Harvest One Cannabis Inc (OTCMKTS:HRVOF) entered a pact to sell Duncan, British Colombia based cannabis processing and cultivation businesses of its United Greeneries to 626875 B.C. Ltd and CCPLLP (Costa Canna Production Limited Liability Partnership). The deal is valued at $8.2 million. Harvest One will also sign a license pact with the purchasers to provide rights to its IP to manufacture and supply cannabis 2.0 products to Canada’s population. The company will receive a royalty for sharing its IP to the purchasers.
Harvest One will receive $1.5 million under bridge financing facility from CCPLLP on signing the agreement. It will repay the loan amount on closing the sale deal. CCPLLP will charge 10% of the loan if Harvest One fails to repay within the agreed timeline.
Commercialization of cannabis 2.0 products
CEO of Harvest One, Andrew Bayfield, said the company decided to offload its Duncan facility and the associated assets to establish itself as a cannabis-focused CPG firm. On completing the sale transaction, the company will expand its brands of Dream Water, LivRelief, and Satipharm. The company will focus on commercializing cannabis 2.0 products in Canada.
Andrew further said the company will strengthen its balance sheet and cost structure following the sale transaction’s completion on or before July 30, 2020. The company is taking decisive steps to streamline operations and minimize spending.
Q3 2020 results
Harvest One reported revenues of $3.3 million in Q3 2020. It represents an increase of 88% compared to Q2 2020. The company reduced operating expenses by 22% compared to Q2 2020.
Harvest One expects to post better sales volume for the remainder of this year and 2021. The company is experiencing strong demand for its products from provincial and retail partners. It will account for accruing sales in Q4 2020. The company is also taking measures to reduce overheads and improve cost savings.
Harvest One is also considering the sale of non-essential assets, including a 51% stake in Lucky Lake facility and Greenbelt Greenhouse. It will also initiate necessary measures, including mobilization of funds to support the expansion of CPG brands and promote growth.
Changes in management
Andrew Kain will continue in his contractual assignment and provide advisory services to the board and CEO. CFO, Aaron Wang, relinquishes his post with effect from June 30, 2020, to pursue other interests. Harvest One recruited Marc Tran as interim CFO with effect from July 1, 2020.