Nutritional High Signs a Purchase Agreement for Palo Verde LLC and Provides a General Corporate Update
Nutritional High International Inc. (CSE:EAT) (OTCQB:SPLIF) (“Nutritional High” or the “Company”) is pleased to announce that it has signed a purchase agreement for the acquisition of Palo Verde LLC (“Palo Verde”).
Palo Verde is a Colorado based processor and manufacturer of vape and edible products including vape cartridges, all-in-one vapes, syringes, chocolate edibles and infused pre rolls for the recreational and medical markets. These products are manufactured by Palo Verde under the award winning FLÏ brand. In addition, the Company owns the building and equipment which has been leased to Palo Verde since 2014.
In accordance with recent legislative and regulatory changes in the State of Colorado, publicly traded companies are now able to directly own licensed cannabis businesses in the state subject to the approval of the Colorado Marijuana Enforcement Division (“MED”) and the local licensing authority. On May 15, 2020 the agreement was signed, and an application has been submitted to the MED for approval of the change in ownership of Palo Verde.
In accordance with the purchase agreement, Nutritional High will acquire 100% of Palo Verde subject to the approval of the license transfer by the MED and by Pueblo County. The acquisition is arm’s-length with total consideration that includes the assumption of debt and a nominal cash amount. There is no finder’s fee associated with this transaction. Further details regarding the acquisition will be provided upon MED approval and closing of the transaction.
“The acquisition of Palo Verde represents an important milestone in the implementation of our branded manufacturing strategy,” said John Durfy, the CEO of Nutritional High. “We look forward to working with the team at Palo Verde to grow the business in Colorado and leverage their experience in other markets where we operate.”
Strategic Review Update
With recent changes in the environment for cannabis companies, the Company will refocus its resources on the segments of the business most likely to achieve profitability in the short term. Through development and marketing of in-house brands, the Company believes it can achieve improved profitability and value as opposed to licensing third party products and brands. This strategy has proven successful in Colorado where the FLÏ brand of cannabis-infused products have achieved success in the market winning the Leaflink 2019 best selling vape product.
On February 26, 2020, the Company announced that it has entered into a non-binding letter of intent to sell a controlling interest in Calyx to a strategic partner. Further details regarding Calyx and the status of this transaction will be provided shortly.
Oregon, Washington and California
Nutritional High continues to assess its assets and operations in Oregon, Washington and California as part of the strategic assessment of its overall business. The Company intends to continue to grow its current operations in Oregon with expansion of capacity and adoption of new products. Further, the Company expects to commence operations and relaunch its brands in both Washington and California. In California, Nutritional High will be focused on commercialization of in-house brands while leveraging its continued interest in Calyx for distribution.
Consistent with this brand focused strategy, the Company will discontinue production of all third-party products and terminate its licensing agreement with Docklight for the Marley brands in Washington and Oregon.
In Nevada, Nutritional High has an agreement to acquire 75% of Green Therapeutics, an award winning manufacturer of branded concentrates and premium flower sold in the majority of dispensaries across the state. Closing has been delayed due to a state wide moratorium on Cannabis licensing and transfers and the Company and Green Therapeutics continue to engage and work together to effect a closing.
The Company continues to asses it’s relationship with Golden Triangle Health Company Ltd. to manufacture and distribute branded products. Golden Triangle is a Thailand-based health and wellness company with a family of brands looking to successfully commercialize in the North American market.
As part of the strategic review, the Company has undertaken an effort to reduce its liabilities through the sale of Calyx, settlement of payables, renegotiation of lease agreements and repricing and conversion of the unsecured debentures. A proposal for the conversion of the unsecured debenture will be put forth in the meeting of the senior unsecured convertible debenture on June 24, 2020. Amendments and settlement of other debt is underway and further details will be provided in the coming weeks.
In the markets which the Company operates, cannabis has been deemed an ‘essential’ business which has allowed for continued operation during the COVID-19 crisis. Nutritional High has taken the necessary measures to ensure the protection of its employees, suppliers and customers. As was the case for many companies in the industry, during March we experienced a significant increase in business. Since this time social distancing limitations implemented in the retail channel have resulted in lower sales volumes. While we have not, to date, experienced product shortages, we are closely monitoring the condition of our supply chain and focusing our resources on adapting to the situation as it unfolds.
About Nutritional High International Inc.
Nutritional High is focused on developing and manufacturing branded products in the cannabis industry, with a specific focus on edibles and oil extracts for medical and adult recreational use. The Company works exclusively in jurisdictions where such activity is permitted and regulated by state law.
The Company has a strategy for acquisitions in extraction, production and sales sectors of the cannabis industry. Nutritional High has brought its flagship FLÏ edibles and vape product lines from production to market in various markets including Colorado where its FLÏ products are manufactured by Pale Verde, LLC. In California, the Company distributes products through its wholly owned distributor Calyx Brands Inc.
For updates on the Company’s activities and highlights of the Company’s press releases and other media coverage, please follow Nutritional High on Facebook, Twitter and Instagram or visit www.nutritionalhigh.com.
For further information, please contact:
Chief Financial Officer
Nutritional High International Inc.
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This news release may contain forward-looking statements and information based on current expectations. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Risks that may have an impact on the ability for these events to be achieved include completion of due diligence, negotiation of definitive agreements and receipt of applicable approvals. Although such statements are based on management’s reasonable assumptions, there can be no assurance that such assumptions will prove to be correct. We assume no responsibility to update or revise them to reflect new events or circumstances.
The Company’s securities have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or applicable state securities laws, and may not be offered or sold to, or for the account or benefit of, persons in the United States or “U.S. Persons”, as such term is defined in Regulation S under the U.S. Securities Act, absent registration or an applicable exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in the United States or any jurisdiction in which such offer, solicitation or sale would be unlawful.
Additionally, there are known and unknown risk factors which could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. All forward-looking information herein is qualified in its entirety by this cautionary statement, and the Company disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law. Some of the risks and other factors that could cause actual results to differ materially from those expressed in forward-looking information expressed in this press release include, but are not limited to: obtaining and maintaining regulatory approvals including acquiring and renewing U.S. state, local or other licenses, the uncertainty of existing protection from U.S. federal or other prosecution, regulatory or political change such as changes in applicable laws and regulations, including U.S. state-law legalization, market and general economic conditions of the cannabis sector or otherwise.