Kelowna, British Columbia—Citation Growth Corp. (CSE:CGRO) (OTCQX:CGOTF) (“Citation” or “Company”), a licensed multi-state Cannabis cultivator, producer and retailer, is pleased to announce that it has executed a non-binding letter of intent dated October 8, 2020 (“LOI”) with 1260474 BC Ltd. (the “Vendor”) to purchase two completed retail cannabis stores located in the Okanagan Valley of British Columbia. Citation’s management team anticipates the execution of a Definitive Agreement (the “Definitive Agreement”) to purchase the business on or before November 30, 2020 with the closing of the transaction (the “Closing”) anticipated to follow shortly thereafter upon the satisfaction of such terms and conditions precedent to the Closing, which are customary for transactions of this nature.
With British Columbia moving towards a direct delivery sales system, Citation will have the ability to deliver from its micro cultivation facility in Vernon, BC directly to these stores in the Central and Southern Okanagan Valley. Paired with Wednesday’s announcement of the LOI with Laughing Turtle Farms, Citation will be vertically integrated in BC and the Canadian cannabis market. These two acquisitions strategically focus on the short-term financial goals of Citation by increasing revenue, adding to the bottom line, increasing cash flow and the long-term strategic goals with a minority presence in Canada while increasing US operations as the main objective.
“While we’re still laser-focused on our US operations in Nevada and California, the opportunity to add two retail stores and a micro cultivation operation in BC presented a means to increase our top-line revenue and profitability immediately” commented Citation CEO, Erik Anderson. “Neither this acquisition nor the acquisition of Laughing Turtle Farms will require any cash outlay as both deals contain an earnout component from annual profits as well as a share position in Citation. Laughing Turtle Farms is a complete turn-key operation and both retail stores will be staffed from operations, meaning that no additional working capital will be required to complete these acquisitions. We are very excited to become a small-batch, vertically integrated craft producer in BC.”
It should be noted that Citation’s strategy of maximizing brand exposure for Fiore and Diamante in Nevada is well under way with multiple upgrades having been completed at the Apex cultivation and production facility in North Las Vegas. Citation’s dispensary in Desert Hot Springs, California has also been growing its market share over the past nine months and sales have been on the rise due to additional marketing of the store as well as adding an express window and deliver services throughout the Coachella Valley.
Citation still plans to divest its Celista, BC asset to Indigenomix and is working collaboratively with their team to finalize financing to complete the sale. Further updates will be made available over the coming weeks.
“Due to the constantly changing dynamics of the US and Canadian Cannabis Industries, it was necessary to shift our Canadian focus to take advantage of the opportunity to increase revenues and become cash flow positive as per the company’s direction,” commented Chairman, Marcel LeBlanc. “This deal not only helps us meet our targets; it will allow us to gain more attention from US investors while having no upfront cash outlays”.
Citation’s Board of Directors and Management Team believes this deal will:
- maximize revenues due to synergies in the Western Canadian supply chain;
- accelerate overall company revenue and profitability with immediate cash flow positive operations in BC; and
- strategically and correctly position Citation as an International Cannabis Company as well as a US multi-state operator.
Terms of the Proposed Transaction
Citation will pay $2,000,000 through a combination of shares and an earn out to be negotiated in the Definitive Agreement. This transaction will not have any immediate cash outlays and any such earn outs will be paid no sooner than one year of the transaction close date. The LOI agrees that the Vendor will remain in a working capacity as a retail operator.
Additional details regarding the Proposed Transaction will be provided in a comprehensive press release if and when the parties enter into the Definitive Agreement. The Definitive Agreement will incorporate the principal terms of the Proposed Transaction described herein and may be modified by agreement between the Company and the Purchaser prior to finalizing the Definitive Agreement. In addition, more detailed terms and conditions of the structure and nature of the Proposed Transaction will be made available after receiving further tax, legal, securities, regulatory and financial advice from the respective advisors. The Proposed Transaction is subject to due diligence by the Purchaser as well as the customary conditions for a transaction of this nature, which include all necessary security-holder and corporate approvals, third-party consents, permits, including those of government authorities, and the approval of the CSE, if required.
About Citation Growth Corp.
Citation Growth Corp. (CSE:CGRO) (OTCQX:CGOTF) is a publicly traded company that has been investing in the development of medical and recreational cannabis products since 2014. Citation has expanded its operating portfolio to include cultivation, production and retail offerings in our key North American legal jurisdictions Nevada, California, Washington and British Columbia. For more information, please visit www.citationgrowth.com.
For Further Information:
Erik Anderson, President and CEO
1-877-438-5448 Ext 713
Neither the CSE nor its Regulation Services Provider, nor the OTCQX® has approved nor disapproved the contents of this press release. Neither the CSE, nor the OTCQX® accepts responsibility for the adequacy or accuracy of this release.
Cannabis Industry Involvement:
The Company owns marijuana licenses in California and Nevada. Marijuana is legal in each state; however, marijuana remains illegal under United States federal law and the approach to enforcement of U.S. federal law against marijuana is subject to change. Shareholders and investors need to be aware that federal enforcement actions could adversely affect their investments and that the Company’s ability to support continuing U.S.-based operations and its access private and public capital could be materially adversely affected.
The Company’s business is conducted in a manner consistent with state law and is in compliance with applicable state licensing requirements in the U.S. The Company has internal compliance procedures in place and has compliance focused attorneys engaged in jurisdictions to monitor changes in laws for compliance with U.S. federal and state law on an ongoing basis. These law firms inform any necessary changes to our policies and procedures for compliance in Canada and the U.S.
Unlike in Canada which has Federal legislation uniformly governing the cultivation, distribution, sale and possession of cannabis under the Cannabis Act (Canada), readers are cautioned that in the U.S., cannabis is largely regulated at the state level. Notwithstanding the permissive regulatory environment of medical cannabis at some of the state level, cannabis continues to be categorized as a controlled substance under the Controlled Substances Act in the U.S. and as such, cannabis-related practices or activities, including without limitation, the manufacture, importation, possession, use or distribution of cannabis are illegal under U.S. federal law. Strict compliance with state laws with respect to cannabis will neither absolve the Company of liability under the U.S. federal law, nor will it provide a defense to any U.S. federal proceeding, which may be brought against the Company. Any such proceedings brought against the Company may materially adversely affect its operations and financial performance in the U.S. market.
This news release contains forward-looking statements or information that relate to our current expectations and views of future events. These statements relate to future events or future performance. Statements which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, outlook, expectations or intentions regarding the future including words or phrases such as “anticipate”, “objective”, “may”, “will”, “might”, “should”, “could”, “can”, “intend”, “expect”, “believe”, “estimate”, “predict”, “potential”, “plan”, “is designed to”, “project”, “continue”, or similar expressions suggest future outcomes or the negative thereof or similar variations. Forward-looking statements may also include, among other things, statements about the future business strategy; expectations of obtaining licenses and permits; expectations regarding expenses, sales and operations; future customer concentration; anticipated cash needs and estimates regarding capital requirements and the need for additional financing; total processing capacity; the ability to anticipate the future needs of customers; plans for future products and enhancements of existing products; future growth strategy and growth rate; future intellectual property; changes in laws and regulations; regulatory approvals and other matters; and anticipated trends and challenges in the markets in which the Company may operate.
Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for our products; anticipated costs and ability to achieve goals; the Company’s ability to complete any contemplated transactions; historical prices of cannabis; and that there will be no regulation or law that will prevent the Company from operating its businesses; the state of the economy in general and capital markets in particular; present and future business strategies; the environment in which the Company will operate in the future; the estimated size of the cannabis market; and other factors, many of which are beyond the control of the Company. While such estimates and assumptions are considered reasonable by the management of the Company, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, the reader should not place undue reliance on these forward-looking statements.
Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: management estimated future capital expenditure costs, revenue, and timeframes for operations; business, economic and capital market conditions; the ability to manage the Company’s operating expenses, which may adversely affect the Company’s financial condition; the Company’s ability to remain competitive; regulatory uncertainties; market conditions and the demand and pricing for our products; exchange rate fluctuations; security threats; the Company’s relationships with its customers, distributors and business partners; the Company’s ability to attract, retain and motivate qualified personnel; industry competition; the impact of technology changes on the Company’s products and industry; the Company’s ability to successfully maintain and enforce its intellectual property rights and defend third-party claims of infringement of their intellectual property rights; the impact of litigation that could materially and adversely affect our business; the Company’s ability to manage its working capital; and the Company’s dependence on key personnel. The Company is not a positive cash flow company and it may not actually achieve its plans, projections, or expectations (the Company has a history of losses).
The securities of the Company are considered highly speculative due to the nature of the Company’s businesses.
Important factors that could cause actual results to differ materially from the Company’s expectations include, consumer sentiment towards the Company’s products and cannabis generally; risks related to the Company’s ability to maintain its licenses issued by governments in good standing; uncertainty with respect to the Company’s ability to grow, store and sell cannabis; risks related to the costs required to meet the obligations related to regulatory compliance; risks related to the extensive control and regulations inherent in the industry in which the Company operates; risks related to governmental regulations, including those relating to taxes and other levies; risks related an early stage business and a business involving an agricultural product and a regulated consumer product; risks related to building brand awareness in a new industry and market; risks relating to restrictions on sales and marketing activities imposed by governments; risks inherent in the agricultural business; risks relating to energy costs; risks relating to product liability claims, regulatory action and litigation; risks relating to recall or return of products; and risks relating to insurance coverage; global economic climate; equipment and building failures; increase in operating costs; decrease in the price of cannabis; security threats; government regulations; loss of key employees and consultants; additional funding requirements; volatility in the securities of the Company; changes in laws; technology failures; failure to obtain permits and licenses; anticipated and unanticipated costs; competition; risks associated with the substantial obligations of being a public company; and failure of counterparties to perform their contractual obligations. This list is not exhaustive of the factors that may affect the forward-looking statements. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements.
Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future event or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Neither the Company nor any of its representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the information in this news release. Neither the Company nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to the reader or any person resulting from the use of the information in this news release by the reader or its representatives or for omissions from the information in this news release.