TAAT Global scores another big funding round

Tobacco-free cigarette maker TAAT Global Alternatives (TAAT Global Alternatives Stock Quote, Charts, News, Analysts, Financials CSE:TAAT) is all fired up after a new financing round and ready to roll into the huge worldwide tobacco market. The company announced on Wednesday a $10-million follow-on private placement which TAAT says shows further confidence from its investors in the TAAT brand.

“It is a wonderful validation for such prolific investors to be making a follow-on investment into TAAT as we continue our entry into the $814 billion global tobacco industry, with multiple international expansions already underway,” said TAAT CEO Setti Coscarella in a press release.

TAAT makes a tobacco-free and nicotine-free cigarette using its proprietary Beyond Tobacco base material, giving its products the smell and taste of a cigarette without the addiction-forming qualities of nicotine. TAAT aims to set itself apart from tobacco cigarettes but also vaping products which aren’t seen to give users the same experience and ritual of cigarette smoking.

The company, formerly TAAT Lifestyle & Wellness, started commercial-scale production last fall and began selling in retail stores in the state of Ohio in January with three products, Original, Smooth and Menthol, and launched in Illinois in July. TAAT sells across the US through its e-commerce platform while the company also has upcoming launches in Australia, the UK and Ireland.

The new funding is from a group of venture investors led by Ms Debbie Chang of Horizons Ventures and comes after a $6.75-million investment from the same group earlier this month. All told, the investment group has now put $26.7 million into TAAT while the stock has gone from $0.67 last June to currently around $3.80 per share and had been as high as $5.92 in February of this year.

TAAT said it plans to use the new funding to expand its manufacturing and for marketing and brand-building initiatives. 

“The Investors’ initial investment in 2020 was instrumental to us reaching several of the milestones we have attained so far to include growing our manufacturing facilities, undertaking further research and development, placing TAAT in more than 1,000 stores in the United States, and organically establishing the TAAT brand as a well-known nicotine-free alternative to cigarettes for smokers aged 21+,” said Coscarella.

“Accordingly, we are confident that this additional investment can be a catalyst for our continued growth in both new and existing markets, and we are most grateful to the Investors for their ongoing commitment to TAAT,” he said.

By the numbers, TAAT reported its fiscal third quarter 2021 finances earlier this month, showing gross revenue of $1.3 million, up 89 per cent sequentially, with gross profit of $781,226 for a profit margin of 60 per cent, which was up from a gross profit margin of 53 per cent for the previous quarter. TAAT’s net loss for the third quarter was $7.74 million compared to a loss of $3.75 million a year earlier, while the company ended the Q3 with $10.2 million in working capital.

“We have undertaken aggressive strategies to market TAAT in this consumer segment in order to sustain and grow interest in the United States by continuing to add stores to expand our sales pipeline. Establishing a reputable and well-known brand comes with the long-term benefit of laying the groundwork to introduce TAAT to new global markets,” said Coscarella in an October 5 press release.

Disclosure: TAAT Global Alternatives is an annual sponsor of Cantech Letter.