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Canadian Marijuana Infused Products IPO Opens For Business In The US

|Includes: Nutritional High International Inc. (SPLIF)

Nutritional High Inc common shares commenced trading on the Canadian Securities Exchange at the opening of market on March 23, 2015 under the trading symbol "NHL" and anticipates a US listing by April 20th but can be currently traded through select brokerages in the US. A link for investors on how to trade is found on the Nutritional High Inc website.

www.nutritionalhigh.com/

  • Canadian IPO competing in the recreational and medical marijuana segment in the US ~ American Listing coming April 20, 2015
  • Royalty model through creation of product lines and licensing opportunities to MIP producers
  • Acquire real estate for lease to Licensed Operators and provide financing, equipment, and consulting services
  • Options on two MMPR growers applicants in Canada
  • Competing in the Medical Marijuana Dispensary business segment
  • Nutritional High Inc common shares commenced trading on the Canadian Securities Exchange at the opening of market on March 23, 2015 under the trading symbol "NHL".

Nutritional High Inc summary per SEDAR filing MD&A April 1,2015 and Prospectus January 29,2015

Nutritional High Inc {NHL} core strength is development of edible Marijuana-Infused Products {MIPs}

The Company may focus on different parts of the industry value chain, or focus on acquiring assets in the industries, not directly related to Marijuana-Infused Products or Marijuana Concentrate extraction in order to ensure such compliance (e.g., acquisition of real estate,unsecured lending and consulting).

Plans are to begin in the US market while keeping options open to develop Canadian markets as well.

Management Team

  • CEO, President & Director David Postner
  • VP Product Development Melissa Parks
  • Director and Corporate Secretary Adam K Swerzas
  • CFO Al Quong
  • Chairman of the Board Statis Regis

David Postner CEO

U.S. States without Residency Requirements

NHL is also considering seeking licensing to manufacture and distribute edible MIPs and Marijuana Concentrates in certain U.S. States where such U.S. States will provide a License without residency requirements or with residency requirements that the Company is able to comply with.

In some states, for a licensed MIPs operator to be eligible to be granted a License, the owners of the licensed operator must be residents of such U.S. State. As such, listed companies or other widely held enterprises are ineligible to obtain a License in those states where a Licensed Operator must be a U.S. State resident.

In the U.S. States without residency requirements, the Company may choose to apply for a License or acquire entities with a license and produce products itself, or work with other licensed operators. The Licensed Operators include growers of Marijuana, MIP manufacturers and retail dispensaries. Ancillary service providers may include medical and educational centers and marijuana paraphernalia shops.

Products and Services and Intangible Properties

The company intends to develop product lines for retailing opportunities in the legal Colorado recreational market and to adapt them to become suitable for medical marijuana markets.

Nutritional High is now in its development stage of branding and product packaging and has submitted trademark applications in the United States and Canada on three initial brand names it intends to utilize, being Breaking Bud, Heisenberg Blue and Gootch.

In its Marijuana-Infused Products Segment, the Company is focused on developing, acquiring and designing Marijuana-Infused Products and Marijuana Concentrate products and brands for use by Licensed Operators that have entered into royalty agreements with Nutritional High.

Medical Advisory and Retail Segment

The Medical Advisory and Retail Segment of the Company's business is comprised of the Clinic Business, which provides medical and educational consulting services and is focused on franchising retail Medical Marijuana dispensaries in the jurisdictions in the United States without Residency Requirements, where permitted by regulation.

On February 2, 2015, NHL was advised by the Illinois Department of Financial and Professional Regulation (the "Division") that it has been awarded authorization to register a medical marijuana dispensary under the Compassionate Use of Medical Cannabis Pilot Program Act (Illinois). This authorization permits the Company to submit a registration package to the Division , and upon their satisfaction, the Company will receive conditional approval for a Dispensary license. The Company is working to submit the Registration within the prescribed 120 day timeline.

Business Model

Activities Expected Revenue Streams
Acquire and develop recipes, know-how and other intellectual property for the preparation of Marijuana-Infused Products and
Marijuana Concentrates, for use by Royalty Producers entering into royalty agreements with the Company.
Royalty fees
Develop recognizable brands for Marijuana-Infused Products and
Marijuana Concentrates for use by Royalty Producers entering into royalty agreements with the Company for their use.
Royalty fees
Provide consulting services with respect to extraction processes,
techniques, training and know how relating to Marijuana
Concentrates.
Consulting fees
Royalty fees
Acquire real estate for lease to Licensed Operators. Leasing fees, Rent
Provide financing and equipment leasing to Licensed Operators and prospective Licensed Operators. Interest income
Loan fees (renewal, origination, etc.)
Leasing Fees
Provide financial and strategic support to Licensed Operators in
securing supply of Marijuana.
Miscellaneous consulting fees

Specialized Skill and Knowledge

NHL has hired Melissa Parks, as the Vice President, Product Development. Ms. Parks is a Cordon Bleu trained chef with extensive experience in the manufacturing of edible MIPs and creating high end baked goods and confectionery products incorporating Marijuana Concentrates. Ms. Parks also provides know how and consulting services to the Company's clients.

NHL has acquired 30 recipes for edible MIPs from Ms. Parks, including recipes for Chocolate Chew, Colorado Peach Pound Cake, High Altitude Hard Candy and Caramel Cashew Popcorn with Chocolate Drizzle. Ms. Parks' role with the Company includes developing additional recipes which will be proprietary to the Company and will, along with the acquired recipes, form a library of proprietary recipes for edible MIPs in regards to which, NHI will enter into royalty agreements with royalty producers.

www.thestonerscookbook.com/chef/melissa-parks

Product Lines

  1. The Breaking Bud product line includes solid marijuana concentrates, liquid marijuana concentrates, cartridges for vapes, and other products
  2. The Heisenberg Blue product line includes hard candy, sugar & sweeteners, tinctures and drink additives
  3. Gootch is the Company's high end line of products that includes chocolates, chews, energy bars and sauces

(The product Images are from the Huffington Post)

Royalty Producer partnerships

NHL will generally only enter into royalty agreements with Royalty Producers that have the ability to produce the Marijuana-Infused Products in a commercial kitchen. NHI expects to acquire certain processing equipment and a confectionery depositor/printer,
which the Company anticipates leasing to Royalty Producers. Management estimates that the processor is capable of processing up to 40 pounds of Retail Marijuana per four-hour cycle into Marijuana Concentrate.

Colorado Market size estimates

Based on quarterly reports for the first six months of the fiscal 2013-2014 year and monthly reports for the second six months of 2013-2014 fiscal year total medical marijuana and total recreational marijuana sales were US$364 million and US$117 million, respectively.

The Cannabist

Colorado Supply size estimates as of December 1,2014

  • 491 Medical Marijuana Stores
  • 300 Retail Marijuana Stores
  • 156 Medical Infused Product Manufacturers
  • 91 Retail Infused Product Manufacturers
  • 15 State Licensed Retail Marijuana Testing Facilities

Since marijuana has only recently been legalized in certain jurisdictions, the NHL's management believes the industry is still in infancy stages, and business, industrial and regulatory frameworks are not fully developed. Lack of traditional sources of financing, absence of an efficient supply chain network and streamlined marketing channels, and strict regulatory requirements create market inefficiencies, which create a business opportunity for the Company.

Boston.com

Key Competitors offering financing, incubation and strategic services to Licensed Operators

  • Agritek Holdings Inc.
  • BreedIT Corp.
  • Cannabis Sativa Inc.
  • Cannabis Science Inc.
  • Medical Marijuana Inc.
  • Mentor Capital Inc.
  • Chuma Holdings Inc.

Competitors in the Edibles Segment

Canadian MMPR growers interests

NHL has also entered into options to acquire interests in two separate companies in the process of applying for Marihuana for Medical Purposes Regulations licenses ("MMPR")

(NYSE:I) Haldimand Option

www.haldimandcounty.on.ca/

  • The Company may exercise the option, at its sole discretion, by paying a fee of $62,500 within 10 days of the option or receiving the "ready to build" letter from Health Canada in Common Shares at a deemed price of $0.025, and (ii) within 10 days from the date option or satisfies all requirements with Health Canada to become a licensed producer pay a fee of $187,500, payable in Common Shares at a deemed price of $0.025 per share. The Company will then be responsible for 50% of the development costs required to bring the facility up to commercial production. The site includes 48 acres of vacant land zoned for agricultural use is available for the construction of further facilities to expand future production capacity, should such be required. The Haldimand Option submitted the initial application to Health Canada and additional information was provided on July 11, 2014 on Health Canada's request. On November 13, 2014, Health Canada advised the option or that the application is currently at the "Enhanced Screening Stage". Since then, to the Company's knowledge, no further communication has taken place in respect of the application.

(II) Northumberland Option

www.northumberlandcounty.ca/en/index.asp

  • NHL issued 150,000 Series II Warrants pursuant to this option agreement. The company may exercise the option, at its sole discretion by issuing 625,000 common shares to the option or at an effective issue price of $0.10 per share within 14 days from the date the option or notifies NHL of the receipt of a "ready to build" letter from Health Canada and paying in cash the positive difference between the current value of the shares and $62,500, and (ii) issuing 1,875,000 common shares to the option or at a deemed issue price of $0.10 per share within 14 days from the date the option or notifies NHL of the receipt of a license from Health Canada in respect of the facility and paying in cash the positive difference between the current value of the shares and $187,500. NHL will then be responsible for 100% of the development costs required to bring the facility up to commercial production. The option or of the Northumberland Option submitted the initial application to Health Canada on June 25, 2014. To the company's knowledge, no further communication has taken place in respect of the application.

Photo courtesy ofCanada.com

Colorado Property acquired details

Pueblo Location Acquisition

en.wikipedia.org/wiki/Pueblo,_Colorado

NHL acquired the Pueblo Location on November 17, 2014. The Pueblo Location is comprised of three main buildings, several smaller storage buildings, an old boiler building and an oversized two-car garage on approximately three acres. NHC paid an aggregate purchase price of US$885,000.

The Company financed the purchase price of the Pueblo Location through the issuance of two secured convertible debentures in an aggregate principal amount of $600,000. The remainder of the purchase price was funded by the Company through working capital.

Closing of Senior and Subordinate Debenture financing relating to Pueblo Location Acquisition

The Company issued to an arm's length party a senior secured convertible debenture (the "Senior Convertible Debenture") in the principal amount of $450,000. The Senior Convertible Debenture matures on November 17, 2016 (the "Maturity Date") and carries an interest rate of 12% per annum. The Senior Convertible Debenture is secured by a first ranking general security interest over all assets of the Company. The Senior Convertible Debenture is convertible into Common Shares at any time prior to the Maturity Date at a price equal $0.06 (the "Conversion Price"). In connection with an amendment to the terms

The Company has also issued a subordinated secured convertible debenture (the "Subordinate Convertible Debenture") in the principal amount of $150,000 to a group of lenders comprised of Adam Szweras, Statis Rizas and David Posner, all of whom are directors of the Company. The Subordinate Convertible Debenture matures on the Maturity Date and carries an interest rate of 12% per annum. The Subordinate Convertible Debenture is secured by a general security interest over all assets of the Company, subordinate to the Senior Convertible Debenture. The Subordinate Convertible Debentures carries the same Conversion Price and Conversion Price Adjustment provisions as the Senior Convertible Debentures.

RollingStone.com

Grant of Two Marijuana Licenses to Palo Verde On October 1, 2014, Palo Verde advised the Company that it has received two marijuana licenses from the MED:

www.colorado.gov/pacific/enforcement/business-license-applicant-criteria-medical-marijuana

  1. Retail Marijuana Product Manufacturing License ("RMIP License")
  2. Retail Marijuana Cultivation License ("RMC License")

The Company is working with Palo Verde to finalize a brand and recipe royalty agreement.

Agreements with Palo Verde

  1. The Lease Agreement (MIP), which carries an annual rent of US$15 per square foot, subject to a 5% annual increase, and having a term of two years with an option to renew for an additional four years. The Lease Agreement (MIP) covers an area of 11,000 square feet. The rent commences on January 1, 2015, subject to a six month deferral period. The deferred rent will accrue at a rate of 12% per annum and will be paid over a period of three months commencing on the expiry of the deferral period. Under the terms of the lease agreement, Palo Verde shall not sublet the leased property or any part thereof, nor assign the leases or any interest therein, without the prior written consent of NHL.
  2. The Lease Agreement (Cultivation), which carries an annual rent of US$15 per square foot, subject to a 5% annual increase, and having a term of two years with an option to renew for an additional four years. The Lease Agreement (Cultivation) covers an aggregate area of 15,000 square feet, comprised of two buildings. The vendor of the Pueblo Location currently occupies the 10,000 building pursuant to the Pueblo PSA and pays US$2,500 per month in rent. The vendor of the Pueblo Location is expected to vacate the premises at the end of August 2015, at which time, Palo Verde will occupy the building pursuant to the Lease Agreement (Cultivation) and commence paying rent in accordance with such agreement. The rent payable on the 10,000 square feet to be occupied by Palo Verde beginning on September 1, 2015, commences on September 1, 2015, subject to a nine month deferral period. The deferred rent will accrue at a rate of 12% per annum and will be paid over a period of three months commencing on the expiry of the deferral period.

A revolving loan agreement providing a US$150,000 unsecured debt facility to Palo Verde to draw funds for general day-to-day operating purposes, obtaining raw materials, hiring of staff and other ancillary costs related to starting and maintaining production. The loan commenced on July 23, 2014, and is effective for a period of 12 month at a rate of 12% per annum. The interest compounds on a monthly basis. Principal and accrued interest are payable at maturity of the facility. Palo Verde may extend the maturity date for up to five successive one-year terms for a total of five years, but no later than July 22, 2020. Each extension is subject to 2% origination fee.

The Company is also finalizing a recipe and branding royalty agreement to provide its intellectual property including recipes, branding, packaging and other know-how to Palo Verde. The Company anticipates entering such agreement with Palo Verde in early 2015, conditional on approval of the Marijuana Enforcement Division, Colorado Department of Revenue (" MED").

Financing and share structure

On October 8, 2014, the Company completed a private placement (the "Private Placement") of 4,000,000 Common Shares and 2,000,000 Series I Warrants for aggregate proceeds of $100,000 (2.5 cents per share plus warrants) from an arm's length investor, which funds were received in trust in June 2014. In connection with the Private Placement, the Company paid a finder's fee of $8,000 and issued an aggregate of 320,000 finder's warrants (the "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.

Following the completion of the Private Placement, there were an aggregate of 15,500,006 Series I Warrants outstanding, each of which entitles the holder thereof to acquire one Common Share at a price of $0.05 per Common Share at any time prior to the date that is 18 months from the issuance thereof, subject to the early exercise provisions as follows:

If the holders of Series I Warrants elect to exercise the Series I Warrants prior to October 31, 2014, in addition to receiving a Common Share, they will receive an additional warrant ("Series III Warrant") exercisable at a price of $0.10 at any time prior to October 31, 2016. An aggregate of 3,566,638 Series I Warrants at 5 cents per share were exercised prior to October 31, 2014 for aggregate proceeds of $178,332 initiating the Series III warrant activation clause activation and subsequent issuance of 3,566,638 additional Series III warrants as a sweetener for early pick up of the warrant by the holder

On March 13, 2015, 32,900,000 units at $0.05 per unit were issued for gross proceeds of $1,645,000 upon the successful close of the IPO. Each unit consisted of one common share and one half of one share purchase warrant ("Unit Warrant"), with each warrant exercisable into one common share at a price of $0.07 per share until 24 months from the date of issuance.

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.

On March 18, 2015, the Company paid an extension fee of $30,000 by issuing an aggregate of 600,000 units and one half of one share purchase warrant, exercisable into one common share at a price of $0.07 per share until 24 months from the date of issuance.

On March 18, 2015, the Company paid a going public success fee of $35,000 by issuing an aggregate of 700,000 units and one half of one share purchase warrant, exercisable into one common share at a price of $0.07 per share until 24 months from the date of issuance.

On March 18, 2015, the Company granted 3,400,000 incentive stock options to certain officers, directors and consultants to purchase common shares of the Company at the exercise price of $0.10 exercisable until 60 months from the date of issuance.

On March 18, 2015, the Company granted 3,550,000 incentive stock options to advisory board members and consultants to purchase common shares of the Company at the exercise price of $0.10 exercisable until 60 months from the date of issuance.

On March 26, 2015, 400,000 warrants were exercised for gross proceeds of $28,000.

On March 27, 2015, 400,000 warrants were exercised for gross proceeds of $28,000.

On March 30, 2015, 12,000 compensation options under the warrant indenture were exercised for $600 for 12,000 common shares and 6,000 share purchase warrants, exercisable at a price of $0.07 per share until March 16, 2017.

Share Grand Totals

  • As of the date hereof, the Company has issued and outstanding an aggregate of 114,492,269 Common Shares, 11,933,368 Series I Warrants, 150,000 Series II Warrants, 3,566,638 Series III Warrants, 320,000 Finder's Warrants, 16,300,000 Unit Warrants, 2,398,800 Compensation Options and 10,150,000 Company stock options.

Fully Diluted Shares =149,266,075

Financial Situation

  • Overall Performance
  • As at January 31, 2015, the Company had assets of $1,142,548, liabilities of $1,137,331, and shareholders' equity of $5,217. During the period ended January 31, 2015, the Company incurred a loss of $752,657.
  • As at January 31, 2015, the Company had working capital deficiency of $414,386 and cash of $22,514.

Related Party Transactions and Key Management Compensation

NHL and FMI Capital Advisory Inc. (Formerly Foundation Opportunities Inc.) ("FMI") entered into an advisory and consulting agreement on May 1, 2014. FMI is a subsidiary of Foundation Financial Holdings Corp. ("FFHC"). FFHC is an entity in which an officer is a director of the Company. In consideration for services, NHL agreed to pay an initial advisory fee of $35,000 and a monthly fee of $8,000 commencing on May 1, 2014. An amendment to the agreement was entered into on October 27, 2014, to include a success fee of $70,000, payable upon successful completion of the IPO Offering, half of which is payable in Units. For the six month period ended January 31, 2015, NHL was charged $48,000 by FMI. At January 31, 2015, $8,000 is included in accounts payable and accrued liabilities in relation to FOI.

For the period ended January 31, 2015, the Company incurred a finder's fee of $4,000 and issued 160,000 finder's warrants to Foundation Markets Inc., a company with a related director. This was in connection with the October 8, 2014 closing of the 4,000,000 unit private placement.

NHL and Branson entered into a management services agreement on May 1, 2014. The management services agreement includes the provision of services of the Company's Chief Financial Officer. Branson is an entity in which FFHC is a 49.0% shareholder. In consideration for services the Company agreed to pay $3,000 per month. An amendment to the agreement was entered into on October 1, 2014 to increase the fee to $5,000 per month. A further amendment to the agreement was entered into on October 27, 2014, to include a success fee of $30,000, payable upon successful completion of the Offering. For the six month period ended January 31, 2015, the Company recorded $26,000 for management services provided by Branson. As at January 31, 2015, $5,000 is included in accounts payable and accrued liabilities in relation to Branson.

During the six month period ended January 31, 2015, Fogler, Rubinoff LLP ("Fogler") a law firm in which an officer and director of the Company is also a partner, provided $276,771 of legal services, which are included in professional fees. As at January 31, 2015, $324,761 due to Fogler is included in accounts payable and accrued liabilities.

photo courtesy of westword.com

Conclusion

The opportunity to invest at the beginning stages of Nutritional High Inc brings along that advantage of a good management team who have gained a large amount of media exposure as they begin to put the parts together of a diverse new company looking to capitalize on the expanding marijuana industry.

The sky is literally the limit for quality companies in the new marijuana industry. Those who manage the opportunity the best stand to profit and provide a large return to investors.

The focus is into several areas:

Lending-Federal laws prohibit traditional financing and NHL looks to provide financing for emerging partners at a healthy rate of return to shareholders of NHL.

Edible or MIPs are being developed and branded while the expectation will be to charge a royalty based fee to retailers of the products.

Provide real estate leasing and consulting for industry players who are in need of assistance.

Expansion into Canada through options on a couple small MMPR applicants and when legally possible bring the established brands being created into the Canadian market as well.

Enter a variety of states with a diverse offering depending on each states requirements, laws and opportunities while having a superior ability to fund partners and avenues of interest in comparison to the smaller fragmented market players currently existing

Risks

One main risk is the fact that US federal law classifies Marijuana as a schedule 1 drug and therefore it is an illegal substance. Though individual states have passed Marijuana friendly legislation the federal government has not yet agreed on that approach.

NHL is only beginning so much of the future business is still unknown and some ways from being profitable. An initial period is necessary to execute the business plan and find the partners and opportunities through the coming months and years.

This company is a small cap play and carries with it that inherent risk and should be considered a speculative investment and will likely have some volatility associated with its stock price.

Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in NTRGF, C.NHL over the next 72 hours.