PureKana, LLC entered into a non-binding letter of intent to acquire AF1 Capital Corp. (TSXV:AFC.P) in a reverse merger transaction for $32 million on May 11, 2020. PureKana, LLC entered into a business combination agreement to acquire AF1 Capital Corp. in a reverse merger transaction on November 20, 2020. AF1 will acquire Heavenly RX's indirectly-held 50.1% equity interest in PureKana for $68.9 million to be satisfied through the issuance of shares and assumption of certain debts related to, subject to negotiation and adjustment based on the parties' due diligence investigations and final agreement on the valuations of PureKana and AF1. AF1 shall satisfy the purchase price as payment of $32 million through the issuance of post-consolidation AF1 shares, AF1 shall assume Heavenly subsidiary's obligation to pay $22.55 million in Heavenly common shares pursuant to a membership interest purchase agreement between Heavenly, Cody J. Alt, Jeff Yauck, Purekana and Heavenly's subsidiary, and AF1 shall assume secured debts payable by Heavenly's subsidiary to Cody J. Alt and Jeff Yauck in the aggregate principle amount of $14.3 million pursuant to certain promissory notes made between Heavenly Rx and Cody Alt and Jeff Yauck in December 2019 as part of consideration for the membership interest sale. Prior to closing of the transaction, the common shares of AF1 will be consolidated on a 40:1 basis. Concurrently with closing of the transaction, or shortly thereafter, Heavenly RX will distribute a portion of the post-consolidation AF1 Shares issued in to its shareholders by way of a dividend or return of capital. Upon entering into a definitive agreement, AF1 Capital Corp. will provide to Heavenly Rx Ltd., a secured loan or refundable deposit of up to $0.16 million on terms to be agreed.

Upon completion, it is anticipated that, immediately thereafter, the Resulting Issuer will have approximately 7 million Resulting Issuer Shares issued and outstanding, with (a) the PureKana Founders holding an aggregate of 2.8 million Resulting Issuer Shares representing approximately 40.2% of the outstanding Resulting Issuer Shares, (b) Heavenly holding an aggregate of 0.6 approximately Resulting Issuer Shares, representing approximately 8.6% of the outstanding Resulting Issuer Shares, (c) the Heavenly shareholders and certain arm's-length third party transferees holding an aggregate of 3.4 million Resulting Issuer Shares, representing approximately 48.5% of the outstanding Resulting Issuer Shares, and (d) current AF1 shareholders holding an aggregate of 0.13 million Resulting Issuer Shares, representing approximately 1.8% of the outstanding Resulting Issuer Shares. Upon completion, it is the intention of the parties that the Resulting Issuer will be named "PureK Holdings Corp." and will continue the business of PureKana as a Tier 1 Industrial Issuer on the TSXV. If agreement is terminated by AF1, a cash payment of $0.7 million each to Heavenly and PureKana; if terminated by Heavenly, a cash payment of $0.1 million to AF1, and a cash payment of $1.3 million to PureKana; and if terminated by PureKana: a cash payment of $0.1 million to AF1, and a cash payment of $1.3 million to Heavenly.

Upon completion of the proposed transaction, it is anticipated that the board of directors of the Resulting Issuer will be comprised of four individuals. Paul Norman, Jeff Yauck, Cody Alt, and Michael Galloro are anticipated to be the directors and Kathy Casey as Chief Executive Officer and Brian Meadows as Chief Financial Officer and Corporate Secretary of the Resulting Issuer. The transaction is subject to, among other things, completion of satisfactory due diligence, the negotiation of a definitive agreement setting out binding transaction terms, receipt of all requisite security holder and regulatory approvals, including approval of the TSX Venture Exchange, and additional conditions to be set out in the definitive agreement. On November 4, 2020, the Exchange conditionally accepted the transaction subject to AF1 fulfilling all of the requirements of the Exchange. AF1 has received shareholder approval from a majority of its shareholders with respect to the share consolidation by way of written consent resolution. The AF1 Board has approved the transaction. AF1 has applied for, and the TSXV has provided AF1 with, a waiver from the sponsorship requirement in accordance with TSXV policies. The transaction is expected to close on or about December 3, 2020. TSX Trust Company acted as transfer agent and registrar to AF1. Steven Agnew of Irwin Lowy LLP acted as legal advisor for AF1. Sanjay M. Joshi of DLA Piper (Canada) LLP acted as legal advisor for PureKana. Peter Simeon of Gowling WLG (Canada) LLP acted as legal advisor for Heavenly, the parent company of PureKana.

PureKana, LLC completed the acquisition of AF1 Capital Corp. (TSXV:AFC.P) in a reverse merger transaction on December 7, 2020. The combined company has been renamed as PureK Holdings Corp. Trading in the common shares of PureK Holdings Corp. is expected to commence on the TSXV under the symbol “PKAN” on or about December 10, 2020.