Benzinga | May 27, 2021 03:20PM EDT

Myconic Capital To Purchase Auxly's KGK Science For Up To $16.5M

Auxly Cannabis Group Inc. (OTCQX:CBWTF) announced Thursday that it's selling KGK Science Inc. to Myconic Capital Corp. (NEO: MEDI).

The Vancouver-based investment company agreed to purchase KGK for up to $16.5 million.

Transaction Details: The sum Myconic has agreed to pay includes $12.5 million purchase price, $1.5 million payable if KGK achieves gross revenues of $8 million in any 12 months over the two years following the closing and $2.5 million credit against future KGK services to Auxly within the next 10 years.

The purchase price consists of $1.5 million in cash payable on closing, $1 million in cash payable six months following the closing, and $10 million in Myconic shares valued at $1.55 per share and issued on the closing date of the transaction.

The acquisition is scheduled to finalize on or around the week of June 7.

As a contract research organization that focuses on nutraceuticals, cannabis, and emerging industries, KGK is entering into the field of psychedelics research.

"We've gained invaluable insight from our partnership with Auxly and look forward to continuing our relationship and helping them bring safe and effective cannabis products to market," Najla Guthrie, president and CEO of KGK, said.

In 2020, KGK boosted Auxly's balance sheet with roughly $4.4 million in revenues.

"This agreement with Myconic is a win-win for Auxly and its shareholders in both the short and long-term, as the additional capital can be deployed into our core business and accelerates Auxly's path to profitability while continuing our long-standing relationship with KGK to leverage their deep clinical expertise as we continue to bring innovative cannabis products to market that meet our consumer promise of quality, safety, and efficacy," Hugo Alves, CEO of Auxly, said.

Photo by CRYSTALWEED cannabis on Unsplash