American cannabis company Halo Collective Inc. (OTCMKTS: HCANF) saw first quarter revenue drop nearly 25 per cent year-over-year as it undergoes a strategic shift.
On Tuesday, the company announced its financial results for the three months ended March 31.
Halo reported revenue of US$7.6 million during the first quarter, a 23.9 per cent decrease compared to revenue of US$9.9 million in Q1 2021.
According to the company, revenue was impacted by a significant downturn in both the California and Oregon markets. The flower category sharply declined, with sales falling by 23 per cent in California and 26 per cent in Oregon year-over-year.
The company reported gross profit of US$1.4 million, or 18.7 per cent gross margin, compared to US$2.2 million, or 22.1 per cent gross margin, during the same period last year.
Halo had an adjusted EBITDA that represented losses of US$3.9 million during the first quarter, compared to a loss of US$6 million during Q1 2021.
As of March 31, the company had a book value of US$80.7 million (US$1.65 book value per share) and US$1.9 million in cash.
Chart via Halo Collective Inc.
Halo is a vertically integrated cannabis company operating cultivation, manufacturing, distribution, and retail assets in Oregon, California, and Alberta. The company has recently made a fundamental shift in strategy to incubate and spin out cannabis-related companies.
As an incubator, Halo has acquired and integrated a variety of companies which were subsequently reorganized to create Akanda Corp. (Nasdaq: AKAN), an international medical cannabis and wellness company, of which Halo currently owns approximately 44 per cent of the common shares.
“In 2022, we intend to develop, grow, and ultimately monetize assets by incubating promising cannabis related businesses while remaining laser focused on optimizing West coast cannabis operations,” Halo president and director Katie Field said in a statement.
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Earlier this month Halo Tek Inc., a subsidiary of Halo, filed a preliminary long form prospectus with the securities regulatory authorities in each Canadian province and territory (other than Québec) for the purpose of qualifying the distribution by Halo to holders of Halo’s common shares of all of the issued and outstanding common shares in the capital of Halo Tek as a return of capital.
The company has also signed a letter of intent and entered into exclusive negotiations to acquire Phytocann, one of Europe’s leading wellness CBD companies.
“The planned spinout of Halo Tek Inc. is expected to result in a distribution to all Halo shareholders. The intended acquisition of Phytocann is expected to add significant revenue and EBITDA to the company in late 2022,” Field said.
ryan@mugglehead.com
