County Durham CBD firm acquired from administration in pre-pack deal
Mon, 15 Jul 2024 | BUSINESS SALE
Dodd Heres Limited, a County Durham-based business that had been aiming to sell CBD-based wellbeing products, has been acquired in a pre-pack deal after falling into administration. Over recent years, the Consett-based company had faced significant difficulties attaining the regulatory licence required to sell CBD products.
The firm was founded in 2018 but only began trading in 2023, following a lengthy research and development phase. Despite being awarded a near £500,000 government grant in 2022, and attracting around £1.45 million in investment from shareholders, the company had reportedly struggled to be awarded a Food Standards Agency (FSA) licence.
The company’s products would have been aimed at fighting pain and helping to regulate conditions including type two diabetes. The government grant, meanwhile, was awarded to help the firm manufacture CBD-HQ, an oxidised version of CBD (the active ingredient in cannabis) that is reported to be more easily absorbed by the human body.
Without a licence, Dodd Heres turned to selling hemp products and attempting to sell CBD-HQ products on a business-to-business basis. However, this reportedly did not lead to sufficient business to generate turnover and profit growth. Since August last year, the company generated sales of £170,000 and was seeking further backing.
The company owed approximately £1.7 million to shareholders, including large sums owed to two shareholders, and faced rent arrears totalling approximately £40,000, as well as salary costs. As a result of its ongoing issues, Steven Ross and Allan Kelly of FRP Advisory were appointed as joint administrators of the business and undertook an accelerated marketing process that resulted in three bids.
The company’s business and assets have subsequently been sold to State of Mind Food Supplements Limited as a going concern in a pre-pack deal valued at £50,000. The deal also includes intellectual property developed by Dodd Heres relating to its accelerated oxidisation process used to get CBD-HQ from cannabidoil.
FRP said: "The company utilised all options to raise capital by way of director/shareholder loans, shareholder premium accounts and government grants where it was applicable to apply. Despite all efforts, the company's cashflow was such that the company could not meet ongoing and overdue liabilities and advice was sought from FRP regarding the financial position of the company."
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