Swell operates a 10,000-sq. ft. processing facility in Portland, Ore. and has expansion rights for an additional 18,000 sq. ft., adjacent to the primary facility. The company currently employs 41 full-time professionals in the extraction and manufacturing of THC and CBD derived products. Its brands include Dab Society Extracts and Hood Oil.
Swell has become an early leader in the competitive Oregon market.
“Acquiring Swell fulfills a critical segment of our expansion strategy, positioning C21 as a competitive player in the rapidly growing consumer packaged goods segment of the industry by bolstering our extraction and manufacturing expertise across all of our operations,” C21 Investments President and CEO Robert Cheney stated.
C21 issued 1,266,667 common shares at US$3.00 per share to the vendors of the Swell and warrants to purchase 1,200,000 common shares at a price of C$1.50 per share until May 24, 2024.
The company further agreed to pay to the vendors: on or before July 1 the sum of US$500,000 in cash; the sum of US$350,000 in cash on or before September 30, 2019, the sum of US$1,370,586 by issuing to the vendors 456,862 common shares at US$3.00 per share on November 23, 2020, and, on May 23, 2021, the sum of US$7,350,000 by issuing to the vendors 2,450,000 shares at US$3.00 per share.
If the average closing price of the C21 shares on the Canadian Securities Exchange over the 15 trading days immediately preceding such last payment date is less than C$3.75 per share then the vendors may elect by a notice in writing to the purchaser to receive up to US$5,000,000 of such US$7,350,000 amount in cash.
The company also agreed to issue to the vendors up to an additional 6,000,000 common shares at US$3.00 per share over a period of up to seven years upon the achievement of certain earn‑out conditions.