Cann Global has insisted it remains on course for future growth despite falling revenues.
The firm reported income of A$69,000 in the three months to March, down 69% on the previous quarter and 75% on the same period last year.
But in a bullish quarterly update, Cann Global said the decline was expected as it completes its business restructure, beds down new brands and steps up awareness of its Instacann medicinal cannabis.
The company rolled out its Fuss Pot skincare brand in late 2021 with a focus on the high-end retail market, and launched health-food brand Grass Roots in the March quarter.
Cann Global described the drop in revenue as “temporary”, driven by a strategic decision to chase a higher-margin business model.
“While this has resulted in lower near-term earnings as expected, Cann Global is confident that the revised range and new Grass Roots products will underpin revenue and deliver strong growth,” the company said.
A new range of CBD Fuss Pot skincare products is being launched at cosmetics trade show Cosmoprof this weekend, while deals with three distributors could see its Grass Roots products reach 7,000 health food stores, pharmacies, specialty grocery stores and online retailers.
Meanwhile, patient feedback to its Instacann medicinal cannabis has been “extremely positive”, the firm said, with a continued focus on increasing product awareness among prescribers.
While delivering a positive outlook, Cann warned that research and development, manufacturing and marketing costs are likely to increase over the next 12 months as it invests in products and brand awareness.
The firm, which has a cash balance of $9.7m, told investors: “We have now positioned ourselves solidly in an established and growing market. We have strong implementation and execution strategies around our product positioning, pricing, user experience and marketing in order to gain competitive advantage and grow our market share rapidly.”
Shares in Cann Global slipped 6.6% to $0.28c giving it a market capitalisation of $7.76m.