velveeta512
2 years ago
Chalice Brands Ltd. Open Letter to Shareholders
Tuesday August 23, 2022
Portland, OR – August 23, 2022 – Chalice Brands Ltd. (CSE: CHAL) (OTCQB: CHALF) (the “Company” or “Chalice Brands”), a premier consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, announced today that it has issued the following open letter to shareholders from the Chalice Brands leadership team. Please see the contents of the letter below.
To our valued shareholders:
On behalf of everyone at Chalice Brands Ltd., we would first and foremost like to express gratitude to all our shareholders for their continued support of Chalice Brands. As we have written in the past, a key part of our engagement efforts is to provide as much transparency as we can to shareholders. We acknowledge that it has been difficult to communicate over the past several months and the current situation is not ideal. Today, we’d like to take a few moments to offer insights into our organizational health, emphasize the path forward, and align our commitment to the people, shareholders, and the communities we serve. Chalice Brands has come a long way since our rebranding and remains focused on the mission towards building a strong west coast U.S. cannabis company.
The current leadership team at Chalice Brands joined the Company at various stages, while sharing a common excitement to be part of an industry that had the potential to make a significant impact in the quality of people’s lives. Over the past decade, we have witnessed state-after-state legalize cannabis use – medical use in 39 states and the District of Columbia, and recreational or adult-use in 19 states and the District of Columbia. According to a survey of U.S. adults conducted September 2019 on Pew Research Center’s American Trends Panel, 91% of U.S. adults overwhelmingly agree that cannabis should be legal for recreational or medical use. The Chalice Brands leadership team alongside the Board of Directors (the “Board”) have been both financial and vocal supporters of those in a commanding position that can effectuate positive change. While we are frustrated at the lack of progress at the federal level for reform, we remain optimistic that it’s not a question of if, but when.
Unlike many other industries that experienced volatility in their marketplace over the past two years, as a consequence of the pandemic, the cannabis industry flourished. Due to the work from home requirements, legal cannabis being declared as essential medicine during state shutdowns, along with many relief programs; a boon was created – especially in Oregon. Based on data from the Oregon Liquor and Cannabis Commission (OLCC), cannabis sales in Oregon rose from $795 million in 2019 to $1.11 billion in 2020, and a peak of $1.18 billion in 2021 – nearly an increase of 50% in two years. As the pandemic subsided towards the end of 2021 and people’s lives returned to normalcy, it has become clear that maintaining the level of growth our industry experienced was not sustainable.
Unfortunately, the cannabis industry was confronted with global macroeconomic issues that shape the decline in demand such as rising inflation, surging gas prices, higher interest rates, increased cost of living, and downward consumer trends. Oregon’s marketplace has been further exacerbated by repetitive theft, increased overhead, and excessive competition. According to OLCC data, Oregon adult-use cannabis sales sold $319.7 million in products through the first fourth months of the year, a decrease of 14.4% from the $373.7 million sold during the same time period last year. Furthermore, Portland flower sales peaked in June 2021 recording $21 million, while June 2022 flower sales tallied $11.5 million – a decline of almost 50% year-over-year. Some of this decline is due to falling average retail prices (ARP’s) reported by BDSA Q1 Cannabis Market Overview, with the equivalent ARP in Q1 2022 falling 5% from Q4 2021 and remaining almost flat from Q1 2022 across Oregon, California, Nevada and Oregon markets. Declines in unit sales resulting from the fading pandemic work-from-home lifestyle, escalating macroeconomic factors, and state-specific challenges underscores the vulnerability of operating a cannabis business and the ongoing headwinds facing the industry. In a period of increasing uncertainties, Chalice Brands remains committed to operate efficiently and preserve the long-term growth expectations for the Company.
Despite these ongoing challenges, Chalice Brands is navigating and staying the course as we pursue our product-focused business strategy driven by our recognized brands, passionate people, and the communities we serve. Today, we are proud to own 16 and operate 2 retail locations in Oregon with notable value through vertical integration at every step of the complete seed-to-sale process. We strongly believe Chalice Brands stands out in today’s increasingly competitive market and continues to be a true leader in Oregon’s cannabis industry.
We would like to take a moment to highlight some of the accomplishments Chalice Brands achieved in the past six months:
* The Company signed an amending agreement to acquire four retail stores branded Cannabliss & Co. from Acreage Holdings, Inc., further increasing our footprint in Oregon. The amendment allowed us to extend the term on the debt to better match cashflows from Cannabliss.
* We accomplished the rebranding of all but one retail store under the Chalice Farms brand, which better reflects the brand recognition we’ve built in Oregon.
* We launched our newest product line - Private Stash – the most successful product introduction for Chalice Brands to date. The new line boasts a portfolio of more than 30 products, featuring strain-specific cartridges, flavored edibles, tinctures and distillate cartridges, as well as a variety of hand-crafted, small batch pre-rolls in a selection of classic strains.
* We achieved full integration of all products lines into Chalice Brands owned and operated retail stores, including Cannabliss & Co., and reached an all-time high share of first party product – driven by the success of flower sales and the launch of Private Stash lines.
* We made tremendous improvements in respect to business payroll, retail store staffing, and operational reductions to operate more efficiently.
Based on preliminary unaudited results, Chalice Brands Dispensary Revenue[1] for the first quarter of 2022 was $5.3 million, representing a 45.1% increase compared to the same period in the prior year. The increase was the result of the Homegrown Oregon acquisition on May 19, 2021. Dispensary revenue for the second quarter 2022 was $5.2 million, representing a 1.4% increase compared to the same period in the prior year. Similar to the first quarter comparison, the dispensary revenue increase is largely attributable to the Homegrown Oregon acquisition. Dispensary revenue for the first six months of 2022 was $10.5 million representing a 19.5% increase compared to the same period in the prior year.
While the foundation of our growth strategy and success has been predicated on the operating philosophy of “crawl, walk, run,” we acknowledge that best-in-class companies must prove to be adaptable in times of uncertainty. This year has been very difficult to operate stemming from the inability for us to access capital to support our growth trajectory. Even though the Company has made evident progress, the insufficient capital markets have continued to challenge our working capital. We will maintain our pursuit of constant margin improvements despite the lack of access to capital in order to remain competitive in the marketplace. We intend to take additional steps to improve our accountability now and in the future. With the interest of our shareholders in mind, we would like to address how our team is deliberately reacting in these tough market conditions.
To meet current economic challenges, we’ve worked aggressively this year to reduce costs. Since Q1 2022, the Company has reduced gross wages and salaries by 30% to ensure our unit economics are sustainable the short and long-term. In parallel, we have continued to improve our margins through product mix, and the way we are buying product – through both first-party and third-party margins. Additionally, we have maintained an incredible relationship with our strategic partners, led by Chief Operating Officer Meghan Miller, who are critically important in our industry and for the success of Chalice Brands. Despite market conditions, we remain confident in the decisions we made to focus our operational footprint and strengthen our vertical capabilities.
As previously announced, the Company changed its auditor to M&K CPAS, PLLC (“Successor Auditor”) from Baker Tilly US, LLP (“Former Auditor”). We understand our delay in issuing audited financial statements is causing concern and frustration with our shareholders and stakeholders. There are internal and external factors that have contributed to the delay, but those factors did not include accounting disputes or reportable events between the Company and our former auditor. The decision to change audit firms was based on the belief that the Successor Auditor had the immediate resources available to complete audit work for the year ending 2021 and move quickly through supporting the issuance of Q1 and Q2 unaudited financial statements. The Company is highly encouraged with our progress with the Successor Auditor to date and expects to issue audited financial statements for the year ended December 31, 2021, by the end of September.
The Chalice Brands leadership team is incredibly appreciative of the tremendous support of our Board members. We want our shareholders to know that the Board is actively engaged in oversight of the Company’s initiatives. The level of adherence from the Board is demonstrated by a commitment to weekly meetings to review progress in the audit and business operations, as well as additional meetings with the chair of the Board twice weekly. Above all, the Board members and the Chief Executive Officer, Jeff Yapp, are operating with no compensation and will continue to do so for the foreseeable future. Chalice Brands senior management team will continue to work closely with the Board to ensure accountability and transparency for shareholders.
While we strongly believe providing consumers with the highest quality in product, value, and experience are at the core of our success, we understand our role is to deliver the best possible outcome for our shareholders and employees. Our team will continue to be vigilant in this environment and stay grounded in our core values.
On behalf of the entire Chalice Brands leadership team, we would like to again thank you for your continued support. In closing, we remain confident that we have the talent, expertise, and strategic approach necessary to build upon our foundation.
Sincerely,
The Chalice Brands Ltd. Leadership Team
StockLogistics
2 years ago
“5:45p ET 12/22/2021 - Globe Newswire
Chalice Brands Ltd. Announces Final Closing and Amended Terms of Acquisition of Tozmoz Assets, A Premier Cannabis Extractor In Oregon
Chalice Brands Ltd. (CSE: CHAL) (OTCQB: CHALF) ("Chalice" or the "Company"), a premier consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, today announces the Company received all required regulatory approvals from the Oregon Liquor Control Commission ("OLCC") and Clackamas County to complete its previously announced acquisition of the assets of Tozmoz, LLC ("Tozmoz"), an Oregon limited liability company, and it has reached an agreement ("Agreement") on final terms.
"We are happy to formally close the transaction with Tozmoz, a partner that has been instrumental in strengthening Chalice's product portfolio, specifically for Elysium Fields and RXO. While we awaited the necessary regulatory approvals, unexpected delays occurred because of the ongoing pandemic. As a result of the closing, Chalice will continue to benefit from the expertise and broad capabilities that Tozmoz provides to support our product-focused business strategy, with the opportunity to further expand our diverse portfolio of products," stated Jeff Yapp, President and Chief Executive Officer of Chalice. "With a focus on serving the highest quality of cannabis products on the market, our combined organizations are poised to leverage our ability scale as we continue to cement our position as a leading West Coast operator."
Pursuant to the terms of the Asset Purchase Agreement, Chalice purchased substantially all the assets of Tozmoz, including the facility located in Clackamas County, which serves as the headquarters for multiple extraction options as stated above, for total consideration of 1,268,116 shares of Chalice stock, a 48-month promissory note for US$400,000 bearing six percent interest, and forgiveness of $650,000 of promissory notes owed to Chalice. Chalice has satisfied certain conditions by way of the previous consulting agreement with Tozmoz, resulting in zero cash due at closing.
Founded in 2015 as one of the first OLCC licensed processors in Oregon, Tozmoz established itself as a premier cannabis extractor in the state. Tozmoz offers multiple extraction processes including CO2, hydrocarbon and ethanol, and both short path and wiped film distillation. Additionally, Tozmoz provides product manufacturing and formulation, as well as packaging services, providing clients OLCC-approved products ready for wholesale distribution and retail sale.
"Having worked closely with Chalice over the past year, I couldn't have asked for a better leadership team to help elevate my business to a much higher level. When it comes to the field of cannabis, I am a dinosaur, and I have never seen a team in this industry so capable of building a true west coast cannabis powerhouse," commented Joel Klobas, Co-founder of Tozmoz.
"It has been an incredible experience working with Joel and the Tozmoz team over the past 2 years. Being one of the first businesses to receive a processing license in Oregon, Joel has been a crucial partner for Chalice and we look forward to even greater success in the future," noted Meghan Miller, Chief Operating Officer of Chalice.
Co-Founder of Tozmoz, Joel Klobas, will continue providing services to Chalice and will be employed by the Company as Vice President, Production.
About Chalice Brands Ltd.
Chalice Brands is a premier consumer-driven cannabis company specializing in production, processing, wholesale, distribution and retail, with twelve owned and four managed dispensaries in and around Portland, Oregon. The Company is committed to developing a dynamic portfolio built around the recognized brands of Chalice Farms, with a focus on health and wellness. Chalice operates nationally through Fifth & Root and has operations in Oregon and California. Visit investors.chalicebrandsltd.com/ for regular updates.”
StockLogistics
2 years ago
“ 8:29a ET 11/24/2021 - Benzinga
Chalice Brands Q3 Revenue Grows 29% YoY To $8M, Closes $4.49M Private Placement
Chalice Brands Ltd. (CSE: CHAL) (OTCQB: CHALF) reported its third-quarter financial results Tuesday with 29% year-over-year revenue growth to $8.0 million and announced it has completed a brokered private placement for gross proceeds of CA$5.7 million ($4.49 million).
Q3 Financial Highlights
Record quarterly revenues were partly driven by a full quarter of revenues from the company's Homegrown Oregon stores;
63.7% growth in gross profit for third quarter 2021 of $3.6 million, or 45% gross margin, compared to $2.2 million or 36% gross margin for the same period in 2020;
Adjusted EBITDA was a gain of around $600,000, representing the fourth consecutive quarter of positive adjusted EBITDA, and comparing to an adjusted EBITDA loss of $260,000 in the same period a year ago;
Net income amounted to $750,361, versus a net loss of $2.72 million in the same period of 2020;
'The third quarter was another outstanding performance for Chalice as we accomplished record revenues and our most profitable quarter to date,' Jeff Yapp, president and CEO of Chalice Brands stated. "During the quarter, we closed a transformative acquisition in Oregon of four retail dispensaries from Acreage, bolstering our retail footprint by 130% in the fiscal year. By maintaining our focus on profitable operations and accretive acquisitions, Chalice has immediately impacted the vertical contribution within the new stores ahead of schedule.'
Subsequent to third quarter, on October 7, the company announced the promotion of Meghan Miller to chief operating officer.
Private Placement Details
The Portland, Oregon-based cannabis company also confirmed Tuesday it has completed the previously announced brokered private placement of unsecured convertible debenture units and equity units led by Canaccord Genuity Corp. as sole agent and book-runner.
Under the offering, Chalice Brands issued, for gross proceeds of CA$5.7 million: (a) 4,025 debenture units, with each debenture unit consisting of one CA$1,000 principal amount unsecured convertible debenture and 500 warrants of the company; and (b) 2.29 million equity units at a price equal to CA$0.75 per equity unit, with each equity unit comprised of one common share of the company and one-half of one (1/2) warrant.
The debentures will mature on November 23, 2024, and bear interest at a rate of 10% per annum from the closing date, calculated and payable on a semi-annual basis.
The company intends to use the net proceeds of the offering for strategic retail license acquisitions and general corporate purposes.
Price Action
Chalice Brands' shares closed Tuesday's pre-market session 4.57% higher at 51 cents per share.
Photo: Courtesy of CRYSTALWEED cannabis on Unsplash
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.”
StockLogistics
2 years ago
“ 11:26p ET 12/8/2021 - Globe Newswire
Chalice Brands Ltd. Announces Flagship Superstore and Relationship with Aventine Property Group
Chalice Brands Ltd. (CSE:CHAL) (OTCQB:CHALF) ("Chalice" or the "Company"), a premier consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, is pleased to announce it has successfully completed an agreement (the "Agreement") to lease a retail property located in Portland, Oregon from Aventine Property Group, Inc. ("Aventine").
"We have been working diligently to identify the ideal location for Chalice's new, state-of-the-art flagship superstore. Establishing a centralized consumer headquarters in Portland will allow for better synergy of product awareness and delivery while presenting a meaningful draw for our customers. The Chalice team is excited to open the doors to this flagship location, allowing us to showcase our award-winning brands and fantastic dispensary experiences to the entire Oregon cannabis market," said Jeff Yapp, President & Chief Executive Officer of Chalice. "We are thrilled to collaborate with Aventine on this significant step forward and look forward to our continued partnership as we improve our ability to accelerate expansion."
"We are excited to launch a meaningful relationship with Chalice to facilitate their new flagship superstore facility in Central Portland and cement their leadership position in the market. I look forward to working with Chalice to further execute their long-term West Coast retail growth strategy," commented Raymond J. Lewis, President and Chief Executive Officer of Aventine Property Group, Inc.
Transaction Highlights:
"We are excited to open the new Chalice flagship superstore for many reasons. This location will offer our vendors and our trusted partners the opportunity to showcase their products like never before in the Oregon market. Our customers will be able to experience the best that Oregon has to offer in one location. We are especially looking forward to utilizing the superstore and its event space to become an important member of our local community," noted Meghan Miller, Chief Operating Officer of Chalice.
"This transaction not only represents the beginning of an important partnership with Aventine, but a validation of the progress Chalice has made in cementing our position as one of Oregon's leading cannabis companies. Our disciplined approach to capital allocation in the past year has resulted in four sequential quarters of positive cashflow and adjusted EBITDA, record third quarter revenues, and notable accretive acquisitions. We are proud of our efforts to increase the value of Chalice in the near-term while demonstrating our dedication to expanding our reach as part of the long-term strategy," continued Jeff Yapp. "We will continue to pursue real estate investments on the West Coast to accelerate Chalice's growth in a highly competitive U.S. cannabis market."
About Chalice Brands Ltd.
Chalice Brands is a premier consumer-driven cannabis company specializing in production, processing, wholesale, distribution and retail, with twelve owned and four managed dispensaries in and around Portland, Oregon. The Company is committed to developing a dynamic portfolio built around the recognized brands of Chalice Farms, with a focus on health and wellness. Chalice operates nationally through Fifth & Root and has operations in Oregon and California. Visit investors.chalicebrandsltd.com for regular updates.”
molee
3 years ago
Chalice Brands Ltd. Pre-announces Highest Revenues to date during Second Quarter 2021
PORTLAND, Ore., July 06, 2021 (GLOBE NEWSWIRE) -- Chalice Brands Ltd., formerly Golden Leaf Holdings Ltd. (CSE:CHAL) (OTCQB:CHALF) (“Chalice” or the “Company”), a premier consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, today pre-announces its unaudited financial results for the second quarter 2021. All amounts stated are in US Dollars unless otherwise noted.
Second Quarter Preliminary Unaudited Financial Highlights:
Achieves highest ever record quarterly revenues from continuing operations of $6.8 million, a 23% year-over-year increase compared to $5.5 million for the same period in 2020.
Estimated gross profit for the second quarter 2021 of $3.1M or 46% gross profit margin compared to $1.7M or 37% gross profit margin rate in 2020, an 82% increase from 2020. Gross margin improvements are due to increased sales of vertical, in-house products manufactured by Chalice and increased third party processing revenues.
“We are immensely proud to execute another record quarter by focusing on profitable operations and the accretive acquisition a Homegrown Oregon. The integration of Homegrown and the adoption of our vertical products within the new stores is ahead of schedule. The staff are highly engaged and motivated to be part of the Chalice family. The whole team is energized and focused on growth as we showcase our brand portfolio nationally and remain dedicated to our ‘crawl-walk-run' strategy,” said Jeff Yapp, Chief Executive Officer and President.
“We will seek to continue our growth both organically and through any opportunistic and accretive transactions we may be able to execute upon,” added John Varghese, Executive Chairman.
The financial information included in this news release is preliminary, unaudited and subject to adjustment. It does not present all information necessary for an understanding of the Company’s financial results for the second quarter of 2021. The Company will provide its full second quarter financial report at the next earnings call, to be announced at a later date.
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