TORONTO, Nov. 14,
2022 /CNW/ - Halo Collective Inc. ("Halo" or the
"Company") (NEO: HALO) (OTCQB: HCANF) (Germany: A9KN) today
announces its financial and operational results for the three and
nine months ended September 30, 2022
("Q3 2022").
Third Quarter 2022 Financial and Operational
Highlights:
- Revenue in the three months ended September 30, 2022 was $5,541,144 net of inter-company eliminations,
compared to $8,738,964 in the three
months ended September 30, 2021, a
36.6% decrease. Revenue was affected by the decrease in pricing in
the overall cannabis markets for both Oregon and California.
- Total sales in the three months ended were 1,974,509 grams
(three months ended September 30,
2021: 3,835,969 grams), a 48.5% decrease. Flower sales
decreased by 18.1% to 1,115,563 grams (three months ended
September 30, 2021: 1,362,670 grams),
sales of pre-rolls decreased by 82.8% to 120,553 grams (three
months ended September 30, 2021:
701,074 grams), oils and extract sales decreased by 43.1% to
702,953 grams (three months ended September
30, 2021: 1,234,801 grams) and edibles sales decreased by
93.4% to 35,440 grams (three months ended September 30, 2021: 537,424 grams).
- Wholesale Revenue1: In the three months ended
September 30, 2022, Oregon generated $3,079,248 in revenue (three months ended
September 30, 2021 $6,303,290), a 51.1% decrease. In the three
months ended September 30, 2022, the
California wholesale business
generated $1,950,678 in revenue
(three months ended September 30,
2021: $1,933,573), a 0.9%
increase.
- Retail Revenue: Budega NOHO which started operations in March
of 2022, added revenues of $259,359
in the three months ended September
30, 2022. Budega Westwood, which started operations in
May 2022, added revenues of
$251,859 in the three months ended
September 30, 2022.
- The adjusted EBITDA, the loss or gain before interest, tax,
depreciation & amortization and adjusted for non-cash items
("adjusted EBITDA2") was a loss of
$1,244,363 (three months ended
September 30, 2021; loss $4,504,831).
- As of September 30, 2022, the
Company had unrestricted cash available in the amount of
$1,711,855.
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1
|
Wholesale Revenue means
all non-retail revenue in California and Oregon. In California this
includes sales to dispensaries and white label production. In
Oregon this includes sales to distributors and
dispensaries.
|
2
|
Adjusted EBITDA is a
non-IFRS financial measure. Please refer to the section entitled
"Non-IFRS Financial Measures".
|
"In Q3 2022 we continued to improve operations. Despite downward
pricing pressure, over-supply, and other challenging factors,
Halo's financial metrics have improved. While revenue is down from
Q3 2021, in California sales grew
and Oregon is down due to a shift
away from unattractive low-margin business segments such as
consignment sales. Indeed both Halo's gross margin and total gross
profit dollars increased despite lower revenue," commented
Katie Field, Executive Chairman and
Chief Executive Officer.
Ms. Field continued, "I look forward to continuing our hard work
to improve Halo's performance. We have reduced our burn rate and
still have further room to trim overheads. Oregon was down in Q3, but September was the
best month in the time period, demonstrating an encouraging
trajectory. In particular, units sold of Hush and Winberry
cartridges grew 4.6% from July to September. In Oregon, we remain focused on maintaining price
and increasing distribution in key product categories such as
cartridges and indoor flower while using our inventory position to
rekindle relationships with old customers. Furthermore, the
sun-grown 2022 harvest is shaping up nicely and we expect prices to
rebound slightly meaning sales should continue to pick up in
Oregon through year end."
She concluded, "I am excited to continue our progress through
the fourth quarter of 2022. We plan to launch an original indoor
flower brand and new genetics at our Pistil Point facility in
Oregon, re-enter the Northern California market with Hush
cartridges and pre-rolls, open our third Los Angeles dispensary, and continue to
streamline non-core assets and business segments. We plan to
continue rebuilding distribution in Oregon with an attractive cartridge offering.
I remain confident that Halo is on the right path in our
markets."
Third Quarter 2022 Financial Results
Revenue
Revenue in the three months ended September 30, 2022 was $5,541,144 net of inter-company eliminations,
compared to $8,738,964 in the three
months ended September 30, 2021, a
36.6% decrease. Revenue was affected by decreased pricing in
Oregon and California. Both Oregon and California markets have experienced an
over-supply in cannabis flower, which has created downward pricing
pressure. In addition, the Company has ceased the sales of
wholesale flower, trim, and oil, whereas sales prior to second and
third quarters in 2022, included the sales of these items.
Total sales in the three months ended September 30, 2022 were 1,974,509 grams (three
months ended September 30, 2021:
3,835,969 grams), a 48.5% decrease. Flower sales decreased by 18.1%
to 1,115,563 grams (three months ended September 30, 2021: 1,362,670 grams), sales of
pre-rolls decreased by 82.8% to 120,553 grams (three months ended
September 30, 2021: 701,074 grams),
no trim and fresh frozen sales (three months ended September 30, 2021: Nil grams), oils and extract
sales decreased by 43.1% to 702,953 grams (three months ended
September 30, 2021: 1,234,801 grams)
and edibles sales decreased by 93.4% to 35,440 grams (three months
ended September 30, 2021: 537,424
grams).
Wholesale Revenue: In the three months ended September 30, 2022, operations in Oregon generated $3,079,248 in revenue (three months ended
September 30, 2021 $6,303,290), a 51.1% decrease. In the three
months ended September 30, 2022, the
California wholesale business
generated $1,950,678 in revenue
(three months ended September 30,
2021: $1,933,573), a 0.9%
increase.
Retail Revenue: Budega North Hollywood, which started operations
in March of 2022, added revenues of $259,359 in the three months ended September 30, 2022. Budega Westwood, which
started operations in May 2022, added
revenues of $251,859 in the three
months ended September 30, 2022.
Kushbar has no revenue in the three months ended September 30, 2022, due to a dispossession.
Kushbar was initially consolidated in July of 2021.
Gross Profit
In the three months ended September 30,
2022, the Company reported a gross profit of $1,700,862 with a margin of 30.7% (three months
ended September 30, 2021: gross
profit $1,639,196 with a margin of
18.8%).
Oregon:
In the three months ended September 30,
2022, the Company reported a gross profit from operations in
Oregon of $822,925 (three months ended September 30, 2021: $1,136,583). In the three months ended
September 30, 2022, the reported
gross margin was 26.7% (three months ended September 30, 2021: 18.0%).
California:
In the three months ended September 30,
2022, the Company reported a gross profit from operations in
California of $734,939 (three months ended September 30, 2021: gross profit $441,677). In the three months ended September 30, 2022, the reported gross margin was
37.7% (three months ended September 30,
2021: 22.8%).
Liquidity and Cash Balance
In the three months ended September 30,
2022, the Company raised $2,062,488 in debt financing, and repaid
$1,778,075 from convertible
debentures. Net of a reduction $454,501 in lease obligations, total capital
raise was $170,088 (three months
ended September 30, 2021:
$11,338,222). Cash inflow was
$142,235 in the three months ended
September 30, 2022 (three months
ended September 30, 2021:
$2,034,615).
As of September 30, 2022, the
Company had unrestricted cash available in the amount of
$1,711,855.
Additional Information
Complete results are reported in the Company's consolidated
financial statements for the three and nine months ended
September 30, 2022, and associated
management's discussion and analysis (the "Q3 2022
MD&A"), which are posted to on Halo's SEDAR profile at
www.sedar.com.
[1] See
"Non-IFRS Financial Measures".
|
About Halo Collective
Halo is focused on the United States West Coast, where it has
vertically integrated operations covering the entire value chain
from seed to sale. Halo cultivates, extracts, manufactures, and
distributes quality cannabis flower, pre-rolls, vape carts,
edibles, and concentrates. Halo sells these products under a
portfolio of brands, including Hush™, Winberry Farms™, its retail
brand Budega™, and license agreements with FlowerShop*. In
addition, Halo has opened two dispensaries in Los Angeles under the Budega™ brand in
North Hollywood and Hollywood, with plans to open one more in
Hollywood in 2022.
In the non-THC sector, Halo is expanding into health and
wellness categories, including CBD and functional supplements such
as nootropic nutraceuticals and nonpsychotropic mushrooms. Halo,
through a series of acquisitions, has product offerings in the form
of beverages (H2C Beverages), dissolvable strips (Dissolve
Medical), capsules (Hushrooms™), and topical supplements (Hatshe)
with proposed national distribution via a strategic agreement with
SWAY Energy Corporation.
Halo has successfully 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 is the largest shareholder. Halo
has also acquired a range of software development assets, including
CannPOS, Cannalift, CannaFeels, and a discrete sublingual dosing
technology, Accudab. Halo intends to reorganize these entities
(including their intellectual property and patent applications)
into a subsidiary called Halo Tek Inc. and to complete the
distribution of the shares of Halo Tek Inc. to shareholders on
record at a date to be determined.
For further information regarding Halo, see Halo's disclosure
documents on SEDAR at www.sedar.com
Connect with Halo Collective: Email
| Website | LinkedIn | Twitter | Instagram
www.haloco.com/investors
Non-IFRS Financial Measures
Adjusted EBITDA is a non-IFRS financial measure that the Company
uses to assess its operating performance and does not have any
standardized meaning prescribed by IFRS. Management defines
Adjusted EBITDA as earnings (loss) before interest, tax,
depreciation, and amortization, as adjusted for non-cash items.
Adjusted EBITDA is provided to assist management and investors in
determining the Company's operating performance. The Company also
believes that securities analysts, investors, and other interested
parties frequently use Adjusted EBITDA in the evaluation of
companies, many of which present similar metrics when reporting
their results. As other companies may calculate Adjusted EBITDA
differently than the Company, Adjusted EBITDA may not be comparable
to similarly titled measures reported by other companies. We
caution readers that Adjusted EBITDA should not be substituted for
determining net loss as an indicator of operating results, or as a
substitute for cash flows from operating and investing activities.
For a reconciliation of Adjusted EBITDA, please refer to
"Reconciliation of Non-GAAP Financial Measures" in the Q3 2022
MD&A, which is available on the Company's SEDAR profile at
www.sedar.com.
Cautionary Note Regarding Forward-Looking Information and
Statements
This press release contains certain "forward-looking
information" within the meaning of applicable Canadian securities
legislation and may also contain statements that may constitute
"forward-looking statements" within the meaning of the safe harbor
provisions of the United States Private Securities Litigation
Reform Act of 1995. Such forward-looking information and
forward-looking statements are not representative of historical
facts or information or current condition, but instead represent
only Halo's beliefs regarding future events, plans or objectives,
many of which, by their nature, are inherently uncertain and
outside of Halo's control. Generally, such forward-looking
information or forward-looking statements can be identified by the
use of forward-looking terminology such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or may contain statements that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "will
continue", "will occur" or "will be achieved". Forward-looking
information may relate to anticipated events or results including,
but not limited to expectations regarding improved performance,
management's plans regarding Pistil Point and the California market, plans regarding
streamlining of business segments, management's plans regarding its
portfolio of cannabis businesses and intention to expand into
health and wellness, the proposed distribution agreement with SWAY
Energy Corporation, the expected opening date of the Company's
California dispensaries and the
proposed spin-off by Halo Tek Inc.
By identifying such information and statements in this
manner, Halo is alerting the reader that such information and
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results to be
materially different from those expressed or implied by such
information and statements. In addition, in connection with the
forward-looking information and forward-looking statements
contained in this press release, Halo has made certain assumptions.
Although Halo believes that the assumptions and factors used in
preparing, and the expectations contained in, the forward-looking
information and statements are reasonable, undue reliance should
not be placed on such information and statements, and no assurance
or guarantee can be given that such forward-looking information and
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
information and statements. Among others, the key factors that
could cause actual results to differ materially from those
projected in the forward-looking information and statements are the
following: inability of management to successfully integrate the
operations of acquired businesses, changes in the consumer market
for cannabis products, changes in the expected outcomes of the
proposed changes to Halo's operations, delays in obtaining required
licenses or approvals necessary for the build-out of Oregon operations, dispensaries or Canadian
operations, the proposed spin-out with Halo Tek Inc., delays or
unforeseen costs incurred in connection with construction, the
ability of competitors to scale operations in Northern California, delays or unforeseen
difficulties in connection with the cultivation and harvest of
Halo's raw material, changes in general economic, business and
political conditions, including changes in the financial markets;
and the other risks disclosed in the Company's annual information
form dated March 31, 2022 and other
disclosure documents available on the Company's profile at
www.sedar.com. Should one or more of these risks, uncertainties or
other factors materialize, or should assumptions underlying the
forward-looking information or statements prove incorrect, actual
results may vary materially from those described herein as
intended, planned, anticipated, believed, estimated or
expected.
The forward-looking information and forward-looking
statements contained in this press release are made as of the date
of this press release, and Halo does not undertake to update any
forward-looking information and/or forward-looking statements that
are contained or referenced herein, except in accordance with
applicable securities laws. All subsequent written and oral
forward-looking information and statements attributable to Halo or
persons acting on its behalf is expressly qualified in its entirety
by this notice.
Non-Solicitation
This press release shall not constitute an offer to sell or
the solicitation of an offer to buy any of the securities described
herein, nor shall there be any sale of these securities in any
state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
SOURCE Halo Collective Inc.