Mr. John Gorst reports
IONIC BRANDS ENTERS LAS VEGAS, NEVADA WITH ACQUISITION OF VEGAS VALLEY GROWERS NORTH
Ionic Brands Corp. has completed the acquisition of Vegas Valley Growers North (VVG) located in Las Vegas, Nev., previously announced on April 2, 2019. VVG is a vertically integrated, cash-flow-positive opportunity with a projected 2019 revenue of $6.6-million (U.S.), expected gross profits of $3.1-million (U.S.) and EBITDA (earnings before interest, taxes, depreciation and amortization) of $2-million (U.S.).
According to Arcview Market Research and Nevada State Department of Taxation, medical and adult-use spending on cannabis is projected to be over $400-million (U.S.) in 2019 and $500-million (U.S.) in 2020. Sales records were set during the first six months of 2018 where Nevada sold more than $195-million (U.S.) in cannabis products compared with $67-million (U.S.) in Washington State and $114-million (U.S.) in Colorado in the same period.
Ionic Brands chairman and chief executive officer John Gorst commented: "The Nevada cannabis market is one of the cornerstone markets in the U.S. for building cannabis brands. With over 42 million visitors to Las Vegas per year, the VVG acquisition will provide our Ionic vape and Zoots edibles brands valuable exposure to national and international cannabis consumers. The VVG acquisition includes the popular Nevada vape brand: Vegas M Stick. VVG offers Ionic Brands vertically integrated operations and distribution into over 75 per cent of Nevada stores." VVG's chief executive officer, Mitch Wilson, commented that: "Ionic vape pens are the perfect complement to the Vegas M Stick. Together, these luxury brands are set to have a massive presence in the Nevada market for years to come."
A 60,000-square-foot cultivation and production (manufacturing) facility with expected completion date of fourth quarter 2019
At closing, VVG will have a lease with an option to purchase that facility. A second 80,000-square-foot facility is planned for the fourth quarter of 2020.
The VVG acquisition also includes four state licences in hand for cultivation and production (manufacturing) of both medical and recreational cannabis. VVG also holds a distributorship licence issued by the State of Nevada, Department of Taxation. In 2018, VVG revenues were $2.6-million (U.S.), with an EBITDA (earnings before interest, taxes, depreciation and amortization) of $800,000 (U.S.). VVG's flagship product is the Vegas M Stick and the Reno M Stick branded vape pens that have current market penetration of over 75 per cent of stores in Nevada. The company expects to increase sales of Ionic-branded products by leveraging off VVG's existing distribution pipeline and introduce various Ionic product SKUs (stock-keeping units) to this distribution channel.
The total purchase price for VVG is $8.87-million (U.S.) ($11,885,800) that includes a cash payment of $7.62-million (U.S.) ($10,134,600), and 2,814,180 common shares of the company at 59.52 cents per share for an aggregate total value of $1.25-million (U.S.) ($1,675,000). The issuance of shares is subject to approval by the board of directors and the Canadian Securities Exchange.
Share purchase warrants
The company also announces that, pursuant to the loan agreement with Top Strike Resources Corp., it has issued 2.6 million share purchase warrants to Top Strike upon repayment of the loan totalling $3.25-million and associated fees of $286,000. Each warrant is exercisable at 55 cents per share for a period of one year from the date of issuance.
The board of directors of the company approved the settlement of $63,262 of an outstanding debt through the issuance of common shares of the company to an arm's-length party. Pursuant to the debt settlement, the company would issue up to 140,582 common shares of the company at a deemed price of 45 cents per share.
About Ionic Brands Corp.
Ionic Brands is a national cannabis holdings company based in Washington, led by a team of successful entrepreneurs. The company is focused on building a multistate consumer-focused cannabis concentrate brand portfolio focusing on the premium and luxury segments.
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