This past week, Isodiol International (CSE: ISOL, OTCMKTS: ISOLF) received a final order from the Supreme Court of British Columbia, approving an arrangement related to that of the Kure Corp subsidiary. In short, the company was approved to divest Kure Corp and tear up the cash incinerating acquisition agreement that came with it. With this news, its possible that Isodiol may finally be on the right track for shareholders.
We have to give some credit to Isodiol here. After our harsh criticism in a December 31, 2018 article (found here), the company announced its intent to take significant efforts to curb shareholder dilution, and thus enhance the value in their company. The first order of business after doing so, was terminating any association to Kathy Ireland and that of Level Brands, two parties which are closely related. Right away, this removed an annual fee of $3mm that came in the form of shares.
For those that follow us and our coverage of Isodiol International closely, you’ll recall that there was some related party connections between Level Brands and Kure Corp – thus, it only made sense that shortly thereafter, it was announced that Isodiol would be divesting of its recently acquired subsidiary. However, this too was at the benefit of shareholders. With the agreement terminated, Isodiol was able to avoid issuing US$25mm worth of company stock to the creditors of Kure Corp.
Instead, the creditors of Kure Corp will be reacquiring their former company at a relatively inexpensive cost to Isodiol. Up until the time of the proposed termination of the subsidiary, Isodiol had funded the firm with US$1,725,000, in addition to handing over roughly 2.4mm shares of the company to former shareholders. In total, Kure is to repay US$500,000 to Isodiol, however it’s a little murky on what will occur with the Isodiol shares currently held by Kure creditors. In terms of cash cost, the experiment cost Isodiol roughly US$1.25mm – which isn’t all that bad given the total cost of acquisition.
Colour us impressed that the concerns we previously highlighted have been addressed – whether it was directly because of us, or because of shareholders screaming at the company. Regardless, change came.
But wait, there’s more.
In addition to the divesture of Kure, other changes have occurred at Isodiol that are worth noting. First and foremost, it cancelled the proposed acquisition of Food Labs, Inc (which was also covered in our New Years Eve article linked above). As a result, the CEO of Isodiol remains to be Marcos Agramont, who appears to finally be stepping up to the plate.
There has been one decidedly questionable move however, in that another dealing with Jared Berry has occurred – this time, it’s the acquisition of the CBD Naturals brand. The company has had a storied past with Berry and CBD Naturals, such as the events that transpired related to Peak Health. However, this acquisition could potentially be seen as a way to clear things up in respect to the relationship between CBD Naturals and that of Isodiol International. With any luck, it’ll be the last dealing that the company has with Berry as well.
In total, the brand and its intellectual property is being acquired for the sum of US$8.5mm in Isodiol common shares, in addition to a private placement for Berry himself to the tune of $500,000. Under the terms, all of the IP and inventory of Carlsbad Naturals LLC (both the Wyoming and the New Mexico limited liability companies) will be transferred to Isodiol.
The acquired assets will be utilized in products to be launched worldwide through a variety of sub brands under the CBD Naturals banner.
To clear up the confusion related to Jared Berry, Isodiol, and the issues surrounding Peak Health and their hops-sourced CBD claims, Isodiol upped its transparency a notch as well, which we just discovered but it appears it was announced last month.
Specifically, it addresses the prior dealings with Jared Berry and how they relate, as well as the events related to the Peak Health debacle. Although it’s not overly positive for Isodiol, we’ll give them credit in that they lay things out in the open for investors and explain the situation, regardless of how poorly it reflects upon their due diligence abilities. The full text can be found on their FAQ page here.
We realize that this isn’t the scathing report that is typical of our Isodiol coverage. However, the company appears to be taking shareholders into consideration for the first time in years, and we felt it needed to be appropriately recognized. Many of the questionable deals that occurred over the past year seem to have gotten the snip over the past three months, and at the current rate of speed things might finally start looking up for long time shareholders.
Isodiol closed at $1.35 on Friday, down $0.05, or -3.57%.
Information for this analysis was found via Sedar, The CSE, and Isodiol International. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
