CV Sciences, a US-based consumer wellness company specialising in hemp extracts and other natural ingredients, has agreed to acquire Extract Labs.
Established in 2016, Extract Labs manufactures and distributes premium cannabinoid (CBD) products including gummies, topicals and tinctures, through B2B and B2C sales channels.
It has operational flexibility to enable low to large minimum order quantity (MOQ) production runs, optimising capital efficiency and lowering the time to market for new products.
The proposed acquisition is expected to be completed during the first quarter of 2025, subject to customary closing conditions.
CV Sciences said the transaction will help enhance its sales to current and new clients and is planning to in-source production of certain of our key products.
CV Sciences CEO Joseph Dowling said: “We are thrilled that Extract Labs and its employees are joining CV Sciences as another milestone in our transition to a thriving health and wellness company.
“The acquisition synergies are expected to increase our revenue and customer base, allow us to leverage our key assets, optimise operations and processes, and drive long-term growth and shareholder value.”
Under the terms of the agreement, the total consideration comprises a cash payment of $400,000, less the amount of certain holdbacks and adjustments.
The consideration also includes shares of CV Sciences’ common stock valued at $1,000,000 based on the sixty-day volume weighted average price (VWAP) of CV Sciences stock.
In addition, Extract Labs sellers will receive up to $600,000 of additional shares of CV Sciences, contingent on achieving certain revenue targets during the two 12-month periods.
The additional shares to Extract Labs sellers will be issued based on the thirty-day VWAP of CV Sciences’ common stock as of the end of each such 12-month period.
Dowling added: “Extract Labs is a stand-alone profitable business and our plan is to increase its existing revenue base and further leverage its existing capacity.
“In addition, we are planning to in-source the manufacturing of select +PlusCBD branded products providing an opportunity for meaningful cost savings.
“Extract Labs manufacturing capability will provide us with greater control over our supply chain and accelerate our new product development cycle.”
