SLANG Worldwide Inc. (CNSX: SLNG) (OTCQB: SLGWF) released financial results for the third quarter ending September 30, 2021, with revenue rising to $10.1 million versus last year’s $7.9 million for the same time period. Slang said that the acquisition of High-Fidelity, Inc. resulted in approximately $1.1 million in revenue during the quarter. the net loss was trimmed slightly to $5.6 million versus last year’s net loss of $5.9 million.
Slang’s new interim CEO Drew McManigle said, “With the significant support from our respected strategic and investor partners, I look forward to utilizing my extensive experience in repositioning corporate operations to assist in the transformation of the SLANG operating platform. This transformation will be based on a refined strategy to appropriately position the Company to achieve future sustainable revenue growth.” McManigle was handed the reins in a major shift of executive management at the company just a few weeks ago. The move saw the exodus of CEO Chris Driessen and numerous board members.
While the repositioning is meant to address the lack of performance, the company quickly crowed about the accomplishments of the third quarter saying Slang’s brands continued to earn market-leading positions in its core markets of Colorado and Vermont. “Highlights include: O.pen ranked as the #1 vape cartridge in Colorado; Firefly Mini was the #6 and O.pen was the #5 disposable vaporizer in Colorado; Bakked was the #6 dabbable distillate in Colorado; District Edibles was the #12 gummy in Colorado; Pressies was the #6 pill in Colorado (Source: BDSA.)” The products, however, weren’t selling as well in Oregon and that seems to be why the company decided to exit the market.
Despite the high product rankings, the company seems to be burning through cash as it was down to $3.5 million of cash and cash equivalents on September 30, 2021, versus $6.5 million on December 31, 2020, and $9.7 million at June 30, 2021. Slang said the decrease in cash though was primarily due to $5 million of transaction expenses related to the Hi-Fi acquisition.
Trulieve To The Rescue
Slang’s strategic partner Trulieve came through with term-loan financing for aggregate gross proceeds of $17.3 million. The financing came with conditions including the company is required to allocate a minimum of 50% of the aggregate proceeds to complete the development and integration of the Vermont operations. Further to building out the Vermont operations, the company will shift its focus to efficiently refining the product mix according to the state’s most popular consumer preferences, as well as creating significant efficiencies across the financial and operational cycle. The financing also stipulated that McManigle step into the top role.
Mr. McManigle continued, “During the third quarter, SLANG deepened its strategic partnership with Trulieve, expanding product availability into new markets exclusively through Trulieve retail locations, and further securing opportunities for additional revenue over the long-term. In the short time, I’ve been appointed to manage the strategic transition and transformation of SLANG, we’ve made substantial progress in evaluating the go-forward structure, effectively executing prudent measures beginning with consolidating core market operations and refining our product mix. We are confident in our rightsizing agenda to create a future path to profitability, and ultimately deliver attractive returns to our shareholders.”
Focus On Colorado/Vermont
The company said in a statement that under the newly appointed leadership a redirection in the company’s focus on regions within the current platform that displays strong consumer demand for the profitable cannabis brands in the company’s product portfolio. As a result, the company has determined its Core Markets going forward will be tapered to Colorado and Vermont, where a properly executed growth strategy has the potential to produce a sustainable and profitable revenue stream. The ongoing consolidation process of the supply chain in the Core Market of Colorado, where the company currently recognizes wholesale revenue from sales of its leading brands directly from retail channels, will create synergies and operating efficiencies to contribute to go-forward revenue recognition.
As part of this process, Slang will work toward further consolidating its manufacturing and distribution segments, and divesting several licenses in the state, as well as its cultivation facility. Relative to the Core Market of Vermont, the Hi-Fi acquisition, in conjunction with the significant Loan Transaction led by industry-leading strategic partners and noteworthy shareholders, represents a catalyst for considerable growth opportunities as the Company continues its effort to capitalize on an integrated SLANG platform while strictly pursuing highly profitable lines of revenue.