KALISPELL, MT / ACCESSWIRE / August 4, 2016 / With yesterday's announcement of three new E-liquid brands for vaporizers in the United States, Gilla Inc. (OTCQB: GLLA) has added to their already award-winning product portfolio. The launch of the three additional E-liquid brands and additional flavors within existing brands were done in advance of the upcoming August 8th deadline from the FDA, which effectively freezes the market by restricting the introduction of new E-Liquid products without obtaining FDA marketing authorization - a costly and timely process.
Using the success of their Coil Glaze brand as a jumping-off point, Gilla's new suite of E-liquids follows in the same line of being delectable tasting, with flavors such as Berry Bluez and Them Applez, which is described as "a freshly baked cobbler crust with gooey apple cinnamon filling, finished with a swirl of whipped cream." In addition, the company is launching three entirely new E-Liquid brands to the U.S. market; "The Drip Factory," "Surf Sauce," and "Siren" to their product portfolio.
The new brands will be available in 0mg, 3mg, and 6mg nicotine strengths, which allow the user to slowly reduce their nicotine intake. According to Graham Simmonds, CEO and Chairman of Gilla, roughly 20% of the E-Liquid bottles sold by Gilla are 0mg, a surprising fact that shows just how hard it can be for ex-smokers to overcome the oral fixation, social gathering, and daily habits of what, for some people, was decades of routine. By switching to vaporizing and a product line like Gilla's, the ex-combustible smoker can slowly reduce their nicotine intake all the way down to 0mg - a tremendous goal for any ex-combustible smoker.
Another company that is targeting zero nicotine users is 22nd Century Group (NYSE MKTS: XXII), a plant-based biotechnology company that holds over 200 patents to genetically engineer the genes that determine nicotine levels in tobacco while it is still being grown. With $3.2 million in Q1 2016 sales, 22nd Century Group's market cap is 27x quarterly revenues as of 8/2/16. For a comparison in the industry, Reynolds American (NYSE: RAI), with a valuation of $71B, trades at 22.5x quarterly revenue and Philip Morris International (NYSE: PM), who has a valuation of $156B, trades at 8.1x quarterly revenues. While Gilla Inc. is not among the multi-billion dollar conglomerates that those combustible cigarette manufacturers are, the above revenue numbers do show the sheer size of the combustible cigarette market that vaping is capturing in ever increasing numbers.
Gilla Continues Global Expansion
With over 300 million estimated vape users in Asia alone, which is equivalent to the entire population of the U.S., Gilla appears to be well poised to move forward after recently signing an exclusive distribution agreement in China. The deal provides exclusivity to the Company's entire line of E-Liquid brands, including those just announced yesterday. A key provision to the deal is that the Chinese company must sell $5.5M worth of Gilla product over the next three years to maintain exclusive rights. As Graham Simmonds, Chairman and CEO of Gilla, said in the press release, "They have been manufacturing E-cigarettes for over 10 years, have over five thousand employees, and over $275 million in annual sales. Pairing Gilla's E-liquid brands with such a strong domestic partner in China is a huge opportunity for the Company. We also expect to build upon this relationship as we will work with the Distributor to cross pollinate our joint international customer bases."
Additionally, Gilla just announced, "A major vape store chain in the United Kingdom (the "UK") has agreed to carry the Company's Coil Glaze brand of products. The vape store chain has over 50 physical locations, plus a significant online presence." As well, Gilla entered into an agreement to have the bottling and boxing of their Coil Glaze E-liquid line manufactured in the UK, which includes having the built-in distribution of over 600 vape shops that the manufacturer currently services. By offering a complete suite of products, Gilla is able to approach distributors such as this one in the UK and provide a sales solution without the headache of working with multiple vendors, a business model made famous by Diageo plc (NYSE: DEO) and their portfolio of Ketel One, Captain Morgan's, Crown Royal, and many more liquors.
Looking to build off their record-setting Q1 2016 revenue numbers, Gilla Inc. trades at just 11.7x quarterly revenues, putting them in the lower end of the spectrum for companies within the industry. In that same release on Q1 earnings, Graham Simmonds gives guidance for the future by saying, "Given our strong revenue growth, we continue to make progress on our goal of achieving positive cash flow during the second half of 2016."
Except for the historical information presented herein, matters discussed in this release contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Tamarack Advisors is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. For making specific investment decisions, readers should seek their own advice.
SOURCE: Tamarack Advisors