Halo Collective's Q3 Revenue: 28% YoY Growth To $8.7M, Completes Simply Sweet Gummy Acquisition

Vertically integrated cannabis company Halo Collective Inc. HALO HCANF (Germany: A9KN) disclosed its third-quarter financial results Wednesday with revenue of $8.7 million, up by 28% from $6.8 million in the same quarter of 2020.

Third Quarter 2021 Financial Highlights

• Organic revenue growth was 9% despite a significant downturn in both the California and Oregon markets.
• Gross profit was $1.6 million, or 18.8% gross margin, compared to $1.6 million, or 67.1% gross margin, in Q3 2020.
• Adjusted EBITDA was a loss of $4.5 million compared to an adjusted EBITDA gain of $500,000 Q3 2020.
• At the end of the reporting period on Sep. 30, Halo held $8 million in cash and $523,000 in restricted cash.

"The difficult conditions in our California and Oregon markets are having a short-term impact on our financial results but not on our determination to make the Company profitable and boost shareholder value," CEO Kiran Sidhu stated. "We are actively executing a four-pronged strategy consisting of growing our wholesale business in California and Oregon, launching California retail in Los Angeles, streamlining costs and monetizing equity positions in Akanda, Triangle Canna and HaloTek. Even with the strong headwinds in both California and Oregon, we believe that we have a path to profitability in 2022."

Recent Milestones And Updates 

• On November 4, 2021, Halo completed its previously announced transaction with Akanda Corp. as part of its international re-organization efforts. This significantly reduces Halo's overhead and provides the company with a $6.6 million secured convertible debenture and an approximate 68% equity position in Akanda. On November 10, 2021, the company announced the planned $75 million Reg A+ financing by Triangle Canna Corp. Halo maintains a 44% equity stake in Triangle Canna, which is being valued at $165 million prior to the completion of Triangle Financing. The Triangle Financing has been qualified by the U.S Securities Exchange Commission and is expected to launch prior to December 2021.  

Simply Sweet Gummy Acquisition 

In addition, Halo also announced Wednesday that it has completed the acquisition of all of the issued and outstanding shares of Simply Sweet Gummy Ltd. a health-conscious, low-sugar cannabis-infused confectionery company based in Vancouver, British Columbia. In consideration for all of the issued and outstanding shares of Simply Sweet, which holds assets and formulations (including $1 million in cash), the company issued 2.7 million common shares to the previous shareholder of Simply Sweet. The Company has also issued 202,500 common shares to an arm's-length finder.

2021 Guidance

Halo is withdrawing its 2021 financial guidance primarily due to competition for consumer discretionary funds from other industries as the effects of COVID restrictions ease and oversupply of cannabis in both California and Oregon.

The Company plans to give 2022 guidance on or before releasing annual financial results on April 15, 2022.

Photo: Courtesy of Luca Bravo on Unsplash