Nutritional High (CSE: EAT) this morning announced that it is undergoing a strategic review following the termination of its distribution agreement with Plus Products (CSE: PLUS). The loss of the major customer has resulted in the chief financial officer of the firm, Mike DiNapoli, resigning from his position and the refocus of operations on a new service model.
As a result of the termination of the agreement with Plus Products, Plus will be taking control of its inventories from Nutritional High subsidiary Calyx Brands, along with a portion of associated accounts receivable and cash holdings that are associated with the sale of Plus products. As part of the termination agreement, Plus will forbear, or “push out” certain amounts owed by Calyx for a period of 180 days.
During the fiscal year ended July 31, 2019, as per the audited annual financial statements one client amounted to approximately 80% of Nutritional High’s revenues. That client is believed to be Plus Products via the distribution conducted for the brand throughout California.
Calyx has spent a lot of time and energy building a full-service distribution model driven by the needs of a single customer. Without this concentration in our customer base, Calyx will focus on onboarding our newly signed brand customers into a more cost efficient distribution model.Adam Szweras, CEO of Nutritional High
As a result of the loss of such a major customer, Calyx is now working towards reducing costs to right size its operations. Cost cutting measures were not mentioned specifically however, rather they focused on the narrative that Nutritional High now has a more diversified customer base.
With the contract being lost, Nutritional High is now undergoing strategic review. The review is being lead by Eight Capital as the exclusive financial advisor.
Calyx Brands currently provides distribution services to over 600 retailers across California for several different brands.
An interim CFO is expected to be named in the near term.
Nutiritional High last traded at $0.075 on the CSE.
Information for this briefing was found via Sedar and Nutritional High. 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. The author holds no licenses.
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