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TAAT Global revenues taking off following transformative quarter

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Revenues of TAAT Global Alternatives (CSE:TAAT), the producer of nicotine-free cigarettes, really took off in the third quarter of this year under new chief executive Michael Saxon as the company reshaped its strategy to focus on sales in Las Vegas and San Diego and completed the acquisition of ADCO Distributors.

In a call with investors yesterday Saxon said that despite the challenging macro-economic environment the third quarter was “transformative” for the firm and that the improved infrastructure through the acquisition of ADCO provided the company with the capability to significantly refine its sales process.

During its fiscal third quarter which ended on 31 July the company’s revenues rose to an impressive CAD17.47 million from CAD1.3 million in Q3 2021 as the company added 1,000 stores in Las Vegas and San Diego. A strong focus on in-store marketing and raising of brand awareness helped boost sales by between 200% and 300% in those two cities.

Gross profit amounted to CAD 567,404 compared with CAD 781.226 in the same quarter of 2021. Share-based compensation related to the legacy closure of the company’s office space in Canada and the move of its headquarters to Las Vegas weighed on the profits and the quarter ended with a net loss of CAD 7.4 million.

TAAT’s total assets rose by around 49% to CAD 23.4m on the quarter with Account Receivables jumping 233% to CAD 5.7m and inventories by 131% to CAD 5.12m.

During the quarter the company also fine-tuned its products, bringing out version three of its TAAT Original, Smooth and Menthol products which are radically different to versions one and two. Saxon noted that the response to different products was different in different markets, with US buyers typically preferring the original taste while European and UK buyers opted more frequently for the slightly lighter tasting smooth product.

Look ahead

The company’s previous strategy involved selling more widely across the US but this approach ran into difficulty over the recognition of not only a new product but actually a whole new category of product, a zero-nicotine, zero-tobacco cigarette. The very focused marketing strategy for Las Vegas and San Diego proved successful and the company plans to proceed in a similar vein and strengthen its sales in the US, conquering smaller areas at a time rather than spreading itself thin in a nationwide campaign.

“We cracked the marketing within the store challenge and we now plan to do this in more locations. This will take capital but we have a strong balance sheet,” Saxon said. Future plans include building up significant inventories. The company will also aim to improve margins as it sells to a customer base of existing smokers looking to switch to a nicotine-free alternative.

TAAT Global Alternatives international strategy

The company’s chief executive was positive about his recent trip to the UK saying he was excited about opportunities to partner up with local partners who can take TAAT sales forward there. “The UK has long been a leader in the harm reduction efforts and everything we shipped over during our trip was sold out,” he said.

Podcast: We chat with Michael Saxon, CEO of TAAT Global Alternatives

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

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