

723,686

1,106,524

246,287

311,623

190,806

12,752

Non-IFRS Adjusted Loss 3

(578,039)

(577,218)

(469,487)

(1,136,242)

(758,895)

(1,251,091)

(1,639,950)

Total Shareholders' Equity (CAD)

18,423,043

17,833,109

18,516,087

10,077,520

11,251,166

11,878,195

13,192,937

Inventory balance (kg of gold) 4

255

222

244

135

131

90

54

Customer orders

5,167

4,437

6,729

3,994

2,389

951

74

Units of jewelry sold

7,183

8,182

9,111

6,168

2,920

941

80

Jewelry weight sold (total kg)

42

43

51

35

23

16

1

Notes:

(1) The period July 11, 2017 to December 31, 2017 and the fiscal year ended December 31, 2018 are audited figures. The period Q1 to Q3 2018 have been reviewed by the Company's independent auditor firm, KPMG.

(2) The Company began generating sales to an invite-only group in October 2017. The Company began selling to the general public in January 2018.

(3) The Company adjusts its revenue by adding back the value of jewelry that the Company bought back from, or was returned by customers, and discounts given to customers. These adjustments are made to assess the gross revenue before deducting these items from revenue. See Non-IFRS Measures for a full definition.

(4) The Company adjusts its gross profit by adjusting for revenue and cost of sales to be added back for the value of jewelry that the Company bought back from, or was returned by customers, and discounts given to customers. See Non-IFRS Measures for a full definition.

(5) Inventory balances in kilograms of gold are calculated by taking the total Canadian Dollar (CAD) inventory value at each quarter-end date, and dividing the value by the CAD gold spot price per gram.

Change in Chief Financial Officer:

The Company is pleased to announce the reappointment of Steve Fray, CPA, CGA, FCCA, MBA as the Chief Financial Officer, effective August 30, 2019. Robert Lee will resign as CFO of the Company on the same date.

Mr. Fray previously served as the Company's CFO from inception to February 27, 2019. Mr. Fray has over 20 years of experience building and leading finance teams in global companies with significant operating scale and complexity. Mr. Fray is currently the CFO of Goldmoney Inc. (TSX: XAU) Prior to joining Goldmoney, Steve was VP of Finance at Guestlogix, senior finance manager at Accounting General’s Department of Bermuda and numerous audit roles at KPMG.

Mr. Fray holds several designations and professional affiliations namely a Masters of Business Administration (MBA) in Finance from the University of Manchester, Certified Professional Accountant, Certified General Accountant, (CPA, CGA), Fellow of the Association of Certified Chartered Accountants, (FCCA-UK), Certified Public Accountant (CPA-USA), Certified Internal Auditor, (CIA-USA), Certified Fraud Examiner, (CFE-USA).

Statement from Founder & CEO Roy Sebag:

Menē delivered another solid quarter in customer orders, units sold, and gross revenue. This is an impressive achievement, especially when considering that Menē continues to reduce its operating expenditures including marketing. While the company is required to book many expenses under the advertising and marketing line items per IFRS, in actuality the company spent a negligible amount on traffic acquisition. In other words, sales are consistently generated by word of mouth as the flywheel effect of the Menē concept and value proposition spreads throughout and beyond our growing base of global customers. Note that the nature of the jewelry business is that it is seasonal; therefore, jewelry businesses should be measured YoY rather than by sequential quarters. When doing so, investors can begin to see the impressive YoY figures which the Menē business is achieving less than two years since it has launched. We are now entering the three most important quarters in the jewelry business and we expect to see significant sales that outpace last year’s activity. As such, we have prepared by deploying our balance sheet. At the time of writing, we have nearly $17 million in inventory in preparation for the September 2019 to February 2020 period. In addition, the Menē design team is preparing to launch the second Menē X collaboration in October. Both Diana Piccasso and Sunjoo Moon have worked on this special project for over a year, and they are thrilled to unveil the legendary person behind the forthcoming collaboration.

In conclusion, I would like to underscore how the vision and philosophy of Menē have positively impacted the lives of its customers: nearly every customer who has purchased Menē 24k jewelry has experienced an increase in the value of their piece(s). The recent trends in the gold market and the demonstrable excitement of Menē customers indicates that customers purchase Menē for lifelong savings and investment value in addition to the joyful sentimental value which our jewelry brings. I would also like to draw the attention of our shareholders to the persistent and promising growth in brand equity that Menē is achieving worldwide as a disruptor within the jewelry industry. With nearly 9,000 independent reviews and some of the world’s leading tastemakers and thought leaders embracing our brand and philosophy, the present and future of Menē shine brightly. Our strong capital position and prudently run operation mean that this brand will remain and grow for years to come. Thank you.

Non-IFRS Measures

This news release contains non-IFRS financial measures; the Company believes that these measures provide investors with useful supplemental information about the financial performance of its business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating its business. Although management believes these financial measures are important in evaluating the Company's performance, they are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with IFRS. These non-IFRS financial measures do not have any standardized meaning and may not be comparable with similar measures used by other companies. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. These non-IFRS financial measures should not be viewed as alternatives to measures of financial performance determined in accordance with IFRS. Moreover, presentation of certain of these measures is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of the adjustments thereto provided herein have an actual effect on the Company's operating results.

Non-IFRS Adjusted Revenue1 is a non-IFRS measure. The Company adjusts its revenue by adding back the value of jewelry that the Company bought back from, or was returned by customers, and discounts given to customers. These adjustments are made to assess the gross revenue before deducting these items per IFRS revenue.

Non-IFRS Adjusted Gross Profit2 is a non-IFRS measure. The Company adjusts its gross profit by adjusting for the additional revenue and associated cost of sales added back for the value of jewelry that the Company bought back from, or was returned by customers, and discounts given to customers.

Non-IFRS Adjusted Loss3 is a non-IFRS measure. The Company adjusts its total comprehensive loss by adjusting for Non-IFRS Adjusted Gross Profit, and removing the impact of non-cash expenses, consisting of depreciation and amortization, stock based compensation, and a one-time listing expense, the fair value of 5,984,750 shares issued for the amalgamation with Amador Gold Corp.’s subsidiary in Q4 2018.

For a full definition of non-IFRS financial measures used herein to their nearest IFRS equivalents, please see the section entitled "Non-IFRS Financial Measures" in the Company's MD&A for the three and six months ended June 30, 2019.

About Menē Inc.

Menē crafts pure 24 karat gold and platinum jewelry that is transparently sold by gram weight. Through mene.com, customers may buy jewelry, monitor the value of their collection over time, and sell or exchange their pieces by gram weight at prevailing market prices. Menē was founded by Roy Sebag and Diana Widmaier-Picasso with a mission to restore the relationship between jewelry and savings. Menē empowers consumers by marrying innovative technology, timeless design, and pure precious metals to create pieces which endure as a store of value.

For more information about Menē, visit mene.com.

Forward-Looking Statements

This news release contains or refers to certain forward-looking information. Forward-looking information can often be identified by forward-looking words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "may", "potential" and "will" or similar words suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. All information other than information regarding historical fact, which addresses activities, events or developments that the Menē Inc. (the "Company") believes, expects or anticipates will or may occur in the future, is forward looking information. Forward-looking information does not constitute historical fact but reflects the current expectations the Company regarding future results or events based on information that is currently available. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur. Such forward-looking information in this release speak only as of the date hereof.

Contacts

Media and Investor Relations Inquiries:

Renee Wei
Head of Investor Relations
+1 647 494 0296
ir@mene.com

Robert Lee
Chief Financial Officer
robert@mene.com

Contacts

Media and Investor Relations Inquiries:

Renee Wei
Head of Investor Relations
+1 647 494 0296
ir@mene.com

Robert Lee
Chief Financial Officer
robert@mene.com