SAN DIEGO, Jan. 13, 2016 (GLOBE NEWSWIRE) -- Medical Marijuana, Inc. (the “Company”) (OTC Pink:MJNA) is pleased to announce the Company has significantly reduced its debt obligation from $24 million at the close of the third quarter (ending 9/30/2015) to approximately $10 million at the close of the fourth quarter (ending 12/31/2015), a reduction of approximately $14 million. The Company also acquired and consolidated several of its partnerships including 93.4% of HempMeds® Brasil™, LLC and the remaining 20% of HempMeds® PX that Medical Marijuana, Inc. did not already own from affiliated parties that comprise the largest shareholder of the Company.
Prior to the acquisitions, the Company sold its RSHO™ products to HempMeds Brasil™ and the other consolidated companies at wholesale, which then in turn sold those products retail to consumers in their respective markets. As a result of the acquisitions, the Company will now realize the full margin between the cost of manufacturing the product and retail pricing on the sales of the product.
The acquisition of the remaining 20% of HempMeds® PX was completed after HempMeds® PX acquired HempMeds® PR (Puerto Rico) Ventures, LLC and KannaMex™, LLC from the same affiliated shareholder. The combined purchase price for the two acquisitions was $13,875,000. Under the terms of the acquisitions, the purchase price is subject to downward adjustment if the aggregate post-acquisition valuation of both entities (as of the transaction date of December 31, 2015) by a recognized independent valuation firm is less than the purchase price and is not subject to upward adjustment unless the aggregate valuation is greater than $100 million (as of December 31, 2015) and such upward valuation is nonetheless subject to a cap of $20 million.
The acquisition by HempMeds® PX of HempMeds® Puerto Rico™ and KannaMex™ was completed immediately prior to the Company’s acquisition of HempMeds® PX for the nominal sum of $100,000. The value of these two entities shall not be included in the aggregate valuations of HempMeds® Brasil™ and HempMeds® PX unless their aggregate valuation is less than the purchase price.
In commenting on the transactions, CEO Stuart Titus stated: “The elimination of $14 million in debt and associated improvement in our balance sheet combined with the acquisitions enhances the Company’s positioning for significant growth. We believe that we’re acquiring 93.4% of HempMeds Brasil™ and the 20% of our flagship U.S.-based operation HempMeds® PX for a fraction of what the independent valuations will show these entities to be worth. In the very unlikely event that we’re wrong, the transaction structure protects the shareholders through a purchase price reduction. I’m most excited by the fact that we’ve completed the acquisitions when Brazil has barely begun to realize what we believe to be the potential for explosive growth. Our products have been approved by the Brazilian government as a prescription by Brazilian doctors to patients suffering from Epilepsy, Parkinson’s and Chronic Pain. These represent enormous markets in Brazil with these conditions estimated to affect approximately 20 million people.”
Titus went on to say, “In addition, HempMeds® Puerto Rico and KannaMex™ were essentially included in the deal for what amounts to mere nominal consideration. Puerto Rico holds great potential, specifically the Company has 12 medical product registrations as well as an agreement for the distribution and marketing of those products by the island’s largest private pharmaceutical sales and distribution company. KannaMex™ made significant inroads in Mexico and we expect to announce some of those accomplishments in the very near future. We believe that Mexico alone has the potential to be as large or even larger than the South American markets we have already been approved in. Our affiliated largest shareholders that entered into these transactions at these prices, and with these protections for the shareholders, have demonstrated an impressive commitment to enhancing shareholder value for itself, and for the other shareholders of the Company. I could not be more optimistic about what this means for our future.”
Summary of above:
Loan Payable Chicago Ventures:
(a) Amount outstanding reduced from $8,299,189 (as of 9/30/2015) to approximately $5.09 million (as of 12/31/2015), a reduction of approximately $3.2 million.
(b) The note still has $2 million in cash, available to be drawn down upon included in the $5.09 million balance.
(c) Extended the maturity date of the note from February 17, 2016, to October 17, 2017.
HDDC Notes Payable:
(a) Reduced HDDC notes payable from $13,980,338 (as of 9/30/15) to approximately $2.96 million of notes payable (as of 12/31/2015), a reduction of approximately $11 million. Extended maturity on the remaining note payable from January 2017 to January 2026.
Below is a summary of the acquisitions and related acquisitions:
(a) The company acquired the 20% balance of HempMeds® PX following HempMeds® PX having acquired 100% of HempMeds® Puerto Rico™ and 100% of HempMeds® Mexico™. As a result the Company now owns 100% of HempMeds® PX and 100% each of HempMeds® Puerto Rico™ and HempMeds® Mexico™ by virtue of its ownership of HempMeds® PX. The Company acquired 93.4 percent of HempMeds® Brasil™.
About Medical Marijuana Inc.
The mission of Medical Marijuana, Inc. (OTC Pink:MJNA) is to be the premier hemp industry innovator, leveraging our team of professionals to source, evaluate and purchase value-added companies and products, while allowing them to keep their integrity and entrepreneurial spirit. We strive to create awareness within our industry, develop environmentally-friendly, economically sustainable businesses, while increasing shareholder value.
For more information, please visit the company's website at: www.MedicalMarijuanaInc.com.
About HempMeds® Brasil™
HempMeds Brasil™ currently has three cannabis products approved for importation into Brazil as a prescription medication for Epilepsy, Parkinson's and Chronic Pain. The company had the first-ever cannabis product allowed for import into Brazil and its products are currently subsidized by the Brazilian government, under their health care system, for all three medical indications listed above. HempMeds Brasil™ is working on additional approvals for multiple indications.
For more information, please the company’s website at: www.HempMeds.com.br.
FOOD AND DRUG ADMINISTRATION (FDA) DISCLOSURE
These statements have not been evaluated by the FDA and are not intended to diagnose, treat or cure any disease.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Medical Marijuana, Inc. to be materially different from the statements made herein.
LEGAL DISCLOSURE
Medical Marijuana Inc. and HempMeds do not sell or distribute any products that are in violation of the United States Controlled Substances Act (US.CSA). These companies do grow, sell, and distribute hemp-based products and are involved with the federally legal distribution of medical marijuana-based products within certain international markets. Cannabidiol is a natural constituent of hemp oil.