Harvest One Cannabis Inc. (TSXV:HVST) (“Harvest One Cannabis” or the “Company“) is pleased to announce that it has closed its previously announced acquisition from MMJ PhytoTech Limited (“MMJ“) of 100% of the issued and outstanding shares of United Greeneries Holdings Ltd. (“United Greeneries“) and Satipharm AG (“Satipharm“) (the “Purchased Shares“) from PhytoTechMedical (UK) Pty Ltd. (“Phyto UK“), a wholly owned subsidiary of MMJ (the “Acquisition“). In connection with the closing of the Acquisition, the net proceeds of the Company’s $25 million private placement in support of the Acquisition (the “Offering“) have been released to the Company from escrow. Immediately prior to closing of the Acquisition, the Company completed a consolidation (the “Consolidation“) on the basis of 1.79 pre-Consolidation common shares to one (1) post-Consolidation common share (each post-Consolidation common share, a “Common Share“), and changed its name from “Harvest One Capital Inc.” to “Harvest One Cannabis Inc.” (the “Name Change“).
The Acquisition constitutes the Company’s “Qualifying Transaction” within the meaning of the TSX Venture Exchange (“TSXV“) policies. In connection with the Acquisition, the Company has filed an amended filing statement dated April 19, 2017 (the “Filing Statement“). More information about the Acquisition, as well as additional disclosure about United Greeneries and Satipharm, can be obtained from the Company’s Filing Statement filed on SEDAR at www.sedar.com.
Unless otherwise expressed, all references herein to securities issuable in the Offering and Acquisition, and corresponding subscription prices, are made on a post-Consolidation basis. All monetary references herein refer to Canadian dollars unless otherwise specified.
Conversion of Subscription Receipts
Pursuant to an agency agreement dated February 22, 2017 (the “Agency Agreement“), among MMJ, the Company, and a syndicate of agents led by Mackie Research Capital Corporation (the “Lead Agent“) and including Canaccord Genuity Corp., Eight Capital and GMP Securities L.P. (the “Agents“), the Agents agreed to act as exclusive agents to the Company to arrange for the sale of up to 29,334,000 Subscription Receipts for aggregate gross proceeds of up to $22,000,500 on a “best efforts” private placement basis. The Agency Agreement also provided the Agents with an option to purchase up to an additional 4,000,000 Subscription Receipts for additional gross proceeds of $3,000,000 (the “Agents’ Option“). The Agents exercised the Agents’ Option in full, resulting in the sale of 33,334,000 Subscription Receipts for aggregate gross proceeds of $25,000,500 under the Offering.
Each Subscription Receipt has been automatically exchanged, without any further action by the holder thereof and for no additional consideration, for one unit (a “Unit“) of the Company. Each Unit consists of one Common Share and one-half of one common share purchase warrant (each whole warrant, a “Warrant“). Each Warrant entitles the holder thereof to acquire one Common Share (a “Warrant Share“) for an exercise price of $1.00 per Warrant Share for a period of 36 months from the issuance of such Warrant.
Following the satisfaction of certain conditions precedent, proceeds of the Offering, less the Agents’ 6% commission and certain expenses, have been delivered to the Company pursuant to a subscription receipt agreement among the Company, Computershare Trust Company of Canada, the Lead Agent, and MMJ dated February 22, 2017.
The Agents also received compensation options that entitle the Agents to acquire that number of Units equal to 6.0% of the number of Subscription Receipt issued pursuant to the Offering, including the Agents’ Option, at an exercise price of $0.75 per Unit at any time on or prior to the date that is 36 months from the closing date.
Completion of Acquisition
Pursuant to a share exchange agreement dated December 7, 2016, as amended, the Company acquired from Phyto UK all of the Purchased Shares. In consideration for the Purchased Shares, Phyto UK received $33,180,997 payable by way of a combination of $2,000,000 in cash and the issuance of 41,574,662 Common Shares at $0.75 per Common Share. In consideration for the transfer to Harvest and extinguishment of certain intercorporate debts of United Greeneries and Satipharm owed to MMJ, MMJ received $8,819,003 payable to MMJ by way of the issuance 11,758,671 Common Shares.
Board of Directors
The board of directors of the Company will initially consist of Andreas Gedeon, Peter Wall, Jason Bednar and Anne Chopra. Will Stewart will join the advisory board of the Company, and it is intended that Mr. Stewart be nominated for election to the board at the 2017 annual general meeting of shareholders of the Company. Select biographical details regarding Messrs. Gedeon, Wall, Bednar and Stewart and Ms. Chopra can be found in the Filing Statement.
Option Issuance
The board of directors of the Company has authorized the grant of 8,050,000 incentive stock options to certain of its directors, officers, employees and consultants. Each such option entitles the holder to acquire one Common Share for a period of five years at an exercise price of $0.75 per share. The options are subject to vesting over the course of 24 months following the grant date.
Escrowed Securities
As disclosed in the Filing Statement, the 41,574,662 Common Shares held by Phyto UK and the 11,758,671 Common Shares held by MMJ are subject to a Tier 1 Value Security Escrow Agreement. 1,000,000 Common Shares of the Company remain subject to a CPC Escrow Agreement.
Listing
The Company has obtained final approval to list its common shares on the TSXV as a Tier 1 Industrial or Life Sciences Issuer. The common shares are expected to begin trading on the TSXV at the opening of markets on or about April 28, 2017 under the symbol “HVST”.
Issued and Outstanding
Following completion of the Acquisition, Consolidation, and Offering, there are 88,953,992 issued and outstanding Common Shares on a non-diluted basis, and 117,516,451 Common Shares on a fully diluted basis, as disclosed in the Filing Statement.
Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company’s current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to anticipated effects of the Acquisition. The business of the Company is subject to a number of material risks and uncertainties, including integration risks following the Acquisition. Please refer to the Filing Statement and other SEDAR filings for further details. These transactions are subject to a number of material risks, and there is no assurance that they will be completed on the terms or within the timeframes currently contemplated, or at all. The forward-looking information contained in this press release is made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release nor have either of them in any way passed upon the merits of the qualifying transaction or in any way approved or disapproved of the contents of this release.
 

CONTACT INFORMATION

Andreas Gedeon
CEO
+1 (250) 713-6302
agedeon@mmj.ca

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