Hardcar Distribution Archives - Green Market Report

Debra BorchardtJune 8, 2022
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California-based distribution company Hardcar crashed hard as the company was facing a big tax bill and no willing investors. In its death spiral, the company also laid off employees without wages that were owed to them. Yet, the “out of business” company was apparently still making cash drops and deliveries until a co-founder stepped back in to shut the operation down for good.

On The Road

Todd Kleperis founded Hardcar as a way to help cannabis companies move large amounts of cash. The company had security vehicles and relationships with banks and the business was growing. Kleperis though became more interested in another company he was creating on the banking side called Payzel. In order to focus on Payzel, he sold his interest to a group called Apollo. Or so he thought.

Kleperis hasn’t had any involvement with the company on a day-to-day basis for some time and was essentially waiting for the deal with Apollo to close to recoup some of his investment in the company which was hundreds of thousands of dollars. Apparently, an Operating Agreement was never signed which put the deal into question but Kleperis had moved on trusting the buyers would complete the paperwork. The company was on solid ground and he felt that it was in good hands. Apollo had allegedly invested over $300,00 into the company so it seemed like they too were motivated to make Hardcar work.

 

Sinking Ship

Apollo though didn’t like what it saw after spending some time with the company. The new CEO Joe Zerucha was unable to keep Hardcar going and questions were swirling about his management. At one point, there was a rumored deal that Manifest Seven Holdings (OTC: MNFSF) would buy Hardcar, but that never came to fruition. In March 2022, Manifest Seven filed a notice that it was discontinuing the operation of its cannabis bulk wholesale products and finished goods distribution services. The company wrote, “The discontinued cannabis distribution operations accounted for $3.32 million of revenue and a net loss of $2.76 million during the three quarters that ended August 31, 2021.” Manifest 7 is in default on its loans and most recently announced that its President and Chief Legal Officer had resigned. Zerucha confirmed that Manifest Seven would not be a white knight and that the deal was ended in December 2021. 

With no “deal” on the books and a looming tax bill as well, this was apparently what prompted the Apollo group to decide to pull the plug. According to Kleperis, when Zerucha replaced former CEO Salvatore Moccia the excise taxes were up to date and had been paid. Since Zerucha took over, the taxes went unpaid and eventually grew to almost half a million dollars. He was allegedly using the tax money to pay for other items, which isn’t allowed.

 Apollo also supposedly felt the company wasn’t in good shape structurally and was a hodge-podge of cobbled together licenses. The company also supposedly operated for a year without a license in good order – another problem that was bound to get caught by regulators. In other words a hot mess, not worth saving or investing any more money into.

Death Spiral

Without the Apollo money or the deal and a co-founder who believed he was no longer a majority owner, the money wasn’t there to keep the company going. Employees weren’t getting paid on time and the situation was only getting worse. The Chief Operating Officer Morgan Dodson resigned on April 29, 2022, suggesting that the company was operating in a manner that wasn’t legal, which made her uncomfortable. Like Kleperis, she was equally confused as to the ownership of Hardcar. She brought her concerns over operations that weren’t within state regulations to Apollo, thinking the company was a majority owner, only to be told to take it up with Zerucha – that he was the owner. Morgan was not only an early employee, but she also invested in the company. Zerucha was in the driver’s seat, not Apollo.

With everyone jumping ship, employee Blake Villa began informing customers the company was closing and to find a new distributor. Then Villa was let go without pay weeks before his wedding. He took to social media and aired his grievances. Zerucha told Green Market Report on May 18, that there was “significant misinformation in the public space and that Hardcar was not closing down.” 

Understandably, customers were confused. Was it closed or not? One small brand saw its limited inventory held captive by Hardcar. The brand, that asked to not be named, asked for its inventory back from the company that was allowing Hardcar to share some warehouse space. But the company declined and said that was up to Zerucha. The brand said it was asked to send thousands of dollars on an unpaid invoice, but the invoice wasn’t provided. 

Zerucha Terminated

Not long after Zerucha insisted the company was still operating, Kleperis stepped back in and terminated his employment. He has also stated that he is returning all inventory to the companies whose products remain and closing every account. Kleperis along with other investors have lost thousands of dollars with the decision to close the company. Accusations of theft, taking money from non-accredited investors, and other misdeeds are being tossed around and lawsuits are a likely outcome. Kleperis claims Zerucha was found to have comingled the client’s money and not deposited customer payments into the company bank account. All major issues that are easily documented by the company.

At least the brands will get their products returned, even if they are now once again forced to find another distributor. 

 


StaffJune 26, 2018
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It’s time for your Daily Hit of financial cannabis news for June 26, 2018.

On The Site

Microcaps And The M&A Scene

Merger and acquisition activity in the cannabis industry is lit this year. So far in 2018, Viridian Capital reports that there have been 106 public and 26 private M&A deals in the cannabis industry for a total of 132 deals for the week ending June 8. Compare this to only 73 deals for the same time period for 2017 – an increase of 80%.

Cultivation and retail accounted for the most deals made, while the investment sector came in second and infused products & extracts were the third most popular sectors for deals. The smaller companies are trying to compete with a market that is quickly leaving the small caps behind. Canopy Growth (CGC) is the leader in Canadian medical marijuana with a 15% market share according to a new report from Stifel. Aurora Cannabis (ACBFF) is acquiring MedReleaf and that is making them almost an equal player to Canopy. This means that two companies will own a third of the market for medical marijuana in Canada.

Aurora Cannabis

In a sign of confidence, Aurora Cannabis Inc. (ACBFF) has agreed to a new C$200 million debt facility, with a potential increase to C$250 million, with the Bank of Montreal. The debt will consist of a $150 million term loan and a $50 million revolving credit facility both of which will mature in 2021.

The debt will be primarily secured by Aurora’s production facilities, including Aurora Sky, Aurora Mountain, and Aurora Vie. Aurora Sky is projected to produce in excess of 100,000 kg per year of high-quality cannabis at low per gram costs and is scheduled to deliver its first harvest this week.

In Other News

Green Spirit Industries Inc.

Green Spirit Industries Inc. (GSRX) said that it has been made aware of recent trading and promotional activity concerning GSRX common stock.  The company has been informed that the higher than average trading volume in its stock may be the result of an unauthorized promotional activity. Green Spirit has been informed that emails promoting GSRX were sent out from unreliable sources utilizing a‘@gmx.com’ email domain.  The company said it was not aware of this promotional activity.

CannTrust Holdings Inc.

CannTrust Holdings Inc. (TSX: TRST) held the official Grand Opening of its Niagara Perpetual Harvest Facility, the first such facility in Canada. The current annual output from the facility is estimated at 50,000 kilograms. In addition, the company has begun construction of an additional fully funded 600,000 sq. ft. expansion, that when completed, will double CannTrust’s annual capacity to in excess of 100,000 kilograms.

Bahamas Development Corporation

Bahamas Development Corporation (BDCI) subsidiary company Global Consortium, Inc. dba Cannabis Consortium Partners has reached a deal with the building owner to purchase the entire 64,000 sq. ft. building in Northern California for $9 million. The building owner has agreed to hold an interest only note for $4.5 million with a 60-day balloon payment once the current tenant is successfully removed from the space or their lease expires. Based on the amount of rental space available, the ROI for the building purchase is 15 months after rentals begin.

HARDCAR Distribution

HARDCAR Distribution is excited to announce a newly minted partnership with Axiom Cyber Solutions to protect businesses in the cannabis industry from cyber attacks and the theft of valuable data. New businesses are coming online every day as the cannabis market explodes throughout the United States and Canada, making them prime targets for hackers.

Although HARDCAR Distribution brings years of security experience to the cannabis industry ensuring the safe and secure transport of cash and product, they understand the importance of protecting their clients on every level. With Axiom’s team of infrastructure specialists, developers, database and business intelligence experts, and project managers, growing cannabis businesses now have a full-service solution with the addition of cutting-edge cybersecurity technology.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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