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CBD of Denver Announces First Quarter 2022 Financial Results

By: Newsfile

Denver, Colorado--(Newsfile Corp. - May 18, 2022) - CBD of Denver, Inc. (OTC Pink: CBDD), a distributor of CBD and cannabis flower and a producer of a full line of CBD oil and unique products sold in Switzerland and throughout Europe, filed its first quarter financial statements on OTCMarkets.com for the period ended March 31, 2022.

CBD of Denver generated $908,086 revenue in the first three months of 2022, with a net loss of $314,248 mainly on an inventory write down of $102,856.

The business was negatively impacted in the quarter by the reintroduction of COVID controls across Europe and pricing pressure on CBD flower. These trends have already reversed, and the Company's April revenue nearly surpassed the entire first quarter's revenue as prices began to stabilize.

The Company completed a restructuring in March to reduce costs, putting itself in a stronger position for the next phase of growth in Europe.

"On the surface, the numbers don't tell the full story and should be viewed in context. While revenues at 3.5% margins don't usually result in overall profitability, my mandate is to transform this business from a commodity trader into a higher-margin, multi-pronged, health and wellness powerhouse in Europe and Asia. With the acquisition of Mellow and further expansion into medical cannabis sales in Germany, we are well on our way toward achieving this goal," said CEO Paul Gurney.

Highlights of Business Transformation Plan:

The Company aims to be the first commercially viable cannabis company in Europe with the mission to build this business according to an:

  • Asset light business model - Leverage strong grower, trading, and retail relationships
  • Dominate geography - Premier cannabis entity in Switzerland expanding into adjacent countries
  • Focus on profitability - Cost control and growth markets

Acquisitions

  • The roll-up opportunity in the Europe is ripe and management has a pipeline with complementary businesses; management has deep capital market experience as a deal maker to leverage the CBDD hemp platform across Europe
  • CBDD announced the acquisition of Mellow, a CBD technology and marketplace., in April; Mellow has reach into Europe and Asia and just signed an agreement with a large cannabis LP for distribution into Asia

Wholesale

  • Opportunity to right-size the hemp trading revenue model to focus on higher-margin opportunities and cross-sell products across the entire value chain to Germany, France, Netherlands, and others

Branded

  • The recent acquisition of Mellow brought their "Grow by Mellow" business into the CBDD family. This CBD focussed advertising agency gives CBDD the capability to bring the big US brands into Europe and offer a turn-key solution from CBD sourcing, manufacturing, distribution, and marketing.

Retail

  • Mellow's other businesses gives CBDD reach across the UK, Europe and now into Asia. This online marketplace provides robust data intelligence on CBD buyers, and a go to market strategy to bring US CBD brands into Europe. The market is the second largest after North America and is estimated at ~US$2B with a 33.5% CAGR out to 2027.
  • Expansion of physical retail presence within Switzerland (population 8.8m), outside current store footprint in St. Gallen and into Austria and Germany.

Medical

  • The German medical market is currently worth ~$300m and growing. CBDD is rapidly building out an experienced pharmaceutical sales team to access the doctor and pharmacy community. A low-cost model with significant upside in the largest legal market in Europe.

"Adding four other lines of business to CBDD will help diversify and stabilize our revenue streams. While it will also provide the opportunity to improve our margin structure to our long-term target of 20-25%. It's nice to see our revenues in wholesale rebounding, while we remain laser focused on building a stronger and better business to capture this historic transformation in Europe," said Gurney.

European cannabis market update

  • The European market is at an inflection point, with cannabis reform a question of how and not if. CBD is fully legal across Europe and the medical markets continue to develop, such as in Germany which grew 43% in 2021. With a population in Europe of over 530 million, 50% bigger than the combined populations of the US and Canada, the potential scale of the adult-use market is immense. It is estimated that around €354 million worth of unlicensed medical cannabis will be sold in Europe 2022, and Prohibition Partners project this will grow to around €2.3 billion by 2026.
  • Germany continues to see positive momentum with the German Finance Minister confirming the process of legalising recreational cannabis has started. While the Mayor of London was visiting California last week appointing a drugs tsar to explore legalisation of cannabis.

Investor Conference Call

The Company will host an investor conference call via Zoom today, May 18, at 11:00 a.m. ET. Please click the link below to join the webinar:

https://redchip.zoom.us/j/89887269653?pwd=aEpWMVFBYVJJbVZweVdLSWovV1hpZz09

Passcode: 276215

Or One tap mobile :

US: +13126266799,,89887269653#,,,,*276215# or +16465588656,,89887269653#,,,,*276215#

Or Telephone:

Dial(for higher quality, dial a number based on your current location):

US: +1 312 626 6799 or +1 646 558 8656 or +1 301 715 8592 or +1 346 248 7799 or +1 720 707 2699 or +1 253 215 8782

Webinar ID: 898 8726 9653

Passcode: 276215

International numbers available: https://redchip.zoom.us/u/keaHhJtmpi

Follow CBDD on Instagram: @SwissCBDTrading @Rockflowr @CBDofDenver_Inc @SwissGreenGrow @RockflowrRetail @mello_talk

Visit Mellow:

www.mellow.store

www.mellowasia.store

CBD of Denver, Inc. and Rockflowr GmbH are now also on LinkedIn.

About CBD of Denver, Inc.

CBD of Denver, Inc. (OTC Pink: CBDD) a full-line Distributor of CBD and Cannabis flower and a producer of a full line of CBD oil and unique products sold in Switzerland and throughout Europe. CBD of Denver, Inc. is focused on using equity to acquire profitable Swiss assets at attractive valuations to create value for all our shareholders and is driven by a passion to improve lives and strengthen communities by unleashing the full potential of cannabis. Through our Rockflowr brands we have built a very strong European customer base by focusing on top quality products and meaningful customer relationships.

Todd McKnight
RedChip Companies
1-800-733-2447
CBDD@redchip.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/124486

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