HempFusion Wellness Inc. (TSX:CBD.U) (OTCQX:CBDHF)
(FWB:8OO) (“HempFusion” or the “Company”), a leading health and
wellness Company offering premium probiotic supplements and
products containing CBD, is pleased to announce that it has
completed its previously announced acquisition of APCNA Holdings
LLC (“Apothecanna”) (the “Transaction”).
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Apothecanna Products (Photo: Business
Wire)
Transaction Highlights:
- Apothecanna had revenue of over $3.8 million in 2020, which now
triples HempFusion’s historical proforma revenue to ~$12 million
with significant expansion planned for 2021 and beyond, making it
immediately accretive to the Company.
- Immediate distribution to an additional 1,800 stores, including
CVS, materially increasing HempFusion’s retail distribution
footprint.
- In addition to FDM and e-commerce, the Transaction provides
added distribution channels, increasing HempFusion’s 5 channel
strategy to 6 channels and bolstering topical product distribution
sales.
- Robust eCommerce platform drives over 17,000 average monthly
sessions, and nearly $2.0 million in gross sales per year with 76%
gross margin historically.
- Product efficiencies across topicals line while providing a
near term opportunity for expansion into ingestible products
supported by HempFusion’s proprietary formulations.
- HempFusion’s substantial investment into regulatory compliance
will help solidify Apothecanna’s leadership position in the CBD
industry.
“With the recent Sagely Naturals acquisition and now closing of
the Apothecanna acquisition, HempFusion is in its strongest
position to date. Not only have we significantly increased our
distribution footprint and product offerings, based on a 2020
proforma revenue basis of all entities combined, the acquisitions
bring our historical revenue to nearly $12 million USD,” commented
Jason Mitchell, N.D., Chief Executive Officer of HempFusion. “We
look forward to benefiting from the Sagely Naturals and Apothecanna
distribution footprints and products, which have been known for
their strong topical products, and exploring opportunities to
introduce HempFusion’s premium CBD ingestibles throughout their
existing distribution points,” continued Dr. Mitchell.
The Transaction was completed pursuant to the terms of the unit
purchase agreement dated May 14, 2021, as amended (the “Purchase
Agreement”) among HempFusion, Apothecanna, all holders of
Apothecanna interests (the “Sellers”) and Jeff Henretig, as
representative of the Sellers. Under the Purchase Agreement,
HempFusion has acquired 100% of the interests in Apothecanna for
initial consideration of US$15 million (the “Initial
Consideration”), of which (i) $13,875,000 was satisfied by the
issuance of 11,633,622 common shares of the Company (“HempFusion
Shares”) issued at the deemed value of approximately US$1.19 per
HempFusion Share, being the volume weighted average trading price
(“VWAP”) of HempFusion Shares on the Toronto Stock Exchange (the
“TSX”) for the 30 trading days immediately prior to the date of the
Purchase Agreement, and (ii) US$1.125 million (943,267 HempFusion
Shares) is subject to a holdback to be released on the 18-month
anniversary of the closing date of the Transaction (the “Closing
Date”), subject to certain post-closing adjustments and
indemnification claims, if any. In addition, the Company will pay
the Sellers up to an additional US$10,000,000 (“Milestone Amount”)
in cash, HempFusion Shares or a combination of both (at the
election of HempFusion), subject to Apothecanna achieving certain
revenue targets (with a minimum revenue threshold of US$6 million)
within 12 months of the Closing Date.
The number of HempFusion Shares to be issued under the Milestone
Payment, if any, will be calculated based on a deemed price which
is the greater of (i) the VWAP of HempFusion Shares on the TSX for
the 30 trading days immediately prior to the 12-month anniversary
of the Closing Date, or (ii) $1.00 per HempFusion Share.
All HempFusion Shares issued in connection with the Purchase
Agreement will be subject to contractual resale restrictions to be
released over a period of 12 months from the issuance date as
follows: (i) 34% will be released on November 30, 2021 (being four
months after issuance), (ii) 33% will be released on March 30, 2022
(being eight months after issuance) and (iii) the remaining balance
of 33% will be released on July 30, 2022 (being twelve months after
issuance).
Further, the Company announces that Ian deQueiroz has resigned
as a director of the Company effective July 30, 2021. The board of
directors of the Company expresses their appreciation to Mr.
deQueiroz for his contribution to the Company as a director. Mr.
deQueiroz will continue in his role as Chief of Brand Strategy and
Partnerships of the Company. Mr. deQuerioz will continue to be
subject to insider filing requirements.
ABOUT HEMPFUSION
HempFusion is a leading health and wellness CBD company
utilizing the power of whole-food hemp nutrition. HempFusion
distributes its family of brands, including HempFusion, Probulin
Probiotics, Biome Research, and HF Labs, to approximately 4,000
retail locations across all 50 states of the United States and
select international locations. Built on a foundation of regulatory
compliance and human safety, HempFusion’s diverse product portfolio
comprises 48 SKUs including tinctures, proprietary FDA Drug Listed
Over-The-Counter (OTC) Topicals, Doctor/Practitioner Lines and
more. With a strong focus on research and development, HempFusion
has an additional 30 products under development. HempFusion is a
board member of the US Hemp Roundtable, and HempFusion’s
wholly-owned subsidiary, Probulin Probiotics, is one of the
fastest-growing probiotics companies in the United States,
according to SPINs reported data. HempFusion’s CBD products are
based on a proprietary Whole Food Hemp Complex™ and are available
in-store or by visiting HempFusion online at www.hempfusion.com or
www.probulin.com.
Follow HempFusion on Twitter, Facebook and Instagram and
Probulin on Twitter, Facebook and Instagram.
Neither the TSX nor its Regulation Services Provider (as that
term is defined in the policies of the TSX) accepts responsibility
for the adequacy or accuracy of this release.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements and
forward-looking information within the meaning of Canadian
securities legislation (collectively, “forward-looking statements”)
that relate to HempFusion’s current expectations and views of
future events. Any statements that express, or involve discussions
as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the
use of words or phrases such as “will likely result”, “are expected
to”, “expects”, “will continue”, “is anticipated”, “anticipates”,
“believes”, “estimated”, “intends”, “plans”, “forecast”,
“projection”, “strategy”, “objective” and “outlook”) are not
historical facts and may be forward-looking statements and may
involve estimates, assumptions and uncertainties which could cause
actual results or outcomes to differ materially from those
expressed in such forward-looking statements. No assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not
be unduly relied upon. These statements speak only as of the date
of this news release. In particular and without limitation, this
news release contains forward-looking statements relating to the
Transaction and related distribution, revenue and expansion
opportunities, product efficiencies, compliance solidification and
the Company’s other plans, focus and objectives.
Forward-looking statements are based on a number of assumptions
and are subject to a number of risks and uncertainties, many of
which are beyond HempFusion’s control, which could cause actual
results and events to differ materially from those that are
disclosed in or implied by such forward-looking statements. Such
risks and uncertainties include, but are not limited to, the impact
and progression of the COVID-19 pandemic and other factors set
forth under “Cautionary Note Regarding Forward-Looking Statements”
and “Risk Factors” in the annual information form of the Company
dated March 31, 2021 and available under the Company’s profile on
SEDAR at www.sedar.com. HempFusion undertakes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required by law. New factors emerge from time to time, and
it is not possible for HempFusion to predict all of them or assess
the impact of each such factor or the extent to which any factor,
or combination of factors, may cause results to differ materially
from those contained in any forward-looking statement. Any
forward-looking statements contained in this news release are
expressly qualified in their entirety by this cautionary
statement.
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version on businesswire.com: https://www.businesswire.com/news/home/20210803005347/en/
Jason Mitchell, N.D. Chief Executive Officer and Director Email:
ir@hempfusion.com Phone: 416-803-5638
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