GPFT - Cannabis company Grapefruit to acquire Diagnostic Lab; secure debt financing

Delaware-based cannabis company Grapefruit USA is acquiring Englewood Cliffs, N.J.-based food and agriculture safety company Diagnostic Lab.

The companies executed a binding letter of intent (LOI), entered by the parties on June 30, under which the two will jointly recapitalize Grapefruit and raise $12.5M of debt financing (including $5.5M already committed from a construction lender).

The debt financing will be used to complete the construction of Grapefruit's “Mothership” cultivation, manufacturing and distribution facility in Coachillin's Industrial Cultivation and Ancillary Canna-Business Park, located 14 miles from downtown Palm Springs, California.

The fund will also be used to acquire all of Diagnostic Lab's assets for a to-be-determined amount of cash and Grapefruit common shares.

Fund Grapefruit's application for an FDA 510K approval for its patented Hourglass time release Z-POD THC/CBD/cannabinoid infused delivery cream; and fund Grapefruit's studies to evaluate the effects of the Hourglass delivery cream on pain and other symptoms in patients with osteoarthritis.

The companies said they plan to retire the $12.5M of new debt through a public equity capital raise and concurrent up-list to a U.S. or Canadian exchange.

Transaction is subject to Grapefruit's completion of due diligence and execution of a definitive agreement between Grapefruit and Diagnostic Lab.

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