IONIC in a nutshellThe Operations of Ionic Brands At the time of writing, Ionic Brands currently has active operations that spread across three states Washington, Oregon, and California. With Washington as its home base, it has since expanded into these two other markets to capture market share and to increase its brand awareness. Ionic has established itself within Washington as an experienced luxury cannabis concentrates brand. Selling both disposable and reusable vape pens, the Ionic brand currently has shelf presence within 337 out of 516 dispensaries within its home state. Currently, it is the largest oil manufacturer within the state as well as the number one vape brand. With the flagship brand having launched in 2015, Ionic has seen steady revenue growth year over year. Growing from US$2.3mm in 2016, to that of US$9.9mm in 2018 in Washington state alone, there has been consistently steady growth for the Ionic brand. With the recently entered Oregon and California markets, total revenue for Ionic Premium Vape Pens reached US$10.5mm in 2018. In addition to the Ionic line of products, Ionic Brands has several acquisition targets that it is currently in negotiations with. These targets span several states and will compliment the current operation by expanding reach as well as providing vertical integration within certain markets. Zoots Premium Cannabis Infusions As another Washington based operation, Zoots is a premium edibles company with operations in two states. With its processor license under the company name DB3, the firm has been in operation since 2014 producing hand crafted edibles in a small batch format to ensure premium quality. With revenue projections of US$6mm in 2019, Zoots is heavily focused on brand expansion across both the Washington and Colorado markets. Additionally, it has targeted a number of states including Massachusetts, New York, California, and Florida for entry in 2019. Although this acquisition has not officially closed, Dan Devlin, co-founder of DB3, is listed on the Ionic Brands website as being Interim COO of the company. Thus, it appears its only a matter of time before the acquisition is announced as being complete, expanding Ionics reach to include that of Colorado as well. Total consideration for Ionics acquisition of Zoots is pegged at US$11 million, US$600k of which is cash with the remainder being in the form of shares. WW Agriculture The acquisition of WW Agriculture (WWAG) will bring valuable vertical integration to its Washington operations. Founded in 2014 and located in Spokane County, WWAG consists of 140 acres of outdoor cultivation of cannabis. Currently operating on a sub $0.10 per gram cost basis, the addition of the entity to the Ionic Brands portfolio will reduce input costs for the firm by an astounding 80%. The on site production of cannabis flower will be used to exclusively to derive crude oil for the purpose of concentrates, and presumably, edibles. This will thereby vertically integrate the operations under the Ionic banner within the state and secure consistent, quality cannabis for processing into concentrates. The acquisition of WWAG will be the pilot project for Ionic in terms of vertical integration to determine whether cultivation assets are valuable to the overall business plan. Its presumed that further vertical integration will occur within other markets should the pilot project work well. Total consideration for WW Agriculture is US$2.75mm, with US$750,000 being in the form of shares. The remaining US$2.0mm is to be paid via earn-out conditions over the course of two years. Vegas Valley Growers While on the topic of vertical integration, lets take a look at the Nevada based assets that Ionic Brands currently has a definitive agreement to purchase. Vegas Valley Growers is a revenue generating operation, posting US$2.56mm in sales for 2018, on positive EBITDA of $600k. Currently licensed for cultivation, volatile and non-volatile extraction, as well as distribution, VVG is fully integrated within the Nevada market space, with a market penetration rate of 80%. Their products are currently produced within a 1,700 square foot facility within Las Vegas. However, construction is underway on a 70,000 sq ft manufacturing facility that is expected to be complete in June, in addition to a second 65,000 sq ft facility that is to be completed in the second half of the year. Also focused on the vaporizer market segment, Vegas Valleys primary brand is the M branded disposable luxury vape pen. Upon acquisition, the firm will also be responsible for producing and marketing Ionic branded vape pens within Nevada. This is expected to increase overall market share within the state, in addition to increasing revenue figures. The value of Vegas Valley Growers is pegged at CAD$22.8mm, with CAD$1.65mm being in the form of cash. The remainder is to be paid in company stock upon closing. Vuber Tech The final known acquisition within the Ionic Brands pipeline is that of Vuber Tech, a Washington based hardware company focused on rechargeable vaporizers. The firm is focused on developing premium vaporizers for the cannabis market, and currently has several already on the market. In addition to the hardware, Ionic will also acquire 11 provisional patents through Vuber Tech. Revenue generating, the firm has anticipated revenues of US$8mm in 2019, with EBITDA of US$720k. Consideration for the acquisition of Vuber Tech comes in at US$12.5mm, with US$2.5mm being in the form of cash and the remainder in the form of Ionic stock. Nationwide Infused Coffee Patents It was recently announced that Ionic Brands has acquired two cannabis-infused coffee patents from that of Canna Cafe. Formally, this brings Ionic deep into the cannabis-infused beverage market. Specifically, the two patents relate to the infusion of CO2, ethanol, and heat extraction derived THC and CBD into coffee products, including espressos and teas. This includes both traditional coffee, as well as K-Cup coffee products for single-serving applications, in both residential and commercial operations. The patents, applicable only in the US, are filed under numbers 62/037,827 and 15/837,623, are among the first cannabis related patents filed within the US. The full patents can be found via Justia, and are located here and here. Note that they are filed by Imbue LLC, the parent company of Canna Cafe. Related claims covered under the patents can be found at the bottom of the page.