C21 Investments (CSE: CXXI) (OTCQX: CXXIF) (“C21” or the “Company”) a vertically-integrated cannabis company, today announced plans to transition to U.S. GAAP1 accounting for the fourth quarter and current fiscal year, ending January 31, 2022. C21 is a British Columbia company and will remain a U.S. foreign private issuer under the Securities and Exchange Act of 1934.
C21 has also entered into an agreement (the “Agreement“) in connection with the entitlement of certain individuals to receive Phantom Earn-Out Shares2 pursuant to the purchase agreement (the “Purchase Agreement“) governing the acquisition of Phantom Farms (see news release dated February 4, 2019). Pursuant to the Agreement, individuals who were entitled to receive up to 4.5 million Phantom Earn-Out Shares pursuant to the Purchase Agreement will collectively receive 1.3 million common shares of C21 in exchange for their entitlement to receive the Phantom Earn-Out Shares.
CEO & President, Sonny Newman stated, “Regarding the transition to U.S. GAAP, the Company believes it is important to align our accounting standards with the geography of our operations. This will improve financial transparency with investors and comparability to our peers. The elimination of the Phantom Earn-out Shares is a critical step in strengthening our balance sheet by lowering the impact and volatility of derivative liabilities associated with earn-out shares, and reducing the potential dilution from the Phantom Earn-Out Shares by 70%.”
C21 has recently completed its first harvest in the new grow rooms at its expanded cultivation facility in Nevada. This first harvest generated an 18% average increase in yields over historical levels, depending on strain of flower. The Company will use the expanded grow to increase in-house product offerings, as well as take advantage of wholesale opportunities in the market. Given the higher production yields from its new grow rooms, C21 has undertaken to retrofit lighting in its original grow rooms beginning in January 2022. Upon completion, the Company will produce approximately double the high grade flower relative to pre-expansion levels.
“We are excited to see the strong yield results from the first harvest in our expanded cultivation facility,” stated CEO and President, Sonny Newman. “We are continuing the planning of the next phase of cultivation expansion in conjunction with extending our footprint in Nevada.”