SLANG Aiming High With Its IPO This Week

“When a brand is so successful that its name becomes ubiquitous with the product (Kleenex / facial tissue), it becomes “Slang” for the product,” said Peter Miller, CEO of SLANG Worldwide. “We are aiming high for our branded products, and their names will be slang for their categories.”

Slang will be going public this week on Tuesday on the Canadian Securities Exchange in an IPO with an implied market value of $541 million using the ticker SLNG. The company was previously known as Fire Cannabis Inc.

Slang is a combination of National Concession Group, better known as Organa Brands and Firefly vape pens. Organa is based in Denver, CO and is best known for its product called O.penVAPE. In addition to the O.penVAPE line, Organa makes the Magic Buzz cannabis beverages, District Edible gummies and a line of dab products called Bakked.

The real key to the company though is Organa Labs, the part of the company that houses its custom extraction process. The company earns royalty payments through its ability to turn other company’s cannabis products into premium vape pens.

Organa’s revenue for the nine months ending September 30, 2018, was $11,699,259  versus last year’s $8,820,455 for the same time period. Total operating expenses for those same nine months was $4.3 million in 2018 versus $4.6 million in 2017. The company reported net income in 2018 of $4.7 million for those nine months. The O.penVAPE brand is the highest selling brand in Colorado with over $170 million in retail revenue generated since 2014.

SLANG is paying upwards of $200 million for Organa, but Billy Levy, the President of Slang said he considered it more of a merger than an acquisition. Levy and Miller decided that the licensed producer side of the business wasn’t a place for big growth in the cannabis industry. They believe that brands and distribution will be the key places for growth. Organa was the way for them to accomplish this goal.

Miller and Levy are very experienced when it comes to LP’s. The two co-founded Mettrum Health, which was acquired by Canopy Growth Corp. (CGC)  for $430 million. Levy co-founded Virgin MEGA with Sir Richard Branson which was acquired by Nike (N). Miller is also the CEO of Agripharm.

As they built Mettrum, Miller and Levy said they came across Organa. The two companies developed a mutual respect for each other ’s businesses. Organa went from selling its products in Colorado to its current count of ten states. Mettrum was sold and Slang became the new plan. “Our goal was to acquire great brands and pair that with distribution,” said Levy. Organa became a founding partner in Slang.

In addition to the Organa acquisition, Slang is also acquiring NWT Holdings, which is also known as Firefly. This is a dry material vape pen that competes with PAX. Miller said he was most impressed with Firefly’s co-founder Mark Williams who was a design manager at Apple leading the Mac OS X interface. “His design expertise is truly blue chip,” said Miller. “We want to leverage his expertise of industrial design across the whole portfolio as well.” He said that the next generation of Firefly vape pens is going to occupy a super-premium segment of the market.  Firefly will also be launching its own oil products this year.

The purchase price for Firefly is $16 million,  50% in cash and 50% through the issuance of approximately 7,450,870 shares issued at a deemed price of $1.50 per share. The company reported $3.1 million in revenue for the nine months ending September 30, 2018, but reported a net loss of $440,000 for that time period.

Slang will also have the right of first refusal to license the Green House Brands, which includes the Green House Seed Co. and Strain Hunters. The Green House Seed Company has produced over 60 award-winning cannabis strains and was founded by Arjam Roskam.  Green House also holds an exclusive master license to Strain Hunters, a series of documentaries centered around the quest for preservation of the cannabis plant, and the series has co-developed documentary series alongside HBO, VICE, and National Geographic.

Following the successful completion of the acquisitions, it is expected that Slang will expand the businesses of Organa and Firefly as a branding and marketing company focused on developing reputable brands and quality hardware products.

 

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