GDHI did just $15K in gross profit for Q3, about half of what it did in Q2 despite adding 30-40% more stores. This means the stores that were fully stocked in Q2 sold fewer products in Q3.
The losses continue to mount as Q3 represents the third straight quarterly loss totaling ($285,000) YTD. The fact that gross profit fell by almost 50% despite adding stores and being no where near profitability demonstrates there is a clear large scale fundamental lacking in the overall business plan.
In short, there is little to no demand for GDHI's products. That will not suddenly change and sales will not spontaneously increase for no reason to a profitable level. Not when they are this far down and Q4 will be no different.
It does not matter if GDHI reaches their "goal" of 1000 stores this year. The gross profit per store per month is in the $8-10 range and it is simply not profitable to service a store for this amount. Even if this figure doubled or tripled or quadrupled it is still not enough.
Business is about two things, provide a service and make a profit. If you fail at either one you won't be in business very long. GDHI may provide a service but there is little demand for their service and they clearly aren't profitable.
Additionally, they have been less than forthright in company PR's first announcing a share retirement, then issuing the same number of shares without an equal announcement. They announced the receipt of $960K in private funding but have yet to account for it on any financial statement. They have issued shares far below market value. Their guidance has been questionable as earlier this year they stated they remained on track for their goal of $1M in gross sales and profitability. Sales are on pace to under perform greater than 60% and profitability for the year is out of reach.
At this point you really have to question how long GDHI can continue. GDHI has raised $382K through the sale of shares this year and that is the only thing that has kept them afloat. The number of available shares to issue is dwindling barring a reverse split.
At this point they really have three choices. They can continue to issue shares for needed working capital and stay the course. They can reevaluate the business plan and try a different approach although they will still need the capital to do this and many more months. And lastly they can call it a day and decide the business plan is not viable despite the best of intentions or effort. I think staying the course and hoping for profitability is a long shot. Facts are facts.
For shareholders none of the above options are good news and at this point the risk outweighs the reward. There is currently a $2.5M market cap and only $81K in shareholder equity.
Whether you hold, buy more or exit, Good Luck!
AI
