8-K: THC Therapeutics Completes Strategic Acquisition of The Headquarters Group, Expanding Cannabis Footprint and Vertical Integration

THC Therapeutics, Inc. has successfully acquired 100% of The Headquarters Group, Inc. and its subsidiaries in an all-share transaction valued at approximately $11 million, significantly advancing its vertical integration and roll-up strategy in the legal cannabis industry.

Summary

• THC Therapeutics, Inc. (THCT) completed the acquisition of 100% of The Headquarters Group, Inc. (THG), an Oregon corporation, and its related subsidiaries on June 20, 2025.
• The acquisition was an all-share transaction, with THCT issuing 11,007 shares of its newly created Series D Preferred Stock as consideration, valued at approximately $11,000,000.
• The Headquarters Group is a holding company with a portfolio of cannabis-related businesses, including genetics, cultivation, extraction, distribution, specialty real estate, and nutrients for commercial and hobby growers.
• Acquired subsidiaries include Oregon Global Distribution, Inc., In & Out Gardens, Inc., Kalix CPN, Inc., Blue Sky Investments, LLC., JSCA, Inc. (Jefferson Soul), Smart Group Inc. (NPK Industries), Shasta Properties Management, LLC., and Harvest Food for Life.
• The acquired companies under THG reported a combined revenue of approximately $4.8 million in 2024, which includes revenue from acquired real estate.
• The Series D Preferred Stock issued has a value of $1,000 per share, entitles holders to 10 votes per share, participates in dividends with common stock, and is convertible after 12 months at the lower of $0.01 or 80% of the closing price prior to conversion.
• The Series D Preferred Stock is subject to a 12-month lock-up period, restricting sales, assignments, pledges, or transfers without prior written consent from Buyer.

Sentiment

Score: 8

Explanation: The document conveys a highly positive sentiment regarding the strategic acquisition, emphasizing vertical integration, market expansion, and the potential for significant growth and efficiency gains. The language used by management is optimistic and forward-looking, positioning the deal as a 'breakthrough' and 'launching pad.' While risks are acknowledged in the forward-looking statements disclaimer, the overall tone is strongly favorable towards the transaction's impact on the company's future.

Positives

• The acquisition establishes THCT as a vertically integrated company, covering genetics, cultivation, extraction, distribution, and nutrient segments within the regulated cannabis industry.
• It provides THCT with a strong foothold and expertise in the California and Oregon markets, with potential for expansion into other U.S. states and international legal markets.
• The transaction brings together 'world-class cannabis operations management with over 60 years of combined experience,' aiming to maximize efficiencies and generate significant revenue.
• The acquisition is described as a 'launching pad' and 'breakthrough transaction' that immediately unites segment leaders into a 'powerful and flexible player' in the legal cannabis market.
• The deal aligns with THCT's stated 'roll-up strategy' to acquire industry-leading cannabis companies, offering benefits of scale and capital availability for further acquisitions and organic growth.

Risks

• THCT's ability to execute its acquisition and disposition strategy and grow and manage growth profitably.
• The ability to retain key employees following the acquisition.
• The risk that THCT may not be able to maintain its listing on the OTC Markets.
• Potential adverse impacts on THCT's business, financial condition, and results of operations if it cannot maintain and enhance its brand and reputation.
• Periods of rapid growth and expansion could place a significant strain on resources, including the employee base, potentially negatively impacting operating results.
• The risk that THCT may never achieve or sustain profitability.
• The potential need to raise additional capital to execute the business plan, which may not be available on acceptable terms or at all.
• Other risks and uncertainties indicated in THCT's Annual Report on Form 10-K for the fiscal year ended April 30, 2024, filed with the SEC on August 13, 2024.

Future Outlook

THC Therapeutics aims to leverage this acquisition as a 'launching pad' for rapid growth and expansion within the cannabis markets. The company plans to continue its 'roll-up strategy' by acquiring industry leaders in cultivation, manufacturing, distribution, and nutrients, with the goal of expanding established operations and brands into other U.S. states and international legal markets. Management believes the current market, characterized by growth and consolidation, presents a favorable environment for efficiency-driven success.

Management Comments

• Scott Cox, CEO of THC Therapeutics Inc.: "This collaboration of deep expertise from world class cannabis operations management with over 60 years of combined experience will allow us to maximize efficiencies and generate significant revenue for THCT."
• Scott Cox, CEO of THC Therapeutics Inc.: "This isn't a starting point, its a launching pad and a breakthrough transaction that delivers on our teams commitment to building out a fully integrated vertical cannabis platform. It immediately unites several segment leaders into a powerful and flexible player in the legal cannabis market."
• Scott Cox, CEO of THC Therapeutics Inc.: "This kicks off our strategy of acquiring industry leaders in our focused verticals that can grow and expand with the management expertise and the capital we can inject as a public company."
• Scott Cox, CEO of THC Therapeutics Inc.: "The acquisition gives THCT a strong foundation for rapid growth and expansion within the cannabis markets as we continue to build a world-class portfolio of assets within the cannabis sectors."
• Richard Rowe, CEO of The Headquarters Group, Inc.: "The market is in a great place right now. The cannabis market itself is growing, while the industry that supports that market is in a strong consolidation phase. This is a good place to be for a successful business with proven systems and access to capital."
• Richard Rowe, CEO of The Headquarters Group, Inc.: "We believe now is a great time to partner with someone like Scott and with a platform like THCT. Investment money has driven the market since its inception. Those who could spend the most money the fastest, were often, temporarily, perceived by the market to be the winners. Now the Era of Efficiency has come, moving forward efficiency, more and more, is going to drive values and returns."
• Richard Rowe, CEO of The Headquarters Group, Inc.: "With 60 years of combined experience in the cannabis market we have proven systems and methods to take advantage of efficiency driven success. The turmoil in the market has affected everyone including well run businesses with successful local or regional Brands. THCT as a platform has the opportunity to combine these companies through this consolidation phase, thereby offering them the benefits of scale and capital availability for further acquisitions and to facilitate organic growth."

Industry Context

This acquisition positions THC Therapeutics to capitalize on the ongoing consolidation phase within the rapidly growing legal cannabis industry. By integrating various segments from genetics to distribution, THCT aims to achieve efficiencies and scale, which management believes will drive value and returns in an era where efficiency is becoming increasingly critical, moving beyond a purely investment-driven market.

Comparison to Industry Standards

• The document highlights 'world-class cannabis operations management with over 60 years of combined experience' and refers to the acquired entities as 'segment leaders' and 'successful business with proven systems.'
• It emphasizes the 'Era of Efficiency' and the benefits of 'scale and capital availability' through consolidation, suggesting a strategic alignment with broader industry trends towards mature, efficient operations.
• No specific comparable companies, projects, or results are listed for direct quantitative comparison within the document.

Management Changes

Corporate Governance

Related Party Transactions

• Section 5.05 of the Share Exchange Agreement, which required all indebtedness owed to an Acquired Company by any Seller or any Related Person of any Seller to be paid in full prior to Closing, was waived by agreement of Buyer and Company/Sellers.

Stakeholder Impact

• **Shareholders (THCT):** Potential for increased shareholder value through strategic growth, vertical integration, and market expansion. Dilution from Series D Preferred Stock issuance is a factor, but the strategic benefits are highlighted.
• **Shareholders (THG Sellers):** Received 11,007 shares of THCT Series D Preferred Stock, subject to a 12-month lock-up, indicating a long-term investment in the combined entity.
• **Employees/Management:** The current operators of THG will assume control of management alongside THCT, suggesting continuity and integration of expertise.
• **Customers & Suppliers:** The acquisition aims to leverage combined capabilities and expand brands, potentially leading to broader product/service availability and stronger supply chains.
• **Creditors:** Buyer indemnifies and releases sellers from personal guarantees related to existing notes on subsidiaries, and commits to paying off notes covering real estate or other assets if sold, including two SBA loans, which could impact creditor relationships and security.

Next Steps

• THCT and the current operators of The Headquarters Group will assume control of management.
• THCT will continue its 'roll-up strategy' to acquire industry-leading cannabis companies in cultivation, manufacturing, distribution, and nutrients segments.
• The combined company plans to expand established brands into other U.S. states and international legal markets.
• Buyer will cause all needed and outstanding SEC filings to be made as soon as practicably possible to get current with SEC requirements, including potentially preparing pro forma financial statements for each acquired company for at least two years back.

Key Dates

Keywords

Cannabis industry, Vertical integration, Acquisition, THC Therapeutics, The Headquarters Group, Series D Preferred Stock, Cannabis cultivation, Cannabis extraction, Cannabis distribution, Cannabis nutrients, Oregon cannabis, California cannabis, SEC filing, Form 8-K, Corporate strategy, Merger and acquisition