Resonate Blends, Inc. Issues Letter to Shareholders and Provides Corporate Update

Rhea-AI Summary

Resonate Blends, Inc. (OTCQB:KOAN) provided a corporate update highlighting progress in its strategic objectives for 2021. The company reported an operating loss primarily due to non-cash management fees and increased liabilities linked to a convertible note. Despite this, Resonate continues to build its flagship Koan Cordials and expects significant revenue growth in the latter half of the year. Key developments include partnerships with sales and logistics firms, expansion of distribution, and the filing of a provisional patent for cannabis nano-emulsions aimed at enhancing user experience.

Positive

• Launch of Koan Cordials in retail channels expected to drive revenue growth.
• Partnership with Good People LLC to enhance sales and marketing efforts.
• Collaboration with MARS for efficient statewide distribution.
• Nugg Club's selection of Koan Cordials for subscription box, expanding consumer reach.
• Patent filing for cannabis nano-emulsions, enhancing product innovation.

Negative

• Operating loss reported due to non-cash management fees and derivative liabilities.
• Increased liabilities related to convertible notes could indicate financial strain.

Resonate Blends, Inc. (OTCQB:KOAN), a Wellness Lifestyle cannabis holding company (“Resonate” or “the Company”), today provided a corporate update covering its recently filed Q2 2021 financial report and the advancement of overall operations. A letter to shareholders from Resonate’s Chairman and CEO, Geoff Selzer, follows:

Dear Shareholders,

2021 is shaping up to be a fast-paced and foundational year for Resonate Blends as we make significant progress on our strategic objectives. Working closely with industry-leading sales, marketing and logistics partners for our flagship Cordials product line, we have built a multi-channel distribution strategy that we expect will materialize with significant positive results in the back half of this year.

Our patent-pending Koan Cordials, the world’s first cannabis-infused cordial, are now available in both Northern and Southern California. Beyond innovation with our products which are built around the idea of “Mastering the Art of Experience”, we are also focusing on a solid foundation of distribution, communication, and education, as we work to normalize cannabis as part of a healthy and engaged lifestyle. To that end, we are adopting a digital native national brand strategy for our Koan product family to ensure that every aspect of our client relationships is carefully managed, providing a specific experience across all platforms and products that is consistent with the development of the brand. Critical to this is our focus on Direct-to-Consumer (D2C) initiatives, which we will be sharing some exciting news about in the coming days.

In our Q2 financial report filed on August 18, 2021, we showed an operating loss that is mainly the result of non-cash management fees and increased liabilities that are attributed to non-cash derivative liabilities on our remaining convertible note that was issued through our recent private placement. This note has a mandatory equity conversion and the derivative liability associated with this note will be eliminated once the mandatory conversion takes place. The non-cash management fees resulted from salary deferrals for insiders from 2020 that we issued in shares of common stock. We continue to emphasize our strict share structure management to support a healthy balance sheet that is attractive to future capital investment. Our Cordials are now generating revenues, and we expect the sales to ramp starting late in the third quarter through the remainder of this year.

Highlights Since our Last Update:

• In May, we announced the launch of our Koan Cordials to the retail channel at WEEDCon, a two-day B2B education and networking expo attended by over 200 California dispensary buyers.

• We partnered with Good People LLC as our statewide Koan Cordial sales team. Good People is working closely with Resonate Blends’ marketing team to plan events, train bud-tenders, schedule and track relevant promotions and inform the innovation pipeline with field insights. Currently, we have more than 80 Cordial dispensary sample kits out for evaluation, and we expect several well-known dispensary chains in California to soon have Cordials on their menus.

• We partnered with BPCM, a global strategic consulting and communications agency, to expand our influencer network and media reach in California and nationwide to increase our consumer outreach.

• MARS, the leading logistics and sales partner for cannabis beverages and top cannabis brands in California, joined us as our statewide distribution partner. MARS was built to support the massive growth in the cannabis industry and bring efficiency and consistency. With hubs in Costa Mesa, Sacramento, Nevada and three more hubs under way, MARS delivers orders to retailers in 72 hours or less.

• Nugg Club, the nation's first cannabis subscription box featuring full-sized products, selected Koan Cordials for inclusion in their September subscription box going to approximately 2,000 consumers throughout California. Nugg Club’s team of experts curate the best products available on the market and match them to customer preferences to create highly personalized boxes.

• We have made progress in our search to expand our portfolio of wellness lifestyle cannabis brands by targeting multi-state, revenue-producing brands. Our focus on maintaining a strong capital structure has put us in a solid position to support our growth strategy through accelerating product and brand development as well as complimentary M&A activity.

• We successfully filed a Provisional Patent Application with the US Patent & Trademark Office (USPTO) entitled “Cannabis Nano-Emulsions for Achieving a Reliable, Targeted, Specific and Repeatable User Experience.” The invention relates to methods and formulations including a combination of cannabinoids and terpenes calculated and specifically formulated to achieve a targeted, specific and repeatable user experience. We are also filing for patent protection on our unique product packaging. IP development and protection continues as a core area of value creation for Resonate.

As always, we are grateful for our shareholders’ support as we continue the process toward focusing our operations on revenue generation. We are uniquely positioned to be a key company in the wellness/lifestyle segment of the industry, and we believe that value-added brands are the future of the Cannabis industry. Over the long-term, we believe that cannabis, as a part of the wellness lifestyle, will become the largest segment in the burgeoning industry and we plan to be one of the leaders in this segment. “Mastering the Art of Experience” is core to our mission and we are well on the way to establishing a solid foundation from which to build an innovative, unique and solid company in the Cannabis industry.

As always, we believe the 3 pillars of vision, execution and financial responsibility will ensure the best performance for Resonate Blends’ shareholders. We look forward to providing further updates and insight into our operational progress in the near term.

Stay safe, stay healthy.

Sincerely,

Geoff Selzer

Chairman & Chief Executive Officer

About Resonate Blends, Inc. (OTCQB:KOAN)

Resonate Blends is a Calabasas, CA-based portfolio of Cannabis Wellness and Lifestyle brands. The company created the Resonate System—a comprehensive system of interconnected experience targets to personalize consumers’ relationship with Cannabis through its products. www.resonateblends.com

Safe Harbor Provision:

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Examples of forward-looking statements include, among others, statements we make regarding: guidance relating to net income; anticipated customer onboardings; and expected operating results, such as revenue growth and earnings. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set out in the Company's SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210818005260/en/

FAQ

What are the latest updates from Resonate Blends, Inc.?

Resonate Blends, Inc. announced significant progress in its operations and strategic objectives for 2021, mainly focusing on its Koan Cordials product line.

What were the financial results for Resonate Blends in Q2 2021?

The Q2 2021 financial report showed an operating loss attributed mainly to non-cash management fees and increased liabilities.

How is Resonate Blends expanding its distribution for Koan Cordials?

Resonate Blends has partnered with MARS for logistics and Good People LLC for sales, enhancing its distribution strategy.

What innovations is Resonate Blends pursuing?

The company has filed a provisional patent for cannabis nano-emulsions aimed at achieving a reliable and repeatable user experience.

When can we expect revenue growth from Resonate Blends?

Resonate Blends anticipates significant revenue ramp-up starting in late Q3 2021 as Koan Cordials gain traction in the market.