Adastra Labs Holdings Ltd (CVE:XTRX), a Health Canada-licensed cannabis processing and analytical testing services company, announced Wednesday the completion of initial due diligence for the acquisition of a set of cannabis concentrates brands from Phyto Extractions.
Adastra, which last month signed a Letter of Intent (LOI) that is non-binding, also said negotiations are currently underway towards a definitive agreement for the acquisition of all the assets of the private, British Columbia-based company.
The terms will be announced once the definitive agreement is signed, the company said in a statement.
READ: Adastra Labs commissions its cryo-ethanol extraction system from Evolved Extraction Solutions to produce cannabis oil
"We are excited to progress the due diligence for the Phyto Extractions brand acquisition,” said Adastra CFO Stephen Brohman. “We have requested a third-party valuation be conducted to complete the terms of the negotiation that has been ongoing. We expect this valuation to be completed shortly and look forward to advancing towards a definitive agreement."
Under the terms of the LOI, Adastra said it and Phyto Extractions are negotiating the purchase of intellectual property and existing licensing agreements. Phyto Extractions has trademarked 21 design and wordmarks associated with their cannabis concentrates and two for CBD-related concentrates in Canada, and has submitted trademark protection in the US.
Phyto Extractions products have been available in the regulated Canadian cannabis market since December 2019. A total of 11 vaporizing SKUs are currently offered and Phyto Extractions recently introduced two live resin SKUs, along with a unique High-Terpene Full Spectrum Extract (HTFSE) CO2 terp sauce SKU.
"With strong penetration in BC, AB, MB, SK and ON, Phyto Extractions is now available, on average, in approximately 28% of the licensed retailers in those provinces and rapidly growing,” said Adastra CEO Andy Hale.
“For example, in BC, over 50% of the licensed retailers stock Phyto Extractions products. The exceptionally high brand recognition and loyalty are converting to strong market presence and market share in the recently legalized cannabis concentrates category."
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