SUMMARY OF THE TRANSACTION
It is currently anticipated that Cann-Is will acquire CWE by way of a share exchange, or other similar form of transaction as agreed by the parties to ultimately form the resulting issuer (the "Resulting Issuer"). The final structure of the Transaction is subject to the receipt of tax, corporate and securities law advice for both Cann-Is and CWE. Upon completion of the Transaction, the Resulting Issuer will carry on the business of CWE. The parties have agreed that for the purposes of the Transaction, the valuation of Cann-Is will be
The Transaction is not a Non-Arm's Length Qualifying Transaction, as such term is defined in the polices of the Exchange and consequently the Transaction will not be subject to approval by Cann-Is' shareholders.
Cann-Is held a meeting of its shareholders on
CWE had 25,000,000 common shares issued and outstanding prior to completion of its financing and debt settlements. Currently, CWE has 48,529,367 shares outstanding, which is a result of a financing and some debt settlements.
As part of the Transaction, CWE completed a financing of
In connection with the Financing, the parties paid to the Agent a cash commission equal to 10% of the aggregate gross proceeds of the Financing (excluding gross proceeds raised from a president's list for which the cash commission shall be 2%); and broker warrants ("Broker Warrants") equivalent to 10% of the underlying securities sold in the Financing excluding funds raised from the president's list subscribers which were reduced to a number of Broker Warrants, equal to 2% of the number of securities sold under that portion of the Financing). Each Broker Warrant is exercisable into one Unit at a price of
Pursuant to the Transaction: (i) holders of issued and outstanding CWE Shares will receive one (1) common share in the capital of the Corporation ("Cann-Is Shares") for each CWE Share (the "Exchange Ratio") held by them; and (ii) all options and warrants convertible into CWE Shares shall be exchanged, based on the Exchange Ratio, for similar securities to purchase Cann-Is Shares on substantially similar terms and conditions.
In connection with the Transaction, CWE has entered into a finder's fee agreement (the "Finder's Fee Agreement") with an arm's length party (the "Finder") for the Finder's introduction of CWE to the Corporation. Pursuant to the terms of the Finder's Fee Agreement, the parties have agreed, subject to the approval by the Exchange, to pay the Finder a fee of 1,937,600 Resulting Issuer Shares or such greater number of Resulting Issuer Shares that is permissible under the polices of the Exchange, subject to a maximum of 2,000,000 Resulting Issuer Shares, to be issued upon closing of the Transaction.
Upon completion of the Transaction and on an undiluted basis, it is expected that (i) the former shareholders of CWE will hold approximately 46.52% of the common shares in the Resulting Issuer (each a "Resulting Issuer Share") (on a non-diluted basis), (ii) the former shareholders of Cann-Is will hold approximately 9.68% of the Resulting Issuer Shares, (iii) the investors in the Financing will hold, assuming completion of the minimum Financing, 39.3% of the Resulting Issuer Shares, and (iv) the Finder and others will hold 5.1% of the Resulting Issuer Shares.
Closing of the Transaction will be subject to a number of conditions precedent, including, without limitation:
a) | completion of mutual satisfactory due diligence investigations of CWE and Cann-Is; |
b) | approval of the Transaction by the boards of directors of CWE and Cann-Is; |
c) | execution of a definitive agreement effecting the Transaction; |
d) | completion of the Financing; |
e) | receipt of all regulatory approvals with respect to the Transaction and the listing of the Resulting Issuer Shares on the Exchange; |
f) | approval of the Transaction by CWE shareholders, |
g) | approval of the Name Change, and the approval of new directors by the Cann-Is shareholders; and |
h) | confirmation of no material adverse change by CWE and Cann-Is. |
It is anticipated that the Resulting Issuer will qualify as a Tier 2 Issuer pursuant to the requirements of the Exchange.
SPONSORSHIP
Sponsorship of a Transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. The Corporation intends to apply for a waiver from the sponsorship requirement in accordance with Exchange Policy 2.2.
HISTORY OF CWE
CWE was incorporated under the Business Corporations Act (
CWE is seeking to become the largest Hemp offline and online retailer in
The Corporation's subsidiaries include:
DCI Cannabis Institute GmbH ("DCI"), incorporated inGermany onDecember 1, 2016 . CWE acquired 89.6% of the share capital of DCI onJuly 4, 2019 pursuant to an agreement with four (4) shareholders of DCI. The balance of the share capital, 10.4%, is owned by an arm's length German company. DCI owns and operates six (6) shops inGermany .CWE Trading GmbH ("CWE-UG") incorporated inGermany onApril 16, 2020 as wholly owned subsidiary. CWE-UG owns and operates two (2) shops.CWE Trading EINS GmbH ("CWE-E-UG") incorporated inGermany onAugust 16, 2020 as wholly owned subsidiary. CWE-E-UG owns and operates one (2) shops.
SELECTED FINANCIAL INFORMATION OF CWE
The following table sets out historical financial information of CWE, in each case, for the periods ended and as of the dates indicated. The selected financial information of CWE has been derived from the unaudited consolidated interim financial statements of CWE for the six-month period ended
Balance Sheet Account | As at | As at |
Current Assets | 1,119,076 | 3,390,213 |
Total Assets | 1,520,357 | 4,221,186 |
Total Liabilities | 1,502,725 | 1,930,884 |
Total Shareholder's Equity | 17,632 | 2,290,303 |
Income Statement | Six months ended, | Six months ended, |
Revenue | 1,045,682 | 1,550,293 |
Total Expenses | 1,134,884 | 2,190,407 |
Net Income (Loss) | (89,202) | (640,784) |
EBITDA | (161,595) | (619,550) |
MANAGEMENT, BOARD OF DIRECTORS AND INSIDERS OF THE RESULTING ISSUER
Upon closing of the Transaction, the board of directors of Cann-Is shall be reconstituted, to be comprised of the nominees of CWE to consist of at least three (3) members. Upon closing of the Transaction, the management, board of directors and insiders of the Resulting Issuer will be as set forth below. CWE has appointed
Jörn Follmer is a serial entrepreneur that has sold his company to a NASDAQ firm in 1999, built up another company to take it public at the EU-regulated market General Standard segment of Deutsche Börse in 2005. As co-founder of DCI, Jörn has consulted with Wenzel Cerveny since they met in 2016 on the campaign trail. In 2008, Jörn became an investment banker, who has since taken public more than 40 companies as official listing partner of various exchanges. Similar to his position in CWE, Jörn takes financial positions in emerging market companies. Having served on the board of directors of listed companies in
Ronnie Jaegermann – Director
Mr. Jaegermann has been a Venture Partner at
DISCLOSURE DOCUMENT
In connection with the Transaction, Cann-Is expects to apply to the Exchange for a waiver from the requirement to file a non-offering prospectus. Instead, Cann-Is expects to file a filing statement which will contain details regarding the Transaction, Cann-Is, CWE and the Resulting Issuer.
ABOUT
The Corporation is a
ADDITIONAL INFORMATION
Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information release or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The
NEITHER THE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
FORWARD-LOOKING STATEMENTS
This news release contains certain forward-looking statements, including statements relating to the Transaction and certain terms and conditions thereof, the ability of the parties to complete the Transaction, the Financing, the Exchange Ratio, the Name Change, the Resulting Issuer's ability to qualify as a Tier 2 Issuer, the Corporation receiving a waiver from the Exchange for sponsorship requirements, shareholder, director and regulatory approvals, future press releases and disclosure, and other statements that are not historical facts. Wherever possible, words such as "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict" or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management as at the date hereof.
Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. As a result, the Corporation cannot guarantee that the Transaction will be completed on the terms described herein or at all. These factors should be considered carefully, and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, the Corporation cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and the Corporation assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.
SOURCE
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