KushCo Holdings Inc (OTCQX:KSHB), provider of ancillary products and services to the legal cannabis and CBD industries, has reached a potentially $40 million deal with investors for the purchase and sale of more than 24.2 million shares of common stock, as well as warrants to buy nearly 9.7 million more, the company announced Monday.
The shares and warrants will have a combined offering price of $1.65 per share pursuant to a registered direct offering, the company said, and the warrants will be exercisable at $2 per share with a purchase window of five years.
KushCo plans to use the net proceeds to pay down its debt and for general corporate purposes, including, working capital, product development, acquisitions, capital expenditures and other business opportunities. The registered direct offering is expected to close by Wednesday, the company said.
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KushCo’s products and services include:
- Vaporizer hardware and technology (about 60% of the company’s revenue), producing cartridges, pod systems and batteries with a variety of core materials and heating technologies;
- Packaging, papers and supplies (about 30% of the company’s revenue), which encompasses manufacturing child-resistant compatible, fully customizable and CBD packaging plus compliant labels and processing supplies;
- Energy and natural products (around 10% of the company’s revenue), which includes cannabis and CBD-based hydrocarbons, solvents and food-safe oils, as well as investments in stainless steel storage tanks;
- CBD services, such as retail execution, merchandising, and sales management for compliant hemp-derived CBD products, along with hemp trading solutions for growers and processors; and
- Equipment financing through the company’s strategic partnership with XS Financial, in which KushCo owns an approximate 19.5% equity stake
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