OAKLAND, Calif. and TORONTO, ON, Nov. 29, 2021 /CNW/ – Harborside Inc. (“Harborside” or the “Company”) (CSE: HBOR) (OTCQX: HBORF), a California-focused, vertically integrated cannabis enterprise, today reported its financial results for the third quarter ending September 30, 2021 (“Q3 2021”). The unaudited condensed interim consolidated financial statements for Q3 2021 and corresponding management’s discussion and analysis (collectively the “Q3 Filings”) are available for download from the Company’s investor website, investharborside.com, and on the Company’s SEDAR profile. Unless otherwise indicated, all dollar amounts in this press release are denominated in U.S. currency.
Management Commentary
“While bulk prices declined across the state of California in the third quarter, we continued to make improvements to our business, including the expansion of our wholesale presence throughout California through the integration of Sublime into our operations. I’m pleased that we continue to deliver positive adjusted EBITDA(1) as we relentlessly focus on our customers and work on improving capital efficiency throughout the business,” said Matt Hawkins, Chairman and Interim CEO of Harborside.
Mr. Hawkins added, “I’d like to thank our team for their ongoing dedication to achieving our business goals while working tirelessly behind the scenes to push our recently announced business combination with Urbn Leaf and Loudpack towards the finish line.” As announced earlier today, the Company has entered into definitive agreements to acquire UL Holdings Inc. (“Urbn Leaf”), a top California cannabis retailer with a dominant position in Southern California and LPF JV Corporation (“Loudpack”), a leading manufacturer, cultivator and distributor of award-winning cannabis brands in California. On completion of the acquisitions, subject to shareholder and regulatory approval, Harborside is expected to be renamed StateHouse Holdings (“StateHouse”) and to trade under a new symbol (CSE: STHZ).(2)
Management believes that StateHouse will be the largest and most developed cannabis platform in the state of California with superior retail, brands, processing, manufacturing, distribution and cultivation. Management believes that StateHouse will have the highest estimated annual revenue and brand market share among its current publicly-listed California peers(5), providing the Company with a strong platform for growth as a consolidator of California’s cannabis industry. Through the first nine months of 2021, Harborside, on a pro-forma basis including Sublimation Inc. (“Sublime”) for the entire period, had gross revenue of $57.8 million(4), while Urbn Leaf and Loudpack had revenue of $45.9 million and $61.4 million, respectively.(4) Therefore, on a pro forma basis, management estimates that StateHouse would have generated gross revenue of approximately $165 million for the same period.(4) Ed Schmults, the current CEO of Urbn Leaf, is expected to be appointed as CEO of StateHouse upon completion of the Urbn Leaf transaction and will be joining the Board of Directors of Statehouse. Marc Ravner, the current CEO of Loudpack, is expected to be appointed as President of StateHouse upon completion of the Loudpack transaction and will be joining the Board of Directors of StateHouse.
Q3 2021 Operational Highlights
- Total gross revenue was $17.9 million, 10.4% higher sequentially than the previous quarter
- Adjusted EBITDA(1) was $1.5 million, 28.2% higher sequentially than the previous quarter
- Completed the acquisition of Sublime, which included “Fuzzies”, California’s award-winning infused pre-roll brand, for $43.8 million
- Appointed Matt Hawkins as Interim CEO and Ahmer Iqbal as COO of Harborside
- Completed the acquisition of Accucanna LLC (“Accucanna”), the Desert Hot Springs retail dispensary license holder, and the real property related to the Desert Hot Springs dispensary
- Announced a strategic research agreement with Utah State University
Subsequent Events
- Announced plans to install an onsite renewable energy microgrid at the Company’s cultivation and production facility in Salinas, California (the “Production Campus”)
- Announced a retail partnership with the premium brand RNBW
- Announced the resignation of MNP LLP and appointment of Armanino LLP as auditor
- Announced entering into definitive agreements to acquire Urbn Leaf and Loudpack
- Announced the signing of a non-binding term sheet with Pelorus Equity Partners for proposed Roll Up Financing of $77.3 million
- Announced a private placement of up to $10 million of SVS priced at C$0.79 per SVS.
