The accumulated deficit of Calabasas-based Resonate Blends Inc. has grown to $25.2 million — a position the company hopes to improve upon through partnerships and product pivots, according to a recent corporate update.
The cannabis company reported gross profits of $15,278 for the quarter that ended June 30, this year, with a net income loss of $701,770. Resonate’s flagship product and main source of revenue is its Koan Cordials line, cannabis-infused liquids that offer different experiences to users such as “Calm” and “Create,” among others.
Resonate stated in its earnings report that its ability to continue in business is contingent upon the completion of financing arrangements and the achievement and maintenance of profitable operations, matters addressed by Geoff Selzer, the company’s chief executive, in a corporate update released on Aug. 22.
“Our first challenge is to increase revenues in our core brand Koan,” Selzer said in a statement. “To that end, we have previously announced the rollout of our multi-serve packages that reduce the cost per serving of our product by approximately 65%.” Selzer added that its new “Sleep” Koan Cordial would also be available as single- and multi-serve packages.
Resonate now delivers its Koan Cordial products through wholesale marketplace and distribution platform Nabis. The company began working with Koan after a statewide distributor unexpectedly ceased operations in the second quarter, which caused disruptions to Resonate’s sales channel for five weeks.
Partnerships will also be a priority for Resonate moving forward, according to Selzer.
“The cannabis market is presenting some unique opportunities for potential strategic roll-ups,” Selzer said in a statement. “On August 12, we issued an 8-K that detailed our Investment Deck, which was focused on acquiring a well-established and respected California cannabis firm that will not only add significant revenues but also help us increase margins, generate multiple income streams and support our focus on product innovation.”
Selzer said the company is evaluating multiple opportunities to acquire smaller brands where Resonate is seeing the “greatest innovation.”
The definitive agreements for the potential acquisition mentioned in the update were being produced as of the update’s publishing, according to the company.
Outside of internal troubles, Resonate has dealt with external challenges in the form of a tough California cannabis market in 2022. Selzer pointed to “weaker consumer demand, taxation issues, regulatory uncertainty and lack of banking reform.”
Even larger cannabis companies like Culver City-based MedMen, which has multiple stores in Los Angeles and other states, have struggled to succeed in the market. A thriving illegal cannabis market has also presented challenges to legal and regulated firms.
In the corporate update, Selzer made note of the decision to conduct Resonate’s sales process in-house as opposed to outsourcing. The company plans to invest further in that decision and expects to hire additional sales resources across the state.
“We are uniquely positioned to be a positive disruptive force in the wellness/lifestyle segment of the industry built on a growing body of proprietary IP, and we firmly believe that value-added brands are the future of the Cannabis industry,” Selzer said in a statement.