World Class Extractions Inc (CNSX: PUMP) has taken flight on confirming the signing of a letter of intent as it eyes business merger with Quadron Cannatech. Investors have also continued to push the stock up the charts on the company signing a revenue collaboration agreement with Parity Partners PBC.
Share Price Analysis
The stock has started surging after coming under pressure from short seller’s early March. A 10% spike from all-time lows affirms renewed investor interest as World Class Extraction continues to recoup losses accrued in the month.
The emerging uptrend faces resistance at the C$0.16 level. A breach of the resistance level should affirm the uptrend, setting the stage for the stock to continue edging higher as a bull play.
Below the C$0.16 technical level, World Class Extraction remains susceptible to further drops given the underlying steep bear trend and the fact that short sellers remain in firm control.
What Does World Class Extraction Do?
World Class Extraction is a cannabis-focused company engaged in the acquisition and extraction of oils and extracts from cannabis flowers. The company boasts of a proprietary innovative extraction process ideal for both hemp and cannabis industry. The technology enables the extraction of CBD oils and other related extracts from both wet and dried natural plants.
Quadron Cannatech Merger
Shares of World Class Extraction are exploding in the market on the confirmation that the company is in the process of completing a merger with Quadron Cannatech as part of its growth strategy. Under the terms of the agreement, the company is to acquire all issued and outstanding shares of Quadron; directly or through a wholly owned subsidiary.
A merger of the two companies will result in the creation of a leading provider of extraction and processing solutions. World Class Extraction will be able to leverage Quadron’s technical expertise as well as the customer base and management team as it looks to strengthen its prospects in the multi-billion industry.
“We believe that our strong cash position and unique patent-pending technology, which can use both wet and dry cannabis and hemp as inputs, is the perfect complement to Quadron’s experienced team of executives and employees, along with their proven year-over-year revenue increases. This transaction is transformative for World Class and its shareholders,” said CEO Michael McCombie.
Revenue Sharing Agreement
World Class Extraction has since followed the merger development with the signing of a revenue collaboration agreement with Parity Partners PBC. Under the terms of the agreement, Parity Partners is to help World Class Extraction in its bid to expand its hemp and cannabis extraction business across the United States.
Parity Partners is tasked with the responsibility of sourcing appropriate locations for the installation of World Class extraction machines. The company will also have to source all the licenses and approvals needed for the extraction of cannabis oil, in various jurisdictions.
World Class Exaction will in return reimburse Parity for the employment of staff, other than sales staff, and for the delivery and installation of its machines.
The two have since formed a joint venture as part of the revenue sharing pact. The parties will split revenue-generated from their combined efforts with World Class Extraction taking 75% of the profits as Parity goes with the remaining 25%.
“This agreement represents a major milestone in expanding World Class’s business into the United States. We are thrilled to build upon World Class’s present success and momentum by taking our business into the United States. Parity will be a valuable partner, and World Class is excited to work together with Parity through strong collaboration and mutual commitments,” stated Mr. McCombie.
World Class Extraction has affirmed how focused it is about pursuing growth opportunities as well as revenue streams in the Cannabis sector. The signing of a merger agreement with Quadron Cannatech should accelerate the expansion of the company’s operations and revenue streams.
A revenue-sharing pact with Parity Partners is another development that underscores the company’s push for new revenue streams. Strengthening investor confidence about the company’s long-term prospects should result in a spike in the company’s valuation.
That said the stock is likely to continue making a run for the $0.16 technical, above which it would have turned more bullish and eyes further gains.
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Disclosure: We have no position in CNSX: PUMP and have not been compensated for this article.