Successful Evolution Under the New Senior Leadership Team
VANCOUVER, July 23, 2018 /CNW/ - Phivida Holdings
Inc. ("Phivida" or "The Company") or (CSE: VIDA) (OTCMKTS: PHVAF) is pleased to provide a corporate update for the
third quarter of fiscal 2018 and a successful transition under the new senior leadership team and is now on track for entering
major mainstream commercialization. Key updates include a strong balance sheet and capital structure, positive regulatory shifts
in the USA and Canada, a newly evolved board and senior
executive team, and a new strategic portfolio of products and brands, comprehensive consumer research, new product development,
new brand development visual identity and packaging design and an elevated national route-to-market strategy across the
USA.
Key Highlights
- Capital Structure - strong balance sheet with over $15 million CAD cash and no debt or
loans
- New Regulations - Farm Bill in US Senate, legalization of recreational cannabis and edibles in Canada
- Board and Executive - Strengthening of corporate governance with new appointments to its Board of Directors and
senior executive management team, as well as new dedicated full-time operational roles
- Consumer Research - Extensive consumer market research study on the category, brand, products, target markets,
consumer sentiment leading to new brand, packaging and product development initiatives
- Product Development - Based on the results of a consumer insight research, the new senior executive opted to
develop six new flavours of CBD enhanced waters and six newly formulated flavours of CBD enhanced iced teas, under a new brand
developed with the Sid Lee agency - to be launched in Q3 2018
- Brand Development - Sid Lee was retained as the lead agency of record to develop a new modern beverage brand and
market positioning aligned with insights gained from the consumer market research
- Packaging Development - Mr. Brian Schmitt was retained for a creative visionary for
the development of a new visual identity and packaging system consistent with the brand platform developed with Sid Lee
- WeedMD-Phivida - Management confirms that the proposed joint venture project (Cannabis Beverages Inc.) between
WeedMD (TSX.WMD) and Phivida Holdings Inc. (CSE.VIDA) is still on track and in development. Management reports the cancellation
of the Hiku Brands-WeedMD merger has had no material impact to date on the completion of a pending final definitive agreement
for the CanBev project.
- Route-to-Market - Due to positive USA legislative developments, the new executive
elevated its route-to-market strategy, replacing regional state dispensary distribution with a larger national level mainstream
distribution. The new national distribution strategy will focus on major mainstream distributors and brokerage into Natural
Specialty & Grocery retail channels, e-commerce and B2B direct to clinics
Capital Structure
The current cash and equivalents is approximately $15.7M million CAD with no debt or loans.
Total shares issued and outstanding is 60,177,701 and the total shares on a fully diluted basis is 71,908,914. The company
is well capitalized to transition to major mainstream distribution with a solid structure poised for long term
growth.
New Regulations
On June 28th the U.S. Senate passed the Agriculture Improvement Act of 2018 (i.e. the "Farm Bill),
lifting the USA Industrial Hemp laws to an agricultural commodity status and effectively removed hemp from the
controlled substance list. In Canada, the Senate approval of Bill C-45 legalized the production,
distribution and use of recreation cannabis - with edibles to be added in 2019. The bill has received Royal Assent and Cannabis
will be legal as of October 17, 2018. The Cannabis act creates a legal framework for controlling
the production, distribution, sale and possession of cannabis across Canada including
cannabinoid infused beverages.
Board and Executive
Mr. Jim Bailey assumed the role of President in addition to his appointment role as Chief
Executive Officer (CEO) in March 2018. As the newly appointed President, Mr. Bailey now oversees
all operational aspects of the business and back office administration. Mr. George Kovalyov, C.A
has stepped down from the Board to for proper corporate governance and financial reporting requirements. Mr. Kovalyov has been
appointed to a full-time role of Vice President of Finance and Administration, supported by Chief Financial Officer Mr.
Carmelo Marrelli.
Mr. Peter Simeon LLB, an active Phivida Board member, was recently appointed as the Chairman of the Board of Directors. Mr.
Simeon has extensive experience in corporate governance and board management and is a partner of Gowlings WLG Law. The company
also appointed Mr. Vito Piazza to the Board of Directors. Mr. Piazza is a founding partner of the
Toronto office of Sid Lee, a Montreal-based creative
advertising agency operating globally representing internationally-recognized brands such as; North Face, Grey Goose and
Red Bull.
Earlier in May Phivida appointed Mr. Douglas Campbell as its new Chief Commercial Officer (CCO) to drive new sales
revenue growth. Mr. Campbell is the former Director of Sales of Red Bull North America and managed the successful growth of
several multinational beverage brands including; Diaego's Smirnoff, Johnny Walker, Guinness, Baileys brands; Mikes Hard
Lemonade (Mark Anthony Group), Brown Forman's Jack Daniels and Southern Comfort and Stoli Vodka. This appointment is critical in
establishing national distribution visa vis a new multichannel mainstream route-to-market strategy, focused on larger national
level distributors, replacing the limitations of smaller regional distributors in the state legal cannabis sector, as previously
announced.
Under the new CCO, a new Field Sales and Inside Sales Management team has been employed and is now full-time and fully trained
on products, services and key target markets. These sales managers will report to the CCO and Director of Clinical Sales
operating from a new USA field sales and operations office located in San Diego, California. This office is now open for the management of B2B sales and marketing to alternative
health clinics.
The company also recently appointed Mr. Greg McCauley to the Advisory Board. Mr. McCauley brings over 30 years
of experience as a sales and marketing executive in the USA beverage industry with brands such as Red
Bull and Cytosport (Muscle Milk), serving as Executive Vice President of Sales and Marketing.
As founder, Mr. John Belfontaine continues to serve on the Board and assumed the role of Vice
President, Corporate Development, dedicated to managing capital market media, investor relations and market communications. This
new appointment provides a full-time executive role to capital market media for more consistent shareholder communications and
market updates while the new C-suite executive assumes responsibility for new product and brand development, mainstream national
distribution and new sales revenue.
Consumer Research
Under Chief Marketing Officer (CMO) Mr. Michael Cornwell, Phivida commissioned an extensive
consumer insight and market research project. The research project was developed to generate insights on both the US functional
beverage category and functional beverage consumer. The primary research project involved both qualitative and quantitative
polls and studies that focused on gaining valuable insights into consumers perceptions around the growing functional beverage
categories, and the opportunity for hemp derived CBD functional beverages.
Phivida enlisted Seattle-based researcher, The Insight Inn, to perform the consumer research
studies. The Phivida executive team has gained insights around target markets, consumer audiences, product development and brand
and product communication that will factor into branding, marketing and retail sales promotion strategies. The research
initiative is consistent with the Fortune 500 caliber market analysis and was generating invaluable consumer insights for new
product development and branding.
Consumers were questioned on top usage occasions, preferred brand names, preferred competitive branding, knowledge and
perceptions of CBD and functional beverages, preferred purchase methods, etc. Results from the consumer research report included
an 80% approval rating score for the CBD infused Ice Teas and 77% score for CBD infused Enhanced Water. Based on feedback
Phivida's research partner, results above 70% approval are considered exceptional, reinforcing new brand marketing and product
development strategy.
Product Development
Based on the insights in the consumer insight study, the new C-Suite executive has opted to develop new lifestyle branded
beverages such as flavoured water and evolve the iced teas formulas. These new product lines are targeted to the health and
wellness segment and ingredient conscious, "back label" consumers. Congruent with research findings, the new Phivida
executive contracted product formulation services for the development of a new proprietary line of six flavours of CBD infused
waters and six flavours of CBD infused iced teas. The previously announced manufacturing of CBD infused vitamin juices and shots
for distribution in California were postponed while the production team facilitated the
development of these new product lines - to be launched in Q3 2018.
Brand and Packaging
Earlier in the fiscal third quarter, Phivida retained Sid Lee as its creative agency of record. Sid Lee has operational
offices in Paris, Toronto, Montreal, Los Angeles and New York and is
led globally by its President and newly appointed Phivida board member Mr. Vito Piazza. Phivida
has also engaged the services of Mr. Brian Schmitt as the creative lead for new product packaging design and brand visual
identity. Mr. Schmitt has extensive experience with globally recognized consumer brands, having worked for Nike and Apple in his
career to date.
Under the direction of Chief Marketing Officer, Mr. Michael Cornwell, the Sid Lee agency was
employed to use qualitative research to create a new brand positioning for a new range of CBD infused beverages which, in turn,
will inform the development of creative content and collateral. Brian Schmitt implemented this
brand strategy to guide new packaging design and visual identity to a new brand personality, positioning and aesthetic.
With a world-class advertising agency and designer in place, Phivida anticipates the launching of a new premium creative
platform from which to position Phivida as a leader in the mainstream distribution of CBD functional beverages across the
USA. Market research strongly supports a belief that newly evolved branded and targeted products
will appeal to growing market segments of active, health-conscious consumers and athletes.
Post the launch of the new brands and products, Phivida plans to undertake targeted marketing initiatives to build awareness,
interest and trial with the target audience. This will include assertive sampling campaigns, public relations initiatives, events
and experiential marketing and partnerships with social influencers, celebrities, athletes, musicians, and other renown opinion
leaders to help educate, inform and build trust around new CBD infused products. The company also intends to build an
exciting brand launch marketing campaign around the previously signed top World Surf League athlete Malia
Manuel.
WeedMD-Phivida
With the passing of the Bill C-45 and the legalization of cannabis in Canada set for
October 17 th of 2018, the company's joint venture with WeedMD Inc., announced on
March 8 th, 2018 is now progressing. Consolidation in the industry continues to occur
with Canopy Growth's announced acquisition of Hiku Brands (a transaction worth nearly $300
million). This follows Hiku's Brand's announcement in April to merge with WeedMD. The proposed merger between Hiku Brands
and WeedMD has since been cancelled. The Phivida senior executive reports that the WeedMD-Hiku merger cancellation has had no
material impact on expediting completion of a pending definitive agreement with WeedMD to consummate the Cannabis Beverages Inc.
("CanBev") joint venture.
Upon the completion of a definitive agreement, management of Phivida and WeedMD will begin to design and engineer one of the
first federally legal cannabis-infused beverage production facilities in the world. CanBev Inc. has no plans to sell any
cannabis-infused products in the U.S. or any other market unless legally permissible.
Management from both WeedMD and Phivida are collaborating on design and engineering strategies and site evaluations on the
610,000 sq. ft. state-of-the art facility in Strathroy for the development of the CanBev joint
venture project. As an emerging certified food grade production plant, the Strathroy facility is
an ideal location and comes is equipped with extensive production infrastructure, including 50,000 sq. ft. of food production and
packaging area, cold storage, loading docks, and adequate space to expand for future growth.
Route-to-Market
Numerous sources of secondary market industry research indicated that CBD-infused products are making significant gains in the
Natural Products and Specialty channels. Phivida is poised to penetrate this market as quickly and efficiently as possible with
new and updated products and brands. The opportunity in these channels is significant. The industry research reports that
within the Natural Foods and Specialty sector:
- The CBD market is estimated to explode from $360M to $2.1B in
2020 (Hemp Industry Association)
- Hemp-based CBD, such as Phivida's, is expected make up 25% of total CBD sales $450M by 2020,
a 700% growth (Hemp Industry Association)
- Cannabidiol (CBD) and Cannabinoids as functional ingredients in body-care and supplement categories is already showing
+300% growth year-over-year (Forbes)
In response to this, the new C-suite executive has evolved route-to-market strategies for its beverage brands, whereby small
regional distributors are to be replaced with national distributors. Under the new CCO, the company has shifted to larger
distributor, and more modern formulation and co-packing partners for scalability to meet the forecasted growth, while global
distribution partnerships and logistics continue to be developed.
Notes from the CEO
"We could not be more excited about the near term as we approach the commercialization of a newly evolved platform of
CBD-infused beverages and hemp derived oil products," says Phivida President and CEO, Jim Bailey.
"We have made great strides in the past quarter by developing the board and executive, assigning new dedicated operational roles,
commissioning consumer research, new product and brand development and preparing for a major shift into mainstream national
distribution across the USA. Phivida continues to focus on growth markets and lifestyle and
aspirational trends, while evolving and modernizing our strategic product mix and brand portfolio to ensure that Phivida's
offerings resonate with current and future consumers in key retail and clinical markets."
Phivida Holdings Inc.
Phivida infuses CBD derived from Hemp into functional foods, beverages and clinical health products. Phivida uses encapsulated
cannabinoid oils and extracts into water soluble form, enhancing bioavailability, and timed released within the body. Phivida's
CBD is infused into beverages, foods and supplements containing a proprietary blend of phytonutraceuticals studied to target a
range of health conditions, from chronic pain, treatment of stress and anxiety to reducing inflammation in the body. The World
Anti-Doping Association's recently lifted a ban of CBD from hemp oil and the World Health Organization's recent statement
supports clinical benefits of CBD for athletes and active families. Celebrating; Health and Wellness, In Harmony™, Phivida's
vision is to lead the market as the benchmark quality standard in premium CBD infused foods, beverages and clinical products,
with a dedication to research, education and investing back into the communities which we so proudly serve. Phivida
["fiii-vee-daa"] is a publicly traded company listed on the Canadian Securities Exchange under the ticker symbol "VIDA" and on
the OTC Markets as "PHVAF".
Quick Facts:
SOURCE Phivida Holdings Inc.
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