Mellow Enterprise CBDD released Q3 results with revenue of $26,907 and gross profit of $6,303, this compares to Q3 2021 revenue of $6.4 million and gross loss of $432,336. Net income from operations was a loss of $219,160, cutting losses in half from Q2 and comparing to a loss of $458,259 in the same quarter last year. The company made a strategic decision during the quarter to sever relationships with loss-making client relationships to focus the company on cash flow and profitability.
As a part of this restructuring, the work force was reduced and other cost-cutting measures were enacted. This has put the company on much better footing financially going into 2023. In addition, the company was able to raise approximately $210,000 from investors to help fund the business through this transition.
"There have been obstacles to overcome recently at CBDD while working hard to secure its future and allowing it to grow. The cannabis industry remains attractive and Europe is on the cusp of wider-spread legalization as soon as Jan 1, 2024. Since day one, we have focused on reducing the losses at the company to give us a chance to be part of this transition. Now with these adjustments, CBDD has a structure that can allow it to take advantage of opportunities in cannabis and adjacent categories," stated CEO Paul Gurney.
Post-Q3, the Mellow transaction was completed and it is now a part of CBDD. A Mellow site in Switzerland launched, while the decision was made to close the Mellow U.K. site for the time being. This was due to the challenges of the UK CBD market, and many smaller brands going out of business. As part of a broader strategic review, CBDD has expanded the Grow digital marketing agency to target European opportunities in health & wellness, including branding and social media work. Recently, the Grow agency signed its first non-cannabis customer with a product company in Berlin looking to redevelop an existing brand and launch a new product into the U.S.
Looking ahead into Q4 and 2023, CBDD has set five strategic priorities:
Refocus on the flower trading products business with better margins, solid counterparties and additional value-added services. The revenue numbers have already rebounded with $50,000 of revenue in the last six weeks, although they will not approach the levels seen from previous years.
Set-up ad network to deepen retail connection and create new product verticals. The agreement with Tokem app, provides CBDD the opportunity to set-up its own captive store network. The arrangements for the pilot program are ongoing, and CBDD has engaged with its first potential partners in Germany.
Keep building and adding to our network in Germany. CBDD shipped its first order of vapes to Germany this week, with delays due to supply chain constraints in the U.S. This test order was for roughly $12,000, and CBDD sees more opportunity ahead in Germany, Switzerland and the U.K. The demand for quality CBD vapes is increasing, and CBDD has worked for months to find the best suppliers.
Expand the Grow digital media agency into other verticals to tap into larger client wallets, and to leverage its talented team up in Glasgow, Scotland.
Complete the process of name change to Mellow Enterprise, while establishing a solid financial base for the company to seek out accretive acquisitions.
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