The psychedelic corporate shakeout continues as another company, HAVN Life Sciences, folds due to lack of cash flow
2022 has already been a roller coaster ride for both the major stock market averages as well as the emerging psychedelic space, as stocks spent much of the year shedding market value. Both the macro and microeconomic landscape are giving investors pause, and it’s creating a cash crunch in the psychedelics sector. Several companies already folded this year, and the scarce coinage just claimed another victim.
Havn Life Sciences (CSE: HAVN) (OTC: HAVLF) is unable to meet its current financial obligations, and its Board of Directors announced that, recommended by the Company’s CFO, HAVN is no longer a going concern. Despite previous efforts to raise capital to sustain ongoing operations, the Canadian psychedelics company fell short of the minimum needed to stay afloat.
A restructuring plan is being put together by the Board, and the Company is actively pursuing financing. There is no assurance that the restructuring will be successful or that the company will be able to secure a new source of financing.
In 2020, HAVN received permission from Health Canada to possess specified amounts of psilocybin for quality control research and development, which allowed them to diversify into manufacturing natural health products as well as developing a portfolio of psychoactive compounds for clinical trial research. But profitability didn’t reconcile to HAVN’s narrative.
Earlier this year, HAVN CEO Tim Moore touted the Company as one of the few psychedelic companies to report revenue in 2022. According to Moore, HAVN’s competitive advantage was based on their supply chain delivering products to other companies relying upon it for their own respective psychedelic-related operations. He also claimed the nutritional supplement business was experiencing momentum with e-commerce retailers, promising “significant growth coming in 2022.”
However, Serious red flags were raised over the past year when HAVN terminated an acquisition, completed a 30:1 reverse split in July, secured $9M CAD in debt despite a market cap of only $1M CAD, and reported a loss of $22M CAD in the last fiscal year. Regardless of CEO Moore’s optimistic outlook, revenue was only $89.7K CAD for the same period. At press time, HAVN and HAVLF are down approximately 57% and 55%, respectively.
Craig D. Schlesinger is the CFO of PSYC Corp & Spotlight Media and a market analyst with over twenty years experience predicting price movements and trend reversals in various sectors. Follow his #MathOverMyth technical analysis and him on Twitter: @psychedelicraig
Craig holds no positions in HAVN or HAVNLF