Red Light Holland Closes Acquisition of 80% of Happy Caps Mushroom Farm – Specializing in Grow-At-Home Mushroom Kits

Quick Take:

Red Light Holland Corp. (CSE: TRIP), an Ontario-based corporation engaged in the production, growth and sale of a premium brand of magic truffles to the legal, recreational market in the Netherlands, is pleased to announce that is has completed the acquisition of an 80% stake in 4316747 Nova Scotia Limited (“Happy Caps“). Happy Caps Mushroom Farm in Nova Scotia, Canada, is a unique gourmet mushroom farm, cleverly positioned in the mushroom plug spawn business, selling fresh mushrooms for the wholesale market and specializing in ‘grow your own mushroom kits’ with sales in Canada and the United States.

The transaction is immediately revenue accretive, and the Company will aggressively pursue additional revenue growth opportunities, including potentially introducing Happy Caps’ products to Europe via SR Wholesale, RLH Netherlands B.V.’s wholly-owned wholesale company which has established a distribution network of over 400 companies that sell products across Europe. Happy Caps’ two founders, CEO, Andrew Kobayashi and CMO, Andrew Hatfield (collectively, the “Vendors“) bring a wealth of growing expertise and their ‘know how’ will be valuable for Red Light Holland’s broader and future operations. Additionally, this expertise can be leveraged as the Company considers introducing functional mushroom products in the future.

The acquisition of Happy Caps presents a brand building opportunity for Red Light Holland, as Happy Caps products powered by Red Light Holland will reach more consumers in a plethora of markets. Finally, the Happy Caps product suite will serve as a strong platform to launch grow-at-home products of varying species and strains in the future, if and when regulations permit.

The Acquisition was completed pursuant to the terms of the definitive agreement (the “Acquisition Agreement“) dated June 10, 2021, pursuant to which Red Light Holland acquired 80% of the issued and outstanding shares of Happy Caps for $450,000. The consideration was comprised of $50,000 cash and 1,290,323 common shares of the Company (the “Red Light Shares“), with each Red Light Share priced at $0.31 being the 10-day volume weighted average price of the Red Light Shares on the Canadian Securities Exchange immediately prior to the closing of the Acquisition. The Acquisition Agreement provides for up to $550,000 of earn out payments to be made to the Vendors subject to reaching certain sales milestones, with all milestones subject to minimum gross margin requirements.

In addition to the foregoing, as per the terms of the Acquisition Agreement, the Vendors have granted the Company an option to acquire all the remaining shares in Happy Caps not held by the Company, thus allowing Red Light Holland to become the sole shareholder of Happy Caps (the “Call Option“), at a 100% enterprise value equal to $2,500,000. The Call Option will be exercisable at any time following a period of two (2) years from closing. The consideration under the Call Option, if exercised, may be satisfied in Red Light Shares, on the basis of a deemed price per Red Light Share equal to the volume weighted average price per Red Light Share on the CSE for the 10 consecutive trading days preceding closing of the Call Option.

Happy Caps is an urban gourmet mushroom farm located in Halifax, Nova Scotia that specializes in quality ‘grow your own mushroom kits’, mushroom plug spawn and fresh mushrooms for the wholesale market. Grow your own Mushroom kits are available at www.HappyCaps.ca.

The Company is an Ontario-based corporation engaged in the production, growth and sale (through existing Smart Shops operators and an advanced e-commerce platform) of a premium brand of magic truffles to the legal market within the Netherlands, in accordance with the highest standards, in compliance with all applicable laws.