CordovaCann Corp. (LVRLF) (CSE:CDVA)(OTCQB:LVRLF), a cannabis-focused consumer products company, announced today that the Company has entered into an arm's length transaction by executing a non-binding letter of intent to purchase Washington based company, Extraction Technologies, LLC, which provides cannabis extraction services to multiple cannabis licensed processors within the State. The Transaction will enable Cordova to provide manufactured cannabis products on both a white label and branded basis throughout the state of Washington.
Extraction Tech, headquartered in Bremerton, Washington, manufactures a variety of cannabis derivative products via tolling agreements and white label manufacturing contracts. The two-year-old business is expanding its customer base and product offerings, and will be an integral part of the Company's growth strategy in Washington. Extraction Tech is led by a strong operational team that will continue to operate the business post-closing. The Transaction as contemplated is expected to close on or before December 1, 2020 (the "Closing Date"), subject to certain closing conditions, including but not limited to satisfactory due diligence and board approval of the Company.
Pursuant to the terms of the LOI, Cordova has agreed to purchase Extraction Tech, which includes, but is not limited to, ownership of the manufacturing building, processing equipment, related liabilities, and contracts with tolling and white label customers. The proposed consideration for the Transaction is two million (2,000,000) common shares of the Company on the Closing Date (the "Upfront Payment") and five hundred thousand (500,000) common shares of the Company for every $125,000 US dollars in EBITDA generated by Extraction Tech during the 12-month period beginning on the 3-month anniversary of the Closing Date and ending of the 15-month anniversary of the Closing Date (the "Earnout Payment"). The maximum Earnout Payment that can be earned by Extraction Tech is five million (5,000,000) common shares, which will be earned if the business generates $1,125,000 US dollars or greater in EBITDA over that 12-month period.
"We are excited to enter the Washington market and believe that Extraction Tech is a strong first step in building an attractive operation in the state," said Taz Turner, Chairman and CEO of Cordova. "The team and contracts that have been assembled by Extraction Tech have positioned it for success and we anticipate the acquisition to be immediately accretive for Cordova."
About CordovaCann Corp.
CordovaCann Corp. is a Canadian-domiciled company focused on building a leading, diversified cannabis products business across multiple jurisdictions including Canada and the United States. Cordova primarily provides services and investment capital to the processing and production vertical markets of the cannabis industry.
