CB2 Insights Inc () (OTCQB:CBIIF) announced on Tuesday that it has completed the purchase of Colorado-based medical cannabis clinic group Rae of Sunshine Health Services (ROSH) LLC.
On April 4 last year, CB2 said it would acquire 100% of ROSH and its subsidiaries in a cash and stock deal, and took over operations for the multi-location clinic group. As per the agreement, CB2 will issue 882,978 shares to complete the purchase and the shares will be subject to a four-month hold.
ROSH, operating under the name Relaxed Clarity, has four physician-staffed clinics in Colorado specializing in medical cannabis therapy. Last year the company posted nearly C$1.1 million in revenue and C$200,000 in positive earnings before interest, taxes, depreciation, and amortization (EBITDA). In 2019, the US medical cannabis therapy group added 11,000 patients through Relaxed Clarity.
READ: CB2 Insights acquires Colorado-based Relaxed Clarity in a cash and stock deal; shares rise
“Our clinic activity in Colorado, which includes both Relaxed Clarity and MedEval have added a significant amount of strength to our business over the past year, and have surpassed initial targets forecasted for the state with proven growth already within the first quarter of 2020,” CB2 Insights CEO Prad Sekar said in a statement.
“In particular, Colorado illustrates a strong medical cannabis market in a state that has heavy recreational penetration, proving that in a well-evolved, adult-use market, patients still rely on comprehensive consultation and education services from specialty clinics,” he added.
The company also announced an interest payment to Merida Capital related to its outstanding debt note in a share-only payment of 1,213,443 shares.
And CB2 has also issued 1,393,777 shares as part of a non-executive Employee Stock Option Program (ESOP), which vests over four years. The CB2 boss said the team at the company continued to “go above and beyond” despite navigating the coronavirus (COVID-19) pandemic.
“Our business remains strong and that is a direct reflection of our hard-working teams. This new non-executive ESOP will help illustrate at least a portion of our gratitude for those efforts and aligns all internal stakeholders towards the long-term growth of the company,” Sekar added.
Lastly, the company said it will issue an additional 831,287 shares in lieu of certain accounts payable which will allow CB2 to conserve its cash resources as it enters the second quarter. As part of this share issuance, co-founders Sekar and Kash Qureshi, who is CB2's president and CTO have agreed to take 30% of their compensation in shares in lieu of salaries to support of cash management and long-term growth. Both executives have not sold any shares in the company so far.
The Toronto-based data analytics company anticipates achieving its stated 2019 revenue goal of more than C$20 million, giving year-over-year growth of more than 80% compared to 2018, it added in the statement.
CB2 gathers data and creates objective evidence in an effort to bring medical cannabis into traditional health care.
In March, the company acquired MedEval Clinic LLC, a medical cannabis evaluation and education center group with locations in Colorado and Arizona.
Contact the author Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive
