corporate profile · high margin value proposition . 5. processed oil extract can be used to make...

Nutritional High International Inc.

CSE:EAT OTCQB:SPLIF Frankfurt:2NU

Q3

2017

CORPORATE PROFILE

http://nutritionalhigh.com


Forward Looking Statements and Risk Disclosure

The information contained in this presentation does not purport to be all-inclusive or to contain all information that prospective investors

may require. Prospective investors are encouraged to conduct their own analysis and reviews of the Company and of the information

contained in this presentation. Prospective investors should consult their own professional advisors to assess their potential investment in

the Company. The remarks contained in this presentation (“Presentation”) may contain forward-looking statements (as such term is

defined in the Private Securities Litigation Reform Act of 1995) relating to the Company’s operations or to its business environment. These

statements are identified by the use of forward-looking terminology such as “believes,” “plans,” “intend,” ”scheduled,” “potential,”

“continue,” “estimates,” “hopes,” “goal,” “objective,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other

variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The safe harbor

provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended,

apply to forward-looking statements made by the Company. The reader is cautioned that no statements contained in Presentation should

be construed as a guarantee or assurance of future performance or results. These forward-looking statements involve risks and

uncertainties, including those identified within this Presentation. The actual results that the Company achieves may differ materially from

any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations,

and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various

disclosures made by the Company in it’s reports filed on SEDAR that attempt to advise interested parties of the risks and factors that may

affect the Company’s business. The information in this current report shall not be incorporated by reference into any registration

statement pursuant to the Securities Act of 1933, as amended. The furnishing of the information in this Presentation is not intended to,

and does not, constitute a representation that such furnishing is required by Regulation FD or that the information this current report

contains is material investor information that is not otherwise publicly available. This summary has been provided to the recipient for

information purposes only and no representation or warranty, express or implied, is made as to the completeness or accuracy of the

information contained herein. The contents are not to be reproduced or distributed to the public or press. The information contained

herein is not guaranteed as to its accuracy or completeness. Throughout this presentation various logos and trademarks will be used.

These trademarks and logos are the property of their respective owners. An investment in the Company's securities should be considered

highly speculative. There is no guarantee that an investment in the Company will earn any positive return in the short or long term. An

investment in the Company is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment.

There are certain risk factors associated with an investment in the Company’s securities.

2


Company Profile

• Nutritional High is a Canadian public company focused on the U.S. medical and recreational marijuana industries

• Focus is on the high margin, high growth segments - edibles and oil extracts market

• Currently have active projects in 4 U.S states:

• Colorado: Operating one of Colorado’s largest and most automated oil extraction and infused edibles facilities: MIPs License secured through agreements with Colorado-based Palo Verde LLC

• Illinois: Operating in Effingham, IL since Sept 2016. The only dispensary in ISP District 12 in over 60 mile radius

• Nevada: In a process of acquiring producer & processor licenses Nevada, and a real estate property to which the licenses are attached

• Oregon: Closed acquisition of property in La Pine, Oregon, and in the advanced stages of an application process to manufacture cannabis concentrates and edibles in Oregon

• Acquired strategic interest in Aura Health – a private company focused on developing medical cannabis clinics in various US states

• Forming a strategic partnership with Lineage Grow Company Ltd. which intends to build cannabis cultivation facilities in NV and CO at NH’s properties

• Pursuing expansion in additional states – initially targeting WA, CA, AZ, FL, OH and MI

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Building a robust production and distribution platform for nationally branded marijuana-infused products

First marijuana company to successfully complete an IPO (not an RTO) in the Canadian market, raised over $12million to date

Check out our corporate video by clicking here:

http://www.nutritionalhigh.com/investor-relations/introducing-nutritional-high-international/

http://www.nutritionalhigh.com/investor-relations/introducing-nutritional-high-international/

Leadership Team

4

Jim Frazier

Chief Executive Officer

• Over 23 years of experience in the food industry and a proven

track record of developing and implementing branded and

private label programs and driving profits

• Owns and operates a successful Florida-based candy and

chocolate business which has been a well-known manufacturer of

confectioneries for over 40 years

• Managed the expansion of his plant facilities and significantly

expanded sales and developed new customer bases across all

retail channels

David Posner

Chairman of the Board and Director

• Brought “Hempen Gold,” the first hemp-infused beer to Canada

• Imported and created marketing and branding initiatives for

various other alcoholic products in Canada

• Acquisitions Manager for Stonegate Properties Inc. where he

managed real estate and brokered deals in Canada and Oklahoma

Amy Stephenson

Chief Financial Officer

• Over 20 years senior management and capital markets experience,

10 of which were spent in the CFO position for various public

companies, incl. Ceres Global Ag Corp., Goldeye Explorations Ltd.,

Petroworth Resources Inc., and Augen Capital Corp

• As former CFO of Bedrocan Cannabis Corporation, Ms.

Stephenson has a strong familiarity of the cannabis and hemp

industries

• Ms. Stephenson is a CFA Charter holder, a Chartered Professional

Accountant (CPA, CMA) and a member of the Financial Executive

International (FEI)

Alex Storcheus

SVP, Corporate Development

• Mr. Storcheus has been involved with Nutritional High since its

inception in 2014 and is currently an SVP, Corporate Finance at

Foundation Markets - a Toronto-based merchant/investment

bank

• In his current capacity Mr. Storcheus assists Nutritional High with

expansion efforts in various jurisdictions and financial advisory

projects

• Mr. Storcheus has previously worked at the Department of

National Defense, holds a BBA from the Schulich School of

Business at York University, and is also a CFA Charterholder

Adam K. Szweras

Corporate Secretary and Director

• Partner with the law firm Fogler, Rubinoff LLP

• Chairman and Founder of Foundation Markets Inc., a

Toronto-based investment bank, and Exempt Market Dealer

• Expertise in recreational and medicinal marijuana laws in the

US and Canada

• Practiced securities law since 1997

Billy Morrison

Oil Extraction Consultant and Director

• Founded Peloton Pharmaceuticals, where he designed,

developed, and deployed nearly autonomous grow system

that mitigates labor and reduces cost

• Experience in operating marijuana companies, founding The

Union Collective, a successful delivery dispensary; Capstone

Analytical, one of the first Bay Area thin layer

chromatography testing facilities; and Temez Extracts

• Pioneered a patented water conserving technology that

eliminates water change outs

Landon Long

Operations Manager

• Founded Infusion Factory, one of the nations first cannabis

specific contract manufacturers and white label services

provider focused on the formation, production and

commercialization of safe, consistent, dose accurate and

compliant medicinal products.

• Owns and operates a successful vapor hardware company

that has been creating innovative medicinal, vapor and

ancillary consumer products since 2011.

• Over 20 years of combined Marketing, Production and

Cannabis Specific Expertise.

`

Oil Extracts and Edibles:

High Margin Value Proposition

5

Processed oil extract can be

used to make marijuana-

infused products such as

candies, chocolates, topical

creams, tinctures, drink

additives, etc.

Estimated wholesale price

for such products in the

recreational market for

packages that contain

100mg of THC is:

The flower of female marijuana

or cannabis plant (“bud”) is

consumed by smoking, while

leafs, nodes and stems (“trim”)

are not typically utilized for

consuming cannabis through

smoking, but are used in

production of other products

such as oil extracts, which are

used to manufacture number of

Marijuana-Infused Products

~$20-$30/g ~$10-$15/g (~$25 retail)~$5-$7/g

Female Marijuana

Plant Grown Indoors

Flower is usually sold

wholesale to the licensed

dispensaries; trim is either

discarded or sold at a

significant discount to MIP

manufacturers


for flower is:

Bud and trim can be

processed into extract and

sold to MIP product

manufacturers or to

dispensaries


for oil extracts ranges

from:

Our Story

6Nutritional High International Inc.

April 2014

Company formed

Jun 2014

Closing of seed

financing and PSA on

Pueblo Property

Jul 2016

Jim Frazier appointed

as CEO

Aug 2016

IL license granted;

Launch of Jimi Hendrix

cannabis products

Sept 2016

Grand opening of

Clinic Effingham

Nov 2016

Closing of Aura Health

Acquisition

Dec 2016

$5.5m financing,

launch of Pueblo

Facility

Dec 2016

Launch of flagship

“FLI” brand

Dec 2016

Aura Acquires 2nd

clinic

Jan 2017

Enters into Acquisition

for NV licenses

Jan 2017

Acquisition of Dab

Stick product I.P

Feb 2017

Partnership with

Lineage Grow

Mar 2017

Acquisition of Oregon

property

April 2017

Commenced retail

sales of FLI Cartridges

May 2017

Palo Verde achieves

95%+ THC content in

its extracts

TrufflesChocolate

Candy Bar

Gummies Lollipop

FLI Vape Pen Cartridges ready

for shipmentDistillate produced by Palo

Verde at Pueblo Facility

FLÏ - Our Flagship Premium Product Line

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Concentrate Products

Edible Products Concepts

FLI Cartridges on a shelf in CO

Marketing Strategy

88

Product Strategy Distribution StrategyBranding and

Promotion Strategy

• Focus on highest-margin

segments of the industry

• Focus on manufacturing high

quality oil, which forms the

core of the quality standard for

extract and infused products

• Employ leading manufacturing

and extraction methods which

have the potential to become

gold standard, as the industry

continues to evolve

• Continue to innovate by

acquiring and developing

products with novel delivery

systems

• Assemble a robust portfolio of

brands, which have the

potential to become

nationally-recognized

• Develop brands internally:

and partner with IP holders or

acquire brands with widely-

recognized names:

• Focus on promotion in a

manner that is compliant with

regulations and has potential

to reach a wide base of 21+

consumers

• Work exclusively with or through

Licensed Operators, which are

fully compliant with applicable

regulations

• Cultivate key retail-channel

relationships with wholesale buyers

• Source Contract Manufacturing

Opportunities (CMOs) to utilize idle

manufacturing capacity

• Employ distribution strategies that

have successfully been employed in

traditional industries (eg. Direct

Store Delivery Program):

Dab Stick – Innovative Delivery System for Oil Consumers

• The Dab Stick is a dispenser for viscous liquid substances, capable of carrying

approximately ½ gram of cannabis oil extract designed with the retail consumer and adult

use user in mind

• The oil vessel is capable of dispensing oil in very small metered doses, which ensures

consistency between each dose of oil dispensed and providing desired consumer

experience

• The product is also designed with a view to being able to easily integrate empty vessels

into filling equipment

• A provisional patent application has been filed with the United States Patent and

Trademark Office

• Acquisition terms: CAD $500k in shares upon achieving certain operating milestones

(Please see Press Release dated January 30, 2017)

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Geographic Footprint

• Successfully staked out footholds in 4 U.S states

• Colorado: Successfully established one of

Colorado’s largest and most automated oil

extraction and infused edibles facilities: MIPs

License secured through agreements with

Colorado-based Palo Verde LLC

• Illinois: Own 50% of The Clinic Effingham – a

thriving medical cannabis dispensary in

Effingham, Illinois that has been operational

since Sept 2016

• Nevada: Finalizing the acquisition of producer

& processor licenses and real estate to which

the licences will be attached with a view to

commence build-out of MIPs facility in Q3 2017

• Oregon: Closed acquisition of property in La

Pine, Oregon and in the advanced stages of an

application process to manufacture cannabis

concentrates and edibles in Oregon

States with Active Projects

States with Prospective Projects

10

Nutritional High International Inc. 11

Large Warehouse (10,000sf) for Indoor

Cultivation

~2 acres of vacant

land for Outdoor

Greenhouse

Cultivation Small

Warehouse

(5,000sf) for

Indoor

Cultivation

Main Building (11,000sf) for MIPs

Manufacturing (Phase I and

Phase II)

Metal Sheds

and Garages

for Misc.

Storage

Colorado Project

Phase I

• Phase I construction and

equipment installation is complete

• Palo Verde is currently operational

Phase II

• Phase II development is underway

• Palo Verde is finalizing the permitting

process with technical personnel and

local authorities to expand the product

offering to include edibles

• Aiming to complete Phase II by the end

calendar Q3 2017

Phase III

• Lineage Grow Company. intends

to begin construction of cannabis

cultivation facilities in Q3 2017

• 1st crop expected to be planted in

Q2 2018


– Colorado Licensed Producer

Palo Verde LLC – private Colorado company, which holds license to

manufacture marijuana-infused products

Principal of Palo Verde is an established Colorado lawyer

Palo Verde entered into:

• A lease agreement for a 26,000 sq ft at an annual rate of

US$15/sq ft

• An unsecured loan agreement in the amount of US$500,000 for

a period of 1 year, with up to 5 extensions at a rate of 12% with

Nutritional High

Palo Verde and the Company are finalizing a recipe & IP licensing

agreement and branding and packaging supply agreement

12

Over 90%

THC Level

Pesticide

FreeOdorless Made in Colorado


– Strong Production and Sales Team

13

David Johnson – Owner

David Johnson is currently affiliated with several emerging

companies and has an extensive domestic corporate,

international corporate, and entrepreneurial background.

Johnson’s skills span a wide range of industries and sectors

including: executive, corporate development, strategic

planning and financial and management capacities both with

domestic non-profit companies and with domestic and

international for-profit companies in consumer products,

telecommunications, medical services, renewable energy,

venture capital, oil and gas, refining, natural resource and

cannabis sectors.

Vincent Morrison – Production Manager

Vincent Morrison graduated from SIUE with a degree in

Chemistry. Morrison worked for a large biotech company for

several years before moving to Colorado and entering the

cannabis industry.

Since relocating, Morrison has worked for both cannabis and

hemp grows with a focus on extraction technology. To date,

he has managed multiple Quality Assurance labs as well as

Extraction labs.

Mike Niswonger – General Manager

Over 30 years experience in confectionery industry and

familiar with all types of chocolate production and

automation. Previously a key production executive with Patsy’s

Candies, a family owned business, which was sold in 2016.

Mike has consulted in the cannabis industry and is familiar

with most types of infused products. Maintained several

national sales accounts. Mike holds a Bachelor’s Degree in

Business from Colorado State University.

Cole Chapman – Sales

Cole was previously a wholesale account manager with Bolder

Cannabis and Extracts, where he led the wholesales efforts

was instrumental in adding a significant amount of

reoccurring sales. Cole has also worked in the sales capacity

with The Green Solution in Denver - which is one of

Colorado’s largest cannabis companies.

Christopher Marchisio – Sales

Previously a budtender and a regional sales representative

with Pueblo West Organics, focused on medical and adult-use

cannabis. Experience in wholesaling dried cannabis, cartridges

and raw distillate products and maintaining relationship with

dispensary owners.


Illinois Dispensary

• One of the 52 applicants to receive a medical marijuana dispensary license

in the state, and the only dispensary license in ISP District 12. The only

dispensary in over 60 mile radius

• Experiencing strong month-to-month sales growth and stable gross

margins attributed to an expanding patient count and a strong patient and

physician outreach program

• Achieved a monthly returning patient rate of over 90% demonstrating a

strong and loyal customer base

• The Illinois Department of Public Health has approved applications for

approx. 20,600 qualifying patients and approx. 24,553 individuals have

submitted a complete application

• Total retail sales in the State of Illinois for 2016 were just over $36 million

and almost $67 million since the program's inception in November 2015

• The Clinic Effingham Financial Performance (Sept 17, 2016 – Apr 30, 2017):

14

Dispensary location in Effingham, IL

www.clinicillinois.com

* financial summary presented herein is an extrapolation of the results reported in the Company’s

financial statements and shall be reviewed in conjunction with the Company’s financial statements and

MD&A thereto

The Clinic Effingham Quarterly

Income Summary in (USD)*Q1 ended

Oct 31/16

Q2 ended

Jan 31/17

Q3 ended

Apr 30/17

Revenue 37,150 331,319 242,376

Net Profit (Loss) for the Period -47,198 -37,832 11,556

Nevada Project

➢ In the process of acquiring and transferring provisional

producer and processor licenses

➢ Intention to move the licenses to a 17,500 ft2 industrial

building, with approximately 15,500 ft2 of warehouse

space

➢ Building to be remodeled for the purpose of

developing an extraction and MIPs manufacturing

facility, using the same technology and processes

developed in Pueblo, CO

➢ Received approvals from the State of Nevada for the

transfer of licenses. Awaiting approval from the City of

HendersonTarget Facility to Be by Acquired Nutritional High

in Henderson, NV

➢ Partnered with Lakeside Minerals Inc. (to be

renamed Lineage Grow Company Ltd.) to build a

cannabis cultivation and extraction facility in

Henderson, NV

➢ A portion of the building will be acquired by

Lineage, with a view of constructing a cannabis

cultivation facility

15

Oregon Project

➢ In the process of finalizing local

permitting for recreational processor

license

➢ Acquired a property in La Pine, OR for

USD $399,000

➢ Construction is expected to start in Q3

2017

➢ Permits are being secured and land-use

compatibility survey has been completed

16

Proprietary Product Development Approach

Nutritional High has developed a proprietary approach to

establishing MIPs operations:

• Developed proprietary techniques of infusing products

with THC and CBD extracts on a semi- automatic basis

• Exploring potential patents on the processes it has

developed

• NH composed a database of various extraction and

testing techniques to suit the needs of Licensed

Producers in both medical and adult recreational state

• Working with a consultant who has over 30 years of

experience in establishing confectionary manufacturing

facilities for Fortune 500 companies

• Efforts led by Billy Morrison – an experienced oil

extractor with extensive expertise in the marijuana

industry and manufacturing marijuana and hemp-

infused products

• NH brings a nation-wide network of experts, specialized

in every aspect of the seed-to-sale industry, able to

assist with rolling-out the company’s operations

17

1 Assuming fully optimized production and sales process; 2 Subject to ability to place the product with dispensaries;

FINAL PRODUCT:

Distillate Oil Product

Cold Ethanol Distillation Extraction Process

and Economics

STEP 1: Semi Automated

Mechanical Separation using

screens to remove “Kief”

STEP 2: Rotary Evaporator

used for removing residual

solvents

STEP 3: The oil is distilled

using short path apparatus to

remove the terpenes and

purify the product

Economic Parameters

• The current process is able to process up to 50 lbs1 of trim/shake per day, estimated to cost ~US$400/lb in Colorado

• The extraction yield is expected to be 8-10%

• Good quality concentrates for ~US $25/g on the wholesale market (distillate typically goes for higher) 2

• Overhead cost to operate the facility is estimated at US$50,000 per month

• Potential to increase margins by infusing the oil extract into gelatin caps, vape pens and tinctures, which are higher

value add products and where the "effective" value per gram is significantly higher than US$20/g. Eg. a disposable

vape pen with 500mg of THC content is sold for US$15-25/item on the wholesale market

• The margins for edibles are even higher, as the average price for a package with 100mg, sells for $10-15/piece on the

wholesale market

18

Precision AgricultureDeep Water Culture

CRAFT CANNABIS

CONTROLLED MICROCLIMATES BEST-OF-BREED GENETICS

Energy Efficiency Water Reclamation Automation

Strategic Partnership with

Key Deal Terms

• Partnering with Lineage to establish cannabis cultivation & extraction facilities

• Starting with an initial grow facilities in Nevada & Colorado

• Lineage to finance the partnership by acquiring the Provisional Cultivation License from Nutritional High for US$500,000

• Lineage to issue 1,750,000 common shares to Nutritional High

• Lineage will acquire a 50% interest in a property in Henderson Nevada for USD$1.1 Million

• Lineage recently closed a private placement of convertible debentures of $2.5 Million

• Lineage will acquire a Nevada Lineage will lease land and a building from Nutritional High in Pueblo, Colorado and sublease to

Palo Verde

• Nutritional High will enter into a long term purchase agreement with Lineage to buy trim

19

Traditionally, cannabis cultivation has

adopted the philosophy that ‘bigger is

better’. The industry is focused on large

scale, low-cost production of generic

cannabis while ignoring what really drives

consumer preferences. We see this as an

opportunity to disrupt the industry with

premium craft cannabis - grown using

small-batch production techniques

tailored to optimize the cannabinoid,

flavor and smell profiles of each

individual strain.

CRAFT CANNABIS


Corporate Strategy

Nutritional High is seeking to expand nationally by either pursuing organic growth strategies or

pursuing acquisition opportunities focused on:

20

Cole Memo Compliant Operations Only

Our focus is only on the operations which operate within adequate

licensing frameworks and are in compliance with the requirements of the

Cole Memo.

Focus on High-Margin Segments

Nutritional High is focused on the edibles and oil extracts segment of the

marijuana industry, which it believes to have the highest margin potential

and provide an opportunity for rapid scaling. The Company may work in

other value chain segments (such as cultivation or retail dispensaries) in

the jurisdictions which have implemented a "seed-to-sale" regulatory

licensing model, or where a focus solely on edibles or oil extracts is too

prohibitive on stand-alone basis.

Creating Leading Products

Manufacturing high quality products with consistent THC

levels has been one of the dominant problems faced by the

industry. Nutritional High aims to manufacture products

that can become industry leading in terms of quality, THC

levels and have appealing packaging design in each market

from day one.

Compliant Structure and Transparency with

the Regulators

In the U.S. States with residency requirements, the Company

will work exclusively with Licensed Operators to provide a

suite of services (such as providing real estate, financing,

brands and expertise) to facilitate expansion of the Licensed

Operator’s business in the edible MIPs and oil extract

markets. In the states without the residency requirements

the Company may also apply for licenses directly or enter

into JV arrangements with other companies.

High Growth Potential States

Nutritional High selects the states which have a high growth potential.

While the U.S. states which have legalized marijuana for adult recreational

use are the primary focus, Nutritional High will take steps to expand into

the states which have legalized marijuana for medical use with significant

population base, or have potential for legalization for adult recreational

use in the near to medium term.

Expansion Opportunities Overview

California Opportunity

• With state regulation being introduced in California, the

company is developing a potential strategies to secure a

license and enter the edibles market

• Some studies estimate that California accounts for as

much as half of total legal cannabis sales in the United

States, est. at $2.7 billion in 2014

• In Sept 2015, the legislature introduced regulations

contemplating 17 license categories, expected to be

implemented by different state departments by Jan 1,

2018

• Proposition 64 has legalized cannabis for adult

recreational use

Arizona Opportunity

• NH is considering an application for a processing license once

the licensing becomes available

• In discussions with several potential acquisition targets

Michigan Opportunity

• Voters approved the Michigan Medical Marihuana Act on

Nov 4, 2008

• Application submissions after Dec 15, 2017

• 211,000 estimated patients

Washington Opportunity • In discussions with several parties holding Tier 2 or 3 Producer

and/or Processor Licenses regarding a potential transaction with Nutritional High

• Several potential revenue streams:

• Acquire real estate to lease to a licensed entity

• Acquire equipment to lease to a licensed entity

• Provide management services and licensing through a contract

Ohio Opportunity • State licensed dispensaries allowed but not yet operational

• Final rules and specifics to be adopted by Sep 8, 2017. The state plans to grant 40 processor licenses.

• Cultivator rules are adopted and Level I Cultivator applications started being accepted Jun 19th till Jun 30th. Level II Cultivator applications closed Jun 16th.

21

Canada Opportunity• In discussions with several ACMPR LPs and late-stage

applicants regarding a potential transaction with Nutritional High

• With the recently announced federal legislation to legalize recreational cannabis, Canada presents a tremendous growth opportunity


Company Shapshot

Exchange/Symbol

Canadian Securities Exchange EAT

OTCQB SPLIF

Frankfurt 2NU

Market Info as of July 1, 2017

Basic Common Shares Outstanding 250,383,732

Warrants (CN $0.05 - 0.22) 38,005,599

Options (CN $0.075 - $0.30) 16,367,500

Fully Diluted Common SharesOutstanding

304,756,831

Non-Convertible Debt US $1.2 M

Cash Balance CAD $4.51 M

Stock Price $0.152

Market Cap $38 M

22

1Includes amounts in escrow account for Nevada acquisitions2Price of most recent financing

David Posner

Chairman of the Board and Director

T: (647) 985-6727

E: [email protected]

Adam Szweras

Director, Corporate Secretary

T: (416) 564-5926


Jim Frazier

Chief Executive Officer

T: (321) 576-7171


23


Risk Disclosure

The Company is seeking to establish new business lines, which inherently contains a high degree of risk. The subscribers in theOffering are cautioned to review the following risk factors in addition to those contained in public disclosure record of theCompany (available on www.sedar.com), relating to the Company: (1) The Company has a very limited operating history in anemerging area of business and had negative cash flows from operations in its most recently completed financial year. (2) Non-compliance with federal, provincial or state laws and regulations, or the expansion of current, or the enactment of new laws orregulations, could adversely affect the Company's business. (3) The Company may become subject to additional governmentregulation and legal uncertainties that could restrict the demand for its services or increase its cost of doing business, therebyadversely affecting its financial results. (4) The Company may be required to obtain and maintain certain permits, licenses andapprovals in the jurisdictions where their products are licensed, although the Company does not anticipate such approvals will benecessary. (5) As a manufacturer and distributor of products designed to be ingested by humans, the Company faces an inherentrisk of exposure to product liability claims, regulatory action and litigation, if its products are alleged to have caused significant lossor injury. (6) Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a varietyof reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances,packaging safety and inadequate or inaccurate labeling disclosure. (7) The Company may not be able to accurately predict its futurecapital needs and it may not be able to secure additional financing. (8) The market price of the Common Shares could be subject tosignificant fluctuations in response to various factors, many of which are beyond the Company's control. (9) The Company iscurrently in the early development stage. There is a risk that the additional resources will be needed and milestones will not beachieved on time, on budget, or at all, as they can be adversely affected by a variety of factors. (10) The Company may face intensecompetition and expects competition to increase in the future, which could prohibit its development of customer base andgenerating revenue. (11) The Company's operations are subject to environmental and safety laws and regulations concerning,among other things, emissions and discharges to water, air and land, the handling and disposal of hazardous and non-hazardousmaterials and wastes, and employee health and safety. (12) The Company must rely largely on its own market research to forecastsales as detailed forecasts are not generally obtainable from other sources at this early stage of the industry in the U.S. (13) TheCompany may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls.(14) The Company has no earnings or dividend record, and does not anticipate paying any dividends on the Common Shares in theforeseeable future. Dividends paid by the Company would be subject to tax and, potentially, withholdings. (15) Exchange ratefluctuations may adversely affect the Company's financial position and results. (16) In the event of a dispute arising from theCompany's foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successfulin subjecting foreign persons to the jurisdictions of courts in Canada. (17) Officers and directors of the Company own significantshares and can exercise significant influence. (18) Sales of a large number of Common Shares in the public markets, or the potentialfor such sales, could decrease the trading price of the Common Shares and could impair the Company's ability to raise capitalthrough future sales of Common Shares. (19) Volatile global financial and economic conditions may negatively affect theCompany's operations.

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