Below are the recent financials, along with descriptions of several subsidiaries that East West Biosciences controls. Financials (As of October 31, 2021) – Does not include the $4.91 million raised for their storage locker business subsidiary as this happened after the quarter ended. Same with the 3.1 million shares for debt issued at $0.05
ASSETS Cash: $971,540 Accounts Receivable: $47,355 Inventory: $215,274 Due From Related Party: $23,794 Prepaid Expenses: $9,993 Property & Equipment: $2,175,548 Intangible Assets: $193,702 Investment In JV: $49,145 Total Assets: $3,686,351
LIABILITIES Accounts Payable: $1,409,162 Customer Deposits: $95,586 Deferred Revenue: $3,372 Due To Related Party: $363,947 Promissary Note Payable: $237,282 Mortgage Payable: $1,795,200 Loans Payable: $379,048 Total Liabilities: $4,283,597 Discussion of operations (from MD&A):
Eastwest Business Model - Eastwest is a vertically integrated wellness company that provides value and high-quality products and services to its customers in Canada and beyond. To support this vision, Eastwest aims to fully control its supply chain, leverage its assets and currently has several wholly owned operating subsidiaries, from health supplement manufacturing operations to a retail presence across Canada.
Manufacturing – Orchard Vale Naturals Inc. (“OVN”) - OVN is a Health Canada licensed manufacturing facility with capabilities to encapsulate, package and label. OVN manufactures health supplements for its business-to-business (“B2B”) clients. OVN’s unique preposition is that it offers a turnkey solution for small brands and accommodates small quantity orders.
Retail – Sangster’s Group of Companies (“Sangster’s”) - Eastwest acquired Sangster’s on November 30, 2018. The Company established three separate companies to reflect and accommodate the different operational structures and revenue models: 1) Sangster's Health Centres Head Office – 102064495 Saskatchewan Inc. o/a Sangster’s (“495SK”) Head franchisor with 14 franchisees as of October 31, 2021. As the head franchisor, Sangster’s owns the brand rights and manages the franchisor-franchisee distribution relationships. Sangster’s sells supplements and wellness products through its franchise locations and its online eCommerce platform. 2) Sangster’s Corporate Stores – 102064509 Saskatchewan Inc. o/a Sangster’s Corporate Stores (“509SK”) Sangster’s Corporate Stores own and manage Sangster’s corporate owned stores across Canada. As of October 31, 2021, Sangster’s did not maintain any corporate locations. 3) Sangster’s Leases – 102064512 Saskatchewan Inc. o/a Sangster’s Head Office Leasing (“512SK”) 512SK holds the head lease for certain franchise locations with landlord and subleases to franchisees. This allows Sangster's to ensure a franchise is not sold to the competition and to take on corporate stores in case of franchisee retirement, exit or bankruptcy.
Intellectual Property – 1123573 B.C. Ltd. ("573BC") - This subsidiary holds the Health Canada licenses to 187 natural product numbers (“NPNs”) certified by Health Canada. These NPNs are mandatory for supplement products to be marketed in Canada and are valuable assets for any companies that are manufacturing, distributing and marketing supplements in Canada.
Real Estate – 1123568 B.C. Ltd. (“568BC”) - This subsidiary owns and manages the land and building at 260 Okanagan Avenue, Penticton, British Columbia. The facility is a 34,000 square foot facility located off the main street in Penticton. It is equipped with two loading docks, ample parking and is fully secured. Currently it is renting out space to related parties and third-party renters. Current tenants include Eastwest Science Ltd. (“EWS”), OVN and Sangster's.
Self-Storage – 1290185 B.C. Ltd. (“185BC”) - During the year ended July 31, 2021, the Company added self-storage to its already diverse revenue streams through a new subsidiary, 185BC. This subsidiary is an early-stage company intending to build high-quality self-storage facilities across western Canada. The inception of this subsidiary was initiated by the Company’s need to leverage its Penticton facility, which has been underutilized. Eastwest believes that, due to increasing demand in the British Columbia interior, self-storage will be an efficient use for the facility.
Consumer Goods – Eastwest Science Ltd - EWS distributes hemp-based consumer goods to B2B clients, wholesalers, distributors and end consumers. During the year ended July 31, 2021, there has been minimal sales volume. US Operation – EastWest Science USA Inc. (“EWS USA”) - EWS USA is a Kentucky, USA, based company that was established to allow the Company to pursue US based opportunities, in particular for CBD infused products.
Highlights – For the three months ended October 31, 2021
Startup Phase of the Storage Division and Expenses Incurred (185BC) Much of the expenses, in the amount of $289,512, incurred during the three months ended October 31, 2021, were due to site development costs, operational expenses and marketing costs of the Storage Division. Since its inception in the spring of 2021, 185BC has two locations under construction: Penticton, British Columbia, and Oliver, British Columbia. The goal of 185BC is to open 3 additional locations by Q1 2022. The demand for storage is expected to be strong and the Company is very confident in the future success of this division.
Restructuring of the Retail Division (Sangster’s Health Centres) Sangster’s has been impacted by COVID-19. During the three months ended October 31, 2021, the product sales to the franchisees dropped by 30% compared to the same period in the last fiscal year. To overcome these challenges, Sangster’s is undergoing a restructuring process that focus on the following main areas:
• Franchise Stability o The Company will be opening five new locations in the next two quarters o Secure the right locations (new and existing) • Marketing Effectiveness o Measure investment and performance to make better decisions o eCommerce investment and strategy (nationally and internationally) • Pricing and Product Strategy o Continual innovation in new products, training and methods o Leverage suppliers and OVN for a competitive price strategy
As part of the restructuring, Sangster’s has engaged a creative marketing agency to refresh its branding and overhaul the current store design. The result is a brand that is modern, fresh, relevant and communicates the brand’s value proposition. Additionally, Sangster’s is developing a unique subscription-based customized supplement program as part of its new product offerings, online and at store level.
The most recent news releases regarding the $4.91 million placement & shares for debt:
Eastwest to settle debt with 3.09 million shares
2021-11-24 14:56 ET - News Release
Mr. Rodney Gelineau reports
EASTWEST BIOSCIENCE ANNOUNCES CLOSING OF SHARES FOR DEBT SETTLEMENTS
Eastwest Bioscience Inc. has issued 3,095,044 common shares at a price of five cents per common share to certain non-arm's length service providers for expense incurred on behalf of the company and arm's length service providers for settlement in respect of services provided to the company by consultants and for consulting services. The transactions with the consultants were in the normal course of business and the consideration provided was agreed to by the company and the consultants.
The company has received Toronto Stock Exchange (TSX) Venture Exchange approval on the said transactions and a statutory hold period of four-months and one day is in place on the issuance of these common shares in accordance with applicable securities laws.
About Eastwest Bioscience Inc.
Eastwest Bioscience is a vertically integrated wellness company with a multitude of business units and assets that allow for seed-to-sale supply chain management. The company sources its raw material, processes, manufactures, tests, brands, markets and distributes its products to its customers in Canada, the United States and beyond. The company owns and operates retail and manufacturing subsidiaries.
The company's retail subsidiary is the award winning, Canadian, natural health retail franchise -- the Sangster's Health Centres -- with over 40 years of legacy in the health and wellness industry. Sangster's goal is to provide natural choices through quality products and educated advice for a healthy lifestyle. Sangster's Health Centres occupies a unique position in the industry, the stores provide vast knowledge and safe natural remedies for the prevention and treatment of disease and ailments. Sangster's introduction and development of over 202 exclusively labeled products (vitamins, mineral, herbs, proteins, natural body care and organic foods) catapulted Sangster's name and product into a large number of Canadian households. From a solid base in Saskatchewan, Sangster's has become a national brand name with franchise stores located across Canada.
Orchard Vale Naturals is the company's manufacturing arm that is certified with a Health Canada Site licence and has GMP-certified NHP manufacturing capabilities. Orchard Vale Naturals specialize in custom blends and production runs of all sizes, small to large, for top-quality products with quick turnaround times. Orchard Vale Naturals operates out of the 34,000-square Health Canada licensed facility in Penticton, B.C., that is owned by Eastwest Bioscience and is the head office for all its Canadian operations.
Eastwest Bioscience unit closes $4.91-million financing
2021-11-17 13:22 ET - News Release
Mr. Rodney Gelineau reports
EASTWEST BIOSCIENCE ANNOUNCES CLOSING OF FINANCING FOR 1291085 BC LTD
Eastwest Bioscience Inc. has closed a non-brokered financing round through its subsidiary, 1290185 B.C. Ltd., an early-stage company focused on building high-quality and innovative self-storage facilities across Canada.
185 received aggregate proceeds of $4,915,300 from the issuance of 9,830,600 of its common shares at 50 cents per share. The subsidiary is using the proceeds from the offering for the acquisition and construction of new self-storage facilities and for general corporate purposes.
Rodney Gelineau, president and chief executive officer of Eastwest, commented: "This is a milestone moment for 185 as it transitions the company from concept and planning into operational mode. We are excited to have two sites under construction and several others in the pipeline."
About Eastwest Bioscience Inc.
Eastwest Bioscience is a vertically integrated wellness company with a multitude of business units and assets that allow for seed-to-sale supply chain management. The company sources its raw material, process, manufacture, test, brand, market and distribute the company's products to its customers in Canada, the United States and beyond. The company owns and operates retail and manufacturing subsidiaries.
The company's retail subsidiary is the award-winning Canadian natural health retail franchise -- Sangster's Health Centres -- with over 40 years of legacy in the health and wellness industry. Sangster's goal is to provide natural choices through quality products and educated advice for a healthy lifestyle. Sangster's Health Centres occupies a unique position in the industry; the stores provide vast knowledge and safe natural remedies for the prevention and treatment of disease and ailments. Sangster's introduction and development of over 202 exclusively labelled products (vitamins, minerals, herbs, proteins, natural body care and organic foods) catapulted Sangster's name and product into a large number of Canadian households. From a solid base in Saskatchewan, Sangster's has become a national brand name with franchise stores located across Canada.
Orchard Vale Naturals is the company's manufacturing arm that is certified with a Health Canada site licence and has GMP-certified (good manufacturing practice) NHP (natural health product) manufacturing capabilities. Orchard Vale Naturals specializes in custom blends and production runs of all sizes, small to large, for top-quality products with quick turnaround times. Orchard Vale Naturals operates out of a 34,000-square-foot Health Canada licensed facility in Penticton, B.C., owned by Eastwest Bioscience, which acts as the head office for all of Eastwest's Canadian operations.
The company's subsidiary, 185, is building a network of automated self-storage sites in British Columbia. The subsidiary's business model is designed to be low capex (capital expenditure) with highly scalable logistics. It is focused on secondary markets, consumer automation and innovative land partnerships, allowing it to move into new regions quickly at scale and with minimal risk. Eastwest hopes to build the forthcoming brand of 185 into a household name across Canada.