HempFusion now will explore options for bankruptcy.
California-based Gaby Inc. (CSE: GABY) (OTCQB: GABLF) said that it will not be moving forward with the proposed transaction with HempFusion Wellness Inc., which the company announced on April 28.
Gaby was going to buy HempFusion in an all stock deal valued at C$1.3 million.
HempFusion announced on June 1 that it had ceased its manufacturing, research, and development operations, terminated the majority of its employees, and would no longer be shipping its products and accepting any new orders. HempFusion is exploring its options under applicable bankruptcy and insolvency legislation.
A the time of the original announcement, Gaby said that the deal would be highly accretive with $5.4 million in net revenue. The products were sold in approximately 15,000 stores including CVS, Walgreens, Publix, Whole Foods, Sprouts Farmers Market, and Kroger. The company said that approximately 50% of the revenue was comprised of high-margin direct-to-consumer sales.
Right before the deal was announced, Gaby restructured its debt as a result of a settlement with Miramar Professional Services. Gaby agreed to settle certain outstanding indemnity claims, which resulted in amended and restated promissory note.
Not long after the deal was announced, CEO and founder Margot Micallef took a temporary leave of absence from her role as CEO for personal reasons. The Board appointed Simon Lileikis, GABY’s president, to serve as the company’s interim CEO. Lileikis was appointed president of GABY in 2021.
At the beginning of May, Gaby reported its earnings, in which the company stated it was trying to increase revenue and cut costs. The company’s revenue in the last quarter fell to $4.7 million from last year’s $5.7 million in the same time period. The net loss for the quarter was $1.5 million.
Gaby is the owner of Mankind Dispensary, one of the oldest licensed dispensaries in California. Gaby curates and sells a diverse portfolio of products, including its own proprietary brands Kind Republic, Dank Space, and Lulu’s through Mankind. (Full Story)