Halo Collective Inc. (NEO: HALO) (OTCQX: HCANF) has decided to not buy PhytoCann Holdings SA and cited market conditions as the driving factor for not pursuing the proposed acquisition. In addition to killing the PhytoCann deal, Halo also said it essentially gave back the stores it had planned to buy from High Tide.
With regards to the termination of the PhytoCann deal, CEO Katie said, “I have worked in the legal U.S. cannabis industry for nearly a decade and frankly have never seen market conditions as challenging as what we are experiencing today. In conjunction with the Board of Directors, I have therefore decided to focus on Halo’s core assets, including California and Oregon. We are simplifying and strengthening in order to enhance shareholder value. Even under the best conditions, managing an international business out of our core product line presents complexities. We wish Phytocann’s management all the best and look forward to their continued success.”
Ms. Field added, “As the new CEO, I have aggressively reduced overhead costs and plan to continue streamlining expenses to make Halo’s core business profitable. Furthermore, I have opted for a local, tactical approach to sales and marketing that we expect to improve speed to market and connections with our consumers in California and Oregon. We are focused on the Hollywood store opening and improving inventory levels company-wide. We expect to deliver a comprehensive business update in the coming weeks.”
High Tide Stores
In July of 2021, Halo Kushbar Retail Inc., a wholly-owned subsidiary of Halo, purchased three cannabis stores in Alberta from High Tide Inc. (NASDAQ: HITI). The purchase price for the stores was paid by Halo, on behalf of Kushbar, by way of issuance to High Tide of shares in the capital Halo and a convertible promissory note. The debt owing under the Note was secured by, among other things, a share pledge of Halo in respect of the shares it held in Kushbar.
Now Halo is saying that due to a dispute between the two parties regarding certain payments in respect of the stores, Halo did not perform certain of its obligations under the purchase agreement. It seems Halo decided not to make its payments and claimed the stores weren’t generating the revenue or profits it expected. According to the company statement, High Tide has taken back the stores and Halo has no further obligations or liabilities under the Note or the purchase agreement.
Halo has noted this year that it is a going concern. At the end of March, Halo had $1.8 million in cash.