Mota Ventures Corp (CSE:MOTA) (OTCMKTS:PEMTF) has bought online retail business First Class CBD for a total of US$32 million - a deal, which it says, will allow the firm to compete with the largest cannabis companies in the world.
First Class CBD, based in Wyoming, USA is operated by Unified Funding, LLC via subsidiary First Class USA.
First Class offers a wide range of products, including CBD oil drops, CBD gummies, CBD pain relief cream and CBD skin serum.
With a profit margin of around 14%, Unified generated net income of around US$2.7 million from the operations of First Class in 2019, Moto said in a statement, though it noted these figures have not been audited and are based on calculations prepared by Unified.
"The acquisition of First Class is a milestone for the company, and aligns with our goal of becoming a vertically integrated CBD brand,” said Joel Shacker, the CEO of Mota Ventures.
"The revenue they generated in 2019 positions us to compete with the largest cannabis companies in the world, and the infrastructure they have in place is a key building block our organization can use to expand further in the US and Europe."
First Class's hemp-oil formula is made from US-grown hemp and intended to provide users with therapeutic benefits.
The total consideration for the acquisition was US$32 million, of which US$1.5 million was paid upon completion.
A further US$1.5 million is due within six months, while the balance of the purchase price will be satisfied with the issue of 47.125 million shares at an effective price of C$0.80 each.
Unified will also be paid a bonus of US$5 million in shares at each level if First Class reports gross revenues of US$42 million; US$52 million and $62 million in 2020.
The share consideration part is subject to a 36-month pooling agreement, as well as a clawback right which allows Mota to retrieve a portion of the consideration paid to Unified if certain revenue levels are not met in 2020.
Mota Ventures wants to become a vertically integrated global CBD brand and its existing operations in Colombia consist of a 2.5-hectare site that has optimal year-round growing conditions and access to all necessary infrastructure.
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