High Tide Inc. (NASDAQ:HITI) (TSXV:HITI) (FSE:2LYA) has seized the shares of Halo Kushbar Retail Inc., which owns three operating cannabis retail stores in Alberta.
As previously disclosed on July 15, 2021, High Tide sold the Kushbar Stores to Halo Collective Inc. (OTCQB:HCANF), for $5.7 million, of which $3.9 million was already satisfied. Part of the consideration High Tide received from Halo was a convertible promissory note in the principal amount of $1.8 million. Due to ongoing breaches of the amended and restated asset purchase agreement between Halo and High Tide, High Tide accelerated the maturity of the note and has seized the shares of Kushbar pursuant to a share pledge agreement between the parties. Therefore, High Tide, who previously received $3.9 million as payment for the sale of the Kushbar Stores, now has reacquired control of the Kushbar Stores. High Tide anticipates obtaining full ownership of Kushbar in early August 2022.
Bonus Share Issuance
At the company's annual general and special meeting of shareholders held on June 2, 2022, the shareholders approved an issuance of common shares in the capital of the company to certain employees and consultants of Smoke Cartel USA, Inc., a wholly owned subsidiary of the company, pursuant to the terms of their employment and consulting agreements, as amended.
Pursuant to the terms of the agreements, as Smoke Cartel reached certain milestones, including Smoke Cartel achieving gross revenues of at least $12 million, the employees and consultants were entitled to an earn-out in the aggregate sum of $2 million. The company intends on satisfying the earn-out obligation through the issuance of an aggregate of 500,000 common shares at a deemed price of $4.00 per common share, subject to TSX Venture Exchange approval. The bonus shares will be subject to the applicable hold periods under Canadian and United State securities laws.
Cancellation Of Escrowed Shares
As previously disclosed on July 6, 2021, 25% of the High Tide shares issued as consideration for the acquisition of DHC Supply LLC operating as Daily High Club were held in escrow to insure certain indemnification obligations if claims arise. Such a claim arose and High Tide was indemnified for $58,250 which resulted in High Tide canceling 28,553 shares that were previously held in escrow.
Grant Of Options
In addition, High Tide has granted 21,000 stock options to certain employees, pursuant to the terms of the company's fixed 20% equity incentive omnibus plan. Each option is exercisable at the TSX Venture Exchange close price the day before this press release, expires three years from the date of grant and vests over a two-year period. Each option is exercisable to purchase one common share.
Photo: Courtesy of CNW Group/High Tide Inc.