Halo Sales Drop From Third Quarter, Remains A Going Concern

Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) today announced its financial results for the fourth quarter and full-year ending December 31, 2021. Halo delivered revenue of $8.4 million in the fourth quarter, an increase of $3.2 million, or 63% versus $5.1 million in the same time period of 2020. It was a sequential drop from the third quarter’s revenue of $8.7 million. The company said it sold nearly 13 million grams of cannabis products principally to dispensaries in Oregon and California, a 345% year-over-year increase over 2020.

Full Year Results

Revenue was $36.2 million, up $14.5 million, or 67%, compared to $21.6 million in 2020. The company said it sold over 32 million grams of cannabis products principally to dispensaries in Oregon and California, a 381% year-over-year increase compared to 2020. The 2021 net loss was $93.0 million or $10.48 per share, compared with a net loss of $41.2 million, or $7.27 per share, in 2020.

“Halo’s team is actively building significant shareholder value, even while the operating conditions remain difficult in the California and Oregon markets and pressuring our near-term financial performance,” said CEO Kiran Sidhu. “In our growing wholesale businesses, volumes are trending upward due to higher sales velocity and expanded market penetration, offsetting much of the downward pressure on prices and positioning us well for when pricing stabilizes. In our retail business, we’ve opened our first Budega™ dispensary in North Hollywood, California, and are seeing solid preliminary results in the first weeks of operation. Meanwhile, we have taken the necessary steps to rationalize the business to accelerate our path to profitability.”

Going Concern

Halo still hasn’t dug itself out of its hole. The company noted that it has continued losses and an accumulated deficit. “There is no assurance that the company will generate profits from operations or that additional future funding will be available to the company, or that such funding will be both adequate to cover its obligations and available on terms which are acceptable to the management of the Company over the long term.” The company has total liabilities of $38 million. Halo also wrote down the value of many of its businesses and for 2021 had impairment losses of $60 million.

Added Sidhu, “What’s less apparent in the financials is the significant value that we are creating through our incubation efforts within our collective of assets. Take Akanda Corp. as an example. In 2020 we purchased two disparate international cannabis assets, Bophelo Bioscience & Wellness and CanMart and, after completing a reorganization of these assets and putting in place a team, strategy and structure, Halo is now the largest shareholder in this rapidly scaling international medical cannabis company with a stake worth over $100 million based on Akanda’s current market capitalization. We are now assessing other opportunities with respect to Halo’s investments in cannabis businesses ancillary to our West Coast operations, including our investments in CBD and functional beverages, two of the fastest-growing categories in the consumer space that can be widely distributed.”

As of December 31, 2021, Halo had available cash in the amount of $1.7 million and approximately $0.1 million in restricted cash.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.

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