(TAAT: CSE)  (TOBAF: OTCQB) (2TP2: FRA)

Why TAAT?

TAAT is a smokable alternative to tobacco cigarettes containing no nicotine and no tobacco.

The product has been meticulously engineered to closely emulate the sensory components of smoking a tobacco cigarette. Under the administration of experienced leaders from the tobacco industry, TAAT Lifestyle & Wellness Ltd. has developed a nicotine-free and tobacco-free smoking experience offered in “Original”, “Smooth” and “Menthol” varieties. 

• The global tobacco market is worth USD $814 billion
• It contains 1.3 billion tobacco users
• TAAT aims to break into it by offering a way for addicts to leave nicotine behind for good, in ways other disruptors to the tobacco and smoking industry – such as vaping – have not been able to
• TAAT aims to provide the closest experience to smoking tobacco to date and emulating all of the same sensations.

PROBLEM: Still the age-old problem in the smoking industry. Nicotine is addictive and tobacco is horrible for your health. 

SOLUTION: TAAT is trying to solve the problem from a new angle with its hemp-based cigarettes, in hopes that the experience it has created is so similar to that of traditional cigarettes that addicted smokers will make the switch. 

END GOAL: to build Beyond Tobacco into an iconic and recognizable American consumer brand. 

Competitive Advantages:

• Price – TAAT can offer its product at lower prices to traditional cigarettes, as there is no tobacco tax on the product
• Has achieved a tobacco-like taste in the cigarette
• Has positioned itself as a tobacco company would, in the same way Beyond Meat has included its products on shelves in the meat section of stores, and packaged their products as traditional meat products would

 

TAAT Fiscal Year 2022 Highlights in CAD

• Sequential annual revenue growth from $2,560,721 to $42,535,944 (cost of goods sold $1,655,360 and $38,794,122 for each respective period), inclusive of convenience wholesale revenues from ADCO Distributors, Inc. for the period of approximately 5.5 months between May 20, 2022 and October 31, 2022
• Successful acquisition of ADCO (announced in a press release dated May 20, 2022), an Ohio-based convenience and tobacco wholesaler established in 1960

 

Steps Taken to Start the Business

1. Agreed to low-cost commercial scale contract production with major cigarette manufacturer
2. Has acquired supply to produce 60,000 10-pack cartons of TAAT
3. Careful selection of Ohio and expansion states
4. Agreed to terms with major consumer-packaged goods agency CROSSMARK, who has previously developed the market share of similar space products such as e-cigarettes, and is working with TAAT to get their products on the shelves of more than 100,000 convenience stores served by CROSSMARK. 
5. Doubled production at main manufacturing plant in Las Vegas, Nevada
6. Launched Online Store in February 2021

Business Model 

TAAT’s online store launched in February 2021 and achieved:

• C$50,000 worth of sales in its first 48 hours, selling to 39 U.S. states
• Average order value of approximately $57 USD
• An average order size of 1.7 cartons
• Followed by C$100,000 worth of sales across its opening weekend online
• On the heels of this, launched an Explorer Bundle offering

Further Stats

One third of people who visited the TryTAAT landing page during the company’s digital marketing campaign in October 2020 requested a sample of the product.

• As a result, thousands of TAAT packages were shipped as samples to over 38 states late January 2021
• Has emulated all of the sensations of smoking through their 14-step patent-pending manufacturing process.
• As a non-tobacco product, TAAT cigarettes are exempt from the externality tax on traditional tobacco products, giving the company a serious competitive advantage with its pricing. 
• Nielsen reports that e-cigarettes & vaping - after 15 years - holds only a 5% share in the US Nicotine consumption market.
• Former lead strategist of cigarette power-player Phillip Morris International, Setti Coscarella, appointed as CEO.
• CROSSMARK has agreed to represent TAAT with over 100,000 convenience store connections.
• TAAT receives third reorder from UK Distributor 

Press Coverage: TAAT covered in Forbes article on February 3, 2021 that detailed the business.

Press Releases: 

 

 

Highlights of TAAT(TM) Forecasts for 2022 and 2023

• The Company is now positioned to generate substantial revenue growth attributable to its acquisition of HLND Holdings, Inc. ("HLND"); parent entity of ADCO Distributors, Inc. ("ADCO"), as announced in a press release dated May 20, 2022;
• The Company anticipates approximately CAD $88,000,000 in sales between June 1, 2022 and May 31, 2023;
• Repeat orders ("reorders") of TAAT(TM), which comprised over 54% of the Company's gross revenue in its Fiscal Q2 2022 (as detailed in its June 29, 2022 press release), are expected to continue at a steady pace as the Company attentively services its existing accounts while diligently capturing new market share;
• To exploit its recently acquired distribution capabilities, the Company plans to expand the scope of its offerings beyond TAAT(TM) Original, Smooth, and Menthol, with the objective of also becoming a global player in non-traditional smokable and non-smokable products; and
• Working towards a goal of shifting its model from being "product-centric" to "brand-centric", the Company expects to benefit considerably from its enhanced management capabilities between ADCO executive team members as well as the addition of 20-year global tobacco industry veteran Michael Saxon as CEO of TAAT(TM) (announced in a press release dated June 20, 2022).

TAAT(TM) Strategic Plan Action Items for 2022 and 2023

• The Company will continue to commercialize TAAT(TM) as a "category-creating" brand for nicotine-free and tobacco-free options suiting the preferences of adult smokers, capitalizing on its "early-mover advantage" in the emerging area of alternatives to traditional tobacco products;
• TAAT(TM) plans to broaden its domestic distribution in the United States through its newly acquired distribution arm in addition to leveraging its placements in convenience stores and gas stations in major national and global chains to introduce TAAT(TM) into additional brand-name consumer outlets;
• To introduce TAAT(TM) into new international markets, the Company is continuing to identify prospective expansion opportunities based on attractive market dynamics and receptive regulatory environments; and
• Gross product margin is to be maximized with continued emphasis on enhanced technologies, more expansive and efficient distribution networks, as well as the advanced V3 Beyond Tobacco(TM) formulation which is of significantly higher quality and more cost-effective to manufacture.

TAAT(TM) Formal Guidance for Revenue and Sales

• Anticipated revenues for the Company's fiscal year ending October 31, 2022 are CAD $92,000,000;
• Projected loss on operations for the Company's fiscal year ending October 31, 2022 excluding non-cash items is CAD $1,900,000; and
• The Company anticipates continued quarterly losses through the remainder of calendar 2022 as it invests heavily in brand-building, distribution, and further development of its nationwide sales network.

Marketing Efforts

1. 60-day advertisement slot across the 10,442 screens of 1,087 Ohio gas stations
2. The 15-second clip is expected to garner approx. 19 million impressions:  https://www.youtube.com/watch?v=o2pjhCG_R8s&feature=youtu.be

In a 2017 study published in the Preventive Medicine scholarly journal, it was concluded that nearly 6 in 10 smokers last purchased cigarettes from convenience stores & gas stations, with these retailer categories comprising more than two thirds of the most common purchase locations (69.1%).

Partnerships

• CROSSMARK, a Texas-based major sales agency with experience in the tobacco sector and relationships with over 100 000 convenience stores across the nation and a workforce of 25 000 sales employees has agreed to represent TAAT Beyond Tobacco cigarette cartons
• Partners with ADCO Distributors of Ohio who has lead them to opportunities with two other tobacco distributors in the state - Flichia Wholesale Distributing (located in Columbus) and JES Wholesale (located 20 miles east of Columbus) 

Patents/Intellectual Property  

• 17 trademark applications have been filed in 15 jurisdictions
• 54 trademark applications have made internationally to secure the brand in potential future markets as the company looks at expanding
• A patent-pending refinement technique is used in the manufacturing process of the cigarettes that creates a tobacco-like taste and aroma
• TAAT has hired Edmond DeFrank to organize and pursue its intellectual property dealings, has experience with Fortune 100 firms

Revenue 

In Ohio, approximately 60% of retailers who have carried TAAT™ for three or more weeks have reordered at least once, with several reorders being for a greater quantity than the first.

• THE MARKET:
  The U.S. tobacco market was valued at over US$100 billion in 2016 
• In volume terms, over 215 billion cigarettes were sold to 34 million adults in the U.S. in 2018

• Of those, almost two thirds smoked more than 15 cigarettes a day
  • Represents almost 14% of the adult population 
• TAAT Beyond Tobacco™, as a non-tobacco product, has a significant consumer price-driven advantage in many states
  

• State taxes vary, averaging $1.82/pack 
• High of $4.50/pack in D.C., low of $0.17/pack in Missouri
• Favourable regulatory environment allows TAAT to be sold at retail in most states
  
• If one pack of TAAT Beyond Tobacco™ a day was sold at 20% of all U.S. tobacco points of sale, TAAT would capture 0.25% of the market

• This would equate to approximately 2,700,000 cartons of cigarettes a year