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Macellum Issues Letter to Stockholders of Citi Trends

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Macellum SPV III, LP, Macellum Advisors GP, LLC, and certain of their affiliates (collectively, “Macellum”), which own approximately 3.8% of the Common Stock of Citi Trends, Inc. (NASDAQ: CTRN) (the “Company” or “Citi Trends”), issued a letter to its fellow stockholders highlighting the urgent need for immediate and significant change to the composition of the board of directors of the Company (the “Board”) and addressing recent statements made by certain members of Citi Trends’ management and Board in the Company’s March 28th letter.

The full text of the letter can be found below:

Dear Fellow Stockholders,

Macellum Advisors GP, LLC, together with its affiliates (collectively, “Macellum” or “we”), is a large, long-term stockholder of Citi Trends, Inc. (“Citi Trends” or the “Company”), having initially acquired shares in 2016, and currently beneficially owning approximately 3.8% of the outstanding common stock of the Company.  We were disappointed but not surprised to read the Company’s March 28, 2019 letter to stockholders, which we believe materially misrepresented our ongoing efforts to work constructively with the Company to reconstitute the Company’s Board of Directors (the “Board”).  We believe the letter provides a window into the dysfunction and lack of urgency of the existing Board and provides clues as to why an existing director would be forced to formally nominate highly qualified individuals to the Board in the first place.  To be clear, our motivation in putting forth four highly qualified nominees has been to try to improve a Board that is not functioning well in order to address the Company’s prolonged underperformance and poor corporate governance and preserve and maximize value for all stockholders.

As you may know, we previously undertook a successful proxy contest at the 2017 annual meeting of stockholders, resulting in the appointment of Jonathan Duskin to the Board.  Since joining the Board, Mr. Duskin has made considerable efforts to mobilize his fellow directors to implement the changes necessary to deliver stockholder value and create a culture of accountability on the Board.  Unfortunately, despite these persistent efforts, as a single voice on a seven (7) person Board, and a single voice on the six (6) person Nominating and Corporate Governance Committee, the Board has not adopted the meaningful changes we believe are desperately needed at Citi Trends.  Even though the Board agreed it needed to refresh itself not a single director was willing to step down from the Board this year and there is no evaluation process in place to ensure the Board is properly refreshed.

Our many attempts to avoid a public battle were rejected

Over the past several weeks, Mr. Duskin has reached out to the Board and expressed his belief that the Company needs to undertake a Board refreshment.  While the Board agreed a refresh was necessary, the Board has only been willing to increase the size of the Board to add new directors rather than hold itself accountable and replace incumbent long-tenured directors with new highly-qualified, independent directors who would bring much needed fresh perspectives and more relevant experience and skill sets to the Board.

Most recently, we proposed what we believed was an incredibly reasonable compromise to avoid the expense and distraction of a proxy fight.  We proposed that the Board add two new independent directors to the Board for election at the 2019 annual meeting of stockholders (the “2019 Annual Meeting”) – one of Macellum’s nominees and one director candidate that would be mutually agreed upon, which could include one of Macellum’s other nominees.  In addition, in the spirit of moving forward constructively, our proposal suggested that just one incumbent director resign at the 2019 Annual Meeting and an additional incumbent director step down at the 2020 annual meeting of stockholders (the “2020 Annual Meeting”).  This was in response to the Company’s proposal that one of Macellum’s nominees be added to the Company’s slate for the 2019 Annual Meeting and the Board undertake a search for a second independent director to be added by December 31, 2019 without stockholder approval.  The Company’s proposal did not contemplate any incumbent director stepping down from the Board until the 2020 Annual Meeting.

Our most recent proposal was merely an acceleration of the process the Board allegedly wished to undertake, with a further effort to right-size the Board by the 2020 Annual Meeting.  However, much to our disappointment, the offer was summarily rejected, despite the Company’s own acknowledgement that they found Macellum’s nominee, Peter Sachse, qualified to join the Board despite never asking to interview him.  Given the urgent need to address the Company’s underperformance, we cannot find any rational explanation for why the Board would want to delay effecting meaningful changes to unlock stockholder value, which the Board has itself agreed are in the best interest of stockholders.  Instead, the Board seems ready to spend another $2.5 million of stockholder money, to protect incumbent seats on the Board, after it spent approximately $2.5 million during the 2017 proxy fight.  Is spending upwards of $5 million worth it to stockholders to keep the status quo?  We do not think so.   

Macellum formally nominated four highly qualified director candidates for the Board’s consideration because theBoard demonstrated no sense of urgency in refreshment

Macellum’s motivation for nominating four director candidates has been to refresh the Board with the most highly qualified directors.  Because Mr. Duskin is only one of six directors on the Nominating and Corporate Governance Committee, his voice was continually marginalized forcing us to nominate to preserve our rights as stockholders.  Mr. Duskin’s extensive consumer and retail experience enabled Macellum to present a selection of four exceptional candidates for the Board’s consideration to which the Company may not have otherwise had access and which we hoped would save the Company both the time and expense of hiring a search firm.  Nevertheless, in the interest of working with the Board, Mr. Duskin was still initially willing to go through a search firm to identify other candidates, to the extent that it was done in a timely and cost-effective manner.  Unfortunately, the discussions quickly devolved into the Macellum proposed candidate versus the candidates the legacy directors hoped to identify in the future.

Not about expense reimbursement

The Board would like stockholders to believe that Macellum is holding out to have our expenses reimbursed.  We assure you that this is not the case.  We believe the Board actually offered us reimbursement as part of their last settlement proposal, however, Macellum rejected this offer because it did not offer the material change that Macellum believes the Company must have if stockholder value is to be created.

Macellum has a substantial amount of capital invested in Citi Trends.  The only way for Macellum to make money is for the value of the stock to rise significantly.  In our view, the only way for the value of the stock to rise significantly is for there to be material change to the status quo on the Board.

Mr. Duskin is an agent of change to create long term value for the stockholders

The legacy directors would also have you believe Mr. Duskin is only focused on short term value.  Mr. Duskin will certainly take credit for aggressively pushing for additional share repurchases and still believes the $80 million cash balance the Company needs is overstated and erroneously derived.  If he was not on the Board, we doubt that any further repurchases would have occurred beyond what the Company was forced to do in 2017 during the last proxy fight.

Mr. Duskin’s role as a director makes it impossible for us to detail the inner workings of the boardroom, however, we ask you to consider the following questions when you assess Mr. Duskin’s contributions as a director:

Prior to Mr. Duskin joining the Board, did the Company

  • issue any guidance, either annual or quarterly?
  • have a long-term, annual growth algorithm?
  • have a long-term earnings per share (EPS) target of $4?
  • initiate a Hispanic focused test store, despite having 200 stores with bilingual signage?
  • have a store growth rate commensurate with the long-term goal to have 800 stores?
  • initiate a cost cutting program?
  • more meaningfully engage with its stockholders and provide any vision about the future of the Company?

Despite Mr. Duskin’s considerable efforts and the progress made during his tenure, it is still not nearly enough change.  Additional operational changes urgently need to occur, but the Board’s willingness to maintain the status quo has been an obstacle to continued progress and meaningful change.

Manipulating facts and misleading statements

The legacy directors would like stockholders to believe that business has been great and their strategic plan is working.  In reality, last year, earnings before interest and taxes (EBIT) has decreased by 1% despite increasing the number of stores by 3.5% (19 additional stores) and relocating or expanding eight stores. Furthermore, the greater part of EPS growth has been the result of a lower share count and lower tax rate rather than an improvement in the Company’s performance.  Therefore, we think the Company’s claim that EPS has grown by 59% is particularly misleading especially given that it includes $2.5 million of one-time expenses incurred in connection with the prior proxy contest in 2017.  Even though the EPS metric is largely irrelevant because the EBIT is still disappointing, we believe it is still a material misrepresentation.  Perhaps running another contest this year is a way to inflate earnings growth next year.

Disappointing and deteriorating results

Since Mr. Lupo was appointed Chairman of the Board in June of 2018 the total stockholder value has fallen 31%.  Mr. Lupo has been on the Board since the IPO in 2003, is the longest serving director, and has overseen this disastrous underperformance every step of the way.

Most concerning of all are the recent deterioration of results.  Since Bruce Smith was appointed CEO in March of 2018, sales and operating profit have begun a startling slide which appears to be accelerating.  Same store sales have fallen from +3.3% in Q2 2018 to 0.6% in Q3 2018, to 0.2% in Q4 2018, and quarter to date Q1 2019 are down a shocking 8% with management guidance of negative 3% for the quarter.  If management achieves this same store sales guidance it would be the worst quarter since Q4 2015.  Operating profit declines are equally disturbing with Q4 2018 down 9% and Q1 2019 down 10% based on EPS guidance.  There is a clear trend that since former Chairman Ed Anderson left and Mr. Smith assumed the CEO position, the Company’s results are steadily declining.  Clearly, it appears the Board is failing to provide the proper oversight, support and guidance for Mr. Smith to be effective.

Significantly, one year into the Company’s long term growth goal of achieving $4 per share, they are materially behind the annual trajectory.  The Company will fall short of its annual same store sales and earnings growth goal of 3% and 12-15%, respectively, with guidance calling for same store sales to increase 1-2% and earnings to increase 4.5% (as inferred from the Company’s 2019 EPS guidance).  As these results show, the Company struggles to achieve success under the current Board and management configuration.

Perhaps that’s why the Company’s valuation at 3.7x trailing twelve month EBITDA is one of the lowest in the sector.  Largely due to what we believe is lack of confidence that any stockholder or potential investor could have in the Company’s ability to deliver long-term, sustainable growth.

Let’s not lose sight of the long term underperformance

While most of this letter is focused on performance since the Board lost a contested election in 2017, let’s not forget what caused us to engage with the Company in the first place.  Since FY 2009, EBIT has declined from $29.3mm to $25.1mm in FY 2018, or 14%.  Also, the Company has spent $222 million on capital expenditures through Q3 of 2018 which resulted in EBIT dollars per store falling 41% to $45K in FY 2018 from $77K in FY 2009.  Similarly disappointing, same store sales have been flat since FY 2009 and EBITDA margins have declined by 290 bp in FY 2018.  All of this against a back drop of the largest employment gains the core customer has ever experienced.

Macellum owns 18x more stock than Chairman Lupo and 6x more than all the non-executive directors

In the letter, the Company noted that we sold 38,000 shares, or 7% of our entire position, since May 2018.  While this is true, we think it is important to also note that Macellum has purchased every share it owns, and as a manager of outside investor money, Macellum cannot control when investors redeem their investment.  By contrast, no one on the Board has made an open market purchase for years.  Worse, Mr. Lupo has sold over $300K or 30% of his holdings of Citi Trends stock and based on public filings, only owns 27,480 shares despite having served on the Board since 2003.  Additionally, unlike Macellum, Mr. Lupo has total control over his decisions to transact in the securities.  Given Mr. Lupo’s insignificant ownership in the Company, we have concerns that his interests do not fully align with those of the stockholders.

The path forward

Mr. Duskin has gone to great lengths to work constructively with Citi Trends directors since he joined the Board, as evidenced by our decision to avoid a proxy contest last year and to delay our public announcement of our nomination so we could continue to work with the Company toward an agreement without any distractions or unnecessary attention.  Despite our good faith efforts to come to an agreement and achieve meaningful change on the Board, our settlement offers have been repeatedly rejected, seemingly in an effort to project the jobs of the directors rather than the interests of all stockholders.  In our view, the failure of the settlement conversations boil down to one point: no legacy director is willing to step down from the Board at the 2019 Annual Meeting.  Instead, the Board is only willing to increase the number of directors serving on the Board.  We believe this is simply not sufficient and will not result in the urgently needed change in the boardroom or in the Company’s performance.  Stockholders need change immediately so we can address the Company’s stagnant performance and put the Company on the track to achieve long-term, sustainable, consistent growth.  Mr. Duskin, as a single voice of transformation, cannot create value on his own with the status quo and inertia being so strong on the Board.  The Board must be reconstituted now.

Our preference has always been to work privately and constructively with the Board and we are still hopeful that we can reach a settlement that will create meaningful change.  However, as a significant stockholder with interests that are truly aligned with those of the other stockholders, we are committed to doing what is in the best interest of the stockholders of the Company and will take all actions that we deem necessary to deliver value to all stockholders.

Sincerely,

Jonathan Duskin
Macellum Advisors GP, LLC

CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

Macellum SPV III, LP, a Delaware limited partnership, together with the other participants named herein (collectively, “Macellum”), intends to file a preliminary proxy statement and accompanying White proxy card with the Securities and Exchange Commission (“SEC”) to be used to solicit votes for the election of its slate of highly qualified director nominees at the 2019 annual meeting of stockholders of Citi Trends, Inc., a Delaware corporation (the “Company”).

MACELLUM STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.

The “Participants” in the proxy solicitation are Macellum SPV III, LP, a Delaware limited partnership (“Macellum SPV”), Macellum Management, LP, a Delaware limited partnership (“Macellum Management”), Macellum Advisors GP, LLC, a Delaware limited liability company (“Macellum GP”), Jonathan DuskinTheresa R. BackesPaul MetcalfPeter R. Sachse, and Kenneth D. Seipel. As of the date hereof, Macellum GP and its affiliates beneficially own, in the aggregate, 494,019 shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”), including 2,397 shares of restricted stock awarded to Mr. Duskin in his capacity as a director of the Company, which will vest on June 6, 2019, provided Mr. Duskin is a director of the Company at such time, representing approximately 3.8% of the outstanding shares of Common Stock. As of the date hereof, Macellum SPV directly owns 489,010 shares of Common Stock. As of the date hereof, Macellum GP, as the general partner of Macellum SPV, may be deemed to beneficially own the 489,010 shares of Common Stock beneficially owned directly by Macellum SPV. As of the date hereof, Macellum Management, as the investment manager of Macellum SPV, may be deemed to beneficially own the 489,010 shares of Common Stock beneficially owned directly by Macellum SPV. As of the date hereof, Mr. Duskin beneficially owns directly 5,009 shares of Common Stock, including 2,397 shares of restricted stock awarded to him in his capacity as a director of the Company, which will vest on June 6, 2019, provided Mr. Duskin is a director of the Company at such time, and, as the sole member of Macellum GP, may be deemed to beneficially own the 489,010 shares of Common Stock beneficially owned directly by Macellum SPV. As of the date hereof, neither Ms. Backes nor Messrs. Metcalf, Sachse or Seipel beneficially own any shares of the Common Stock.

 

SOURCE Macellum Advisors GP, LLC

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Gen Z’s Engagement in the Sober Curious Movement Surges by 53% from 2023 to 2024, Reveals Latest NCSolutions Analysis

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  • Over one-third of Gen Zers (34%) say they’ll try a new beverage product if it’s marketed as aligning with the sober curious lifestyle.
  • Nearly half (45%) of Gen Z say social media is the most effective advertising channel to inform them about new nonalcoholic options.
  • The most popular month to purchase alcohol in 2023 was December (up 16% over November), and the least popular was January (down 24% compared to December 2022)

The share of Gen Zers born between 1997 and 2002 who say they plan to drink less alcohol in 2024 jumped 53% year over year.  Sixty-one percent say they plan to cut back on their alcohol consumption, compared to 40% who said they planned to drink less in 2023.

The findings are from the latest consumer sentiment survey about the sober curious movement, a follow-up to a similar survey conducted in January 2023. Both surveys were commissioned by NCSolutions (NCS). The findings also include an analysis of NCS’ proprietary consumer purchase data. NCS is the leading company for improving advertising effectiveness for the consumer packaged goods (CPG) ecosystem.

More millennials (born between 1981 and 1996) said they’d drink less in 2024 (49%), an increase of 26% from those surveyed a year before. Overall, 41% of all Americans plan to drink less in 2024, up from 34% the year before. Together, these findings indicate the sober curious movement gained strength over the last year, largely due to interest from younger generations.

“Nonalcoholic alternatives, once a niche category, are becoming more mainstream,” said Alan Miles, chief executive officer, NCSolutions. “Younger consumers are increasingly expressing a growing interest in healthier options for social drinking. Beverage brands have a real opportunity to engage and build brand loyalty with the next generation of consumers by focusing on the right combination of creative, product, placement, and timing.”

Tap into Gen Z with sober curious lifestyle messages

Younger consumers say saving money and improving physical health are the top reasons they switch to a sober lifestyle. More than one-third (36%) of Gen Z say they’re going alcohol-free for their mental health.

This impacts the type of advertising most likely to influence purchases: over one-third of Gen Zers (34%) say they’re more likely to try a new beverage product if it’s aligned with the sober curious lifestyle, compared to 17% of all Americans. The finding adds further nuance to the marketing preferences of Gen Z, who are known to have an affinity for brands whose missions align with their values.

Nearly half (45%) of Gen Zers say social media is the most effective advertising channel to help them learn about new nonalcoholic beverage options, followed by internet searches (16%) and streaming TV (15%).  In addition, nearly one in four (24%) have tried a nonalcoholic beverage because a celebrity or influencer endorsed it.

Mocktails are twice as popular as nonalcoholic beer

Sober curious consumers surveyed are twice as likely to choose a mocktail than a nonalcoholic beer. One in five (19%) Americans said they drank a mocktail in 2023, compared to one in 10 who drank nonalcoholic beer. More than one-third (37%) said they drank mocktails most often.

Mocktails were especially popular among younger generations in 2023. Thirty-seven percent of Gen Z said they drank mocktails last year, compared to 16% who said they had nonalcoholic beer and 10% who said they drank nonalcoholic wine.

Among millennials, 30% said they drank mocktails in 2023, compared to 15% who drank nonalcoholic beer and 9% who had nonalcoholic wine.

Seventeen percent of both millennials and Gen Z said they had tried THC and CBD-infused drinks in 2023.

December leads for nonalcoholic beverage sales

Interest in Dry and Damp January continues to expand. Consumers purchased the least amount of alcoholic beverages in January 2023 (down 24% from December 2022) and August 2023 (down 10% from July 2023), according to NCS purchase data. This follows a 19% drop in January 2022 compared to December 2021.

December was the most popular month of the year to buy alcohol in 2023, followed by May and March. Month-over-month purchases of alcohol in December increased 16% over November. This increase was two times higher than the 8% month-over-month increase in December 2022 and rose 8% in May, compared to April. By contrast, in 2022, the summer and winter holidays saw the highest increase in purchases of alcoholic beverages.

“Alcohol consumption is traditionally seasonal. Consumers purchase significantly more during December in preparation for the holidays,” Miles said. “In the past, we’ve seen alcohol sales rise during summer months, but now the peak is as early as May.  Beverage brands have the opportunity to leverage the sober curious trend beyond January and into the summer months, targeting younger consumers with new summer-focused nonalcoholic products and health-oriented creative.”

Additional results are available on our website.

About NCS

NCSolutions (NCS) makes advertising work better. Our unrivaled data resources powered by leading providers combine with scientific rigor and leading-edge technology to empower the CPG ecosystem to create and deliver more effective advertising. With NCS’s proven approach, brands are achieving continuous optimization everywhere ads appear, through purchase-based audience targeting and sales measurement solutions that have impacted over $25 billion in media spend for our customers. Visit us at ncsolutions.com to learn more.

About the NCS Consumer Sentiment Survey

The consumer sentiment survey of 1,062 Americans was commissioned by NCS in December 2023 and was made up of U.S. adults ages 21+, who were asked about their drinking habits and preferences. Results were weighted to be representative of the U.S. population by age, gender, region, ethnicity, marital status, education level, and household income.

About NCS Purchase Data

NCS provides purchase insights to brands to help them target, optimize, measure, and enable sales-based outcomes. NCS’s representative and balanced consumer CPG purchase data set consists of the industry’s preeminent and comprehensive sources. It includes actual purchase data (transaction information) from big-box retailers, supermarkets, drug stores, convenience stores, and other retail channels at which American households buy CPG products spanning 340+ grocery categories. The NCSolutions purchase data was analyzed in January 2024.

Fair Use

When using this data and research, please attribute by linking to this study and citing NCSolutions.

 

SOURCE NCSolutions

Editor opinion:

The hemp, CBD, and related industries are likely to experience significant growth shortly, especially considering the increasing interest in soberness among Gen Z. The survey indicates that over one-third of Gen Zers (34%) are inclined to try new beverage products aligned with the sober curious lifestyle. This trend suggests a growing market for nonalcoholic alternatives, showcasing a shift towards healthier options for social drinking, including for sure hemp, and infused beverages.

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High Tide’s Raj Grover Clinches Spot on Grow Up’s 2024 Top 50 Cannabis Leaders in Canada List

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High Tide Inc. (“High Tide” or the “Company“) (NASDAQ: HITI) (TSXV: HITI) (FSE: 2LYA), the high-impact, retail-forward enterprise built to deliver real-world value across every component of cannabis, is pleased to announce that its Founder and CEO, Raj Grover, has made Grow Up’s 2024 Top 50 Cannabis Leaders in Canada list. The list, which was hand-selected by Grow Up’s industry advisory committee, recognizes influential leaders in the cannabis industry who are trailblazers in the growth, development, and innovation of the cannabis industry and celebrates their relentless, courageous, and innovative dedication to elevate the industry. The full list is available at Grow Up Top 50.

“I am honored to be included in this list. This would not have been possible without the continuous hard work and dedication of the High Tide team. Our innovative mindset has resulted in our ability to achieve significant milestones in the five years since Canadian legalization, despite broader industry challenges that have seen some of our peers fall by the wayside. Our success is also due to the loyalty and commitment of our customers, who continue to support our business in Canada and internationally,” said Raj Grover, Founder and Chief Executive Officer of High Tide.

 

“I also want to congratulate all the other industry trailblazers recognized on this list who are all leaders helping to shape and grow our industry. As we look to solidify our strength in Canada while exploring emerging markets in 2024, I know that our industry-leading team will continue delivering results for our customers and shareholders alike,” added Mr. Grover.

ABOUT RAJ GROVER

Raj Grover is one of Canada’s foremost business strategists and deal-makers who founded High Tide and its subsidiaries, Valiant Distribution, and Canna Cabana, and also co-founded Famous Brandz. Under his leadership, High Tide has grown from a small shop of 2 employees into Canada’s largest non-franchised cannabis retailer with over 160 locations and 1,500 team members globally. Raj has also expanded High Tide’s online reach in the ancillary cannabis space across North America and Europe. He is committed to giving back to the global community and has spearheaded High Tide’s support of World Vision, sponsoring over 300 children across 101 communities in 33 countries.

ABOUT HIGH TIDE

High Tide, Inc. is the leading community-grown, retail-forward cannabis enterprise engineered to unleash the full value of the world’s most powerful plant. High Tide (HITI) is uniquely built around the cannabis consumer, with wholly diversified and fully integrated operations across all components of cannabis, including:

Bricks & Mortar Retail: Canna Cabana™ is the largest non-franchised cannabis retail chain in Canada, with 162 current locations spanning British ColumbiaAlbertaSaskatchewanManitoba, and Ontario and growing. In 2021, Canna Cabana became the first cannabis discount club retailer in North America.

Retail Innovation: Fastendr™ is a unique and fully automated technology that integrates retail kiosks and smart lockers to facilitate a better buying experience through browsing, ordering, and pickup.

E-commerce Platforms: High Tide operates a suite of leading accessory sites across the world, including Grasscity.com, Smokecartel.com, Dailyhighclub.com, and Dankstop.com.

CBD: High Tide continues to cultivate the possibilities of consumer CBD through Nuleafnaturals.com, FABCBD.com, blessedcbd.de and blessedcbd.co.uk.

Wholesale Distribution: High Tide keeps that cannabis category stocked with wholesale solutions via Valiant™.

Licensing: High Tide continues to push cannabis culture forward through fresh partnerships and license agreements under the Famous Brandz™ name.

High Tide consistently moves ahead of the currents, having been named one of Canada’s Top Growing Companies in 2021, 2022 and 2023 by the Globe and Mail’s Report on Business Magazine and was ranked number one in the retail category on the Financial Times list of Americas’ Fastest Growing Companies for 2023. To discover the full impact of High Tide, visit www.hightideinc.com. For investment performance, don’t miss the High Tide profile pages on SEDAR+ and EDGAR.

ABOUT GROW UP

Since its inception in 2017, Grow Up Conference & Expo has become a benchmark event in the Canadian cannabis industry, known for its high-profile speakers, diverse programming, and commitment to bringing together forward-thinkers and experts. For more information, visit Grow Up Conference & Expo.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

 

SOURCE High Tide Inc.

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Kona Gold Beverages, Inc. Indicates Strategic Expansion Through $5 Million Non-Dilutive Credit Line

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Kona Gold Beverages, Inc. (OTCPK: KGKG), a dynamic holding company specializing in product development within the better-for-you and functional beverage sector, is proud to announce the company has successfully secured a $5 million line of credit that will be dedicated to driving production growth, expanding market share, and exploring potential acquisitions.

Under the visionary leadership of the new management team, Kona Gold Beverages, Inc. is taking a bold step toward sustained growth. The $5 million credit line is non-dilutive, meaning it does not have the option to convert into shares of the company. This strategic move emphasizes the management’s commitment to preserving shareholder value and ensuring responsible financial stewardship.

“This non-dilutive credit line marks a significant milestone for Kona Gold Beverages, Inc. as we strategically position ourselves for growth without compromising the interests of our valued shareholders,” said Brandon White, President and Chairman of Kona Gold Beverages, Inc., “We understand the importance of responsible expansion, and this credit line will play a pivotal role in driving our production capabilities, expanding our market presence, and exploring potential acquisitions that align with our vision.”

Management acknowledges the challenge of a bloated share structure inherited from previous funding sources, including the issuance of shares, warrants, and conversion abilities. While some conversion possibilities may be beyond our control, the new management team is fully committed to transparency and will keep shareholders informed of any developments.

The company is actively taking steps to eliminate conversion possibilities within its control, recognizing the significance of growing the company without diluting shareholder value. Additionally, Kona Gold Beverages, Inc. remains dedicated to seeking funding sources that not only align with the company’s growth objectives but also prioritize the best interests of its shareholders and their value.

Key Highlights:

  • Strategic Credit Line: The $5 million non-dilutive credit line will be used for production growth, market share expansion, and potential acquisitions.
  • Preserving Shareholder Value: The credit line is structured to safeguard shareholder value by preventing conversion into shares of the company.
  • Transparency Commitment: Management is fully committed to transparency and will keep shareholders informed regarding the share structure and any potential conversion developments.
  • Responsible Financial Stewardship: The new management team is focused on eliminating conversion possibilities within its control and seeking funding sources aligned with shareholder interests.

Kona Gold Beverages, Inc. is poised for an exciting phase of growth, and this strategic financial move underlines the company’s dedication to responsible expansion and shareholder value.

The Company recently announced it has eliminated $1.3 Million in debt and has reduced its authorized shares by 4.386 Billion shares.

For more information regarding Kona Gold Beverage, please visit: https://konagoldbeverage.com/

About Kona Gold Beverage, Inc.

Kona Gold Beverage, Inc., a Delaware corporation, operates its wholly-owned subsidiary, Kona Gold LLC.  Kona Gold, LLC has developed a premium Hemp-Infused Energy Drink line; please visit its website at www.konagoldhemp.comKona Gold is located on the east coast of Florida in Rockledge.

Safe Harbor Statement:

The information posted in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words “may,” “will,” “should,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” and similar expressions.  The Company may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties.  There can be no assurance that such statements will prove to be accurate.  The Company cautions that these forward-looking statements are further qualified by other factors including, but not limited to, those outlined in the Company’s Annual Reports on Form 10-K and its other filings with the Securities and Exchange Commission.  Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated.  These risks and uncertainties include but are not limited to, general economic and business conditions, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing various engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, shortages in components, production delays due to performance quality issues with outsourced components, and various other factors beyond the Company’s control.  The Company does not undertake any obligation to update publicly or to revise any statements in this release, whether as a result of new information, future events, or otherwise.

Investor Relations Contact:
844-714-2224
[email protected]

 

SOURCE Kona Gold Beverage, Inc.

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