Nutritional High International Inc.

Nutritional High International Inc.

October 10, 2014 15:15 ET

Nutritional High International Inc. Announces Grant of Two Marijuana Licenses to Its Prospective Colorado Tenant and Corporate Update

TORONTO, ONTARIO--(Marketwired - Oct. 10, 2014) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS.

Nutritional High International Inc. ("Nutritional High" or the "Company") is pleased to announce that Palo Verde LLC ("Palo Verde"), the Company's prospective tenant in Colorado, has received two marijuana licenses from the Marijuana Enforcement Division ("MED") of the State of Colorado. Palo Verde has entered into a lease agreement with the Company whereby Palo Verde will undertake marijuana-infused product manufacturing and marijuana growing operations at the facility being purchased by the Company, located in Pueblo, CO.

The Company also announces that it has amended the terms of its outstanding common share purchase warrants, granted stock options and closed the subscription of units previously announced in its press release dated June 23, 2014.

Grant of Marijuana Licenses to the Company's Prospective Colorado Tenant

Palo Verde has advised the Company that it has received two marijuana licenses from the MED:

  • Retail Marijuana Product Manufacturing License ("RMIP License") - a license used exclusively for the manufacture and preparation of retail marijuana products and concentrates, such as edible products, ointments, and tinctures. The products manufactured under the RMIP License can only be sold to other license holders or to licensed Colorado dispensaries.
  • Retail Marijuana Cultivation License ("RMC License") - used exclusively for the cultivation of retail marijuana plants and the harvesting of retail marijuana. If not associated with a product manufacturer, this licensee may sell retail marijuana to other cultivations, dispensaries or product manufacturers within the Colorado Regulated system.

The Company has previously provided an initial financing facility to Palo Verde in the amount of $150,000 (see press release dated July 25, 2014). The Company is also finalizing a brand and recipe licensing agreement with Palo Verde. The Company expects to finalize the acquisition of a commercial real estate property in Pueblo, CO on or before November 14, 2014, which it has conditionally leased to Palo Verde.

David Posner, CEO of Nutritional High commented: "We are extremely pleased with the progress Nutritional High and Palo Verde have accomplished to date. We look forward to continue working together and hope that we can soon begin rolling out Nutritional High's brands and recipes with Palo Verde."

Both licenses are focused on serving the recreational market in Colorado, as opposed to the medicinal market. In July of this year, the sales of recreational marijuana have exceeded the sales of medicinal marijuana for the first time. In July 2014, customers purchased more than $29.7 million in recreational marijuana - up from $24.7 million in June. Medical marijuana patients spent more than $28.9 million on marijuana in July - comparable to June's $28.6 million in sales1. Based on Colorado Department of Revenue reports, the sales of recreational marijuana for the first 6 months of 2014 have exceeded $100 million and are projected to be as high as $207 million based on the projected tax revenue for the 2014-2015 fiscal year2.

The grant of both licenses is conditional on approval of local authorities which includes filing of building and zoning permits with the Pueblo County commissioner. Palo Verde is in the process of filing the required documentation and expects to obtain the necessary approvals in due course.

Closing of Subscription

The Company is also pleased to announce that it has closed the previously announced subscription (the "Subscription") for 4,000,000 units ("Units") at a price of $0.025 per Unit for gross proceeds of $100,000 from an arm's length investor, which Subscription was received in June 2014 and Subscription funds deposited in trust. The Subscription and the funds were provided conditionally on the Company being approved for listing, which condition has now been waived. Each Unit is comprised of one common share in the capital of the Company (a "Company Share") and one half of one Company Share purchase warrant ("Private Placement Warrant"). Each Private Placement Warrant is exercisable into one Company Share at a price of $0.05 per Company Share for a period of 18 months from the Closing Date.

In connection with the Subscription the Company has paid a finder's fee equal to $8,000 and issued an aggregate of 320,000 finder's warrants ("Finder's Warrants"). Each Finder's Warrant is exercisable into one Unit at a price of $0.025 per Unit for a period of 18 months from the Closing Date.

The securities comprising the Units are subject to a four month hold from the date the funds were released from escrow to the Company ("Closing Date").

Amendment of Warrants

As a part of the share exchange transaction ("Transaction"), announced in the press release dated July 8, 2014, and the Subscription noted herein, the Company has issued 15,500,006 Company Share purchase warrants ("Company Warrants"), which includes 2,000,000 Private Placement Warrants. Each Company Warrant entitles the holder thereof to acquire one Company Share at a price of $0.05 per Company Share at any time prior to the earlier of December 27, 2015 or 18 months from the date the Company completes the going public transaction. The Company Warrants and Private Placement Warrants have been amended to include an early exercise provision as follows:

  • If the holders of Company Warrants elect to exercise the Company Warrants prior to October 31, 2014, in addition to receiving a Company Share, they will receive an additional warrant ("Additional Warrant") exercisable at a price of $0.10 at any time prior to October 31, 2016.
  • The terms of any unexercised Company Warrants outstanding after October 31, 2014 will remain unchanged.

Stock Options Grant

The Company has granted 400,000 incentive stock options to Michael Pesner. Each option is exercisable into one common share at an exercise price of $0.10 per share and expires on the fifth anniversary of grant. This stock option issuance is in consideration of Mr. Pesner joining the board but the Company was unable to issue these options at the time as a non-offering preliminary prospectus (which has subsequently been withdrawn) had been filed and was pending.

In addition, the Company's board has approved an issuance of 3,550,000 additional stock options to officers, directors and consultants with an effective issue date of the date the Company closes its initial public offering. The exercise price of such options will be equal to the exercise price of the warrants that will be issued as a part of such initial public offering.

About Nutritional High International Inc.

Nutritional High's objective is to take advantage of the changing regulatory environment governing the marijuana industry in the United States and Canada. The Company's vision is to establish a leading foothold in several distinct parts of the value chain of the North American recreational and medicinal marijuana industry and replicate its model in other jurisdictions, where permitted. The Company's business is focused on two main segments:

  • Edibles and Oil Extracts Segment. In its Edibles and Oil Extracts Segment the Company is focused on developing, acquiring and designing products and brands in the marijuana-infused edible products and oil extracts sector for licensing to companies that hold a valid license to produce marijuana-infused edible products. As marijuana-infused edible products for medicinal and/or recreational use are currently not legal in Canada, in its Edibles and Oil Extracts Segment the Company is solely focused on the U.S. States where permitted by State law.
  • Medical and Educational Advisory Business. In its Medical and Educational Advisory business the Company is focused on serving the end-users of medicinal marijuana primarily in Canada. The segment will focus on providing support and educational services at its clinics, in conjunction with the patients' family doctors. As well, the Company has entered into two option agreements to purchase interests in companies that are in the process of applying for licenses to produce medicinal marijuana under Marihuana for Medical Purposes Regulations ("MMPR").

The Company does not directly grow, harvest or distribute or sell cannabis or any substances that violate United States Law, Controlled Substances Act (USA) or Controlled Drugs and Substances Act (Canada) nor does it intend to do so in the future, unless the Company receives all required approvals and licenses from the government authorities of each respective jurisdiction.

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. 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.

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.

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATIONS SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

1 "July pot taxes: Recreational marijuana outsells medical for first time" http://www.thecannabist.co/2014/09/09/pot-taxes--july-recreational-outsold-medical/19367/

2 Focus Colorado: Economic And Revenue Forecast, Colorado Legislative Council Staff Economics Section, September 22, 2014, http://1.usa.gov/1nYuimi

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