Thank you again for your support and engagement with Hill Street and for the questions submitted by the group. We have responded below in the groupings that you provided for efficiency.
N/A Line Questions Is there any visibility regarding expansion of N/A beverages into other provinces and/or countries? While our (V)in Zero alcohol-free wine is available in every province and through the e-commerce channel, we believe that there is continued opportunity to gain further retail distribution in Canada and we are also working diligently to gain distribution in other countries. Our European manufacturer has a strong footprint globally as a leader in driving the alcohol-free wine category into new markets and we are leveraging that relationship and footprint to push into new markets. We look forward to announcing those new markets as they come on board.
Via Line Questions Is there any visibility regarding expansion of Via beverages into other provinces and/or countries? We work continuously with our manufacturing and sales partner Molecule Inc. who is the Health Canada licensed entity that manufactures and sells (V)ia Regal branded products into the provincial cannabis boards. As a startup business, Molecule has continued to learn and adapt their operations and sales efforts against the goal of national distribution and sales/marketing support in Canada. There have also been extensive changes in how the provincial boards are managing their new product presentations and overall ordering/supply chain management, as they are also startup operations going through their own learning curves. We are starting to see wins in both geographic footprint expansion as well as introducing the (V)ia Regal white grape sparkler into the market, and we expect to see more advances in the first half of calendar 2022.
Dehydra-tech Line Questions Is there a standard formula or mechanism that BEER uses for royalties regarding the licensing of Dehydra-tech? If there is, or if any general information can be provided on how general revenues are realized from this process. Thank you for asking about our DehydraTECH™ line of business. Our out-licensing of this game-changing cannabinoid delivery system technology to cannabis brands and contract manufacturers is really where we have concentrated our efforts in the past few quarters and looking forward. As part of our acquisition of the DehydraTECH™ patent rights from Lexaria Bioscience Corp., we acquired their pre-existing licensees of the technology along with those royalty structures and we continue to evaluate and develop alternate revenue models as we bring on new licensees of the technology, new product categories (i.e. end consumer product form factors) and new US states in our operating model. There are many factors that must be considered in developing those royalty structures – including the licensee’s product categories and geographic footprints, the appropriate level of IP protection needed, and how best to navigate the highly regulated environments that differ by state in terms of how revenues and costs must flow. The models are quite complex and, as with many B2B businesses, we cannot disclose those for a variety of reasons.
An update as to where we are with the Lucknow facility and what it is currently being used for? We continue to pursue the Health Canada Standard Processor License for Lucknow. We began to push forward on construction but have faced continual delays in local permits and approvals. The good news is that despite the delays we have been able to deliver revenue growth as we have become much more active in pursuing the extensive opportunities for DehydraTECH™ licensing in the US, where we view the regulatory environment, market size and growth opportunity to be more favorable.
Assuming Dehydra power will be produced (will be clarified in afore noted question), will it be sold in Canada only or are there plans to sell this powder in other countries (USA Australia etc)? We have global usage rights to DehydraTECH™ patents for the production of cannabis products containing 0.3% or greater THC and plan to actively develop operations and relationships over time to leverage those globally. While we have explored inbound global opportunities, the US and Canada are our current focus.
Company Questions Can the company confirm warrants set to expire for the following dates have expired Dec. 19/21 at $0.13 Dec. 31/21 at $0.40 We can confirm that these warrants have now expired.
Can the company confirm the $0.05 warrants expiring in May/22 and (if still active), can the company comment on general viewpoint as to repricing/extending in this type of overhang situation? The $0.05 warrants that expire in May 2022 are still outstanding, and we do not have insight into the individual warrant holders’ plans about exercising those warrants at any time prior to expiration. We will continue to evaluate the situation, but at this time the Company has not re-priced or extended the expiry of these warrants.
Does the company believe additional investment in IR/Marketing should be done to attract new shareholders? Our focus has been on building out scalable commercial operating models necessary to drive our growth agenda across the three growth levers of our business – DehydraTECH™ licensing, (V)ia Regal cannabis beverage sales in partnership with Molecule, and (V)in Zero alcohol-free wine sales, treating the precious capital raised from our investors with care as we went about that. Given the progress we have made and the positive results we have achieved from those efforts, we believe that the Company is now in a much better position to market itself to investors and more broadly within the industry to build awareness and reputation. We expect that you’ll see more activity in this area in 2022.
What percentage of management's focus is on building out the B2B vertical vs infused beverages vs NA drinks? We have three distinct growth levers in our growth agenda and a small team to execute on those plans. While we are pushing against opportunities in all three areas, it is fair to say that:
· DehydraTECH™ licensing represents the core of our growth opportunity yet is the most complex and expansive in terms of the number of players and regulatory areas involved in its eco-system. As such, it consumes a significant portion of our focus as we develop a scalable model that goes from opportunity to commercial availability in the marketplace. Given the significant financial metrics and margin improvement with this business, it is certainly worthy of priority focus.
· (V)in Zero sales remain the core revenue generator in the near-term and demand the ongoing attention that would be given to any operating CPG business, including the work that we’ve added to open new global markets. There have also been significant efforts on improving the supply chain and operations of this business to limit the out of stocks and chargebacks that had been problematic in prior periods due to global supply chain problems.
· (V)ia Regal is a fabulous new brand of cannabis beverages in Canada with premium ingredients and a corresponding premium price that reflects its quality. However, we have to work within strict Health Canada regulations that make it a challenge to market that reality. Because our partner Molecule is responsible for key aspects of sales and operations of (V)ia Regal, our focus is on working closely with them to drive toward our goals within their portfolio.
The current CEO of Averi Infusions (Terry D) recently provided some feedback regarding difficulties he had in working out an agreement for use of Dehydra-tech with BEER. As he is well versed in the tech and knows of its superior quality and performance, he claims he reached out to BEER to make arrangements; however, BEER did not follow up with him. As shareholders, it is disturbing to hear of such things and we would like to hear if you can comment any further. As he disclosed, Terry has shared with us about his new venture, his locations and timelines for development and that he remains focused on the cannabis-infused beverage business. Non-disclosure agreements prohibit either party from disclosing information about our meetings with Terry, so unfortunately I am not able to provide any more detail about those conversations.
I can assure you that we are applying appropriate diligence to the many opportunities that we have for DehydraTECH™ across a range of geographies and consumer product categories, while maintaining a firm commitment to protect the valuable IP, and we are bullish on what those opportunities will represent for our business.
Again, thank you for your support and for the opportunity to respond to your questions.
Hope everyone has a great weekend.
Best regards,
Craig
Craig Binkley