Heritage Cannabis Holdings Corp. (OTCQX: HERTF) announced its financial results for the third-quarter ending July 31, 2020. All figures are in Canadian dollars unless otherwise noted. The company delivered a gross revenue of $2.4 million in the quarter versus zero for the same time period last year. The net loss of $0.015 million or $0.00 per common share in the quarter improved over last year’s net loss of $4.2 million or $0.01 per common share.
“Our third-quarter revenue continued to show sequential growth however the quarter remained a transitional period for the business as we focused on ramping up our own product sales under the Purefarma and Pura Vida brands that we launched in BC and Manitoba in September”, stated Clint Sharples, Chief Executive Officer of Heritage. “This combined with new contract manufacturing agreements, the launch of our products in additional Canadian provinces, our edibles product launch, and the acquisition of Opticann to expand our U.S. presence will contribute to revenue growth going forward.”
After adjusting for the impact of excise taxes, the company reported net revenue of $2.3 million in Q3 2020 compared to $nil in Q3 2019. Gross margin percentage loss on sales net of excise taxes for Q3 2020 of 42%. Gross margin in Q3 2020 was negatively impacted as a result of the Company recognizing the uncertain settlement of a potential liability that had previously been adjusted given the expected outcome. Excluding the adjustment, the gross margin percentage in Q3 2020 was 48%. While the gross margins prior to the adjustment improved over the prior quarter, the progression of the COVID-19 outbreak had a negative impact on the Company’s revenue, maintaining efficient production and operating metrics.
For the nine-month period ending July 31, 2020, the Company recorded a net loss of $3.8 million or $0.01 loss per share compared to a net loss of $13.2 or $0.03 loss per share for the nine-month period ended July 31, 2019.
As at the end of the quarter, Heritage had cash and cash equivalents of $10.2 million, and working capital of $10.2 million compared to $11.5 million in cash and cash equivalents and working capital of $11.7 million at the end of the fiscal year 2019.
Sharples added, “This combined with new contract manufacturing agreements, the launch of our products in additional Canadian provinces, our edibles product launch, and the acquisition of Opticann to expand our U.S. presence will contribute to revenue growth going forward.”