Hempshire Group Announces First Quarter Financial Results
CALGARY, AB, May 29, 2023 /CNW/ - The Hempshire Group, Inc. (formerly Hoist Capital Corp.) ("Hempshire" or the "Company") (TSXV: HMPG) is pleased to announce the release of its 2023 first quarter financial results. Selected financial information is outlined below and should be read in conjunction with the Company's unaudited condensed interim consolidated financial statements (the "Financial Statements") and related management's discussion and analysis (the "MD&A") for the three months ended March 31, 2023 and 2022, which are available on the Company's SEDAR profile at www.sedar.com.
All figures referred to in this press release are presented in U.S. dollars, unless otherwise noted.
Financial Summary
Three months ended March 31 |
||
2023 |
2022 |
|
Revenue |
65,792 |
23,389 |
Gross margin |
41,067 |
13,800 |
Gross margin % |
62 % |
59 % |
Loss from operations |
(490,744) |
(482,851) |
Net loss and total comprehensive loss |
(488,510) |
(658,523) |
Basic & diluted loss per share |
(0.01) |
(0.01) |
The Company almost tripled its revenues during the first quarter of 2023 from the comparative period in 2022 as the Company focused on rebalancing its US domestic sales strategy in 2023 to build brand awareness across direct to consumer ("D2C") and business to business ("B2B") sales channels. The growth in sales was driven by the adoption of a competitive pricing strategy, combined with a revised marketing and sales plan, which included targeted social media campaigns through the use of influencers and an increased focus on trade shows and events.
Gross margins improved to 62% during the first quarter of 2023 versus 59% in the comparative period. This was primarily driven by the impact of lower production and raw material costs per unit incurred during the Company's most recent production run which occurred during the fourth quarter of 2022. As a result, the Company obtained an overall lower average cost of goods sold per unit. The improved cost structure enabled the Company to adopt a more competitive pricing strategy which contributed to an overall increase in unit sales and total revenue across both D2C and B2B sales channels while still contributing to an overall improvement in gross margin as a percentage of revenue.
Losses from operations marginally increased during the three months ended March 31, 2023 versus the comparative period, mainly due to higher selling and marketing costs related to building brand awareness to drive revenue growth. Increased sales volumes quarter over quarter also correlated with increased fulfillment, shipping, and delivery fees. General and administrative costs and investor relations costs increased year over year due to increased costs associated with becoming a public company in 2022. These increases were partially offset by overall lower employee and consultant related costs.
The Company's first quarter 2023 net loss and total comprehensive loss improved to $0.5 million versus $0.7 million from the comparative period, as the prior period included interest expenses and losses on derivative liabilities related to debt instruments that were settled in 2022.
As at March 31, 2023, the Company's combined cash and non-cash working capital balances (see "Non-GAAP measures" below) were $0.2 million. As previously announced on April 27, 2023, the Company completed a note financing (the "Note Financing") with certain related parties and other private investors of the Company for aggregate gross proceeds equal to C$733,500. Proceeds from the Note Financing will be used toward marketing and sales efforts, working capital requirements and other general corporate purposes.
Hempshire formulates and markets its own proprietary brand of organic hemp smokes under the MOUNTAIN® Smokes brand name, including MOUNTAIN® Original, Mint Squeeze, and Pineapple Squeeze. MOUNTAIN® Smokes were created as a smooth and delicious smokable alternative that looks, feels, burns and smokes just like a tobacco cigarette, but contains no tobacco, no nicotine, no additives, and no preservatives. MOUNTAIN® Smokes are made up of a proprietary blend of only three herbal ingredients – organic hemp, organic sage, and organic mullein.
Information about the Company's MOUNTAIN® Smokes line can be found at the Company's ecommerce website at https://mountainsmokes.com.
SOURCE Hempshire Group
Alex Shegelman, CEO and Director The Hempshire Group, Inc., Email: [email protected]
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