Mojave Jane Brands Inc (CSE:HC) (OTCMKTS:HHPHF) signed a binding letter of intent (LOI) to acquire 100% of members’ interest in Pacific Crest 4 LLC, including its licenses, property lease, extraction equipment and operations in Adelanto, California.
The 4,000-square-foot Adelanto property is operational with an experienced team, the company said, and has Type 6 and Type 7 licenses from the California Department of Public Health, allowing for cannabis extraction using a volatile or non-volatile solvent or a mechanical method.
Volatile extraction in particular sets Mojave up to enter the market with products such as oil, wax, budder and shatter.
Upon completion of the transaction, the company will be able to consolidate its supercritical CO2 extraction and wiped film distillation equipment, in addition to enabling the company to deliver the raw materials required for the manufacturing of Caligold bars.
The Toronto-based company will pay $500,000 in cash upfront and enter a one-year secured $700,000 convertible debenture note with the sellers, for a total of $1.2 million. The note comes with a 10% yearly interest rate, and the principal is convertible into Mojave shares.
"The Adelanto transaction, once completed, enables us to rapidly move into the production of high-end concentrates and distillate, and will form a foundational piece in the execution of our strategy as it relates to brands and products,” CEO Gary Latham said in a statement. “At the same time, we will be able to leverage our part ownership of SpeedWeed to accelerate distribution of our products to the Californian market."
Additionally, Mojave opted not to complete its proposed acquisition of CB Asset Management (CBAM). The company announced the $7.5 million transaction in June, but said that additional due diligence revealed that it would need to spend more capital on the CBAM facility in order to meet requirements.
"While we have lost some time due to the protracted CBAM due diligence and negotiations, we were able to secure a superior and much cheaper option, removing significant potential overhang in the market,” Latham said. “With the Adelanto Property, Mojave Jane will be very well positioned to execute on its manufacturing, brands and delivery strategy, quickly generate revenues, and accelerate growth and generate shareholder value going forward."
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