Nutritional High International Inc. Ordinary Shares C.NHL

RE:lets try this again .... 7 Q&A from NH.

[LiquidOctopusV2]

This is the best intel we've gotten in a very long time.  Thank you for reaching out to the company.  I hope everyone reads this. 

stevelayton wrote:

Our responses are below in green. Please let me know if you'd like further clarification or have any other questions.

 

 

1) Nutritional High has made investments in the Asia market, how actively is NH pursing this market or has the strategy changed since the change in leadership (CEO)?

 

• The company is still interested in pursuing a strategy in Asia and is working with its business partners, namely Tom Kruesopon, as the company has announced earlier this year. The reality is that the cannabis and hemp markets are very nascent in Asia and the company wants to be very careful before committing capital and making outbound investments in Asia. Adam Szweras, CEO, still considers that Asian remains a very lucrative opportunity for Nutritional High and the company is opportunistically considering various ways to capitalize on that, while still maintaining our core focus on the US. The initial near-term focus on this international partnership is focused on expanding the Company product offerings in the US, as Tom believes that there is a large domestic consumer market of Asian food products that has remained on the sidelines domestically, but is beginning to warm up to CBD-infused products.

 

 

 

2) Is Nutritional high still on track for this quarter to produce in Sacramento or is there an update around timing or setbacks that can be disclosed?

 

• The permitting and buildout process is still ongoing. FLI products are currently being manufactured by the third party and we have ways to make more product. Production in Sacramento is a near term objective, but a lot of it depends on how quickly the permitting process is concluded with the local authorities.We have limited white labeling capacity in California. We haven't been happy with most of the contract manufactured products so have limited our production and sales until we have our our facilities and can focus on ensuring a high quality product offering. Until we have our own manufacturing capacity in California, our edibles and oil sales in California will be limited. 

 

 

3) Is there a focus on reducing expenses to improve profitability for this and subsequent quarters?

 

• Expense management is always a focus to the company and all the commitments and capex expenditures that the company makes are always carefully considered by the management and measured in relation to the budgets. The near-term focus is sales and market share growth which requires to spend money in order to secure and maintain a leading position. As the company continues to grow we expect that the costs will normalize relative to the revenues and all the internal financial management decisions are made with a view of getting the Company’s operations to a cashflow positive position. We’ve put in a lot of work into scenario planning and what capital will be needed to achieve the desired growth targets.

 

 

4) The amount of sales from FLI products appear very low when you back out the calyx contributions in terms of top line revenue. Are we seeing an increase in sales of the FLI brand or is there anything being done in the future to expand on this brand to be competitive? In terms of edibles, there are only a small handful of SKU’s when you remove the flavour combinations (chocolate shots, mints, chocolate bar … 3 products). For a company defined as an edibles company, this seems low and represents very little of the revenue. We would like to understand apart from distribution, what the product/brand strategy is for the company going forward.

 

• A lot of the FLI sales currently take place in Colorado by Palo Verde, which for obvious reasons we can’t put on the financial statements. In California, most FLI sales are of vape pens. We expect that FLI will continue to be our in-house flagship brand and we will focus on over the near and medium term and will include other product SKUs once the manufacturing is online. We’re also working on augmenting the brand development and marketing team which will take a more active role in developing and executing a strategy around our in-house and third-party brands. In short, we intend to continue to seek out brands to acquire in order to make them our “in-house” brands, as well as new brands to distribute. We do have to be selective in order to avoid several in-house brands competing with each other and thus cannibalizing the market share. Lastly, given the company’s size we want to stay focused and limit the number of products and SKUs to those where we see the highest impact in terms of margins and economics for the company as spreading ourselves too thin by selling every product possible is not a viable strategy in our view. We have a benefit of getting real-time market feedback from Calyx’s operations and are very in-tune of what are the trends and which products/SKUs should we be focusing on.

 

 

5) Will NH be doing presentations to any institutional investors or has Oak Hills been actively engaged in driving shareholder value? There was a news release sharing that NH is paying ~10k / month to Oak Hills to drive this forward, not much has been shared in terms of an ROI on this investment.

 

• While it is difficult to assign a direct correlation between an IR provider and impact on stock volume/share price, we have been impressed with their team and believe that they have been valuable in providing services to the Company. Please note that the markets are slow right now and a combination of a slip in stock prices across the board and the fact that it is summer it has been difficult to plan large-scale IR initiatives without committing to significant expenditures. We have been working with Oak Hill and other service providers on ways to improve messaging and to step up the investor relations efforts and expect rolling out several of them in early-mid September.

 

 

6) On your social media, you post the changes in the hemp regulations are favourable for the sector. Does NH have plans to capture a portion of the CBD market or have CBD products for consideration in the coming months, quarters?

 

• The short answer is yes. There are plans in the works, but again the core of the business continues to be distribution and manufacturing, and we believe that is potential to take advantage of our infrastructure to capitalize on that. Our product development team will be putting forward about next steps in rolling-out our CBD strategy. We should note that the distribution channels for hemp products are very different, and we are exploring our specific entry point to the hemp markets, but won't go "head-to-head" with the multinationals and other large companies which are moving into this market. 

 

 

7) Any updates that can be shared around Nevada progress or the Nuetrisci partnership?

 

• We’re in the final innings of securing the regulatory approvals to finalize the Nevada acquisition and expect to be closing very soon. Regarding NeutriSci – we’ve been in touch with their management team, but need additional input on strategy and direction from our product development team which is being augmented right now. We will announce updates when they occur.