The company expands its revenue base. MPX INTERNATIONAL ENTERS INTO ASSET PURCHASE AGREEMENT TO EXPAND INTO THE ALBERTA RETAIL CANNABIS MARKET UNDER THE RETAIL BANNER 'STRAIN REC'
MPX International Corp.'s wholly owned subsidiary, MPXI Alberta Corp., has entered into an asset purchase agreement dated July 31, 2020, pursuant to which MPXI Alberta will acquire substantially all of the assets of Blaze 420 Today Inc., including the leasehold interests to three locations across Alberta which each have received development permits to operate as retail cannabis stores.
The assets being acquired will enable MPXI to establish a cannabis retail platform in Alberta and open up to three retail cannabis stores in the Edmonton, Alta., area, subject to the final approval from Alberta Gaming, Liquor & Cannabis (AGLC), upon meeting all licensing requirements.
"The acquisition of the Blaze 420 assets is another step forward in achieving our overall retail strategy in the province of Alberta," noted Michael Arnkvarn, chief operating officer of Canada for MPXI. "Canveda Inc., MPXI Alberta's affiliate, recently entered into an agreement with AGLC to supply non-medical cannabis to retail outlets in the province of Alberta, including AlbertaCannabis.org. In addition to the supply agreement with AGLC, opening our own retail storefronts in Alberta is expected to give MPXI the ability to showcase its branded products to Canadian consumers."
Pursuant to the terms of the agreement, MPXI Alberta will acquire the assets for a total purchase price of up to $749,000, comprising the following consideration and based upon the achievement of certain milestones as set out below:
- Up to $283,333 as of the date of the official opening of the first retail store (milestone 1) satisfied as follows: (a) $83,333 in cash; (b) $100,000 of common shares in the capital of MPXI to be issued at a fixed price of 25 cents per MPXI share; and (c) $100,000 through the issuance of a promissory note (note 1), less any outstanding principal amount and any accrued and unpaid interest owing by Blaze 420 to MPXI as of the closing date (as defined in the agreement) pursuant to the promissory note between Blaze 420 and the corporation dated June 27, 2019;
- Up to $183,333 as of the date of the official opening of the second retail store (milestone 2) satisfied as follows: (a) $83,333 in cash; and (b) $100,000 through the through the issuance of a promissory note (note 2);
- Up to $283,333 as of the date of the official opening of the third retail store (milestone 3) satisfied as follows: (a) $83,333 in cash; (b) $100,000 of MPXI shares to be issued at a price per share equal to the 10-day volume-weighted average price of the MPXI shares on the Canadian Securities Exchange; and (c) $100,000 through the through the issuance of a promissory note (note 3).
The notes will be paid in quarterly increments with each payment equal to 20 per cent of the free cash flow generated in the previous quarter by the specific retail store operated by MPXI Alberta that the note was issued in connection with. Free cash flow means the cash that is produced after MPXI Alberta pays for all its operating expenses (including creditor payments, sales taxes, corporate taxes and interest payments) and provides for accrued but unpaid salaries, payroll taxes, sales taxes, corporate taxes and operating expenses, and overdue creditor accounts. For the avoidance of doubt, the free cash flow calculation for purposes of the agreement will exclude (a) the introduction of new capital, (b) any capital expenditure and (c) proceeds from the disposal of any assets.