CanX CBD Shareholder Update Q4, 2022
In Q4, 2021 we have achieved higher sales than ever before thanks to our early pivot to private and white labelling and adding new products to our portfolio - we managed to accomplish this on a shoe-string budget. In addition, we onboarded our first enterprise level client. Our balance sheet is now getting stronger with revenues accruing and our ability to reduce payables. I’ll outline some of the contracts below but first I’ll give you a quick macro summary of what is currently happening in the CBD market in Europe.
Turbulence continues in the European CBD markets with constituents like Elixinol retreating and clarity on regulation being further delayed (Novel Foods). However, the markets are finally showing signs of sustained improvement from a demand perspective – we believe that Novel Foods regulation will eventually provide a further catalyst for our customer base to appreciate compliance and conformity and we are already noticing an increasing quantity and quality of inquiries through our online channels.
While Q2, 2021 was a quarter overshadowed by CBD related banking issues which in turn led to some logistical and supply-chain challenges for CanX we are now better positioned than ever to capitalize on the CBD markets across the EU going forward.
MILESTONE SALES ACHIEVEMENTS THIS PAST QUARTER:
1. CanX has signed a distribution agreement for the French market with a well-established group with access to over 10000 retail outlets. Rollout to 200 stores has already begun with CanX supplying 25,000 formulated fully packaged and labelled tincture bottles between 5-30% CBD – we are currently formulating and developing a CBD vaping product with 50,000 units set to roll out in December 2021. CanX has become a trusted supplier and partner for all things CBD to our client allowing us to act as a broker in some instances adding additional low touch brokerage revenues to our bottom line whilst maintaining a fair margin. We are extremely excited about this milestone opportunity.
2. CanX has started manufacturing a range of CBD products – starting with 12500 bottles -for OVVA Pharmaceuticals. OVVA is currently finalizing negotiations on adding their products to duty free shops across Europe, as well as OMV Petrom with 794 locations in Romania and a total of 2100 in ten countries and Socar petrol stations with a total network of 63 locations.
3. Our team started supplying BIONATIV in Romania—our domestic country market. Bionativ is a chain of 10 physical stores and a well-established ecommerce platform with revenues of 2.5m EUR/year in natural products with additional distribution potential to over 50 natural product stores across Romania.
4. We received an initial order of 1000 units of CBD oils in different concentrations for COSELI SA, a leader in the FMCG market in Romania with large retail exposure and revenues of over 7.5mil EUR per year.
LISTING & FINANCING
We are acutely aware of the depressed valuations and multiples of public global CBD companies. A recent study by Hannam Partners, UK summarizes the state of the markets:
On behalf of management and the board of directors I want to thank all shareholders for their patience as we adapt to these changing market realities, leading to slower than anticipated scaling of revenues.
Due to the above mentioned factors, the Board of Directors has authorized a private placement offered only to existing shareholders at $0.10 per share, up to a maximum of CAN $750,000 (subject to regulatory exemptions). Closing is anticipated in early 2022. CanX anticipates to file for a listing application in Q3, 2022.
Our back office will be in touch with each shareholder via email informing them of the particulars and providing a timeframe to collect subscriptions in early January – we anticipate to close this financing no later then February 15, 2022.
IN OTHER NEWS
As reported in the Q1 quarterly update we have now been able to get approval from the Japanese Ministry for our CBD isolates to be sold in the Japanese markets and are expanding our business development efforts. So far, the average selling price is 8x higher than in Europe. Further developments are expected through increasing the sales volume and adding to our Japanese portfolio CBG and CBG isolates as well as finished products under the same license.
We also further strengthened our business development team by adding Mr. Mihnea Loghin, a graduate from the International Business Academy in Denmark, with a bachelor’s degree in international Sales and Marketing Management and a Master’s in international Leisure and Event Management from NHL Stenden University of Applied sciences in the Netherlands. His dissertation topic was ‘Research on the effects of cannabis consumption across the globe’. Previously Mr. Loghin worked for the largest e-commerce platform in Eastern Europe in the position of International Sales Development Manager leading a team of 10 sales representatives.
In Q3, 2021 CanX exhibited at the White Label Expo in Frankfurt, Germany which marked our first in- person event after 18 months of online meetings and virtual tradeshows. Despite Covid restrictions we managed to assemble our team in Frankfurt giving us a strong presence and a great pipeline of additional leads and opportunities going into 2022.
With Novel Foods dossiers submitted to both UKFSA and EUFSA we are in a strong position to capitalize and expand our footprint in all major European countries by displacing some of our competitors with our mandate of quality and service.
Thank you for your continued support,
+1(778) 896 7445
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