Isodiol International (CSE: ISOL, OTCMKTS: ISOLF) has been a fan favourite of Deep Dive viewers since our inception. As such, we felt it appropriate to make it the final story we cover for the year and to go out with a bang.
Isodiol has blessed us with much to cover as we say farewell to the year, and there’s only so much that we can cover in a single article. First, there was the news of the acquisition of Food Labs Inc, then the termination of its investment in CN Pharma, followed by the company cancelling the agreement it has in place with Canopy Growth. All of which we assume the company hopes went unnoticed. The share price may reveal this much to be true.
If you’re currently a shareholder of Isodiol International, the bright side is that by now you should be used to the abuse the company has done to your investment. After the performance the equity saw in 2018, it really can’t get much worse, can it?
Isodiol International: Heres to the New Year
Perhaps the most significant news that appears to have gone unnoticed is that the current chief executive officer, Marcos Agramont, will be stepping down upon the acquisition of Food Labs Inc. Taking Marcos place will be Michael Cancelleri, who will also service as the chairman of the board of directors for Isodiol. The related release indicates that Cancelleri “has extensive experience bringing consumer products to mass retail, including in the ready-to-drink beverage market.”
The purchase price for Food Labs is stated as being a total of US$12,000,000 which is to be paid in Isodiol stock based on the closing price on December 18, 2018. As such, due to the price of US$1.13, this in turn implies that approximately 10,619,470 shares will be distributed for the acquisition upon closing. In addition Toba Capital, the financial partner of Food Labs Inc, will form a strategic investor relationship with Isodiol. Although it is unclear what, if any, value this will provide to the company and its shareholders Toba was nonetheless awarded US$5,000,000 million worth of warrants with an exercise price of CA$2.00.
So, who exactly is Food Labs Inc? Within the release, the company is identified as “a brand-focused innovator of hemp- and cannabis-based consumer products with a flagship line of full spectrum, hemp-oil based health and wellness products.” However, it has such a strong brand that it fails to appear on any google search regardless of how specific we get. When we searched OpenCorporates it was revealed to be a Nevada based organization incorporated on March 26, 2018, which is also licensed to operate in the state of California. This trail however ended quickly after that.
When we finally typed Food Labs into our address bar directly, we were redirected to rebrandsusa.com. This appears to be our intended destination based on the hemp products displayed, however the so-called “flagship line” has every product listed as coming soon. The management team, with its experience in bringing products to mass retail, has managed to set up only amazon.com as a vendor based on the information displayed on the website.
When we dig into the history of the CEO of Food Labs, Michael Cancelleri, we can find only slightly more data. It appears he was the founder behind Positive Energy, an organic all natural energy drink. It appears that the product has mild success in certain localities – it’s available in a handful of household names according to the website, such as Albertsons and Safeway, and we did manage to find older listing for the product on both Amazon as well as Walmart. It’s unclear whether or not the products are still available – from what we could see, everything was listed as being sold out.
Aside from the short stint he had with Positive Energy Drinks, almost nothing could be found on Cancelleri. At one point someone with the same name was associated with a capital firm by the name of Mont Perelin Capital, LLC, but the firm has since closed down and we are unable to verify whether it is the same individual. It’s unclear whether or not Cancelleri has the experience necessary to manage an entity as cumbersome as Isodiol based on what we could find, however it’s clear that investors are wanting any form of change when it comes to the management team. Thus, the change may be welcomed with open arms by the majority, even if the experience of the new CEO leaves many wanting more.
The short of it is that even Isodiol recognizes that investors likely will be skeptical of the deal – they state immediately in the news release that the firm has $5,000,000 in cash in company coffers currently. If this isn’t justification for an overpriced deal, we’re not sure what is. This is par for the course with Isodiol however, as we have identified in several of our articles – the most recent of which focused on the absurd pricing of both Farmtiva and Round Mountain Technologies.
A few short days later after announcing the change in management, Isodiol also quietly announced a change in strategy altogether. Coupled together with it’s mandatory congratulatory text on the Farm Bill passing, the company released material information stating that it would be divesting its Canadian assets altogether. This includes its investment in CN Pharma. Speaking to business strategy, the company stated “The divestiture marks a strategy shift whereby the company intends to make its products available in Canada through manufacturing and distribution partnerships with existing Licensed Producers in multiple jurisdictions, rather than through a captive Licensed Dealer in British Columbia.”
Isodiol then went on to contradict itself only two paragraphs later when it then informed investors that they had in fact terminated an agreement with Canopy Growth, the largest licensed producer in Canada, “The Company also has terminated its agreement with Canopy Growth Corporation and brought the Canadian distribution rights for its Pot-O-Coffee products back in house, which will allow those products to be distributed through the Company’s Canadian manufacturing and distribution network as it develops.” What this network entails still remains unclear, considering the firm has just cut ties with every noted member of its budding network.
The bright side for Isodiol investors, is that tomorrow starts a new year. With any luck, it will bring a rebranded Isodiol with a refreshed management team that can do right by its shareholders. After all, it can’t get much worse from here.
Happy new year from the Deep Dive, and best wishes for 2019!
Information for this analysis was found via Sedar, Bloomberg, 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.