PharmaCielo Ltd. (TSXV: PCLO) (OTCQX: PCLOF) saw revenues drop sequentially, as the company tries to shave down spending and expand its footprint abroad. The Canadian parent of a Colombia producer of dried flower and medicinal-grade cannabis extracts, PharmaCielo Colombia Holdings S.A.S., published its financial results for the third quarter ending September 30.
Revenue for the period totaled $475,323, a 2% downtick versus $485,510 in the third quarter last year. It was a big drop sequentially from the $2.1 million in revenue reported in the second quarter. Net loss for the period was nearly $5.18 million, a 69% improvement since $8.75 million in the same time last year; although a 47% rise since the second quarter.
PharmaCielo had cash equivalents of $400,000 in the third quarter versus $5.3 million at the end of 2021’s fiscal year.
The company announced at the end of August that its previously disclosed non-brokered private placement of debenture units was oversubscribed, with a total of $15.1 million raised or committed. This financing will generate $6 million in additional capital in equal monthly installments through the end of the first quarter in 2023, subject to regulatory approval including that of the TSX Venture Exchange.
“Our team has successfully implemented the turnaround plan we outlined for shareholders when I joined as CEO in August of last year,” said chairman and CEO Bill Petron. “In the first nine months of 2022, our business development group has initiated shipments to 23 customers in nine countries, with a robust pipeline that we fully expect will translate into significant growth in 2023 both with new partners and existing ones.”
PharmaCielo has reduced its adjusted EBITDA loss from $4.2 million to $2.5 million. Management said that it continues to focus on reducing discretionary expenses to lower the company’s use of cash and ensure a leaner organization with a lower cost base to drive top-line growth. The company said it would also keep growing its sales team.
“Concurrently, our finance and operating teams have worked together to streamline the business, cutting SG&A expenses by more than 40% over the past nine months, with a focus on the elimination of unnecessary legacy overhead, and an eye to reinvesting some of those savings in revenue-generating functions,” Petron said.
The company also announced that its board of directors has appointed BDO Canada LLP as the new independent registered auditor of PharmaCielo.
The company is working towards EU-GMP certification of all of its extracted products, and management expects to achieve certification in early 2023. The certification would better position PharmaCielo to sign larger, longer-term supply agreements with global pharmaceutical and cosmetics customers. Additionally, PharmaCielo plans to initiate the process to obtain EU-GMP certification for its dried flower in the first quarter of 2023. The company expects certification to take up to a year.
PharmaCielo said that it has grown its global business development organization and has made early progress with sales to Argentina, Brazil, Colombia, the Czech Republic, Uruguay and Spain; as well as progress in markets such as Germany, Mexico, and Poland.
“2023 is set to be a breakout year for PharmaCielo as international markets continue to open, we achieve EU-GMP certification for our extracted and dried flower products, and as our team continues to execute,” Petron said.