High Tide Inc. (NASDAQ: HITI) (TSXV: HITI) has entered into an agreement with a syndicate of underwriters led by Echelon Wealth Partners Inc. have agreed to purchase 4,310,400 units at a price of C$2.32 per Unit for total gross proceeds of approximately C$10 million. Despite raising the money in the bought deal, the company cautioned in its remarks that the overall cannabis landscape was becoming more challenging.
“On April 18, 2022, we announced that we had executed a letter of intent with Connect First Credit Union Ltd. for non-dilutive credit facilities. Due diligence on this financing remains ongoing; however, this process is taking much longer than previously anticipated. Accordingly, we are being proactive with a supplemental C$10,000,000 equity capital injection. Despite the recent deteriorating and uncertain macro environment, our operations remain very strong, and today’s news will ensure that we can continue our trajectory and take advantage of the attractive opportunities that present themselves in the market.” said Raj Grover, President and Chief Executive Officer of High Tide.
The company said that the money will be used for constructing and opening new retail cannabis store locations, the repayment of the debt, and for general corporate and working capital purposes. It reported that it had C$15 million in cash at the end of April.
Sailing Through Rough Waters
As Grover stated, the company’s previous earnings were solid. Last month, it released its financial results for the second fiscal quarter of 2022 ending April 30, 2022. Revenue for High Tide increased to $81.0 million versus $40.9 million in the same quarter last year. Sequentially, revenue increased by 12% compared to the first fiscal quarter. That represented the second-highest quarterly revenue figure generated by a Canadian cannabis company reporting in Canadian dollars. The net loss was trimmed by 33% to $8 million in the quarter versus last year’s net loss of $12 million for the same period.
In June, High Tide said it expected to continue to increase its revenue through the third fiscal quarter of 2022, and for the remainder of the year through organic growth and accretive M&A. The goal is to have at least 150 stores open by the end of the year. Currently, it has 126 stores in its Canadian retail store portfolio. The company also said it anticipates entering the British Columbia market within the third fiscal quarter of 2022 and will continue growing strategically in other provinces where it currently operates.