Financial Archives - Green Market Report

Debra BorchardtJanuary 12, 2023

7min14740

There have been a lot of expectations for consolidation in the cannabis industry and so it seems 2023 is already off to a busy start. Today there are three deals to mention.

Akerna

Akerna (Nasdaq: KERN) announced it was selling 365 Cannabis also known as The NAV People to 365 Holdco LLC as of an agreement signed on January 11, 2023. Under the terms of the SPA, Akerna received a cash payment of $500,000 and the parties agreed to terminate an earn-out payment due and payable to the principals of 365 Holdco LLC with a deemed value of $2,283,806. According to a company statement, $100,000 of the cash payment is being held back by 365 Holdco in accordance with the terms of the SPA for post-closing accounts payable adjustments and certain indemnification claims through April 30, 2023.

Akerna acquired 365 Cannabis in a deal valued at $17 million in October 2021. At the time Akerna CEO Jessica Billingsley said, “The 365 Cannabis acquisition represents the final piece of the puzzle for connecting cannabis compliance with mainstream ERP offerings to give our clients a choice between all of the most popular financial and operational systems.” The acquisition of 365 Cannabis by Akerna was meant to accelerate the deployment of a financial solution strategy with the addition of Microsoft capabilities, further establishing Akerna as the most robust cannabis-compliant ERP system offering a complete portfolio of mainstream tax and financials.

Despite selling the asset for much less than it cost, Akerna shares were up almost 41% in pre-market trading to lately sell at $1.37. Akerna has been working to improve its balance sheet over the past year. The company said in November that it continues to explore strategic and financial alternatives to strengthen its balance sheet. It also announced in November that shareholders voted in favor of a 20-for-1 reverse stock split which was effectuated immediately thereafter in order to maintain compliance with Nasdaq listing standards.

LEEF Brands

LEEF Brands, Inc. (OTCQB: ICNAF) has completed the acquisition of The Leaf at 73740 LLC in an all-stock transaction as of January 11, 2023. The transaction was previously announced on September 19, 2022. The Leaf is a premium California retailer located in the heart of Palm Desert, California at 73740 El Paseo.

“We are extremely excited to welcome The Leaf into the LEEF Brands family and to commence our corporate strategy of acquiring top performing and best in class retail dispensaries in locations that will serve to augment LEEF product offerings in select markets. The Leaf has built a trusted retail platform in the heart of Palm Desert and we look forward to garnering invaluable customer insights through The Leaf’s platform and begin to integrate those insights throughout our organization to build a lasting relationship with the cannabis consumer. We also look forward to building upon The Leaf’s trusted retail platform and continuing the legacy of R.D Hubbard, in building a best-in-class cannabis retail experience,” said Micah Anderson, CEO of LEEF Brands. “Our acquisition strategy is two-fold: gain operational efficiencies and significantly grow revenue. We will accomplish this by consolidating operating expenses and building the presence of our in-house brands in-store.”

Wee-Cig International

Wee-Cig International Corporation (OTCMarkets: WCIG) signed a Letter of Intent (LOI) to acquire The Jamaican Brew House. The Jamaican Brew House is a producer of an exclusive neutral liquid base made from cannabis that can be used in a range of food and beverage applications. The naturally soluble liquid eliminates the need for emulsification or nanoencapsulation, resulting in a finished product that has consistent CBD/THC content and is free of the taste of cannabis terpenes. JBH is the first company to utilize a botanical process to naturally create a neutral cannabis base and is further differentiated by its innovative products, unique flavor profiles, and customer-first experience, making cannabis products more enjoyable for consumers. The team at JBH includes sales and marketing leaders from the beverages industry, cannabis and food processing, and a corporate advisory team, all of whom will bring their industry knowledge to the company’s operations.

“I am extremely excited to announce we have entered into a Letter of Intent,” comments Efraim Babayov, CFO of Wee-Cig International Corporation. “The expansion of operations of The Jamaican Brew House is expected to be the focus of our company in 2023 and will bring a new and existing operating segment. I believe this acquisition once concluded will provide tremendous value to our company and shareholders.”

Russell Korus, CEO, President, and director of the company, has resigned all positions. Mr. Efraim Babayov has agreed to assume the role of interim CEO and President.

This acquisition will bring a patent-pending technology to Wee-Cig International Corporation, which the company intends to immediately commence marketing. The company said it expects to enter into a definitive agreement with JBH no later than thirty (30) days from entry into this LOI, with closing during the first quarter of fiscal 2023.


Debra BorchardtDecember 20, 2022
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3min5850

Agrify Corp. (Nasdaq: AGFY) is heading into the holidays with a little more green after closing its previously announced underwritten public offering of 11,884,615 shares of its common stock and pre-funded warrants to purchase 1,500,000 shares of its common stock. The accompanying warrants would purchase 26,769,230 shares of common stock.

The combined offering price was $0.649, while the stock closed today at 29 cents.

The company said it would receive $8.7 million in gross proceeds from the deal, while the net proceeds will be $8.2 million. Agrify also said it plans to use the money for working capital and general corporate purposes, which may include capital expenditures and repayment of debt.

Agrify reported its earnings in November, saying at the time that revenue fell by 55% to $7 million for the third quarter, compared to last year’s $15.8 million for the same time period. The company said that the revenue drop reflected the deferral of $5.3 million of design and build revenue in connection with the Bud and Mary’s lawsuit.

The company’s net loss for the third quarter was $46.3 million, or $17.33 per diluted share, compared to a net loss of $9.8 million, or $4.68 per diluted share, in the prior-year period.

The company ended the third quarter 2022 with a combined amount of cash, restricted cash, and marketable securities of $12.5 million. However, expenses have been rising. Operating expenses totaled $27.4 million for the third quarter versus last year’s $9.4 million in the prior year period. The company said that the increase in the operating expenses was largely attributable to increases in reserves associated with loans receivable, increases in depreciation and amortization, and changes in contingent consideration related to the fair value estimates associated with ongoing acquisition-related earnout arrangements.

At the time of earnings, Simply Wall Street wrote, “It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business.”


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