Portland, Oregon – October 26th, 2021
- Hemptown has secured a licensing agreement with award-winning Canadian comedy group, The Trailer Park Boys, to develop an exclusive co-branded pack of Hemp Stix and leverage the respective strengths and market of each company.
- Kirkman Group, Hemptown’s nutraceutical division, has exceeded its 6-month financial goal, grossing 3.7 million USD, which has accelerated The Company’s growth and revenue stream.
- In October 2021, the Kirkman division achieved the highest monthly sales in over 2 years, with over $800,000 USD in monthly revenue1.
- Kirkman’s top 22 SKUS have been added to Kroger’s (NYSE:KR) online ecommerce marketing platform.
- Hemptown Natural’s Reg CF campaign continues to be one of the best performing crowd-funding (Reg CF and Reg A+ combined) offerings in the US week over week, securing over $1.5m from 700+ investors closed, positioning the company for a successful go-public transaction.
- The Company’s new VP of Corporate Finance, Tariq Rahim, has proved to be instrumental in streamlining the financial reporting and management processes, bolstering Hemptown’s push towards profitability.
- On November 1st, 2021 at 10am PDT The Company will be hosting a live webinar to provide a corporate update for all our valued shareholders and investors.
I hope that everyone had a great summer, the news this quarter is less exciting than in past quarters. By this time last year, we had sold approx. $3.8m USD worth of flower and biomass from the farm. So far this year we have sold $1m USD worth of flower and derivatives from the 2020 harvest. The quality and variety of the hemp plant matter are of the same high quality as previous harvests. The factors affecting our sales are the consistent pressure on the commodity price which is down to an average of $75.00 per pound for the trimmed flower and an average of $1.00 per pound for the shucked biomass. Seeing this trend coming a year ago, we pivoted into the consumer packaged goods (“CPG”) space with our Hemptown Naturals flavored Hemp Stix, Twisted Rogue, pre-rolled hemp blunts, our line of tinctures and topicals, alongside investment in the robust Kirkman Nutraceutical business, which collectively have higher margins. The good news is that the substantial hemp flower we have in inventory will be utilized to produce Hemp Stix and blunts for the foreseeable future.
Hemptown Naturals (HTN) has been promoting hemp smokable products aggressively through its website and through retail channels, with a specific focus on smoke shops and convenience stores. We are marketing across social media and industry conferences, including Champs and the CBD White Label conference. The Company was also present at MJBizCon Las Vegas last week and will be co-sponsoring an event with the Southern California Rapper Yung Pinch in Huntington Beach this Friday October 29th, 2021 – tickets available here.
The Company has signed licensing agreement with the Trailer Park Boys (“TPB”) to accelerate growth for both brands in the fast-growing smokeable hemp industry. The Trailer Park Boys are an award-winning Canadian comedy group, with multiple Netflix-produced series. Hemptown Naturals and TPB intend to launch a co-branded pack of Hemp Stix that emphasizes the established branding and identity of both companies. Under the agreement, TPB will receive a royalty on all co-branded packs sold.
The co-branding agreement brokered by licensing & marketing firm Gavin Hoss, leverages the respective strengths of Hemptown and The Trailer Park Boys to create compelling value for both companies and their respective shareholders. Brad Stella, Global Head of Brand for TPB adds “We identified Hemptown as the perfect fit for the Trailer Park Boys. They have a fantastic product that the boys enjoy.”
Kirkman Group, the Company’s wholly-owned nutraceutical manufacturing facility in Portland, Oregon, has met and exceeded its financial goals for six months ending June 30, 2021, bringing in USD$3.7 million in gross revenue1. In the second half of 2021 Kirkman has revamped its website and invested in a digital marketing campaign to drive traffic and accelerate profitable growth, ultimately making a bigger contribution to Hemptown’s overall bottom line.
To drive incremental sales and reach, several of Kirkman’s top 22 SKUS have been added to Kroger’s (NYSE:KR) online ecommerce marketing platform. This includes Kroger.com, FredMeyer.com, HarrisTeeter.com, Ralph’s.com plus their remaining store banners owned by Kroger (NYSE:KR). The access to these Kroger consumers will provide a new revenue stream that will be fulfilled by our fulfillment location based in Portland, Oregon.
In further good news at Kirkman, the division achieved the highest monthly sales in over 2 years, with over $800,000 USD in monthly revenue1.
Hemptown announced on May 27th that we engaged Canaccord Genuity Corp. (“Canaccord”) to assist in our go-public RTO and concurrent private placement. After careful review and consultation with prospective investors, the proposed price of the offering is perceived to be too high in this current micro-cap market and our inability to hit our previously guided $11m in revenues for 2021.
The Company is currently in the process of restructuring its outstanding convertible debentures issued in 2019. The Company is currently in discussions with Canaccord and the debenture holders to discuss the conversion of the debt into equity in the immediate short term, alongside a proposed equity restructure. The intention is driven by the notion that the perception of a debt-free capital structure, where the share capitalization is known at the time of pre-IPO/RTO financing will be better received by the capital markets and enable the Company to complete its public listing.
The Company intends on announcing more detailed information with respect to the convertible debenture conversion and proposed equity structure in the next 10 days.
The Company continues to work on completing its audited financial statements for the years ended December 31, 2019, and 2020, as well as the six months to June 30, 2021. We are seeing good progress towards this goal and anticipate audited statements will be completed in the short term.
Hemptown’s new VP of Corporate Finance, Tariq Rahim, previously with Canopy Growth Corp., is fitting in well and has now joined the management team at HTN as the CFO. Tariq is working from the company’s Kirkman facility in Portland which will now become the company’s head office.
HTN is a subsidiary that is 97% owned by Hemptown Organics Corp. (the parent entity) and has been running a very successful Regulation Crowd Funding (“Reg CF”) campaign since the beginning of the year. The HTN’s Reg CF campaign continues to be one of the best performing crowd-funding (Reg CF and Reg A+ combined) offerings in the US week over week, with over $1.5m from 700+ investors closed. The Company feels that this strong US retail investor interest that has been attracted to the private offering presents a good indication that would trade very well post a public listing.
The Company will be hosting a webinar on November 1st, 2021 at 10 am PST to provide a corporate update for all shareholders and investors. Management will also be taking questions via Q&A at this time. To register please click the link below
With US federal cannabis legalization now only a matter of time, management believes more than ever that branding and marketing, to support sales and distribution are key to capturing a meaningful slice of the combined revenue opportunity that recreational cannabis legalization will bring to the industry. Having our hemp smokes and blunts in as many stores as possible ahead of legalization is seen as a “trojan horse” strategy by gaining the shelf space and consumer brand loyalty we feel we will be perfectly positioned to capitalize on the considerable opportunity.
We appreciate all the continued support that our shareholders and investors have given us this year as we work towards a public listing. If you have any questions, please do not hesitate to reach out directly to the Company at the contact info provided below or during the Webinar Q&A scheduled for November 1st, 2021.
Eric “Grip”Gripentrog CEO
About Hemptown Organics Corp.
Hemptown is a diversified, industry-leading cannabinoid company delivering a diverse product offering across the value chain, in multiple sales channels, to meet the growing global demand for cannabinoid-based products. Hemptown’s FDA-licensed and cGMP certified product manufacturing, and a strong management team with Fortune 500 experience, are the pillars for Hemptown’s growth model as the Company pushes into the consumer-packaged goods sectors with top quality branded product lines for the consumer market. For more information, visit www.hemptownusa.com.
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Disclaimer for Forward-Looking Statements
This letter contains forward-looking statements that involve various risks and uncertainties regarding future events. Such forward-looking statements are based on current expectations of management, involve a number of risks and uncertainties, and are not guarantees of future performance. These statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements in this letter include statements regarding the RTO; financing arrangements; proposed amendments to the debentures; and Hemptown’s strategic and marketing plans for the future. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors that may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include general market conditions, significant business, competitive, political and social risks and other factors beyond the control of the Company. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
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