Halo Collective Inc. (OTCQB:HCANF) (NEO:HALO) (Germany:A9KN) released its financial and operational results for three months ended March 31, 2022, revealing consolidated Q1 2022 revenue of $7.6 million declined $2.4 million, or 23.9%, compared to revenue of $9.9 million in Q1 2021.
Q1 2022 Financial Highlights:
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Adjusted gross profit was $1.4 million, or 18.7% gross margin, compared to $2.2 million, or 22.1% gross margin, in Q1 2021.
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Halo's California Wholesale business segment posted positive EBITDA in Q1 2022.
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As of March 31, 2022, the company had a book value of $80.7 million.
Cannabis Incubation Strategy Update
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Akanda Corp. (NASDAQ:AKAN) successfully listed the Akanda shares on the Nasdaq Capital Market on March 15, 2022.
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Halo Tek Inc., a wholly owned subsidiary of Halo, filed a preliminary long form prospectus with the securities regulatory authorities in each of the provinces and territories of Canada, other than Québec, for the purpose of qualifying the distribution by Halo to holders of Halo's common shares of all of the issued and outstanding common shares in the capital of Halo Tek as a return of capital.
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Halo signed a letter of intent and entered into exclusive negotiations to acquire Phytocann, one of Europe's leading wellness CBD companies. Upon closing the acquisition of PhytoCann, PhytoCann is expected to add substantial net revenue and EBITDA and an impressive CBD-based product lineup to Halo.
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The company also expects its holding in Elegance Brands, Inc., now known as Sway Energy Corporation, to be listed on a major North American exchange in 2022.
"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," stated 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."
Halo corporate overheads were $10.6 million in Q1 2022 compared to $10.9 million in Q4 2021, a 3% decrease. The company expects more significant reductions through 2022. These reductions include, but are not limited to:
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Professional and legal fees are expected to decline as Halo Tek spins out, the pace of smaller acquisitions declines, and more professional and legal services have been brought in house.
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Executive salaries are expected to be paid in cash by Q3 2022, reducing aggregate costs by 50%.
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General and administrative costs are expected to decline as travel costs abate.
Photo by Ryan Lange on Unsplash
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