The global cannabis industry continues to expand and this has created new opportunities for companies levered to this opportunity.
Over the last two years, we have learned a lot about the cannabis plant and the medical benefits associated with marijuana. During this time, a chemical compound found in the plant, Cannabidiol (CBD) has become one of the best known chemical compounds and this is primarily due to its medical benefits.
Isodiol: Capitalizing on Demand for Cannabis Products
Isodiol International Inc. (ISOL.CN) (LAGBF) is one of the companies capitalizing on this burgeoning opportunity, however, the company has recently come under pressure.
Last week, the company provided an operational update on its subsidiary, Iso International and the results were strong. During the quarter, Iso recorded a net profit of almost $897,596 on $4,919,693 in revenue. Although these numbers are un-audited, we expect the company report operating results that are in line with these numbers.
This development is significant for Isodiol and represents a milestone for the company. We have been monitoring Isodiol closely and the company has been laser focused on increasing market share and entering new international markets.
Isodiol CEO Marcos Agramont said the company is positioned to begin exploring additional expansion opportunities and is specifically focused on vertical integration, expanding its product distribution channels, and out-of-state manufacturing and processing.
A Multi-Faceted Growth Strategy
Isodiol has continued to execute on its business plan and specializes in the development of pharmaceutical and consumer products. The company’s nutraceutical division has been focused on developing hemp-derived cannabidiol (CBD) for the highest quality consumable and topical skin care products.
We are favorable on Isodiol’s multi-faceted growth strategy and expect to see continued growth for quarters to come. The company will benefit from a diverse strategy that is focused on both organic and inorganic growth opportunities.
Part of its strategy includes developing over-the-counter and pharmaceutical drugs, entering joint venture partnerships and making acquisitions to expand its portfolio of brands and subsidiaries, and continuing to expand internationally and enter new markets in Latin America, Asia and Europe.
New Distribution and Growth Opportunities
The last two months have been very significant for Isodiol and we expect these developments to benefit the company over the coming quarters.
In July, Canopy Growth (WEED.TO) (TWMJF) and Isodiol announced a licensing agreement where Canopy can manufacture and distribute Pot-O-Coffee and Pot-O-Tea branded marijuana infused single serve K-Cup products in Canada and international markets that allow it. Canopy also has the right of first refusal to sell Pot-O branded products in any territory outside of the United States, Mexico and Puerto Rico.
This development took place only one month after Isodiol acquired the cannabis-based beverage company for 20,937,500 common shares (at $0.12 a share) and a one-time cash payment of $250,000.
Isodiol continues to expand its reach and has successfully entered new markets. We are favorable on these developments and expect the company to enter several new markets over the next year.
One of the exciting developments in this area for Isodiol took place during June when the company started the approval process through Brazil’s Health Regulatory Agency to have its CBD products added to the list of approved imported CBD products.
We are favorable on the Brazil market and believe that the company can gain significant traction within it. Shortly after this announcement, Isodiol reported to have established operations in Mexico and said that it would start shipping its CBD products throughout the country.
Well Capitalized and Positioned to Execute
Isodiol is well capitalized and this will help the company execute on new market opportunities. During June, Isodiol closed the second tranche of its non-brokered private placement for $1,896,954 in gross proceeds.
The private placement was oversubscribed and generated more than $4.1 million in proceeds. The company sold units at $0.12 and each unit was comprised of one common share and one common share purchase warrant (exercisable at $0.25 for a period of two years).
Isodiol said that it plans to use the proceeds primarily for working capital and general corporate purposes, which may include expansion of growth, research and development.
An Attractive Global Growth Story
Although Isodiol has continued to execute, the shares have come well off its recent highs and we are monitoring how the shares trade off these levels. The company’s products continue to gain traction and we expect to see continued growth.
We are favorable on the un-audited quarterly results, the partnership with Canopy Growth, the continued focus on new international markets, the stronger balance sheet, and the growth prospects.
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