Demand Brands Releases Annual Shareholder Letter and 2023 Forecast
January 10, 2023
I write to introduce myself, update you on the past year’s corporate developments, and give you an overview of what to expect in 2023.
In June, after the CF3 acquisition changeover was complete, Andrew Colehower delivered a resignation letter to the Board of Directors and stepped away. The Board met shortly thereafter, accepted his resignation and appointed me to succeed him. We appreciate Andrew’s contributions as CEO and wish him well in his next endeavors.
I have worked in the legal cannabis realm since the Prop 215 days, operating at every level of the industry from cultivation to retail marketing. I accepted the appointment as CEO as I believe my considerable experience provides valuable insight not previously present at the highest management level of the company. Demands’ vision is simple- expand its management services division, acquire companies that add value and broaden the scope of support Demand can offer, and establish a multi-state footprint in advance of eventual federal deregulation.
I am keenly aware that our shareholders have seen management groups and business models come and go in the past five years. I am here to assure you that the current management team is committed to Demand Brands.
Our immediate goal is to increase the volume and value of our stock. Each step we take is to meet that target. The DMAN share price and trading volume do not in any way reflect the fundamentals and true market value of the Company, they appear to only reflect the general malaise in the sector. Demand is well diversified and poised to thrive. We are committed to putting substantial effort into Investor Relations going forward to meet our goal.
In June we engaged BF Borgers to audit the company. The audit will be complete in early January 2023 at which point we will proceed to up-list to OTCQB.
Simultaneously, we have retained Whitley LLP, Attorneys at Law, of Katy, TX, as securities counsel.
After entertaining several merger and acquisition offers, we have entered an agreement with three synergistic companies to acquire them in all-stock transactions, also to be completed in Q1 2023.
We will be acquiring two companies, MediGrow LLC and LGrove MMJ Park LLC, each of which holds real property in California and Oklahoma respectively, to establish footholds in each location as GMP-certified medical grade cultivators in anticipation of the eventual biopharma entrance to the cannabis industry in America.
The potential of the third company, Hello Mary! Inc, is intriguing- a B2C cannabis software platform that utilizes artificial intelligence technology to provide virtual budtender services as well as delivery on demand for medical and recreational consumers. Hello Mary is a developmental stage business. Completing the development and launching Hello Mary will allow Demand to further automate its subsidiary wholesale distribution model and expand services in the retail cannabis market across the globe.
Another prong of our business development is an international project. We are registering a new subsidiary, Demand Brands Kazakhstan Ltd., (“DBK”), in Kazakhstan. DBK will develop a commercial industrial hemp project in that country. Our focus will be on the CBD health sector to capture revenue from that burgeoning market, and produce biomass for applications in green energy as well as hemp textiles and eco-friendly building materials. DBK can be at the green forefront of the expansion to alternative fuel sources in Kazakhstan and neighboring countries.
To round out my summary, I want to speak about revenue in 2022. As a holding company, all profit is generated by our subsidiaries. Income grossly under-performed our projections put forth when Demand acquired CF3 in Q1 2022. Our subsidiary’s income was negatively and dramatically impacted by the halt in cash flow in the cannabis industry as everyone went into survival mode.
As a bit of background for those perhaps not well-versed in the cannabis industry, the market crashed in Q3 2021. Prices plummeted leaving farms distressed and distributors overstocked.
2022, described as an ‘extinction event’, brought little relief to licensees throughout the industry as scores went out of business.
Those left standing are our target customers. Demand Brands’ business model is uniquely suited to finding purchases in the distressed sector. Between the crash in the market and the state of the general economy lending a reticence on the part of investors to extend credit, there are companies across the board who find themselves at a loss to maintain existing businesses or develop new ones. Through our subsidiary Viridi Farms we offer cannabis business solutions at every step from cultivation to manufacturing to wholesale supply chain management to retail sales. Our strength is and will always be our team. We remain confident because we possess a stable group of senior executives who have led the development of our current strategy and have a strong track record of successfully executing underlying objectives and business plans in the face of adversity.
Our focus remains on expanding our management services platform to generate revenue. Multiple service contracts are active in California. Currently, Viridi is in late-stage negotiations with cultivators in Oklahoma to provide services to maximize their production, for which Viridi will receive substantial service fees based upon improvements in yield and quality. This is Viridi’s strength and core business model.
We believe that being a strong, diversified company is in the best interests of our shareholders, our customers, the communities we serve, and, in turn, fortifies our ability to grow the company year by year.
Lastly, to sign up for Demand Brand’s Investor Email Alerts, click here. We look forward to directly sending you press releases and other corporate news to share the progress being made in pursuit of the growth of our Company.
It is my pleasure to bring you up to date on the approach we have taken and will continue to take to build Demand Brands into a successful thriving company.
With our current path, we look forward to a strong and progressive 2023.
/s/ Kevin Sparks
Kevin Sparks, CEO, COO, Demand Brands Inc.