After the close of the market on Monday, Harborside Inc. (CSE: HBOR) (OTCQX: HBORF) reported its financial results for the second quarter ending June 30, 2021, as revenues were essentially flat year over year, but up sequentially. The revenue for the quarter was $16.19 million versus last year’s $16.14, but an improvement over the first quarter’s total revenue of $12.9 million. There are two analysts covering Harborside who had an average estimate for revenues of $12.4 million.
Harborside delivered a net income attributable of $1.8 million in the second quarter versus a net (loss) of approximately $(1.7) million in 2020, an approximately 201% increase in net income on a year-over-year basis. The company attributed the year-over-year increase was due primarily to fair value gains related to other current assets which were recognized during the quarter.
“I’m thrilled with the strong sequential growth we drove in our second quarter while continuing to make solid improvements to our gross margins and profitability,” said Matt Hawkins, Chairman and Interim Chief Executive Officer (“CEO”) of Harborside. “We continue to build a robust business, supported by our high-quality cultivation, leading consumer brands, and best-in-class retail experience. Our continued focus on improvement has allowed us to become a leader in the California cannabis market and we expect our business to continue to advance as we begin to integrate the synergies afforded by the Sublime Acquisition that closed in July.”
Harborside noted that the retail gross revenue was $11.0 million and the wholesale gross revenue was $5.2 million, for total gross revenue of $16.2 million, as compared to retail gross revenue of $10.0 million, wholesale gross revenue of $2.9 million and total gross revenue of $12.9 million during the first quarter of 2021. The company said that on a quarter over quarter basis, retail revenues improved by approximately 9% as the Company adjusted its customer loyalty program from a points-based plan to a new model that rewards frequent buyers while relying less on cumulative discounting at the point of sale. Wholesale revenues increased as the Salinas production campus delivered improved harvest yields and flower quality in the second quarter, which allowed the company to bring more bulk products to market during the quarter.
The company noted that total operating expenses increased to approximately $9.0 million over last year’s $7.1 million. The year-to-year increase in total operating expenses was primarily due to an increase in general and administrative expenses of $0.9 million, to $5.4 million as compared to $4.5 million in the comparative period in 2020 and an increase in professional fees of $1.0 million, to $3.3 million as compared to $2.3 million in Q2 2020, which was primarily due to an increased level of legal and professional fees in the current quarter related to the Sublime Acquisition and the settlement of litigation. In July, Harborside completed its previously announced acquisition of Sublimation Inc., an award-winning cannabis manufacturing company located in Oakland, CA, for a total consideration of $43.8 million.
Harborside had total current assets of approximately $38.4 million, including approximately $26.9 million of available cash, as compared to current assets of approximately $21.9 million, including approximately $13.6 million in available cash as of June 30, 2020. During the first quarter, Harborside closed a brokered private placement for aggregate gross proceeds of approximately C$35.1 million and entered into a loan financing arrangement with a federally regulated commercial bank in the amount of $12.0 million pursuant to a senior secured revolving credit facility due March 19, 2023. On May 28, 2021, Harborside drew down approximately $11.4 million on the revolving credit facility in advance of purchasing the cultivation/production facility in Salinas on June 1, 2021.
Hawkins added, “As we move into the second half of the year, our focus remains on further scaling our reach through accretive M&A opportunities and building our leadership team, including our goal to bring in a new CEO, which together with our strong foundation will position Harborside for long-term growth