Halo Collective Archives - Green Market Report

Adam JacksonAugust 16, 2022
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4min110

Halo Collective Inc.  (NEO: HALO) (OTCQB: HCANF) posted mostly positive results with revenues ticking up over the quarter — illustrating the west-coast operator’s pursuit to shave losses and pay down debt. The company announced its financial results for the first quarter ending June 30, 2022.

Halo reported approximately $6.9 million in revenue during the period, a 24.9% gain versus the same period last year; and a gain of 9.7% sequentially.

The company also reported a second-quarter net loss of $11.4 million, down from $13.8 million sequentially; and a net income of $11.3 million in the same period last year. The earnings were a loss of $1.64 per share versus a loss of $0.28 cents per share in the previous quarter, according to SEDAR filings.

“During the quarter, we ramped up efforts in our brand sales business, specifically Hush and Budega which are resonating with West Coast consumers and continued the retail rollout in Los Angeles where we opened the second of three planned dispensaries,” said CEO Katie Field. “Meanwhile, we de-emphasized other areas such as bulk wholesale flower and trim sales which generated good revenue but yielded lower profitability. And, we have made the decision to walk away from other parts of the plan altogether such as the Ukiah Ventures buildout and Canadian retail.”

Total second-quarter sales were 2.0 million grams versus 5.0 million grams in the same period last year — a 59.4% decrease. Year-over-year, flower sales fell by 6.2%, sales of pre-rolls rose by 11.5%, oils and extract sales slumped by 68.3% and edibles sales fell by 88.8%.

Halo reported a gross profit of $2.1 million, or 31.9% gross margin, versus a gross profit of $2.2 million, or 24.1% gross margin, in the same period last year. Adjusted EBITDA loss of $4.1 million versus an adjusted EBITDA loss of $4.4 million in the same period last year.

The company said it repaid $7.7 million in debt financing and raised $8.0 million from convertible debentures. It had unrestricted cash available in the amount of $1.6 million at the end of the period.

“Our efforts to do more with less are already paying off,” Field said. “In the second quarter, we maintained steady gross margins despite the downward pressure on wholesale pricing and volumes across our markets. We have also made progress reducing Halo’s indebtedness through debt paydowns.”

“Importantly, we are transforming the Company into a focused West Coast operator amidst market conditions in California and Oregon that continue to be very challenging,” she added, “but longer-term, are expected to be fertile grounds for significant growth and profitability for well-positioned companies such as Halo. I am highly confident that Halo is on the right path as a leader in these attractive markets. The initiatives we are undertaking, including those in the second quarter, will strengthen the Company and ultimately enhance shareholder value.”


Debra BorchardtJuly 27, 2022
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4min170

Halo Collective Inc. (NEO: HALO) (OTCQX: HCANF) has decided to not buy PhytoCann Holdings SA and cited market conditions as the driving factor for not pursuing the proposed acquisition. In addition to killing the PhytoCann deal, Halo also said it essentially gave back the stores it had planned to buy from High Tide.

With regards to the termination of the PhytoCann deal, CEO Katie said, “I have worked in the legal U.S. cannabis industry for nearly a decade and frankly have never seen market conditions as challenging as what we are experiencing today. In conjunction with the Board of Directors, I have therefore decided to focus on Halo’s core assets, including California and Oregon. We are simplifying and strengthening in order to enhance shareholder value. Even under the best conditions, managing an international business out of our core product line presents complexities. We wish Phytocann’s management all the best and look forward to their continued success.”

Halo has been struggling and when it reported its first-quarter earnings the company said revenue declined 23% to $7.6 million and that sales were impacted by a significant downturn in both the California and Oregon markets.

Ms. Field added, “As the new CEO, I have aggressively reduced overhead costs and plan to continue streamlining expenses to make Halo’s core business profitable. Furthermore, I have opted for a local, tactical approach to sales and marketing that we expect to improve speed to market and connections with our consumers in California and Oregon. We are focused on the Hollywood store opening and improving inventory levels company-wide. We expect to deliver a comprehensive business update in the coming weeks.”

High Tide Stores

In July of 2021, Halo Kushbar Retail Inc., a wholly-owned subsidiary of Halo, purchased three cannabis stores in Alberta from High Tide Inc. (NASDAQ: HITI). The purchase price for the stores was paid by Halo, on behalf of Kushbar, by way of issuance to High Tide of shares in the capital Halo and a convertible promissory note. The debt owing under the Note was secured by, among other things, a share pledge of Halo in respect of the shares it held in Kushbar.

Now Halo is saying that due to a dispute between the two parties regarding certain payments in respect of the stores, Halo did not perform certain of its obligations under the purchase agreement. It seems Halo decided not to make its payments and claimed the stores weren’t generating the revenue or profits it expected. According to the company statement, High Tide has taken back the stores and Halo has no further obligations or liabilities under the Note or the purchase agreement.

Halo has noted this year that it is a going concern. At the end of March, Halo had $1.8 million in cash.


StaffMay 17, 2022
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6min30

Halo Collective Inc.  (NEO: HALO) (OTCQB: HCANF) announced its financial results for the first quarter ending March 31, 2022, as revenue declined 23% to $7.6 million versus revenue of $9.9 million for the same time period in 2021. Halo said that sales were impacted by a significant downturn in both the California and Oregon markets. The company also said that the flower category, which is a leading indicator, sharply declined, with sales falling by 23% in California and 26% in Oregon year over year. Halo also reported a net loss of $13 million in the quarter, which increased over last year’s net loss of $9 million.

“Marked to market the company’s estimated unrealized gain before taxes at March 31, 2021, on Halo’s investment in Akanda was approximately $74.6 million,” said Kiran Sidhu, CEO, and Director. “We expect that if the intended acquisition and subsequent spin out of PhytoCann SA is completed, it will also create substantial value by delivering meaningful revenue and operating profit contribution.”

Oregon Issues

The company noted the numerous issues within the Oregon market and is attempting to address them while the state tries to rectify the situation. Halo said it decreased distribution of its products to Oregon dispensaries from 478 on December 31, 2021, to 464 on March 31st, 2022. the company also noted that bad debts have been reduced, and accounts receivable days have decreased. It plans on further reductions planned of production overheads and “right-sizing” of the business for current revenue and future projections. It has also reduced outdoor cultivation operations both in scope and cost for the 2022 growing season to decrease working capital expenditure and improve cash flow.

Halo said in a statement that in March 2022, the Oregon legislature signed HB4016, a moratorium that inactivates all marijuana license applications received after January 1, 2022, until March 31, 2024. Additionally, it allows the Oregon Liquor and Cannabis Commission to refuse to issue any new marijuana licenses until further notice. Halo anticipates this favorable policy change will decrease saturation and lead to rising wholesale cannabis prices over time. The net effect of this bill is expected to result in an increase in product profitability in the State of Oregon.

California

As of April 2022, Halo discontinued operations at Coastal Harvest and consolidated with Outer Galactic Chocolates/Mendocino Distribution and Transportation LLC, which will reduce overheads and increase profitability in the second quarter 2022. The company anticipates Governor Newsom’s tax proposal- which would eliminate cultivation tax starting July 2022– if passed, would further increase profitability and growth of the California business segment.

“Halo’s California wholesale business segment is EBITDA positive and scaling. We expect to re-achieve positive EBITDA contribution from the Oregon wholesale business segment in the latter half of 2022,” added Joshua Haddox, Chief Operating Officer.

“The Company’s California dispensary business segment officially opened in Q1 and is growing quickly. After a six-month ramp-up period per dispensary, we expect the Los Angeles dispensaries in North HollywoodWestwood, and Hollywood to contribute positive EBITDA,” commented Beau McKeon, Senior Vice President of Retail Operations.

Looking Ahead

“In 2022, we intend to develop, grow, and ultimately monetize assets by incubating promising cannabis related businesses while remaining laser-focused on optimizing West coast cannabis operations. The planned spinout of Halo Tek Inc. is expected to result in a distribution to all Halo shareholders. The intended acquisition of Phytocann is expected to add significant revenue and EBITDA to the Company in late 2022,” said Katie Field, President, and Director. The company remains a going concern according to its filing.


Debra BorchardtApril 1, 2022
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5min140

Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) today announced its financial results for the fourth quarter and full-year ending December 31, 2021. Halo delivered revenue of $8.4 million in the fourth quarter, an increase of $3.2 million, or 63% versus $5.1 million in the same time period of 2020. It was a sequential drop from the third quarter’s revenue of $8.7 million. The company said it sold nearly 13 million grams of cannabis products principally to dispensaries in Oregon and California, a 345% year-over-year increase over 2020.

Full Year Results

Revenue was $36.2 million, up $14.5 million, or 67%, compared to $21.6 million in 2020. The company said it sold over 32 million grams of cannabis products principally to dispensaries in Oregon and California, a 381% year-over-year increase compared to 2020. The 2021 net loss was $93.0 million or $10.48 per share, compared with a net loss of $41.2 million, or $7.27 per share, in 2020.

“Halo’s team is actively building significant shareholder value, even while the operating conditions remain difficult in the California and Oregon markets and pressuring our near-term financial performance,” said CEO Kiran Sidhu. “In our growing wholesale businesses, volumes are trending upward due to higher sales velocity and expanded market penetration, offsetting much of the downward pressure on prices and positioning us well for when pricing stabilizes. In our retail business, we’ve opened our first Budega™ dispensary in North Hollywood, California, and are seeing solid preliminary results in the first weeks of operation. Meanwhile, we have taken the necessary steps to rationalize the business to accelerate our path to profitability.”

Going Concern

Halo still hasn’t dug itself out of its hole. The company noted that it has continued losses and an accumulated deficit. “There is no assurance that the company will generate profits from operations or that additional future funding will be available to the company, or that such funding will be both adequate to cover its obligations and available on terms which are acceptable to the management of the Company over the long term.” The company has total liabilities of $38 million. Halo also wrote down the value of many of its businesses and for 2021 had impairment losses of $60 million.

Added Sidhu, “What’s less apparent in the financials is the significant value that we are creating through our incubation efforts within our collective of assets. Take Akanda Corp. as an example. In 2020 we purchased two disparate international cannabis assets, Bophelo Bioscience & Wellness and CanMart and, after completing a reorganization of these assets and putting in place a team, strategy and structure, Halo is now the largest shareholder in this rapidly scaling international medical cannabis company with a stake worth over $100 million based on Akanda’s current market capitalization. We are now assessing other opportunities with respect to Halo’s investments in cannabis businesses ancillary to our West Coast operations, including our investments in CBD and functional beverages, two of the fastest-growing categories in the consumer space that can be widely distributed.”

As of December 31, 2021, Halo had available cash in the amount of $1.7 million and approximately $0.1 million in restricted cash.


Debra BorchardtSeptember 8, 2021
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6min160

Halo Collective Inc.  (NEO: HALO) (OTCQB: HCANF)  announced preliminary unaudited monthly net revenue in August 2021 of approximately $3.9 million. Halo said that this was a 94% increase versus August 2020 and was driven by continued organic growth and increased market penetration in California and Oregon, as well as a contribution from the recent acquisitions of Winberry Farms and the company’s three KushBar retail cannabis stores located in Alberta, Canada. Excluding acquisitions, organic revenue growth was 19% in August 2021 compared to August 2020.

Kiran Sidhu, CEO, and Founder of Halo said, “Our team has stepped up efforts to focus on higher-quality sales throughout the summer and this is driving continued strong revenue growth in August. The expected improvement in gross margins from these initiatives combined with a significant reduction in corporate overhead over the coming quarters should accelerate our path toward profitability as we progress toward our stated goal of being a West Coast operator focused on Oregon and California. As Halo opens dispensaries in Southern California in the later part of 2021, we expect our revenue growth to continue to accelerate.”

In August, Halo said that it was buying Food Concepts LLC, the master tenant of an approximately 55,000 square foot indoor cannabis cultivation, processing, and wholesaling facility in Portland, Oregon operated under the Pistil Point name and the related licenses issued by the Oregon Liquor Control Commission and other operating assets owned by the entities doing business as Pistil Point. Halo said that when the deal is closed, it will be one of the largest indoor growers in Oregon, adding to its current 11 acres of owned and contracted outdoor and greenhouse cultivation.

“With Halo’s acquisition of certain Pistil assets, we now enter the very attractive indoor flower and pre-roll markets in Oregon, which in the flower segment has the highest price point, is the fastest growing, and carries the highest margins,” said Dustin Jessop, Halo’s CRO and Winberry’s Founder. “We plan to greatly expand this capacity from 200 to 500 flowering lights. This acquisition will increase our number-one wholesale footprint in Oregon, giving us the same-day delivery capability to a vast majority of the market. We plan to double our overall production capabilities as well as establish Oregon’s first cash and carry showroom. Once the first showroom is completed, we plan to do the same in EugeneBend, and Medford.”

Halo also reported in August that its second-quarter revenue was $9.1 million, up $3.9 million, or 74.3%, compared to $5.2 million in the same period in 2020, including the sale of over 4.3 million grams of cannabis products principally to dispensaries in Oregon and California, a 302% year-over-year increase. Philip Van Den Berg, CFO and Co-Founder said, “The Q2 results demonstrate that we are on track toward our goal of profitability. We are reducing our full-year 2021 revenue guidance from $75 million to $65 million. Our dispensaries should be online over the next 120 days, contributing at a full run rate by year-end. Meanwhile, we expect to improve overall profitability by the opening of our three Los Angeles dispensaries, significantly reducing core U.S. overheads, and executing on the strategic actions related to the Halo Tek and Akanda transactions.”

Halo has also recently announced its intention to reorganize its non-U.S. operations into a newly formed entity called Akanda Corp., whose mission will be to provide high-quality and ethically sourced medical cannabis products to patients worldwide. Akanda will combine the scaled production capabilities of Bophelo Bioscience & Wellness Pty. Ltd., Halo’s Lesotho-based cultivation and processing campus located in the world’s first Special Economic Zone (SEZ) containing a cannabis cultivation operation, with distribution and route-to-market efficiency of Canmart Ltd.


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