Nutritional High is primarily focused on developing, acquiring and designing products and brands in the marijuana-infused edible products and oil extracts sectors for medical and adult recreational use.
TORONTO, April 10, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (the “Company” or “Nutritional High”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) would like to congratulate Lineage Growth Company Ltd. (“Lineage”) on the signing of a definitive merger agreement of a reverse takeover transaction (the “Transaction”) between Lineage and FLRish, Inc., a California corporation d/b/a Harborside (“Harborside”) (see Lineage and Harborside’s press release on Feb 11, 2019).
Harborside currently carries Nutritional High’s flagship FLÏ products and the Company’s wholly owned distributor, Calyx Brands, Inc. (“Calyx”) supplies various other cannabis products to Harborside. Nutritional High also supplies its flagship FLÏ-branded products to Lineage’s Terpene Station dispensaries in both Eugene and Portland, Oregon.
Nutritional High would also like to report that it has signed a letter agreement with Lineage (the “Letter Agreement”) amending part of an amended and restated letter agreement (the “Lineage Agreement”) dated February 1, 2018, in order to facilitate and support the Transaction. Pursuant to the terms of the Lineage Agreement (see the Company’s press release on February 7, 2018), in exchange for certain financial covenants and financial support of Nutritional High, Lineage (among other consideration) issued to Nutritional High 1,250,000 common shares of Lineage, and was to reserve at least 20% of the dispensary’s shelf space for Nutritional High’s products, subject to availability of supply. Nutritional High’s financial obligations have since been extinguished. Nutritional High strongly supports the Lineage-Harborside Transaction and enjoys commercial relationships with both companies. As such, and conditional on the closing of the Transaction, Nutritional High has agreed to release Lineage of its shelf space obligation. The Company has also agreed to convert a $75,000 debt obligation it had from Lineage, into 454,545 additional common shares of Lineage at a deemed price of $0.165 per common share (the “Debt Settlement”). Completion of the Debt Settlement is subject to the approval of the Canadian Securities Exchange and the common shares will be subject to a four-month hold period in accordance with applicable securities laws.
The Letter Agreement regarding the release of its shelf space obligation was approved by the independent board members of Nutritional High with Adam Szweras and David Posner recusing themselves given their involvement with Lineage.
Jim Frazier, CEO of Nutritional High, commented, “This Letter Agreement is an important step in the development of a long-term sustainable relationship with Harborside and Lineage, which we have already cemented at the operational level via our FLÏ products and Calyx distribution.” Jim continued, “We want to grow our sales to Harborside and Lineage based on the quality and growing consumer demand for our products, as opposed to merely being a beneficiary of a contractual obligation. We look forward to deepening our relationship and working together in the States of California and Oregon.”
Peter Bilodeau, CEO of Lineage, added, “Lineage appreciates Nutritional High’s ongoing support for the Transaction, and we are pleased to announce the definitive merger agreement between Harborside and Lineage is moving towards completion. We look forward to new business opportunities and potential collaborations moving forward.”
Andrew Berman, CEO of Harborside, commented, “Harborside enjoys working with Calyx and is pleased to carry FLÏ products in Harborside. We have been receiving positive feedback about the FLÏ-branded product lines from our consumers. Harborside strongly appreciates the support and relationship that we have with Nutritional High and looks forward to the mutually beneficial growth of both businesses.”
TORONTO, July 02, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company“) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) is pleased to announce its financial and business results and wishes to provide highlights and commentary on the results for the third quarter ended April 30, 2019.
Gross Margin %
Lease and Interest Revenue*
Other Income (Loss)
Net and Comprehensive Income/(Loss)
Earnings/(Loss) per Share
All Figures in Thousands CAD, unless otherwise stated
Green Therapeutics (Nevada) and Palo Verde (Colorado) financials are not consolidated in these results
* Historically, revenue was derived from lease and interest income; beginning fiscal Q3 2018, the Company started to earn revenue from Cannabis sales
Q3 2019 Financial Highlights:
Revenue – $6.2 million from the sale of Cannabis related products primarily via its wholly owned distributor in California, Calyx Brands Inc. (“Calyx”).
– Represents an annualized revenue run rate of $24.6 million – Five quarters of continuous revenue growth starting Q3 2018, with the latest quarter representing an increase of 368% year over year in Cannabis sales.
– At the end of January 31, 2019, the Company has now recognized a trailing twelve-month revenue from Cannabis sales of approximately $22.1 million.
– Management fully expects to strengthen revenue growth from Calyx in the coming months, post activation of its new distribution facility in Chatsworth (more details below). The Company’s new facility enables Calyx to service the Southern California market from a local center, shortening sales cycles, increasing throughput volume and effectively uncapping revenue.
Gross Profit of 26.5%, indicating cost of goods sold of $4.5 million including costs of product purchase, direct labor related to products sales and an allocation of overhead directly attributable to product sales. Margin improvement of 1.5% over prior quarter.
Total operating expenses of $8.1 million, an increase of $1.0 million over prior quarter and $5.4 million over Q3 2018.
– In Q3 2019, the Company enhanced its internal controls – procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. As part of this, management diligently identified the need to record a loss and reserve on inventory of approximately $2.2 million, composed of $1.7 million in overstatement of inventory and $0.5 million in reserve for slow moving inventory. To ensure that any material recordings such as the above are minimized in the future, management has conducted a detailed review of current systems, workflow processes, and personnel identifying several areas of opportunities for improvements which include but are not limited to: enhancing and updating all SOPs related to inventory management and valuation tracking; reviewing Operations and Finance workflows and implementing advance training as needed; and upgrading key positions and inventory management systems.
– Excluding the above, year over year increase can also be largely attributed to the ongoing ramp up of Calyx operations and infrastructure to facilitate revenue and margin growth, along with inclusion of operating costs at FLI Labs NorCal and the Company’s La Pine facility in Oregon, increased promotional activities at Calyx, increase in corporate marketing costs and addition of members to senior management and strategic advisors.
Other Income loss of ($3.0) million in Q3, a change of ($2.0) million versus the prior quarter. The Company recorded the following one-time/non-recurring items relating to Pasa Verde LLC (“Pasa Verde”):
– Impairment: Due to loss of authorization for cannabis manufacturing at Pasa Verde in February 2019, the Company decided to recognize impairment loss (non – cash) of existing intangible assets (license, trade name and customer relationship) and goodwill, of approximately ($6.4) million, also due to a decision of the Company to apply for new local and state licenses.
– Consideration Payable: as part of the acquisition in July 2018, the Company was obligated to pay up to $6.9 million (“the Earn-out payment”) between 12 and 24 months of the closing date, based on certain performance milestones of Pasa Verde. In connection with the license cancellation in February 2019, Nutritional High has now completed a settlement agreement with the previous owner of Pasa Verde, as a result of which it recognized a gain of approximately $4.9 million due to a reduction in its total consideration payable. The settlement improves the relative financial metrics of the acquisition by significantly reducing future cash obligations, for the Company.
Excluding the above, foreign exchange gain/loss, unrealized changes in fair value of derivative liability relating to the Company’s convertible debentures and all other items, totaled another ($0.5) million.
Business Highlights: Q3 2019 and Subsequent
Nutritional High has strengthened its top management position with the appointment of Adam Szweras as CEO in June 2019. Mr. Szweras was a founder of the Company and has been active in its leadership since inception, most recently as Co-Chair of the board. Mr. Szweras is replacing Jim Frazier, who served as CEO of the Company since July 2016, and has stepped down to pursue other business opportunities. Mr. Szweras is a securities lawyer and an investment banking professional with a successful track record of incubating and scaling cannabis focused companies. He is also currently a director of several leading cannabis companies including Aurora Cannabis Inc., Harborside Inc. and Quinsam Capital Corp.
Calyx has established itself as one of the premier distributors of cannabis products, currently being the number one distributor of edible brands in California. It has delivered five quarters of consecutive revenue growth from Cannabis sales, with a continuous focus on same store sales growth and expanding its service footprint to currently 600 retail stores in the State of California. Simultaneously, it has built a robust data warehouse from its millions of sales transactions that can enable top tier market intelligence and analytics relating to both product categories/segments and geographic demand.
Management has executed on its strategy to equip Calyx with the infrastructure needed to effectively service the rapidly growing California retail landscape. In June 2019, the Company signed a non-binding letter of Intent (“LOI”) with Good Vybes, LLC (“GV”) and Hannah Ashby (“Ashby”) to provide a Southern California base of operations for Calyx, located in Chatsworth (“Chatsworth”). The Company has also funded the build out completion of Chatsworth, after which, Calyx and Ashby will service Calyx’s Southern California clients on an exclusive basis. This additional facility enables the Company to expand the scope of its services to areas such as Los Angeles, Long Beach, Palm Springs/Palm Desert, the Inland Empire and San Diego County.
In June 2019, the Company received its provisional distribution license from the State of California for NH Distribution California, LLC, located in Sacramento, and will commence distribution operations from this location as well, upon receipt of the Business Operating Permit (“BOP”). The Company’s distribution facilities in Oakland, Sacramento and Chatsworth together make up Nutritional High’s top tier distribution network in California, cementing its capability to service the 1,000 – 2000 dispensaries expected to open in the State. This extensive network provides the architecture towards a step change in on time delivery and pickup, delivery accuracy and minimizing storage demands for retailers.
Nutritional High also rapidly moving forward with the build-out of FLI Labs NorCal with the goal of solidifying its manufacturing footprint in California. The Company has engaged in discussions with the City of Sacramento Cannabis Policy & Enforcement (the “City”) and is proceeding to apply for local and State licensing. The Company expects the build-out to be completed before end of 2019, and the BOP is expected to be issued prior to year-end.
In May 2019, Nutritional High and Green Therapeutics (“GT”) amended the MIPA (“Amended Agreement”) to exclude certain assets and accompanying intellectual property which were not core to the Company’s manufacturing and distribution focused business model, reducing the purchase price by 50% to USD $9.0 million. Under the Amended Agreement, at closing of the acquisition of a 75% interest in Green Therapeutics, Nutritional High’s Nevada operation will include Green Therapeutics’ currently operating cultivation and manufacturing licenses, a dispensary license, and a distribution license. Excluded from the Amended Agreement are one cultivation and one manufacturing license, non-core brands marketed by GT in Nevada, and the planned purchase of a parcel of land which had been intended for cannabis cultivation. By reducing the purchase price and only acquiring the most accretive assets, the amended agreement allows the Company to remain lean and focused on its core value proposition and drive shareholder value. Closing is pending approval by Nevada State and municipal authorities, expected shortly. In the interim, the Company and Green Therapeutics are considering completing an escrow closing while awaiting State and local approvals. Green Therapeutics’ financials are not yet included in Nutritional High’s financial reporting.
In Colorado, the Company currently leases its Pueblo, property and equipment to Palo Verde LLC (“Palo Verde”), an independent third-party processor licensed by the State of Colorado, and Palo Verde produces the Company’s branded products under a licensing agreement. In May 2019, Colorado Governor Jared Polis signed into law HB19-1090 – “Publicly Licensed Marijuana Companies” which repeals the provision that prohibits publicly traded companies from holding a marijuana license. The Bill was passed by the Colorado Legislature on April 27, 2019, and was sponsored by two Democrats and two Republicans. The new law paves the way for Nutritional High to potentially gain direct ownership interest in MED-licensed entities. Palo Verde also remains laser focused on revenue growth, developing its own distribution network and the development of new product categories for both the recreational and medical markets. Palo Verde’s financials are not included in Nutritional High’s financial reporting.
In Washington, the locally licensed entity to whom Nutritional High has sublicensed the rights for Marley Natural, is currently in the planning process of a Marley re-launch in the state focusing on premium concentrate products. In Oregon, the Company is laser focused on a re-defined commercial plan to capitalize on the fast-growing segments of the market, within the edibles, concentrates and pre-rolls categories.
In March 2019, the Company entered into a consulting agreement with Thai political operator and businessman, Tom Kruesopon, to develop business opportunities for Nutritional High in Asia. Mr. Kruesopon will assist Nutritional High in developing opportunities in legal jurisdictions across Asia, as well as bringing Asian brands and products to North America. As part of the arrangement, Apple Wealth Holding Company Limited (“AWH”), an affiliate of Mr. Kruesopon, completed a non-brokered private placement (the “Offering”) whereby AWH purchased an aggregate of 5,000,000 common shares for gross proceeds of C$1,350,000.
The Company continues to manage its cash position to ensure liquidity and execution of its growth initiatives. Notably, on May 29, 2019 (“Closing Date”), the Company closed a brokered private placement and issued 18,117,000 Units at $0.20 per Unit, for gross proceeds of $3,623,400. Concurrently, 7,670,000 Units were issued in the non-brokered private placement at $0.20 per Unit, for gross proceeds of $1,534,000. Each Unit consists of one Common Share and one Common Share purchase warrants (“Warrant”). Each Warrant entitles the holder to purchase one Common Share, at a price of $0.30 for a period of 36 months (the “Expiry Date”) from Closing Date.
“Own the pipeline, control the shelf space – That is the strategy on which we continue to focus as we continue on our way to becoming a market leader in cannabis extraction, infused product manufacturing, branded products and distribution,” commented Adam Szweras, CEO of Nutritional High. “Our model in California has started to show its impact on our performance and we intend to replicate that strategy in the other states where we operate. The Green Therapeutics deal is expected to close next quarter and together with the new developments in Colorado and Washington, Nutritional High’s business plan is coming to fruition and we’re poised for success well beyond 2019. As part of our corporate strategy, we will aggressively seek out M&A opportunities with the right players in the cannabis distribution and manufacturing space to create further value accretion for our shareholders.”
TORONTO, June 24, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) has appointed Adam Szweras as the new Chief Executive Officer of the Company. Mr. Szweras was a founder of the Company and has been active in its leadership since inception, most recently as Co-Chair of the board. Mr. Szweras is replacing Jim Frazier CEO of the Company since July 2016, who has stepped down to pursue other business opportunities. Mr. Frazier has also resigned from the board of directors of the Company, but will continue working closely with Mr. Szweras in a consulting capacity focused on sales and launching of new product offerings.
Mr. Szweras co-founded Nutritional High along with David Posner, who will continue on as Chairman of the Company. Mr. Szweras is an experienced entrepreneur, securities lawyer and investment banking professional with an extensive background in corporate finance and cannabis-focused strategy development. He has grown several companies through his merchant bank, the Foundation Markets group of companies, which includes Foundation Markets Inc., a Toronto-based investment bank and Exempt Market Dealer, and FMI Capital Advisory Inc., which provides consulting and advisory services to high growth companies listing on Canadian stock exchanges. Mr. Szweras is a partner with the law firm Fogler, Rubinoff LLP where he is a member of its securities law group. Mr. Szweras has served on many corporate boards throughout his career and is currently a director of several leading cannabis companies including Aurora Cannabis Inc., Harborside Inc. and Quinsam Capital Corp. Mr. Szweras is also a director of leading irrigation company Water Ways Technologies Inc.
“I’m excited for the opportunity to take a more hands-on approach and grow the Company,” commented Mr. Szweras. “We will focus our efforts on strengthening and expanding our distribution operations in California, and our manufacturing and branded products business in states we operate with a particular focus on California, Nevada and Colorado.”
Mr. Szweras added: “Our distribution business in California is our engine and we expect to invest in technology and infrastructure to improve service, dispensary reach and margins. And our manufacturing and branded products businesses will target specific emerging and high growth categories with a view to cooperative and mutually beneficial co-existence with our partners on our Calyx distribution platform. In this regard, we will seek strategic long-term relationships with key distribution customers and aggressively seek out M&A opportunities.”
“We are pleased Adam has agreed to take on this new role with Nutritional High,” said Company Chair, David Posner. “We have great confidence in his leadership qualities and will work closely with him to capitalize on strategic opportunities for the Company.” Mr. Posner added: “We appreciate Jim’s significant contribution to the success of the Company and we look forward to continuing to work with him in a new capacity as he pursues other business opportunities.”
(GlobeNewswire) – Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) is pleased to announce its Sacramento facility has received its provisional distribution license from the State. The facility will commence distribution operations upon receipt of its local permit.
Last year we outlined our distribution strategy in California. This license is another step towards our goal of becoming the largest distributor of cannabis products in the State, commented Adam Szweras, Co-Chairman of Nutritional High. The Sacramento facility, together with our Oakland and Chatsworth hubs, forms the backbone of our distribution architecture in California and allows us to expand the reach of our brand portfolio.
According to GreenWave Advisors, legal cannabis sales in California are expected to grow from approximately $2B in 2018 to $6.5B by 2022. The number of licensed dispensaries grew from ~450 in Q3 18 to 650 in Q4 18, but penetration remains low compared to Colorado where there are 540 retail licensees with a population of just 5.6 million.
Our statewide facility architecture is designed not just to service todays 600 stores, but the 1000-to-2000 or more dispensaries we expect in California within just a few years, said Dakota Sullivan, CEO of Calyx Brands. Having our main warehouses located on key transportation arteries in Sacramento and Chatsworth allows us to move product from growers and manufacturers all over the State into our supply chain quickly and with less cost. By plugging in flexible shipping hubs such as our Oakland facility as well as Chatsworth that are in the heart of the fastest growing markets in Northern and Southern California, were able to deliver to dispensaries faster and more frequently for more brands, simplifying life and reducing storage demands for retailers.
TORONTO, June 05, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) has signed a non-binding letter of Intent (“LOI”) with Good Vybes, LLC (“GV”) and Hannah Ashby (“Ashby”) to provide a Southern California base of operations for the Calyx Brands’ (“Calyx”), the wholly owned cannabis products distributor of the Company. The deal provides the Company with an additional distribution center in Southern California, effectively doubling statewide distribution capacity. This additional footprint enables the Company to expand the scope of its services to communities such as Los Angeles, Long Beach, Palm Springs/Palm Desert, the Inland Empire and San Diego County, which represent the largest number of licensed dispensaries in California and where the majority of newly licensed retailers are expected to be opening over the next 24 months (according to temporary licensing data from the Bureau of Cannabis Control (“BCC”)).
“This new distribution hub allows us to improve our quality and speed of service to hundreds of dispensaries across Southern California,” commented Dakota Sullivan, CEO of Calyx Brands, the Company’s wholly owned licensed distribution subsidiary. “Nutritional High continues to make strong progress in California, and with this agreement we are able to better fulfill the needs of the fastest growing cannabis markets in the State. Since Nutritional High acquired Calyx in March 2018, we have increased our revenues more than sevenfold and expanded our service footprint to more than 500 dispensaries. We look forward to continuing our momentum through 2019 and beyond.”
Ashby holds a temporary distribution license issued by the BCC to operate a cannabis distribution business at a property located in Chatsworth, CA (“Chatsworth Licensed Premises”), leased by GV. Ashby is in the process of updating the licenses for GV’s name, which remains subject to regulatory approval.
Nutritional High has funded the completion of the build-out of the Chatsworth Licensed Premises, and the LOI provides for the parties to enter into sublease agreements, services agreements and other ancillary agreements (the “Definitive Agreements”) whereby Calyx and Ashby will service Calyx’s Southern California clients on an exclusive basis. Services offered to clients will include management of laboratory testing, sales and marketing support, packaging, warehousing, tax collection, transportation and fulfillment. Nutritional High will provide GV with an operating line of credit in an amount to be approved by the Company from time-to-time, and certain other financial support of loans and milestone-based payments on meeting licensing milestones of up to US$330,000. The build-out of the Chatsworth Licensed Premises is complete and operations as contemplated under the LOI will commence upon receipt of local authorization, expected this month.
Subject to receiving requisite regulatory approvals, Nutritional High has the right to acquire a 51% equity interest in GV for US$200,000 (made up of the conversion of US$100,000 of its loan to GV, and payment of US$100,000 to Ashby. Ashby will receive a preferred return of US$120,000 per year before any dividends are paid. At the end of five years, Nutritional High shall have an option to acquire Ashby’s remaining 49% interest for $1.00. Ashby will have the right to have GV distribute her products as a mail order cannabis subscription box service as well as other non-competitive products to Calyx or Nutritional High.
TORONTO, May 30, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company“) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU)comments on the signing into law Colorado’s House Bill 19-1090 yesterday afternoon. The new law will permit publicly traded companies to hold marijuana licenses in the State.
Yesterday, May 29, 2019, Colorado Governor Jared Polis signed into law HB19-1090 – “Publicly Licensed Marijuana Companies” which repeals the provision that prohibits publicly traded companies from holding a marijuana license. The Bill was passed by the Colorado Legislature on April 27, 2019, and was sponsored by two Democrats and two Republicans.
Colorado was the first state in the United States to legalize cannabis for adult use and the initial regulations introduced in 2014 did not permit any out-of-state ownership of MED-licensed cannabis businesses. The regulations were subsequently amended to permit some out-of-state ownership for qualified US residents, capped at 15 individuals, effectively barring public companies from having direct ownership of MED-licensed businesses.
“The new legislation is a win-win for Colorado and the cannabis industry,” commented Adam Szweras, Co-Chairman of Nutritional High. “According to BDS Analytics, Colorado sold $1.5 billion of legal cannabis in 2018, second only to California. This new legislation should help maintain Colorado’s status as one of the largest cannabis economies in the world, and effectively opens the floodgates by granting Colorado-based cannabis companies additional avenues for investment. For Nutritional High, the new law paves the way to potentially gaining direct ownership interest in MED-licensed entities.”
The Company currently leases its Pueblo property and equipment to Palo Verde LLC (“Palo Verde”), an independent third-party processor licensed by the State of Colorado. Palo Verde produces various of the Company’s brands under a license agreement. Palo Verde currently manufactures multiple SKU’s of the Company’s FLÏ branded cannabis products, including: FLI Vape Pens, FLI Syringes, FLI Extracts, FLI Chocolates and FLI Space Joints.
“We’re pleased with the progress Palo Verde continues to make as it expands its footprint in the State of Colorado,” says co-Chairman David Posner. “We’ve seen Palo Verde grow from a startup with only a couple of employees to an established player in a mature market. Our strategic relationship with Palo Verde has allowed us to increase visibility of our FLI brand in one of the largest markets in the country. Growing sales together with recent regulatory headwinds are exciting developments for us and our strategic partners. We have learned a lot on this journey and feel that our experience and connections will enable us to quickly identify opportunities to continue to build value.”
TORONTO, May 21, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) is pleased to announce it has entered into an agreement (the “Amending Agreement”) amending certain terms in its membership interest purchase agreement (“MIPA”) between the Company and Nevada-based Green Therapeutics, LLC (“GT”) (as previously announced October 1, 2018).
The MIPA has been amended to exclude certain assets and accompanying intellectual property which were not core to Nutritional Highs’ manufacturing and distribution focused business model, reducing by 50% the purchase price for its interest in GT. At closing, GT will hold its currently operating grow and manufacturing licenses, as well as a dispensary and distribution license authorizations recently awarded. Closing is pending approval by Nevada State and municipal authorities, which approvals are expected in due course.
“We are very pleased to have negotiated this spin-out of non-core assets, which primarily relate to flower cultivation,” commented CEO Jim Frazier. “By facilitating a sale of these assets, we continue our focus on manufacturing and distribution, and limit exposure to growing of cannabis flower, a sector which we believe will continue to be commoditized. This development will allow us to focus our efforts on accelerating our planned rollout of Nutritional High’s edible and extract products in Nevada in the coming months, and launch of distribution operations in Nevada.”
Pursuant to the Amending Agreement, the purchase price to acquire a 75% membership interest in GT has been reduced from USD $18 million to USD $9 million, allowing GT to divest one of its two grow licenses and one of its two manufacturing licenses to Australis Capital Inc., along with certain non-core brands marketed by GT in Nevada. Also excluded is the planned purchase of a parcel of land in North Las Vegas which had been intended for cannabis cultivation. The USD $9 million purchase price will be paid as follows:
USD $3 million invested in the GT business for expansion, advanced over 18 months;
Issuance of a number of common shares of Nutritional High to the founding members of GT equal to USD $4 million. The common shares will be issued at a price equal to the lesser of (a) USD $0.27 per common share; or (b) the 20-day volume weighted average price (“VWAP”) of Nutritional High shares on the Canadian Securities Exchange, converted into USD on the day that is three business days prior to the closing date;
Issuance of secured convertible promissory notes (the “Notes”) to the founding members of GT for an aggregate principal amount of USD $2mm. The first USD $1mm of the Notes shall have a maturity date of one year from the date of issuance, and the remaining USD $1mm shall mature two years from the date of issuance. The Notes will be convertible into common shares of Nutritional High at a price that is the lesser of: (a) USD$0.27 per Nutritional High share, or (b) the 20-day VWAP price of NHI on the Canadian Securities Exchange, converted into USD on the day that is three (3) business days prior to the closing date.
TORONTO, May 13, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) is pleased to report acceleration and expansion in the Company’s California operations.
April 2019 was a record sales month for Calyx Brands Inc. (“Calyx”), Nutritional High’s wholly owned California-based distributor. Calyx recorded monthly revenue in excess of US $1.85M (~CAD $2.5M), reflecting strong demand for core products driven by development of additional distribution capacity. In addition, estimated and unaudited gross margin rose to 15%, in line with management’s expectations. Calyx continues to expand its distribution network and now services more than 500 licensed retail dispensary outlets in the State of California.
As disclosed in the press release dated April 1, 2019, for the 12 months ended January 31, 2018, Calyx reported revenue of approximately $17.2 million with sales in the second half of the period increasing by 96% to $11.4 million from $5.8 million in the first half of the period. Over the same period, gross margin increased by approximately 10%.
The Company is also pleased to announce that it has received approval to modify the conditional use permit (“CUP”) attached to Nutritional High’s FLI Labs NorCal facility in Sacramento, California. Pending final regulatory approval, the modification will add another distribution hub to Calyx’s network and reinforce its position of leadership in the burgeoning Northern California cannabis market. Upon receipt of the requisite building permits, the Company will commence build-out of the warehousing space, seek a certificate of occupancy and apply for an operating permit to launch distribution operations. Once operational, the additional infrastructure will significantly increase the Company’s ability to influence retail shelf space in California via enhanced market access, order fulfillment frequency and wider breadth of branded product offerings.
“We maintain our commitment to becoming one of the leading manufacturers and distributors of cannabis products in Western US,” commented Adam Szweras, Co-Chairman of Nutritional High. “We have proven out our strategy in California, where we are the top distributor of edibles, and will continue expanding our footprint in the state. We are moving ahead with core strategic focus on California and Nevada, while progressively executing our commercial growth plans in other jurisdictions as well.”
Nutritional High and Tres Ojos Naturals LLC (“Tres Ojos”) mutually elected not to proceed with the previously announced acquisition (announced January 29, 2019). The Company will however continue to distribute SolDaze through its wholly-owned subsidiary, Calyx and very much looks forward to a continued close relationship with the SolDaze team.
What does the future hold for Canada’s legal cannabis landscape? Since legalization spread across the nation on October 17, 2018, Canada has undergone a rapid transformation. The “Cannabis Act” or “Bill C-45” will likely (eventually) dissolve both the black market and Canada’s medical cannabis industry; melding the North American country’s legal weed industry into a hotspot for alternative industries to cash-in on cannabis.
After becoming the first G7 nation to fully legalize recreational cannabis, Canada set a wave in motion across the cannabis industry at large. Investors from overseas immediately started taking interest in Canada’s cannabis industry during the build-up to legalization, with no sight of things slowing down anytime soon.
Nonetheless, nobody is entirely sure just how large the market will be. Then again, since 4.9 million Canadians admitting to consuming some form of cannabis in 2017, changing attitudes on the plant are sure to influence the numbers that are effectively steering the nation’s success.
Federal Cannabis Legalization in the U.S. Will Influence Canada’s Industry
Home to some 37.1 million people, Canada’s population is very close to California’s population of 39.7 million. How it will fare in the revenue stakes compared to the U.S. cannabis industry depends on whether or not the U.S. embraces federal legalization.
During the first 24 hours of legal cannabis sales in Canada, Ontario’s online store had registered 100,000 orders. During the first two weeks of legalization, $43 million CAD was raked in by legal cannabis businesses, such as dispensaries. Of that amount, Ontario and Quebec accounted for half of the sales.
A rush of investment is sweeping across the Great White North as a result of rising consumption and sales. Many companies are capitalizing on Canada’s cannabis industry, even though it’s in its early stages. Nutritional High (NH) is a prime example.
By venturing into business partnerships spread across Colorado, California, Canada, Nevada, Oregon, and Washington, NH is positioning itself as a well-established company that is adapting to growth in an expanding industry.
Companies in the Cannabis Space Must Capitalize on Trends
In order to stay abreast of evolution amidst the unfolding of Bill C-45, cannabis companies need to focus on trends and meet consumer demands within those emerging avenues. Thanks to scientific research and state-of-the-art technology, cannabis product manufacturers are finding innovative ways to deliver consumers a dose of cannabinoids.
Take NH’s FLÏTM product which includes a range of cannabis-infused mints. Available in four unique flavors, the mints are infused with a specific dosage of THC or CBD – perfect for controlled dosing. FLi is just one example of a brand acquired by NH. Through bolstering its portfolio with an assortment of products that ensure convenience, discretion and most importantly, safety, NH is well-positioned to infiltrate Canada’s growing market.
Recently, the company solidified its entrance into the Canadian cannabis market when it revealed that its joint venture agreement Abba Medix, who recently received an oil extraction license from Health Canada.
Infused edibles aside, the cannabis market is also welcoming a number of new products designed to simplify dosage, usage, and overall efficacy. Those products include vaporizers, lotions, sprays, tinctures and more. Capitalizing on these trends may prove volatile, but as more Canadians open up to the idea of legal weed, demand for product diversity will grow.
Partnerships Across the Border Expected
The recent Democratic House flip has changed the outlook for federal cannabis legalization in the U.S. What’s more, since former anti-cannabis Attorney General Jeff Sessions stepped down from his role, the future looks green for federal cannabis legalization in the U.S.
What’s this got to do with the future of Canada’s cannabis industry? Well, as it blossoms, investor attention will be piqued from far beyond the nation’s borders.
Cannabis industry investors could take inspiration from NH, which has already planted roots in 5 of the largest legal U.S. cannabis markets. Currently, the company is working on various stages of operations in California, Colorado, Oregon, Nevada, and Washington. Combined with its involvement in America’s northern neighbor, the Canadian company is setting the foundation for success.
Canada’s Provincial Governments will Rake in Profits and Taxes
Amidst the wake of Canada’s cannabis legalization, analysts are getting excited calculating just how much money the market might yield. According to a report from the Canadian bank CIBC, the nation will swell to CAD $6.8 billion by 2020, with residents expected to consume a whopping 800,000 kilograms (1.7 million pounds) on an annual basis.
CIBC speculates that, of the aforementioned projected figure, Canada’s provincial governments will harvest $3 billion CAD in earned profits and taxes. Conversely, Deloitte predicts that the recreational market alone could top $8.7 billion CAD annually and create an “overall economic impact” amounting to $22.6 billion.
After all, a significant portion of the industry will rely on businesses that don’t even touch the plant, such as companies that manufacture and supply vaporizers, cannabis grows, LED lamps and fertilizers.
However, since these figures were conjectured prior to Canada’s cannabis legalization rolling out late last year, it’s really just a case of waiting and seeing how the Cannabis Act’s first year of passing will pan out.
As cannabis consumption and purchasing becomes more widespread throughout North America, the value of the legal cannabis industry isn’t the only thing that is skyrocketing. Investment activity is permeating all areas of the cannabis industry, with many early investors seeing some attractive returns. Moreover, cannabis consumer spending is expected to see gains of 40% this year, tempting investors further to add cannabis to their portfolios.
Investors have already placed a significant amount of capital into the industry… to the tune of approximately $1.23 billion within the first five weeks of 2018. This figure was registered by the Viridian Cannabis Deal Tracker and it is sure to increase significantly for 2019. Compare it to the $178 billion of investments that the industry received within the first five weeks of 2017 and the 600% growth in cannabis investments.
Cannabis reform is contributing to an ever-growing list of publicly listed cannabis companies. However, volatility is suffused throughout the current state of the cannabis market. Government crackdowns and existing lack of federal support for legalization in the U.S. may unexpectedly propel investors into panic mode at any moment; prompting them to shift money elsewhere.
The risks shouldn’t discourage you from making an investment into the industry. Established companies could present an opportunity to secure a long-term, progressive growth amidst the volatility that comes with cannabis investing.
Cannabis Investing is Becoming More Common
Widespread cannabis legalization has enabled cannabis to gain recognition for its potential medicinal benefits, which range from pain and arthritis relief, to relaxation, anxiety management and even as a potential treatment for palliative care.
Moreover, cannabis has emerged as a popular substance for recreational leisure. Combined, the industries present an alluring investment, with analysts predicting the industry will pull in $57 billion by the year 2027.
In 2017, a Statista survey found that 19% of respondents had invested in cannabis companies. Some of those companies are closely involved with processing or distributing the plant itself, whereas others even come into close contact with the plant. The diversity of investment options is an indication of the potential that comes with cannabis investing. By the close of 2017, cannabis retail and cultivation investments topped $236 million.
With the recent passing of the Hemp Farm Bill in 2018, investor opportunities are expanding. This will further bolster development in various areas of the industry, such as agriculture technology, ancillary products and services, biotechnology, cultivation and retail, consulting services, products and extracts, industrial hemp, organic farming, and much more.
Consequently, cannabis stock volatility is likely to continue as the legal landscape evolves. It’s inevitable for an industry undergoing such radical transformation.
Medical and Recreational Cannabis are Two High-Growth Investment Sectors
Canada is currently paving the way for complete cannabis legalization, having recently passed the long-awaited “Cannabis Act” or “Bill C-45” on October 17, 2018. A Deloitte report revealed how Canada’s legal recreational cannabis market could generate $4.34 billion this year.
If the U.S. follows in Canada’s footsteps, the nation could yield $75 billion by 2030, according to Cowen & Co. Canada’s cannabis market is expected to completely eclipse its medicinal cannabis market as a result of legalization, fueling a strengthening industry that is attracting investors from different avenues.
Nonetheless, companies like Nutritional High (NH) are capitalizing on the rise of cannabis-infused products across North America. With legalization for this segment of products in the works in Canada, the company has signed agreements in Colorado, California, Nevada, Oregon, Illinois, Washington, and Canada to produce and distribute cannabis infused infused products.
The Best Investments Can be Created By Volatile Markets
In spite of the volatility that is attached to cannabis investing, huge opportunities can arise even when stocks are tumbling. That’s not to say that you must invest when a cannabis stock is declining. Rather, place a focus on established companies with properly established fundamentals.
Using NH as another example, the company’s Chief Executive Officer (CEO), Jim Frazier, boasts 23 years of experience in the food industry. This knowledge has been incredibly important as the company’s branded products are heavily focused on the edibles (food/beverage) segment. The rest of the Nutritional High executive team is also well-versed in other arenas of the industry, creating a well-rounded wealth of knowledge.
Being thoughtful when investing in cannabis stocks could mean the difference between a safe and an unsafe investment. Sidestepping risk is possible when you track down established companies that understand how to navigate the waters of a volatile market.
Nutritional High is one of many leading Canadian cannabis companies that have demonstrated an understanding of the market. Based on the trends to date, investing in well-established cannabis companies can yield significant returns.