Deveron Corp. (TSXV-FARM) has completed a letter of intent (LOI) with Frontier Labs Inc., that would see Deveron acquiring 100 per cent of Frontier Labs’ assets. Frontier Labs is a leading soil lab and agronomy company, based in Iowa, USA.
Frontier Labs influences 320,000 acres annually through its soil lab and soil sampling services. The acquisition would add 2021 unaudited revenue of $2.1-million and EBITDA of $450,000.
The proposed acquisition continues Deveron’s strategy to vertically integrate the soil collection and analysis process within its ecosystem, while adding important local relationships in one of the United States largest agricultural regions.
“We are excited to sign this LOI with Frontier Labs. Frontier marks the fourth soil lab transaction in Deveron’s growing, vertically integrated soil lab network and creates important regional distribution in the U.S. Midwest,” said David MacMillan, president and chief executive officer of Deveron. “This will provide Deveron with a soil lab hub in Iowa to support its boots on the ground network of agronomists and soil technicians. With the increased capacity across our soil lab network, Deveron can continue to execute on its mission to help local agriculture achieve excellence using impartial data. Jim and his team have built a successful and trusted business in Iowa, and we are excited to incorporate them into the Deveron family.”
Pursuant to the terms of the LOI, Deveron has agreed to: (i) pay Frontier Labs an initial cash payment of $825,000 (U.S.) upon completion of the proposed transaction and $412,500 (U.S.) on each of the first two anniversaries following the completion of the proposed transaction; and (ii) issue such number of common shares in the capital of the company equal to $275,000 (U.S.) upon receipt of the approval of the TSX Venture Exchange and an additional number of common shares equal to $137,500 (U.S.) on each of the first two anniversaries following the completion of the proposed transaction.
In addition, the company is pleased to announce a non-brokered private placement with a European long-only impact fund, Coeli Circulus, through the issuance of three million common shares in the capital of the company at a price of 50 cents per common share, for gross proceeds of $1.5-million.
The completion of the proposed transaction and the offering are expected to close on or about Sept. 30, 2022.
The completion of the transaction remains subject to all regulatory and other approvals, including the approval of the TSX Venture Exchange. All securities issued in connection with the offering will be subject to a hold period of four months plus a day from the date of issuance and the resale rules of applicable securities legislation.
** I am a Founder of Deveron Corp. and the Founder and CEO of Greencastle Resources Ltd. Greencastle owns 10,000,000 Deveron common shares.