World Class Extractions’ (PUMP.C) forms JV with Nutralife Holdings, and lays out operational road map to revenue

road map
12/11/2019

World Class Extractions (PUMP.C) signed an agreement to start a joint-venture with Nutralife Holdings and Nutralife Extraction LP to form a hemp extraction and processing facility in Imperial County, California.

A lot of companies put together deals like this, and they expect the retail investor to assume that it includes a solid plan and a revenue road map, but what PUMP’s done is provide one. There’s no bullshit with this company. No needless pumping. No pointless acquisitions. Unlike a lot of companies presently bleeding out after the cannabis-bubble burst, World Class has their head down and is busy making deals.

Under the JV, the two parties will share the economic benefits through a profit sharing structure. First, the JV will be split 60/40 with the larger percentage going to Nutralife while PUMP takes the smaller portion.

They’re going to extract hemp produced by Nutralife Farming LP, one of Nutralife Holding’s subsidiaries, in consideration for a processing fee of one-third of the value of the extracted product. The climate should produce two crops per year, whereas other states and counties generally produce one.

“Our joint venture with Nutralife marks a significant milestone for World Class. The deployment of our hemp extraction and processing facility in Southern California provides World Class with access to the market in the United States. The joint venture will not only extract and process hemp oil, but will also manufacture hemp-derived products for human health and pet wellness with distribution of these products through Nutralife’s affiliate, Nutralife Wellness. The joint venture will also allow us to offer our hemp extraction and processing services to licensed third parties in the United States,” said Rosy Mondin, CEO of World Class Extractions.

Nutralife is an affiliate of Nutralife Wellness LLC, which produces products derived from hemp, including face and body skin care, general wellness and products for pets. Their sales are limited to the United States right now, but will be expanding their reach when laws permit.

The road map

The companies JV involves two stages. The first stage involves Nutralife Farming entering into a 15 year leasing agreement with the landowner, which will be renewable for two additional five-year terms, to lease up to 1,900 acres of farmland. Extraction LP will take care of the permits to grow hemp, and culitivate an initial crop of 80 acres, which World Class will assist in drying and delivering to an extraction facility.

The second stage of the road map involves large industrial scale extraction, carried out by World Class, using a subsidiary in the United States. The Extraction LP will by then have cleared all the regulatory hurdles relating to extraction at the facility, and then the Farming LP will get to work cultivating an initial crop of 400 acres of hemp, with the notion of scaling to encompass all 1,900 acres. The JV will extract hemp oil from hemp, and be paid one third of the fair market value of the extracted product.

If all goes according to plan, this is what the company expects to bring in per acre per month under cultivation:

  
Production area                                                         1 acre
Number of crops per year                                                     2
Estimated revenue                                                      $25,000
Portion allocated to the joint venture
(service fee one-third)                                                 $8,333
Estimate operating costs                                                $1,552
Net operating income to the joint venture                               $6,781
Nutralife interest (60%)                                                $4,068
World Class interest (40%)                                              $2,712

All values above are expressed in U.S. dollars.

Based on two hemp harvests per year, the parties estimate that the facility will accommodate the annual production of up to 3.8 million kilograms of extracted biomass, which could yield between 225,000 kg and 350,000 kg of hemp oil distillate or hemp oil isolate. Extraction services are expected to commence mid-2020.

—Joseph Morton

Full disclosure: World Class Extractions is an equity.guru marketing client.

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