Kalytera Therapeutics (TSXV: KLY) announced this morning that it is walking away from a letter of intent signed earlier this year to acquire a 51% stake in an Oregon-based hemp extractor. The issuer cited declining market conditions for CBD isolate as the main reason for the termination of the letter of intent.
The deal to acquire Oregon 01, LLC was initially announced on June 27, 2019. Kalytera was to acquire a 51% stake in the extraction operator at a price of US$3.5 million, which was payable entirely in cash. The expectation was that the acquisition would allow the firm to begin revenue generation in the near term, while making it a vertically integrated operator in the CBD space.
However as a result of the declining price of CBD isolate, the deal was no longer interesting to the firm who was hoping the transaction would bring near term profitability. The facility was expected to begin generating revenues for Kalytera by the fourth quarter of 2019.
Despite declining CBD isolate prices, the reality is that Kalytera Therapeutics simply could not afford to close the deal. As of the latest financial reports, the firm only had $0.82 million in cash and cash equivalents. A recent attempt at a raise for $1.5 million saw the firm only able to raise a little over a third of its target, thus making the $3.5 million acquisition simply unattainable.
Kalytera Therapeutics closed yesterday’s session at $0.035 on the TSX Venture Exchange.
Information for this briefing was found via Sedar and Kalytera Therapeutics. The author is no position in this security and has no affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.