CBD Global Sciences Inc., dba Global Sciences (OTC: CBDNF) (CSE: CBDN) (Frankfurt: GS3.F) (Munich: GS3.MU) (the “Company“), further to our press release dated December 16, 2022, we are pleased to provide an update post-closing of the asset purchase agreement with New Age Beverage Corporation and NABC Properties, LLC to acquire the Direct Store Distribution operation (“DSD Operations”). Legacy Distribution Group,“Legacy” (Denver, CO), the Company’s wholly owned subsidiary, completed the acquisition of the DSD operations from New Age Beverage Corporation, a Colorado corporation, and a wholly owned subsidiary of New Age, Inc. effective December 12, 2022. The DSD Operations consist of the purchase and distribution of beverages and snacks to over 5,000 grocers, big box retailers and convenience stores in the Colorado community, with many products on an exclusive basis.
The Transition of the DSD Team to Legacy
The Company has successfully transitioned all vendors, customers, and 144 employees to Legacy with payroll, revised benefits, and other areas of interest for the transition into Legacy. Important issues have been addressed, including lease agreements, business insurance, alcohol and tobacco licenses, sales licenses, Information Technology, infrastructure support, HR and Compliance teams, and several other aspects. The transition is expected to be fully completed before the end of Q1 2023. The Company expects there will be significant savings realized throughout the transition process, including as a result of successfully negotiating a lower cost for many components of the business, without degradation of the coverages experienced prior to the acquisition.
DSD Operating Volume
Since the closing acquisition of the DSD Operations in mid-December of 2022, the DSD Operations have averaged $145,541.00 in daily sales. The Company expects that approximately $2,765,296.00 in sales for this 19-day period will be consolidated into the financial statements of the Company for the year ended December 31, 2022. The previous parent company, a multi-level-marketing company, enforced a “Health and Wellness” edict which directly impacted the DSD Operation. That edict limited the DSD Operation from adding products that didn’t fit into the Health and Wellness category, and with the sale of the DSD Operation to Legacy, we plan to tailor the product assortment to fulfill the demand of the stores that the DSD Operation services. In the works are over a dozen new brands being added by the DSD Operations to the Colorado market over the next 60-90 days. Adding new brands is expected to improve top-line sales, provide higher price points, and improve the profitability margin for the DSD Operations. The Company expects daily sales to increase with the addition of new products and vendors in the coming months, and we look forward to reporting the impact of this acquisition on its financial results, as it realizes complete integration of owning the DSD Operations for its first full quarter in 2023 ending March 31, 2023.
Changing the Company’s Direction
The acquisition of the DSD Operations heralds a pivot by the Company to a service industry that is focused on product distribution, brand development, and consultation for new companies that need market recognition and to generate new sales. Known by the industry as the ‘go to’ for brand introduction, the DSD Operations have played a critical role in most all new beverage brands introduced to the market over the past 20 years including brand names like Xing Tea, Monster, Rockstar, Vitamin Water, Smart Water, NOS, Fuze, Nantucket Nectars, Muscle Milk, Izze, Celsius, C4, and many others.
Brad Wyatt, CEO of Global Sciences shared, “This has been a monumental achievement, and I am very excited to be part of it. I am proud of the Legacy Team and their ability to demonstrate commitment to the company and resiliency through the transition to Legacy Distribution Group. They have worked countless hours to successfully transition the operations and continue to build the ‘Legacy’. I am extremely optimistic about the future of our Company. I look forward to presenting new and exciting information about our progress.”
The Company applied to the Alberta Securities Commission (ASC) and the Ontario Securities Commission (OSC) for an order to fully revoke the Cease Trade Order (CTO) issued July 2022, and is working to rectify all deficiencies. The Company is unable to control the timeline, but is working to have the CTO revoked for trading to resume in Canada.