CORPORATE PROFILE Q3 2017 - Nutritional High
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CORPORATE PROFILE
Q3
Nutritional High International Inc. 2017
CSE:EAT OTCQB:SPLIF Frankfurt:2NU
Forward Looking Statements and Risk Disclosure The information contained in this presentation does not purport to be all-inclusive or to contain all information that prospective investors may require. Prospective investors are encouraged to conduct their own analysis and reviews of the Company and of the information contained in this presentation. Prospective investors should consult their own professional advisors to assess their potential investment in the Company. The remarks contained in this presentation (“Presentation”) may contain forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the Company’s operations or to its business environment. These statements are identified by the use of forward-looking terminology such as “believes,” “plans,” “intend,” ”scheduled,” “potential,” “continue,” “estimates,” “hopes,” “goal,” “objective,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by the Company. The reader is cautioned that no statements contained in Presentation should be construed as a guarantee or assurance of future performance or results. These forward-looking statements involve risks and uncertainties, including those identified within this Presentation. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations, and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by the Company in it’s reports filed on SEDAR that attempt to advise interested parties of the risks and factors that may affect the Company’s business. The information in this current report shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended. The furnishing of the information in this Presentation is not intended to, and does not, constitute a representation that such furnishing is required by Regulation FD or that the information this current report contains is material investor information that is not otherwise publicly available. This summary has been provided to the recipient for information purposes only and no representation or warranty, express or implied, is made as to the completeness or accuracy of the information contained herein. The contents are not to be reproduced or distributed to the public or press. The information contained herein is not guaranteed as to its accuracy or completeness. Throughout this presentation various logos and trademarks will be used. These trademarks and logos are the property of their respective owners. An investment in the Company's securities should be considered highly speculative. There is no guarantee that an investment in the Company will earn any positive return in the short or long term. An investment in the Company is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. There are certain risk factors associated with an investment in the Company’s securities. Nutritional High International Inc. 2
Company Profile
• Nutritional High is a Canadian public company focused on the U.S. medical and
recreational marijuana industries
Building a robust production
• Focus is on the high margin, high growth segments - edibles and oil extracts and distribution platform for
market nationally branded
• Currently have active projects in 4 U.S states: marijuana-infused products
• Colorado: Operating one of Colorado’s largest and most automated oil First marijuana company to
extraction and infused edibles facilities: MIPs License secured through successfully complete an IPO
agreements with Colorado-based Palo Verde LLC (not an RTO) in the Canadian
market, raised over $12
• Illinois: Operating in Effingham, IL since Sept 2016. The only dispensary in
ISP District 12 in over 60 mile radius million to date
• Nevada: In a process of acquiring producer & processor licenses Nevada,
and a real estate property to which the licenses are attached
• Oregon: Closed acquisition of property in La Pine, Oregon, and in the
advanced stages of an application process to manufacture cannabis
concentrates and edibles in Oregon
Check out our corporate
• Acquired strategic interest in Aura Health – a private company focused on video by clicking here:
developing medical cannabis clinics in various US states
• Forming a strategic partnership with Lineage Grow Company Ltd. which
intends to build cannabis cultivation facilities in NV and CO at NH’s properties
• Pursuing expansion in additional states – initially targeting WA, CA, AZ, FL, OH
and MI
Nutritional High International Inc. 3
Leadership Team
Jim Frazier Adam K. Szweras
Chief Executive Officer Corporate Secretary and Director
• Over 23 years of experience in the food industry and a proven • Partner with the law firm Fogler, Rubinoff LLP
`
track record of developing and implementing branded and • Chairman and Founder of Foundation Markets Inc., a
private label programs and driving profits Toronto-based investment bank, and Exempt Market Dealer
• Owns and operates a successful Florida-based candy and • Expertise in recreational and medicinal marijuana laws in the
chocolate business which has been a well-known manufacturer of US and Canada
confectioneries for over 40 years • Practiced securities law since 1997
• Managed the expansion of his plant facilities and significantly
expanded sales and developed new customer bases across all
retail channels Billy Morrison
Oil Extraction Consultant and Director
David Posner • Founded Peloton Pharmaceuticals, where he designed,
Chairman of the Board and Director developed, and deployed nearly autonomous grow system
• Brought “Hempen Gold,” the first hemp-infused beer to Canada that mitigates labor and reduces cost
• Imported and created marketing and branding initiatives for • Experience in operating marijuana companies, founding The
various other alcoholic products in Canada Union Collective, a successful delivery dispensary; Capstone
• Acquisitions Manager for Stonegate Properties Inc. where he Analytical, one of the first Bay Area thin layer
managed real estate and brokered deals in Canada and Oklahoma chromatography testing facilities; and Temez Extracts
• Pioneered a patented water conserving technology that
Amy Stephenson eliminates water change outs
Chief Financial Officer
• Over 20 years senior management and capital markets experience,
10 of which were spent in the CFO position for various public Landon Long
companies, incl. Ceres Global Ag Corp., Goldeye Explorations Ltd., Operations Manager
Petroworth Resources Inc., and Augen Capital Corp • Founded Infusion Factory, one of the nations first cannabis
• As former CFO of Bedrocan Cannabis Corporation, Ms. specific contract manufacturers and white label services
Stephenson has a strong familiarity of the cannabis and hemp provider focused on the formation, production and
industries commercialization of safe, consistent, dose accurate and
• Ms. Stephenson is a CFA Charter holder, a Chartered Professional compliant medicinal products.
Accountant (CPA, CMA) and a member of the Financial Executive • Owns and operates a successful vapor hardware company
International (FEI) that has been creating innovative medicinal, vapor and
ancillary consumer products since 2011.
Alex Storcheus • Over 20 years of combined Marketing, Production and
SVP, Corporate Development Cannabis Specific Expertise.
• Mr. Storcheus has been involved with Nutritional High since its
inception in 2014 and is currently an SVP, Corporate Finance at
Foundation Markets - a Toronto-based merchant/investment
bank
• In his current capacity Mr. Storcheus assists Nutritional High with
expansion efforts in various jurisdictions and financial advisory
projects
• Mr. Storcheus has previously worked at the Department of
National Defense, holds a BBA from the Schulich School of
4
Business at York University, and is also a CFA Charterholder
Oil Extracts and Edibles:
High Margin Value Proposition
Female Marijuana Flower is usually sold Bud and trim can be Processed oil extract can be
Plant Grown Indoors wholesale to the licensed processed into extract and used to make marijuana-
dispensaries; trim is either sold to MIP product infused products such as
The flower of female marijuana discarded or sold at a manufacturers or to candies, chocolates, topical
or cannabis plant (“bud”) is
consumed by smoking, while
significant discount to MIP dispensaries creams, tinctures, drink
leafs, nodes and stems (“trim”) manufacturers additives, etc.
are not typically utilized for
consuming cannabis through
smoking, but are used in
production of other products
such as oil extracts, which are
used to manufacture number of
Marijuana-Infused Products Estimated wholesale price
for such products in the
Estimated wholesale price recreational market for
Estimated wholesale price for oil extracts ranges packages that contain
for flower is: from: 100mg of THC is:
~$5-$7/g ~$20-$30/g ~$10-$15/g (~$25 retail) 5
Our Story
Jun 2014 Aug 2016
Jul 2016 Sept 2016
April 2014 Closing of seed IL license granted;
Jim Frazier appointed Grand opening of
Company formed financing and PSA on Launch of Jimi Hendrix
as CEO Clinic Effingham
Pueblo Property cannabis products
Dec 2016
Nov 2016 Dec 2016 Dec 2016 Jan 2017
$5.5m financing,
Closing of Aura Health Launch of flagship Aura Acquires 2nd Enters into Acquisition
launch of Pueblo
Acquisition “FLI” brand clinic for NV licenses
Facility
May 2017
Jan 2017 Feb 2017 Mar 2017 April 2017
Palo Verde achieves
Acquisition of Dab Partnership with Acquisition of Oregon Commenced retail
95%+ THC content in
Stick product I.P Lineage Grow property sales of FLI Cartridges
its extracts
Nutritional High International Inc. 6
FLÏ - Our Flagship Premium Product Line
Concentrate Products
Distillate produced by Palo FLI Vape Pen Cartridges ready
for shipment FLI Cartridges on a shelf in CO
Verde at Pueblo Facility
Edible Products Concepts
Chocolate Gummies Lollipop Truffles
Candy Bar 7
Marketing Strategy
Branding and
Product Strategy Distribution Strategy
Promotion Strategy
• Focus on highest-margin • Assemble a robust portfolio of • Work exclusively with or through
segments of the industry brands, which have the Licensed Operators, which are
potential to become fully compliant with applicable
• Focus on manufacturing high nationally-recognized regulations
quality oil, which forms the
core of the quality standard for • Develop brands internally: • Cultivate key retail-channel
relationships with wholesale buyers
extract and infused products
• Source Contract Manufacturing
• Employ leading manufacturing Opportunities (CMOs) to utilize idle
and extraction methods which and partner with IP holders or manufacturing capacity
have the potential to become acquire brands with widely-
gold standard, as the industry recognized names: • Employ distribution strategies that
continues to evolve have successfully been employed in
traditional industries (eg. Direct
• Continue to innovate by Store Delivery Program):
acquiring and developing
products with novel delivery
systems
• Focus on promotion in a
manner that is compliant with
regulations and has potential
to reach a wide base of 21+
consumers 8
Dab Stick – Innovative Delivery System for Oil Consumers
• The Dab Stick is a dispenser for viscous liquid substances, capable of carrying
approximately ½ gram of cannabis oil extract designed with the retail consumer and adult
use user in mind
• The oil vessel is capable of dispensing oil in very small metered doses, which ensures
consistency between each dose of oil dispensed and providing desired consumer
experience
• The product is also designed with a view to being able to easily integrate empty vessels
into filling equipment
• A provisional patent application has been filed with the United States Patent and
Trademark Office
• Acquisition terms: CAD $500k in shares upon achieving certain operating milestones
(Please see Press Release dated January 30, 2017)
9
Geographic Footprint
• Successfully staked out footholds in 4 U.S states
• Colorado: Successfully established one of
Colorado’s largest and most automated oil
extraction and infused edibles facilities: MIPs
License secured through agreements with
Colorado-based Palo Verde LLC
• Illinois: Own 50% of The Clinic Effingham – a
thriving medical cannabis dispensary in
Effingham, Illinois that has been operational
since Sept 2016
• Nevada: Finalizing the acquisition of producer States with Active Projects
& processor licenses and real estate to which
the licences will be attached with a view to States with Prospective Projects
commence build-out of MIPs facility in Q3 2017
• Oregon: Closed acquisition of property in La
Pine, Oregon and in the advanced stages of an
application process to manufacture cannabis
concentrates and edibles in Oregon
10Colorado Project
Large Warehouse (10,000sf) for Indoor
Cultivation
• Phase I construction and
equipment installation is complete
• Palo Verde is currently operational
Metal Sheds
and Garages
~2 acres of vacant
land for Outdoor
Phase I
for Misc. Greenhouse
Storage Cultivation Small
Warehouse • Phase II development is underway
(5,000sf) for
• Palo Verde is finalizing the permitting
Indoor
Cultivation process with technical personnel and
local authorities to expand the product
offering to include edibles
Phase II • Aiming to complete Phase II by the end
Main Building (11,000sf) for MIPs calendar Q3 2017
Manufacturing (Phase I and
Phase II)
• Lineage Grow Company. intends
to begin construction of cannabis
cultivation facilities in Q3 2017
• 1st crop expected to be planted in
Phase III Q2 2018
Nutritional High International Inc. 11– Colorado Licensed Producer
Palo Verde LLC – private Colorado company, which holds license to
manufacture marijuana-infused products
Principal of Palo Verde is an established Colorado lawyer
Palo Verde entered into:
• A lease agreement for a 26,000 sq ft at an annual rate of
US$15/sq ft
• An unsecured loan agreement in the amount of US$500,000 for
a period of 1 year, with up to 5 extensions at a rate of 12% with
Nutritional High
Palo Verde and the Company are finalizing a recipe & IP licensing
agreement and branding and packaging supply agreement
Over 90% Pesticide Odorless Made in Colorado
THC Level Free
Nutritional High International Inc. 12– Strong Production and Sales Team
David Johnson – Owner Mike Niswonger – General Manager
David Johnson is currently affiliated with several emerging Over 30 years experience in confectionery industry and
companies and has an extensive domestic corporate, familiar with all types of chocolate production and
international corporate, and entrepreneurial background. automation. Previously a key production executive with Patsy’s
Candies, a family owned business, which was sold in 2016.
Johnson’s skills span a wide range of industries and sectors
including: executive, corporate development, strategic Mike has consulted in the cannabis industry and is familiar
planning and financial and management capacities both with with most types of infused products. Maintained several
domestic non-profit companies and with domestic and national sales accounts. Mike holds a Bachelor’s Degree in
international for-profit companies in consumer products, Business from Colorado State University.
telecommunications, medical services, renewable energy,
venture capital, oil and gas, refining, natural resource and
Cole Chapman – Sales
cannabis sectors.
Cole was previously a wholesale account manager with Bolder
Cannabis and Extracts, where he led the wholesales efforts
Vincent Morrison – Production Manager was instrumental in adding a significant amount of
Vincent Morrison graduated from SIUE with a degree in reoccurring sales. Cole has also worked in the sales capacity
Chemistry. Morrison worked for a large biotech company for with The Green Solution in Denver - which is one of
several years before moving to Colorado and entering the Colorado’s largest cannabis companies.
cannabis industry.
Christopher Marchisio – Sales
Since relocating, Morrison has worked for both cannabis and Previously a budtender and a regional sales representative
hemp grows with a focus on extraction technology. To date, with Pueblo West Organics, focused on medical and adult-use
he has managed multiple Quality Assurance labs as well as cannabis. Experience in wholesaling dried cannabis, cartridges
Extraction labs. and raw distillate products and maintaining relationship with
dispensary owners.
Nutritional High International Inc. 13Illinois Dispensary
• One of the 52 applicants to receive a medical marijuana dispensary license
in the state, and the only dispensary license in ISP District 12. The only
dispensary in over 60 mile radius
• Experiencing strong month-to-month sales growth and stable gross
margins attributed to an expanding patient count and a strong patient and
physician outreach program
• Achieved a monthly returning patient rate of over 90% demonstrating a
strong and loyal customer base
• The Illinois Department of Public Health has approved applications for
approx. 20,600 qualifying patients and approx. 24,553 individuals have
submitted a complete application
• Total retail sales in the State of Illinois for 2016 were just over $36 million
and almost $67 million since the program's inception in November 2015
• The Clinic Effingham Financial Performance (Sept 17, 2016 – Apr 30, 2017):
The Clinic Effingham Quarterly Q1 ended Q2 ended Q3 ended
Income Summary in (USD)* Oct 31/16 Jan 31/17 Apr 30/17
Revenue 37,150 331,319 242,376
Net Profit (Loss) for the Period -47,198 -37,832 11,556
* financial summary presented herein is an extrapolation of the results reported in the Company’s
financial statements and shall be reviewed in conjunction with the Company’s financial statements and
MD&A thereto
Dispensary location in Effingham, IL
www.clinicillinois.com
Nutritional High International Inc. 14Nevada Project
➢ In the process of acquiring and transferring provisional
producer and processor licenses
➢ Intention to move the licenses to a 17,500 ft2 industrial
building, with approximately 15,500 ft2 of warehouse
space
➢ Building to be remodeled for the purpose of
developing an extraction and MIPs manufacturing
facility, using the same technology and processes
developed in Pueblo, CO
➢ Received approvals from the State of Nevada for the
transfer of licenses. Awaiting approval from the City of
Target Facility to Be by Acquired Nutritional High Henderson
in Henderson, NV
➢ Partnered with Lakeside Minerals Inc. (to be
renamed Lineage Grow Company Ltd.) to build a
cannabis cultivation and extraction facility in
Henderson, NV
➢ A portion of the building will be acquired by
Lineage, with a view of constructing a cannabis
cultivation facility
15Oregon Project
➢ In the process of finalizing local
permitting for recreational processor
license
➢ Acquired a property in La Pine, OR for
USD $399,000
➢ Construction is expected to start in Q3
2017
➢ Permits are being secured and land-use
compatibility survey has been completed
16Proprietary Product Development Approach
Nutritional High has developed a proprietary approach to
establishing MIPs operations:
• Developed proprietary techniques of infusing products
with THC and CBD extracts on a semi- automatic basis
• Exploring potential patents on the processes it has
developed
• NH composed a database of various extraction and
testing techniques to suit the needs of Licensed
Producers in both medical and adult recreational state
• Working with a consultant who has over 30 years of
experience in establishing confectionary manufacturing
facilities for Fortune 500 companies
• Efforts led by Billy Morrison – an experienced oil
extractor with extensive expertise in the marijuana
industry and manufacturing marijuana and hemp-
infused products
• NH brings a nation-wide network of experts, specialized
in every aspect of the seed-to-sale industry, able to
assist with rolling-out the company’s operations
17Cold Ethanol Distillation Extraction Process
and Economics
STEP 1: Semi Automated STEP 2: Rotary Evaporator STEP 3: The oil is distilled FINAL PRODUCT:
Mechanical Separation using used for removing residual using short path apparatus to Distillate Oil Product
screens to remove “Kief” solvents remove the terpenes and
purify the product
Economic Parameters
• The current process is able to process up to 50 lbs1 of trim/shake per day, estimated to cost ~US$400/lb in Colorado
• The extraction yield is expected to be 8-10%
• Good quality concentrates for ~US $25/g on the wholesale market (distillate typically goes for higher) 2
• Overhead cost to operate the facility is estimated at US$50,000 per month
• Potential to increase margins by infusing the oil extract into gelatin caps, vape pens and tinctures, which are higher
value add products and where the "effective" value per gram is significantly higher than US$20/g. Eg. a disposable
vape pen with 500mg of THC content is sold for US$15-25/item on the wholesale market
• The margins for edibles are even higher, as the average price for a package with 100mg, sells for $10-15/piece on the
wholesale market
1 Assuming fully optimized production and sales process; 2 Subject to ability to place the product with dispensaries; 18Strategic Partnership with
Key Deal Terms
• Partnering with Lineage to establish cannabis cultivation & extraction facilities
• Starting with an initial grow facilities in Nevada & Colorado
• Lineage to finance the partnership by acquiring the Provisional Cultivation License from Nutritional High for US$500,000
• Lineage to issue 1,750,000 common shares to Nutritional High
• Lineage will acquire a 50% interest in a property in Henderson Nevada for USD$1.1 Million
• Lineage recently closed a private placement of convertible debentures of $2.5 Million
• Lineage will acquire a Nevada Lineage will lease land and a building from Nutritional High in Pueblo, Colorado and sublease to
Palo Verde
• Nutritional High will enter into a long term purchase agreement with Lineage to buy trim
CRAFT CANNABIS
Traditionally, cannabis cultivation has
CRAFT CANNABIS adopted the philosophy that ‘bigger is
better’. The industry is focused on large
scale, low-cost production of generic
CONTROLLED MICROCLIMATES BEST-OF-BREED GENETICS cannabis while ignoring what really drives
consumer preferences. We see this as an
opportunity to disrupt the industry with
premium craft cannabis - grown using
small-batch production techniques
tailored to optimize the cannabinoid,
flavor and smell profiles of each
individual strain.
Deep Water Culture Precision Agriculture Energy Efficiency Water Reclamation Automation
19Corporate Strategy
Nutritional High is seeking to expand nationally by either pursuing organic growth strategies or
pursuing acquisition opportunities focused on:
Cole Memo Compliant Operations Only Compliant Structure and Transparency with
Our focus is only on the operations which operate within adequate the Regulators
licensing frameworks and are in compliance with the requirements of the In the U.S. States with residency requirements, the Company
Cole Memo. will work exclusively with Licensed Operators to provide a
suite of services (such as providing real estate, financing,
brands and expertise) to facilitate expansion of the Licensed
Operator’s business in the edible MIPs and oil extract
High Growth Potential States markets. In the states without the residency requirements
Nutritional High selects the states which have a high growth potential. the Company may also apply for licenses directly or enter
While the U.S. states which have legalized marijuana for adult recreational into JV arrangements with other companies.
use are the primary focus, Nutritional High will take steps to expand into
the states which have legalized marijuana for medical use with significant
population base, or have potential for legalization for adult recreational
use in the near to medium term. Creating Leading Products
Manufacturing high quality products with consistent THC
levels has been one of the dominant problems faced by the
Focus on High-Margin Segments industry. Nutritional High aims to manufacture products
Nutritional High is focused on the edibles and oil extracts segment of the that can become industry leading in terms of quality, THC
marijuana industry, which it believes to have the highest margin potential levels and have appealing packaging design in each market
and provide an opportunity for rapid scaling. The Company may work in from day one.
other value chain segments (such as cultivation or retail dispensaries) in
the jurisdictions which have implemented a "seed-to-sale" regulatory
licensing model, or where a focus solely on edibles or oil extracts is too
prohibitive on stand-alone basis.
Nutritional High International Inc. 20Expansion Opportunities Overview
California Opportunity Washington Opportunity
• With state regulation being introduced in California, the • In discussions with several parties holding Tier 2 or 3 Producer
company is developing a potential strategies to secure a and/or Processor Licenses regarding a potential transaction
license and enter the edibles market with Nutritional High
• Some studies estimate that California accounts for as • Several potential revenue streams:
much as half of total legal cannabis sales in the United • Acquire real estate to lease to a licensed entity
States, est. at $2.7 billion in 2014 • Acquire equipment to lease to a licensed entity
• In Sept 2015, the legislature introduced regulations • Provide management services and licensing through a contract
contemplating 17 license categories, expected to be
implemented by different state departments by Jan 1,
2018 Ohio Opportunity
• Proposition 64 has legalized cannabis for adult • State licensed dispensaries allowed but not yet operational
recreational use • Final rules and specifics to be adopted by Sep 8, 2017. The
state plans to grant 40 processor licenses.
• Cultivator rules are adopted and Level I Cultivator
Arizona Opportunity applications started being accepted Jun 19th till Jun 30th.
• NH is considering an application for a processing license once Level II Cultivator applications closed Jun 16th.
the licensing becomes available
• In discussions with several potential acquisition targets
Michigan Opportunity
• Voters approved the Michigan Medical Marihuana Act on Canada Opportunity
Nov 4, 2008 • In discussions with several ACMPR LPs and late-stage
• Application submissions after Dec 15, 2017 applicants regarding a potential transaction with
Nutritional High
• 211,000 estimated patients
• With the recently announced federal legislation to legalize
recreational cannabis, Canada presents a tremendous
growth opportunity
21Company Shapshot
Exchange/Symbol
Canadian Securities Exchange EAT
OTCQB SPLIF
Frankfurt 2NU
Market Info as of July 1, 2017
Basic Common Shares Outstanding 250,383,732
Warrants (CN $0.05 - 0.22) 38,005,599
Options (CN $0.075 - $0.30) 16,367,500
Fully Diluted Common Shares
304,756,831
Outstanding
Non-Convertible Debt US $1.2 M
Cash Balance CAD $4.51 M
Stock Price $0.152
Market Cap $38 M
1Includes amounts in escrow account for Nevada acquisitions
2Price of most recent financing
Nutritional High International Inc. 22Jim Frazier David Posner Adam Szweras
Chief Executive Officer Chairman of the Board and Director Director, Corporate Secretary
T: (321) 576-7171 T: (647) 985-6727 T: (416) 564-5926
E: jfrazier@nutritionalhigh.com E: dposner@nutritionalhigh.com E: aszweras@nutritionalhigh.com
23Risk Disclosure
The Company is seeking to establish new business lines, which inherently contains a high degree of risk. The subscribers in the
Offering are cautioned to review the following risk factors in addition to those contained in public disclosure record of the
Company (available on www.sedar.com), relating to the Company: (1) The Company has a very limited operating history in an
emerging area of business and had negative cash flows from operations in its most recently completed financial year. (2) Non-
compliance with federal, provincial or state laws and regulations, or the expansion of current, or the enactment of new laws or
regulations, could adversely affect the Company's business. (3) The Company may become subject to additional government
regulation and legal uncertainties that could restrict the demand for its services or increase its cost of doing business, thereby
adversely affecting its financial results. (4) The Company may be required to obtain and maintain certain permits, licenses and
approvals in the jurisdictions where their products are licensed, although the Company does not anticipate such approvals will be
necessary. (5) As a manufacturer and distributor of products designed to be ingested by humans, the Company faces an inherent
risk of exposure to product liability claims, regulatory action and litigation, if its products are alleged to have caused significant loss
or injury. (6) Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety
of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances,
packaging safety and inadequate or inaccurate labeling disclosure. (7) The Company may not be able to accurately predict its future
capital needs and it may not be able to secure additional financing. (8) The market price of the Common Shares could be subject to
significant fluctuations in response to various factors, many of which are beyond the Company's control. (9) The Company is
currently in the early development stage. There is a risk that the additional resources will be needed and milestones will not be
achieved on time, on budget, or at all, as they can be adversely affected by a variety of factors. (10) The Company may face intense
competition and expects competition to increase in the future, which could prohibit its development of customer base and
generating revenue. (11) The Company's operations are subject to environmental and safety laws and regulations concerning,
among other things, emissions and discharges to water, air and land, the handling and disposal of hazardous and non-hazardous
materials and wastes, and employee health and safety. (12) The Company must rely largely on its own market research to forecast
sales as detailed forecasts are not generally obtainable from other sources at this early stage of the industry in the U.S. (13) The
Company may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls.
(14) The Company has no earnings or dividend record, and does not anticipate paying any dividends on the Common Shares in the
foreseeable future. Dividends paid by the Company would be subject to tax and, potentially, withholdings. (15) Exchange rate
fluctuations may adversely affect the Company's financial position and results. (16) In the event of a dispute arising from the
Company's foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful
in subjecting foreign persons to the jurisdictions of courts in Canada. (17) Officers and directors of the Company own significant
shares and can exercise significant influence. (18) Sales of a large number of Common Shares in the public markets, or the potential
for such sales, could decrease the trading price of the Common Shares and could impair the Company's ability to raise capital
through future sales of Common Shares. (19) Volatile global financial and economic conditions may negatively affect the
Company's operations.
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