VANCOUVER, British Columbia, May 30, 2019 (GLOBE NEWSWIRE) -- CROP INFRASTRUCTURE CORP. (“CROP” or the “Company”) (CSE:CROP) (CRXPF) (2FR.F) announces today that ELITE VENTURES GROUP, LLC (“Elite”), a Nevada limited liability company in which CROP holds a 49% membership interest, in partnership with its licensee THE HEMPIRE COMPANY, LLC (“Hempire” and, together with Elite, “Elite & Hempire”), has entered into a supply agreement (the “Supply Agreement”) with BIOSCIENCE ENTERPRISES, INC. (“Bioscience”), a California based cannabidiol (“CBD”) isolate distribution company, to supply Bioscience with an aggregate of USD$89,500,000 in CBD isolate, with deliveries required to commence in November, 2019 and ending in March 2020, upon completion of the Supply Agreement’s initial five-month term (the “Initial Term”).
Pursuant to the terms of the Supply Agreement, Elite & Hempire have agreed to provide certain amounts of CBD isolate, on a monthly basis, to Bioscience on an agreed upon per kilogram price in consideration for:
- a USD$525,000 deposit payable upon entry of the Supply Agreement (paid);
- a second deposit of USD$350,000 due within thirty (30) days of entry of the Supply Agreement; and
- USD$875,000 due upon confirmation of the first Shipment (the “Third Deposit” and, collectively, the “Deposits”).
The Deposits are to be applied against the balance of first Shipment. In the event Elite & Hempire fail to deliver the first Shipment, Bioscience is entitled, at its sole discretion, to either the full repayment of the Third Deposit or have the proceeds of Third Deposit converted into common shares in the capital of CROP (each, a “Share”) at a price discounted 20% to the closing market price of the Shares on November 15, 2019, subject to a floor of $0.30 per Share.
Prior to each Shipment, Bioscience shall deposit 10% of the value of the CBD isolate of the subject Shipment (USD$1,900,000) into an escrow account held by Bioscience. The balance of each Shipment (USD$17,100,000) is due and payable within thirty (30) days of the receipt (“NET 30”), by the parties, of testing results for heavy metals, residuals, pesticides and microbial content in addition to a minimum 99.5% purity rating. The CBD isolate is to be sent for testing within three (3) business days of its delivery to Bioscience’s distribution center. During the NET 30 period, Elite & Hempire shall maintain title of the CBD isolate.
All proceeds generated from the sale of the CBD isolate to Bioscience under the Supply Agreement are to be distributed among the members of Elite pro rata to each members’ respective membership interest (approximately USD$43,855,000 for CROP’s 49% membership interest in Elite).
Bioscience has the sole right to extend the Initial Term for an additional two months (until May, 2020) on the same terms disclosed above (an additional USD$38,000,000 in value). The total anticipated value of the Supply Agreement, if the Initial Term is extended, is expected to be approximately USD$131,500,000.
Elite’s Nye County, Nevada CBD farm spans approximately 2,200 acres with 1,350 acres under pivot irrigation using organic growing methodologies. The 2019 cultivation is expected to produce 10-20% CBD genetic hemp-CBD which is expected to be extracted and isolated to produce a minimum 99.5% pure CBD isolate. Based on calculations of the Company’s grow consultant and assuming a minimum average of 10% CBD content, the Supply Agreement will represent ~35% of the farm’s potential CBD isolate yield from its 2019 cultivation. The parties plan to work together not just within the parameters of the Supply Agreement, but also to expand the Supply Agreement to include new high-yield cannabinol (“CBN”) and cannabigerol (“CBG”) isolates in order to provide new SKUs for Bioscience and to help foster a long-term partnership for the Company, its subsidiaries and stakeholders.
In connection with the Supply Agreement, CROP has agreed to pay an introduction fee of 1,333,333 Shares at a deemed price of CAD$0.30 per Share to a third party finder who introduced Elite & Hempire to Bioscience. All securities issued in connection with the Supply Agreement are conditional upon the approval of the Canadian Securities Exchange (“CSE”) and will be subject to a statutory hold period of four months and a day.
Richard Parker, President of Bioscience stated: “We are thrilled to be working with such an innovative group as CROP on a partnership that we hope will flourish within the progressing CBD industry. Having the best products on the market is what we believe makes Bioscience stand out as a reputable supplier, and without producers like CROP that would not be possible.”
Michael Yorke, CEO of CROP stated: “While the monetary value of the Supply Agreement is significant for CROP and its stakeholders, the relationship we are building with the team at Bioscience is key to our continual efforts to become a key player in the CBD production space and the development of new strains of product for isolation which will complement Bioscience’s industry-leading clientele and what both Bioscience and CROP believe will be in demand in 2020, 2021 and far beyond.”
Since its inception in 2018, Bioscience has emerged as a major contender in the CBD supply business. Native to California, Bioscience has contracts across the continental USA and Canada for the supply of European Union and domestic grade isolate, oil and aerosol CDB in white label or specialized labeled products. Bioscience prides itself on having the purest CBD supply on the market today brought through a world class quality assessment and quarantine process.
CROP is a publicly listed company trading on the CSE under the symbol CROP. The Company is focused on owning a portfolio of cannabis branding, CBD and real estate assets through its wholly and partially-owned subsidiaries. CROP’s portfolio of projects includes cultivation properties in California, two in Washington State, a 1,000-acre Nevada cannabis farm, 2,115 acres of Hemp CBD farms, and a growing portfolio of share equity in various companies within the cannabis space.
CROP has developed a portfolio of assets including Canna Drink, a cannabis infused functional beverage line and 16 cannabis brands.
Michael Yorke – CEO and Director
Phone: (604) 484-4206
Disclaimer for Forward-Looking Information
Certain statements in this press release are forward-looking statements and are not based on historical facts, but rather are based on the current expectations and projections of the Company about future events and are, therefore, subject to certain risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by such forward-looking statements. These statements generally can be identified by the use of forward-looking words such as “may”, “should”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements in this news release include statements regarding: (i) the expected returns from the Company’s Nye County hemp-CBD project; (ii) the expected purity of the Company’s CBD isolate; (iii) the expansion of the Supply Agreement to include new high-yield CBN and CBG isolates and new SKUs for Bioscience; (iv) the Company’s ability to development of a long-term partnership with Bioscience; (v) the anticipated value and financial impact of the Supply Agreement; and (vi) the execution of the Company’s overall business plan. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. In addition, cannabis remains a Schedule I drug under the United States Controlled Substances Act of 1970. Although Congress has prohibited the US Justice Department from spending federal funds to interfere with the implementation of state medical marijuana laws, this prohibition must be renewed each year to remain in effect. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding: (i) the regulatory and legal framework of the United States cannabis industry; (ii) risks associated with applicable securities laws and stock exchange rules relating to the cannabis industry; (iii) the risks associated with maintaining the Company’s interests in its various cannabis-related assets; (iv) the ability of the Company to finance its operations and execute its business plan; and (v) general market conditions and other factors beyond the control of the Company. Such forward-looking statements should therefore be construed in light of such factors, and the Company is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
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