Adastra Holdings

Overview

Adastra Holdings Ltd (CSE:XTRX,FRA:D2EP) is a licensed Canadian agricultural-scale cannabis extraction, distillation, product manufacturer, and retailer. Formerly known as Phyto Extractions Inc., the company is one of the best-known brands in the Canadian cannabis market. Its popular vapes, concentrates, and oil products are widely available at 1,400 retailers across Canada.

The company competes in the highly attractive worldwide cannabis market, The company competes in the highly attractive worldwide cannabis market, estimated to reach a value of US$50,251 million in 2021 and is expected to grow at a CAGR of 26.5 percent from 2021 to 2030.

In addition to medical cannabis use, recreational use is on the rise as markets in countries like Canada have opened through regulation in recent years. Critical factors for success in this market include the ability to navigate the complex regulatory landscape, access to supply, manufacturing and processing capability, and strong consumer brands.

Adastra operates through three businesses:

1. Phyto Extractions™ is a high-quality grass-roots cannabis brand with extensive market presence throughout Canada. Our product portfolio is set to expand from 18 to 30+ SKUs in Fiscal 2021 with the following existing and new cannabis products in the pipeline: edibles, beverages, flower (bags, pre-rolls), hydrocarbon extracts (butter, diamond, shatter, terp sauce, wax), topicals (roll-on, creams, oils, oral spray, path), and existing product SKUs for vapes.

2. Adastra Labs is a Health Canada Standard Producer (cannabis extraction, no cultivation), cannabis product formulator/manufacturer, and licensed cannabis sales (extracts, edibles and topicals) operator with a 13,000 sq. ft. facility located in Langley, BC Canada. With our newly commissioned hydrocarbon extractor, we have increased extraction capacity up to 146,000 kgs per year (agricultural scale) that makes us one of the largest full-service cannabis extraction companies in Canada. We produce and manufacture both Phyto Extractions™ branded and white label cannabis extracts and products for sale throughout Canada.

3. Chemia Analytics (chemia.ca) is Adastra’s state-of-the-art in-house testing laboratory. The facility conducts quality assurance, quality control and Health Canada regulatory compliance testing for licensed cannabis producers and products. The company plans to establish Chemia as one of the most advanced cannabis analysis, product sampling, testing and R&D labs in the industry through strategic talent recruitment and a C$1 million capital expenditure investment.

The company’s flagship Shatter product line is a high potency and high purity wax and crumble cannabis concentrate. The product is third-party tested to ensure compliance and quality standards and includes three product SKUs – Pink Kush, Blue Gorilla OG and Death Bubba. Shatter exists within a niche market alongside relatively few competitors. As a result, Shatter has the potential to be a significant opportunity for Adastra Holdings Ltd to further penetrate the cannabis market.

The company has delivered strong financial results for the six months ending June 30, 2021. Highlights include 327% revenue growth to over C$1.8 million compared to the same period last year, driven by increased processing of cannabis biomass for third party licensed producers and in-house distillate production, and hydrocarbon extraction.

Adastra’s financial success is also directly linked to the company’s constant efforts to improve profitability. Most recently, the company reduced expenses by C$7,000 a month while increasing sales by 35%. The company’s shatter and vape products are responsible for around C$1.5 million in revenue. Adastra believes that given their existing presence and market success, they can grow sales to C$4 million per month by launching new products.

The company is led by a highly experienced management team, including cannabis industry pioneers and Ph.D. experts in plant medicine and plant biochemistry. Management strongly believes in the company’s ability to succeed, which is why the company has a tight share structure and is almost debt-free. Adastra also believes there is a blue sky ahead given its extensive presence and success in the cannabis market.

Company Highlights

• Adastra Holdings Ltd (CSE:XTRX,FRA:D2EP) is a leading licensed Canadian agricultural-scale cannabis extraction, distillation, product manufacturer and retailer.
• Adastra’s newly commissioned hydrocarbon extractor has increased the extraction capacity of its facility by up to 146,000 kgs per year (agricultural scale) making them one of the largest full-service cannabis extraction companies in Canada.
• Formerly Adastra Labs, the company is one of the most recognized cannabis brands and its [award winning] shatter and vape products are widely distributed in 1,400 retailers across Canada.
• Adastra’s flagship Shatter product line is unique in the Canadian marketplace and has the potential to be a significant driver of growth. Shatter is a high potency and high purity wax and crumble cannabis concentrate.
• Adastra received its Health Canada R&D license to conduct in-house human testing for various cannabis products.
• The company operates with an attractive financial model that has the potential to generate strong returns for shareholders. The company aims to further increase revenues by launching over a dozen new product lines and white label products.
• The company is led by a highly experienced management team, including cannabis industry pioneers and Ph.D. experts in plant medicine and plant biochemistry.
• Adastra signed a definitive agreement with Sitka Weed Works Inc. regarding the supply of premium craft cannabis grown by Sitka.