Hiku Brands Squeaks Out Gross Profit In Q1, But Posts Big Net Loss

The luxury cannabis company Hiku Brands Ltd. (HIKU) announced the filing of its financial results for the quarter ending on March 31, 2018.

“The first quarter of 2018 was one that focused on solidifying our vertically integrated cannabis company and positioning us to win in the legal adult-use market in Canada.” said Alan Gertner, CEO of Hiku. “With our solid foundation of Tokyo Smoke and its existing retail footprint, our artisanal handcrafted cannabis grown at DOJA’s state of the art facility in British Columbia, and our iconic brands like Van der Pop and Maïtri, we believe that Hiku is very well positioned to usher in the adult-use cannabis sector in Canada.”

The company’s revenue for the quarter was relatively small, totaling C$246,143. The vast majority of that revenue was gobbled up by the retail cost of sales, which totaled C$202,431. The company managed to squeak out a gross profit of C$15,554. Overall, Hiku posted a net loss of $9.1 million for a loss per share of eight cents versus last year’s loss per share of one cent.

Although the numbers on paper are less than favorable, it is important to note that this is still a relatively new company that hasn’t even begun to sell dried cannabis. Since launching in January 2018, the company has been busy obtaining retail licenses and forging partnerships.

Most recently the company announced that it would merge with the medical cannabis brand WeedMD, which also filed their financial results today. The company reported a 33% quarter over quarter increase in sales and a revenue of $1.14 million.

Although WeedMD also reported a net loss of $1.4 million, the company should be able to absorb the loss with a cash balance of approximately $48 million; most of which was raised in the last quarter. Should the merger between the two companies go through, both parties stand to benefit.

WeedMD will be able to supply that cannabis production infrastructure that is currently lacking in Hiku. Merging with Hiku, which specializes in high end cannabis brands, will allow WeedMD to sell its cannabis at a higher price and increase its profit margin. At the moment both companies are burning through their budget, but once recreational cannabis sales go live in Canada that may not be the case.

William Sumner

William Sumner is a freelance writer specializing in the legal cannabis industry. You can follow William on Twitter @W_Sumner or on Medium.

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