SLANG Worldwide Enters Vermont Market Through Closing of High Fidelity Acquisition
Merger includes retail, distribution and cultivation capabilities in the limited license market where adult-use sales are expected to reach up to US$230 million in 2023
Toronto, Ontario--(Newsfile Corp. - August 12, 2021) - SLANG Worldwide Inc. (CSE: SLNG) (OTCQB: SLGWF) ("SLANG" or the "Company"), a leading global cannabis consumer packaged goods (CPG) company with a diversified portfolio of popular brands, today announced that it has closed its previously announced acquisition (the "HI-FI Acquisition") of High Fidelity, Inc. ("HI-FI"), Vermont's largest medical cannabis company.
"The integration of HI-FI into our nationwide platform will allow us to expand our operational footprint and add Vermont to our existing core markets of Colorado and Oregon," said Chris Driessen, Chief Executive Officer of SLANG. "Hi-Fi's vertically integrated business model enhances our capacity and operational capabilities through its cultivation, production, and retail, including home delivery services, adding significant value to our full portfolio of assets. For Vermont, this partnership will bring revenue to the local and state economy while also providing quality jobs with competitive salaries and benefit packages. We are fully committed to nurturing Vermont's value-driven culture as well as the High Fidelity team's core values, standing by the principles of quality, collaboration and best consumer and employee experience."
Key Transaction Benefits:
- HI-FI generated positive adjusted EBITDA in fiscal year June 2021, and on this basis, is expected to be accretive to SLANG's earnings in calendar 2021 and onward. HI-FI's trailing twelve month revenue is $6.9 million USD and trailing twelve month adjusted EBITDA is $1.1 million1
- Broadens SLANG's core market footprint, adding Vermont to its existing core markets of Colorado and Oregon
- Expands SLANG's operational footprint with the addition of Vermont's leading vertically integrated cannabis company, which includes a 28,000-square-foot cultivation, production, lab, and retail distribution facility, with a planned 50,000-square-foot expansion expected to be completed in 2022
- Adds two of the five medical cannabis licenses in Vermont with four fully operational dispensaries, including in the Burlington area, with ability to add two new retail dispensaries upon receipt of licenses
- Strengthens SLANG's experienced leadership with the integration of engaged local management teams including a proven and profitable operator with an eight-year history
Key Vermont Market Benefits:
- Helps build infrastructure to meet market demand in the state, providing fresh capital investment to the area
- Provides new job opportunities with competitive wages and benefit packages
- SLANG's 2200-outlet retail pipeline provides immediate opportunity for Vermont-branded product distribution to a larger US market
- Creates strong partnership in supporting the social justice initiatives in Vermont's cannabis laws
- Adds leadership and expertise to support innovation, best manufacturing practices and compliance
About High Fidelity
HI-FI is Vermont's premier vertically integrated cannabis company, founded in 2012 in Burlington. The Company owns two of the five medical cannabis licenses in Vermont and services approximately 70 percent of registered patients2. In June 2021, both licenses commenced operating under a new brand name, CeresMED. In the upcoming licensing process for adult use, current medical license holders will have early access to the market alongside Vermont's craft growers, giving them a significant opportunity to build consumer loyalty. In addition to the four dispensaries, HI-FI operates statewide home delivery services and wholesale distribution of its own branded products as well as SLANG branded products. Furthermore, HI-FI is awaiting approval of a social equity application for a retail medical cannabis license in New Jersey.
HI-FI also owns and operates Ceres Natural Remedies, Vermont's original CBD store. Since 2016, Ceres has grown to include three retail stores and a portfolio of Ceres branded products with distribution in over 1,200 retail locations, which will expand the SLANG network to over 3,400 total points of retail distribution.
About SLANG Worldwide Inc.
SLANG Worldwide Inc. is a global leader in the cannabis CPG sector with a diversified portfolio of popular brands distributed across the United States. The Company specializes in acquiring and developing market-proven regional brands as well as launching innovative new brands to seize global market opportunities. For more information, please visit www.slangww.com.
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This news release contains statements that constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Forward-looking statements included in this news release include, but are not limited to, statements in respect of the manufacture and distribution of SLANG branded products in Vermont and the expansion of SLANG's facility in Vermont.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management of SLANG at this time, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual results to differ materially from those expressed or implied in such statements. Investors are cautioned not to put undue reliance on forward-looking statements. Applicable risks and uncertainties include, but are not limited to regulatory risks, risks related to the COVID-19 global pandemic, changes in laws, resolutions and guidelines, market risks, concentration risks, operating history, competition, the risks associated with international and foreign operations and the other risks identified under the headings "Risk Factors" in SLANG's annual information form dated April 29, 2021 and other disclosure documents available on the Company's profile on SEDAR at www.sedar.com. SLANG is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
This press release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the revenue and adjusted EBITDA of HI-FI during the fiscal year ended June 30, 2021 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading "Forward-Looking Statements" above and assumptions with respect to market conditions, pricing, and demand. Actual results may vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading "Forward-Looking Statements" above, it should not be relied on as necessarily indicative of future results.
Adjusted EBITDA is a non-IFRS financial measure that the Company uses to assess its operating performance. Adjusted EBITDA is defined as net earnings (loss) before net finance costs, income tax expense (benefit) and depreciation and amortization expense, adjusted for other non-cash items such as the impact of unrealized fair values, share based compensation expense, impairments, one-time gains and losses, and one-time revenues and expenses. This data is furnished to provide additional information and is a non-IFRS measure and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measure to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use this non-IFRS measure in the evaluation of companies, many of which present similar metrics. As other companies may calculate this non-IFRS measure differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities.
Third Party Information
This press release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources
1 Calculated from HI-FI's June 30, 2021 fiscal year-end prepared in accordance with US GAAP on a preliminary unaudited basis. See "Financial Outlook" and "Non-IFRS Measures".
2 Source: Vermont Marjiuana Registry
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