Hill Street Beverage Company Inc (CVE:BEER) (OTCMKTS:HSEEF) posted fiscal second quarter results Tuesday, revealing rising net revenue and a narrowing net loss in its first quarterly report since acquiring the cannabis assets of Lexaria Biosciences Corp (CSE:LXX) (OTCMKTS:LXRP) on December 9.
In the three months ended December 31, Hill Street saw net revenue grow 8% to C$745,748 from C$689,276 in the same period of 2019. The net loss improved 50% to C$481,000 from C$956,000, which the company attributed to increased online sales revenues of 166%, improved gross margin and cost management efforts.
During the quarter and thereafter, the company worked closely with its licensed production partner to address the regulatory requirements for the upcoming launch of its first cannabis infused beverages. The Notice of New Product Introduction to Health Canada was filed on December 31, 2020 beginning the 60-day notice period.
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Hill Street anticipates its cannabis beverages will launch toward the end of the third quarter of fiscal 2021.
"Our attention to costs and our focus on the most profitable lines of business helped us improve gross margin and the bottom line,” CFO Hinta Chambers said in a statement. “The new opportunities we are now able to pursue by leveraging the IP assets of Lexaria Canpharm will help further drive quality of margin through highly differentiated products as well as scale through expanded geographic scope".
The company’s purchase of the assets of Lexaria Canpharm, the company’s cannabis products division, has resulted in a new B2B line of business that is already recording revenue.
"This transformative transaction adds a wholly new operating line to our current alcohol free and cannabis infused beverage businesses: the licensing of DehydraTECH technology to companies around the globe," Hill Street Interim Co-CEO Lori Senecal said in a statement
With the Lexaria transaction, Hill Street acquired existing contracts to provide licenses for use of these patents by companies in Canada and the US.
"The combination of these three businesses creates a vertically integrated, product value chain that leverages knowledge from our consumer lines with our new, patented ingredient line, to span from consumer to enterprise," said Hill Street Co-CEO Craig Binkley.
Additionally, Hill Street announced that it granted stock options to purchase 4.8 million common shares at an exercise price of C$0.095 per share to employees officers and directors, in accordance with the company’s stock options plan.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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