SOURCE: Creative Edge Nutrition, Inc.

March 16, 2015 07:30 ET

Creative Edge Nutrition, Inc. / CEN Biotech, Inc. Letter to Shareholders

BEVERLY HILLS, CA and LAKESHORE, ON--(Marketwired - Mar 16, 2015) - Creative Edge Nutrition, Inc. (OTC PINK: FITX), a nutritional supplement company focusing on active lifestyles, announces a letter to its shareholders of frequently asked questions:

What are the next steps moving forward to obtain a license?

Please see the link below.

http://finance.yahoo.com/news/creative-edge-nutrition-inc-letter-212921212.html

Why doesn't CEN Biotech give tours of the inside of its facilities to outsiders or show inside pictures?

Due to the nature of the MMPR program, it must comply with the Marihuana for Medical Purposes Regulations (MMPR), the Food and Drugs Act (FDA) and the Narcotic Control Regulations (NCR). The Directive On Physical Security Requirements For Controlled Substances describes the necessary security requirements. It is important for the Applicant and the Licensed Producer to maintain security of the site at all times. Giving tours of the facility to non-essential personnel puts the site's integrity at risk. Security is paramount in obtaining and maintaining a license.

In the words of Health Canada, "In some areas of the country there are professional thieves who possess the ability to open any vault, if they are given enough time. If these people are located close to a major drug sub-culture then they have a ready market and there is a reasonable probability that a company handling a drug desired by this sub-culture, will be attacked unless the thief believes that there is a very high probability that he will get caught before he can escape with the drugs."

The Directive later states, "After completing a risk assessment, a security system can be designed which is commensurate with the value of the drugs being protected and the anticipated threat to the drugs." Giving unnecessary tours of the facility, and allowing outsiders to see the details system (the Alarm system, locks and doors, safes and vaults) puts the integrity of the secured site at risk.

The Directive continues to state "The more barriers a would-be intruder must face, the greater the psychological deterrent. The more difficult and time consuming his task, the less likely he is to try or succeed in his efforts. The rings of protection concept is usually designed so that the intruder is detected when he surmounts the first barrier and the rest of the barriers are there to slow him down to such an extent that the police have arrived before he has departed with the drugs. Each barrier should be constructed so that there are no weak areas to attack, otherwise the barriers will be useless in slowing down a professional thief. It is this concept which forms the basis for most of this Bureau's security requirements."

The Guidance Document -- Building and Production Security Requirements for Marihuana for Medical Purposes states "In addition to the requirements included in the Security Directive, there are specific outcome based requirements set out in Division 3 of the MMPR. These requirements aim to prevent unauthorized access to your site and to restrict and monitor access to areas within your site where cannabis is present." Providing tours of the facility is in direct contradiction to the letter and spirit of the requirements pertaining to facility security under the MMPR.

The Document continues to state, "The security of your site and of the areas within your site where cannabis is present does not end with the design and construction. Security requirements detailed in the regulations require your attention on a continual basis. It is the ongoing responsibility of the LP to ensure that all requirements for securing their site, areas within their site where cannabis is present and the storage of cannabis and any activities relating to the production of marihuana for medical purposes (as per their license) are met."

Does CEN Biotech intend to spin-off and Up List to a higher exchange?

CEN Biotech Inc. has given notice of its intent to spin-off CEN Biotech Inc. from Creative Edge Nutrition, Inc. It has hired a PCAOB auditor and is far into its audit. CEN Biotech intends to be a fully audited and fully reporting company.

CEN Biotech is planned to be spun-off from Creative Edge and subsequent plans to be a new publicly-traded company.

Announced in
http://finance.yahoo.com/news/creative-edge-nutrition-inc-announces-223744801.html

Why the pre-license inspection report was made public?

A known shareholder to the company did a Freedom of Information Act request, and received from the Privacy Commissioner under the Authority from Health Canada, the full inspection report. So as to not allow this shareholder sensitive inside information, CEN Biotech, Inc. immediately released the inspection report per their legal obligations to the SEC.

The press release states clearly: "As CEN Biotech Inc. continues in its effort to be transparent, it releases its Health Canada Pre-License inspection report." The report can be viewed http://www.otcmarkets.com/financialReportViewer?symbol=FITX&id=128236 -- The press release can be found http://finance.yahoo.com/news/cen-biotech-releases-health-canada-023220493.html

To address your concern around our inspection report being released; that report was never provided to us after inspection by Health Canada. A shareholder filed a Freedom of Information Request with the Office of Privacy Commissioner to obtain that report. Once that report was released under the scrutiny of the Privacy Commissioner, in full, it was considered public domain; such as other media outlets rely on in their reporting of facts. We were confused as to why Health Canada refused to provide us with the report and we were apprised of the result of the inspection by a shareholder. Only at that time, was CEN Biotech sent a copy of what was intended to be released via FOIA. As a matter of fact, Bill Chaaban denied the request to release any of the information, but was advised by Ms. Vicky Straby that the report had to be released. Once that report was disseminated to one shareholder or individual outside the company, Securities law dictated the company, and Mr. Chaaban as its CEO, was legally responsible to immediately disseminate so as to NOT promote insider trading or an unequal opportunity via market trading. The report had to be disseminated so-as not to put him in a position of liability for providing insider information due to Health Canada's actions. In fact, Health Canada released a press release in regards to releasing pharmaceutical inspections publicly in an attempt to transparency.

Did any officers or employees of CEN Biotech claim to have special access to the Minister or employees at Health Canada?

Roger Glasel personally replied to these allegations directly to the Ministers office as follows: "My involvement with the Minister's activities were peripheral and limited to her constituency office's efforts at citizen involvement, locally. This was in 2010, long before she was appointed to her current portfolio. If anything, I made CEN aware of that brief involvement in Minister Ambrose's constituency office ahead of participating in the company, for the purposes of disclosure so CEN Biotech Inc. could vet any potential conflict."

Not I, nor anyone in this company, ever represented that CEN Biotech Inc. had special access to the Minister or anyone at Health Canada. The rate and progression of our application would be evident proof of our claim.

Why did the company use a nom de plume for Roger Glasel?

Company officers and employees have received multiple death threats and threats of physical harm via email, telephone, and personal visits (some of which have been saved by the Company). Police reports have been made with the appropriate law enforcement agencies. Health Canada was appraised of these death threats via email on December 19, 2014. The email follows:

On December 19, 2014, we notified the Office of the Controlled Substances via email that "As the CEO of a public company, I am being personally harassed, threatened, slandered and defamed because of the time it has taken for our company to complete this process. I do not write to you seeking special treatment, I write requesting a timeline on when our license will be issued or most importantly the Issuance of our license.".

Bill Chaaban and our company had received in excess of one dozen emails and numerous phone calls threatening bodily harm. Reports were made to the appropriate law enforcement departments. It is this very reason why a nom de plume was chosen to protect the life of our executive team and their families.

Where did the company get timelines for pre-license inspection?

CEN Biotech was given timelines for inspection via email from Health Canada. CEN Biotech was told by Health Canada officials via email that inspections would be conducted one to two weeks after a call for inspection. This was materially false as it took three months.

Why wasn't CEN Biotech issued a conditional license?

We felt, from our perspective, we did everything reasonable to ensure we addressed any concern, or requirement, even if those requirements were not required by other LP applicants. We feel that Health Canada, at any time, could have and should have, issued a conditional license pursuant to Section 25(k), since at least June of 2014, and gave CEN Biotech Inc. some indication on final steps, if any, were required.

Does CEN Biotech have the proper zoning?

On the issue of the Town of Lakeshore, we have been very prudent to ensure that Health Canada knew that their untimely decision to attempt to exempt our facility is of grave concern, especially when a "Ready to Build" letter was issued and all parties agreed there were no issues around zoning at time of construction and substantial investment.(Please see http://weblink8.lakeshore.ca/weblink/DocView.aspx?id=9666&dbid=1&cr=1 on page 31-32 which documents that zoning was proper resulting in a "Ready to Build" letter.)

We were provided a letter confirming our position that our lands and buildings, with associated permits, et al was IN FACT in conforming use and legal in the aspects of the Chief Building Official, Morris Harding on October 8, 2014 and was also forwarded to the MMPR officials. Key points are the property was zoned properly and in accordance with the Town of Lakeshore Zoning By-Law Number 2-2012.

On February 24, 2015 in the Windsor Star, Steve Salmons, Director of Community Development was quoted as confirming precisely our argument, medical marijuana is a crop, and as such is to be on agricultural land. A move of a facility like ours to industrial will only endanger the quality of the plant, and the end quality to the patient. The article can be found http://blogs.windsorstar.com/news/cen-biotech-to-fight-medical-marijuana-licence-rejection-in-court

To quote Mr. Salmons, "...The property is zoned agricultural," he said. "Everything they have done so far -- even though it might be visually unappealing -- is legal as a farming operation. Farms can put up fences or agricultural buildings like a pole barn."

The land upon which the premises are located are zoned "Agricultural":

  • Lakeshore Comprehensive Zoning By-Law s. 4(5)
  • October 8, 2014 correspondence from Morris Harding
  • November 12, 2013 memo from Administration (Salmons and Foran) to Lakeshore Town Council
  • "Processing" of medical marihuana is not an allowed activity under the MMPR, so no processing or "value added" may be done to the crop. It must be grown, harvested and sold

No Authorizations are necessary to grow harvest or sell a crop in an "Agricultural" zone. Site Plan Approval must be made if there is Value added, which includes "a use accessory to an agricultural use, used for the processing and refining of crops and produce...."

  • Lakeshore Comprehensive Zoning By-Law s. 4(6)

Lakeshore passed new By-Laws and Official Plan Amendments on November 25, 2014. The by-Laws and Official Plan Amendment have not been approved by the County. As the facilities have been built for the purpose of a Medical Marihuana Facility, the new by-laws cannot be applied retroactively. Please see the doctrine of legal nonconforming use.

  • Central Jewish Institute v. Toronto, [1948] 2 D.L.R. 1 (S.C.C.)
  • Saint-Romuald (City) v. Olivier, [2001] 2 SCR 898 (S.C.C.)

Confusion between Town of Lakeshore and Health Canada surround comments made by Bill Chaaban. Mr. Chaaban wrote to HC on October 8, 2014 indicating:

  • "As per your request, a letter dated today, October 8, 2014 whereby the Town of Lakeshore confirms, in writing, we are properly zoned with no issues reported by the Chief Building Official, Morris Harding, whom is the official recognized under the Municipal Act.

Mr. Foran, for the Town, wrote to HC on October 15, 2014:

  • "The advice provided to you in the October 8th correspondence from CEN Biotech Inc. to the effect that the property is appropriately zoned with no issues relating to the use of that property for medical marihuana production facilities is simply incorrect"

The Applicant submits that they provided accurate information to HC, based on the statements and letters of Town officials. Mr. Foran appears to have misquoted Mr. Chaaban's words.

Reference correspondence from CEN dated October 19 & 29, 2014 and from Baksh to HC dated October 30, 31 and November 6, 2014.

It is the Applicant's position that there is no issue as to proper zoning or authorizations to operate the business of a medical marihuana facility on the site.

HC letter -- "These unresolved issues lead to concerns about appropriate municipal services being in place."

  • The level of municipal services presently in place will be adequate to run the facility. There are no issues as to water, sewage or electrical consumption
  • CEN letter to HC dated November 18, 2014 with attachments.

Does CEN Biotech have the proper municipal services?

To quote the 'Town Administrator, "...the property doesn't have the water, hydro and sewage services that will be needed to support a facility which was touted to annually produce 600,000 kilograms of medical marijuana...". However, we can honestly state on the record that our organization has been refused ANY further permits, pending Lakeshore counsel's legal approval of every single permit since the time the amendment was passed in November, 2014 preventing our land use rights to develop the property properly to accommodate any further requirements of the municipality, or that of the facility. We submitted our business plan and third party engineering reports evidencing our proposed build-out to the 600,000kg capacity.

Did CEN Biotech Rely on Statements made by Health Canada officials?

When relying on the Affidavits of Todd Cain, also of Health Canada, I depose the following facts extracted from his sworn and duly filed affidavits:

1. CEN Biotech relied on assurances and statements made by Health Canada employees. In particular, the timeline given regarding how soon an inspection to take place after it is called and the issuance of a license after the inspection has been conducted. CEN Executives utilized this timeline to raise funds to build and operate the facility.
2. Todd Cain stated in his affidavit dated Feb 7, 2014 that he "worked with the Licensing and Permits team to streamline the application process to make it accessible to potential applicants for production licenses" (emphasis added). It appears that this streamline process was not equally afforded or applied to all applicants in the process; especially not CEN Biotech.
3. In his affidavit, Todd Cain stated "one of the primary strategies has been to conduct an information campaign for production licenses under the MMPR. The goal of this campaign was to generate awareness among potential applicants for production licenses and businesses who could support them, about the legitimate business model created by the MMPR." CEN has the ability to operate as a viable LP but was unfairly refused to do so by Health Canada.
4. In his affidavit, Todd Cain stated that Health Canada had created "streamlined processes for processing applications". Upon information and belief, CEN relied on this statement and watched other LP's as they progressed to full licensing. CEN was never afforded the opportunity to a streamlined process.
5. Todd Cain stated in his affidavit, a case management plan was created for triaging applications for production licenses, "this triage system was created to foster efficient and appropriate approval of qualified applicants and start-up of Licensed Producers. CEN was not afforded this opportunity.
6. Todd Cain stated in his affidavit that "a case management approach was also adopted, which involves appointment of case managers to work with applicants to complete the review process and to enhance timely processing of applications." CEN was NEVER to its knowledge assigned a case manager.
7. Todd Cain stated in his affidavit, "Providing applicants with "Ready to Build" letters, upon the completion of the paper review process, upon request. These letters advise applicants that if they complete their site build as described in their application, if the site is verified by a pre-license inspection, and if security clearances are granted, the applicant's license can be issued. This letter is intended to provide applicants with the documentation they may use to make necessary financial and other business-related arrangements". CEN fulfilled all of its obligations and met the requirements as set out under the MMPR.
8. Todd Cain stated in his affidavit, Health Canada is "Providing a "phased licensing process": If an applicant has completed the paper review and met the regulatory standards for cultivation of dried marihuana". Health Canada has NEVER afforded the opportunity to CEN for a phased licensing process. CEN asked Health Canada months ago for a phased license and was denied without reason.

We, as an organization, can safely say we were never afforded the same opportunities as others in the MMPR program; clearly by our timeline of events alone.

Will Creative Edge Nutrition, Inc. do a reverse in 2015?

There are no plans for a reverse.http://finance.yahoo.com/news/creative-edge-nutrition-inc-ceo-120000433.html

About CEN Biotech

CEN Biotech, Inc. was established in 2013 as a partially owned subsidiary of Creative Edge Nutrition (OTC PINK: FITX) (PINKSHEETS: FITX) for the sole purpose of supplying the Canadian public with pharmaceutical-grade medical cannabis under the newly established Marihuana for Medical Purposes Regulations (MMPR). CEN Biotech Inc. has submitted a comprehensive application to become a licensed producer (LP) of dried marihuana for medicinal purposes and has received a ready-to-build approval from Health Canada. http://www.cenbiotechinc.com info@cenbiotechinc.com

About Creative Edge Nutrition, Inc.

Creative Edge Nutrition, Inc., is a holding company and a Nutritional Supplement Company focused on developing innovative, high quality supplements and energy drinks. The company offers a broad spectrum of capsules, tablets, and powders, as well as science based products in the principal categories of weight management, nutrition challenges, energy and fitness. The Company manufactures under strict GMP guidelines at GMP Certified and/or FDA registered facilities.www.CenergyNutrition.com

Company Disclaimer

As a "penny stock" Company, within the meaning of federal and state securities law, Creative Edge Nutrition, Inc. may not avail itself of the Safe Harbor provisions as identified in the Private Securities Litigation Reform Act of 1995. However, Creative Edge Nutrition, Inc. provides the following disclaimer and warning to protect our shareholders, prospective investors and the public at large by alerting them to the risks and uncertainties involved with any investment, and the need to perform their own due diligence and assessment.

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future development activities, and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers.

Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company's ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties associated with the Company's business and finances in general, including the ability to continue and manage its growth, competition, global economic conditions and other factors discussed in detail in the Company's periodic filings with the Security and Exchange Commission.

CEN Biotech, Inc.
20 North Rear Road
Lakeshore, Ontario

Contact Information