In addition, prior to closing the Agreement, Cabo has entered into an agreement to lease (the “Lease”) a 4,000 square foot distribution facility equipped for the manufacturing, distribution, and/or storage of medicinal and adult use cannabis and cannabis products, permitted by Los Angeles and California cannabis laws and regulations. Under the terms of the lease agreement, the Company intends to use the facility as a cannabis distribution hub. The lease term commences on November 1, 2021 and terminates sixty months thereafter, unless renewed at sole the option of the Company for an additional sixty months. Distribution in Los Angeles is a critical component to California’s supply chain with 205 existing licensed cannabis retailers, and the largest population of any city in the state.
The total purchase price for the acquisition is USD $700,000 (the “Purchase Price”).
Concurrent with execution of the Agreement, Humble has paid into a third-party escrow, USD $600,000 (the “Escrow Funds”), to be released to the sellers in the Acquisition in monthly USD $20,000 instalments from the date of the Agreement.
On closing of the Acquisition, Humble will release the remaining Escrow Funds to the seller and will pay an additional USD $100,000, to be satisfied through the issuance of USD $100,000 of common shares of the Company (to be based on the 30-day VWAP of the Company, for the 30 day period immediately preceding Closing).
The Acquisition is subject to a number of conditions including the completion of due diligence on Cabo to the satisfaction of the Company, and receipt of certain regulatory approvals, including approvals by the Los Angeles Department of Cannabis Regulation and California Department of Cannabis Control and the Canadian Securities Exchange, and on closing, will give rise to ongoing disclosures required by CSA Staff Notice 51-352 (Revised) - Issuers with U.S. Marijuana-Related Activities. The Acquisition is anticipated to close on or around March 31, 2022 and is subject to an outside date of October 17, 2022.
Cabo maintains a Type 6 manufacturing license and Type 11 distribution license in the city of Los Angeles. Under a Type 6 license, the company can extract cannabis using non-volatile solvents, infuse, package and label cannabis products. As a Type 11 distributor, Cabo may: (i) distribute cannabis goods, cannabis accessories, and branded merchandise to retailers; (ii) collect and transmit cannabis cultivation and excise taxes to the California Department of Tax and Fee Administration; (iii) arrange for laboratory testing of cannabis samples; (iv) package and label cannabis goods; and (v) manufacture pre-rolled joints.
Cabo Connection is an operationally-dorment California corporation based in Los Angeles. It is the holder of the Licenses and the Lease.
Humble & Fume Inc. is a leading North American distributor of cannabis and cannabis accessories, supported by a customer-centric sales team and strong fulfillment infrastructure. As the only fully-integrated cannabis distribution solution, Humble bridges the gap for retailers, licensed cannabis producers, multi-state operators, and cannabis consumers to maximize sales penetration, and increase financial performance. With over 20 years of North American operating experience, Humble has cultivated extensive vendor and customer relationships, distributing premium cannabis consumables and consumption devices. The Company is comprised of four subsidiaries that represents its vertical integration across North America; B.O.B. Headquarters Inc. / Humble+Fume, Windship Trading LLC, Humble+ Cannabis Solutions and Fume Labs Inc.
This news release contains "forward-looking information" within the meaning of applicable securities laws relating to, the focus of the Company’s business and growth, and the Company’s specific acquisition strategy for US Marijuana-related activities. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "intends", "contemplates", "believes", "projects", "plans" and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Statements about, among other things, Humble & Fume Inc.'s strategic plans including future growth opportunities and strategies in the United States are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that such forward-looking statements will occur as described herein. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances or actual results unless required by applicable law. Readers are encouraged to refer to the Company’s disclosure available on its SEDAR profile (at www.sedar.com) for information as to the risks and other factors which may effect the Company’s business objectives and strategic plans, including, if applicable at Closing of the Acquisition, risks relating to cannabis operations in the United States given that marijuana remains illegal under U.S. federal law and that enforcement of such relevant laws is a significant risk.