Adastra Labs Holdings Ltd (CSE:XTRX), a Canadian cannabis processing and analytical testing services company, announced Monday it has signed a Letter of Intent (LOI) for the acquisition of Phyto Extractions Brands.
Under the terms of the LOI, Adastra said it and Phyto Extractions will negotiate the purchase of intellectual property and existing licensing agreements regarding 21 trademarked design and wordmarks associated with Phyto Extractions' cannabis concentrates and two for CBD-related concentrates in Canada, as well as submitted trademark protection in the US.
Phyto Extractions brands are licensed through an agreement with CannMart Labs Inc, a majority-owned subsidiary of Namaste Technologies Inc (CVE:N) (OTCMKTS:NXTTF). Adastra said CannMart Labs will continue to hold its exclusive license to use Phyto trademarks on certain cannabis products.
Under the terms of the agreement, British Columbia-based Adastra said it will be the exclusive producer of all distillate products licensed under Phyto Extractions brands, and will also support the production of hydrocarbon concentrates released under the Phyto Extractions family of brands once equipment commissioning has been completed.
Adastra said the LOI is non-binding and a due diligence period is currently underway which, if successful, will be followed by the negotiation of a definitive agreement for the acquisition of all of the assets of the private company. The terms will be announced once the definitive agreement is signed.
“Phyto Extractions brands is one of the most recognizable Canadian concentrate brands from the legacy market and they were at the forefront of transition into the regulated market,” Adastra CEO Andy Hale said in a statement.
“With presence in BC, AB, MB, SK and ON, their brand awareness and demand is growing at a rapid rate. According to Phyto Extractions, sales have doubled over the past three months and sell-through is high, with over 35,000 0.5 gram vaporizing cartridges sold to provincial distributors and licensed retailers in the last 30 days across Canada."
Hale added: "Tremendous brand-equity, consumer support and goodwill have clearly transitioned from the legacy to the regulated market. Incorporation and development of successful cannabis concentrate brands is an integral part of Adastra’s long-term strategy to ensure market-share and stronger margins.”
Phyto Extractions brands were first re-launched in the regulated market with a 0.5 gram vaporizing cartridge SKU in December 2019. Additional vaporizing SKUs were added over recent months for a total of 10 vaporizing SKUs. Phyto Extractions is following up its vaporizing category product offerings with the introduction of some of the first hydrocarbon live resin SKUs and a unique High-Terpene Full Spectrum Extract (HTFSE) CO2 terp sauce SKU later in September 2020.
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