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Natural MedCo and Carlaw Capital V Corp. Provide Update on Qualifying Transaction

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  • NMC and Carlaw enter into an amalgamation agreement
  • NMC announces proposed terms of equity private placements of approximately $10,800,000 and convertible debenture private placement of $10,000,000

TORONTO, June 14, 2018 (GLOBE NEWSWIRE) -- 1600978 Ontario Inc. (which operates as Natural MedCo) ("NMC") and Carlaw Capital V Corp. ("Carlaw") (NEX:CVC.H), are pleased to provide an update to their previously announced proposed transaction (the "Proposed Transaction").

In connection with the Proposed Transaction, NMC and Carlaw have entered into an amalgamation agreement pursuant to which NMC and a wholly-owned subsidiary of Carlaw will amalgamate (the "Amalgamation").

The Amalgamation

Commencing at the effective time of the Amalgamation, all issued and outstanding securities of NMC (each, a "NMC Security") (including the NMC Common Shares issued upon conversion of the Subscription Receipts assuming completion of the Brokered Private Placement (as defined below) and the Debentures and Warrants issued under the Debenture Offering (all as defined below) will be exchanged for securities of Carlaw having substantially the same terms (each, a "Carlaw Security") on a one-for-one basis.

Upon completion of the Amalgamation, it is the intention of the parties that Carlaw will be renamed "Eve & Co Incorporated" (the "Resulting Issuer"), or such other name as may be approved by its board of directors and the TSX Venture Exchange (the "TSXV").

NMC held an annual and special meeting of its shareholders on May 28, 2018 where its shareholders approved, among other things, the Amalgamation and a stock split (the "NMC Stock Split") pursuant to which the issued and outstanding common shares of NMC (the "NMC Common Shares") were split on the basis of two NMC Common Shares for every one NMC Common Share existing prior to closing of Non-Brokered Private Placement (as defined below and which is to occur on a post-NMC Stock Split basis).

Carlaw held an annual and special meeting of its shareholders on April 27, 2018 where its shareholders approved certain matters related to the Amalgamation and a stock split (the "Carlaw Stock Split") pursuant to which the issued and outstanding common shares of Carlaw (the "Carlaw Common Shares") will be split on the basis of two Carlaw Common Shares for every one Carlaw Common Share existing prior to closing of the Amalgamation.

NMC Equity Offerings

In connection with the Proposed Transaction, NMC will complete a non-brokered private placement (the "Non-Brokered Private Placement") of up to 17,852,600 NMC Common Shares at a subscription price of $0.25 per NMC Common Share (on a post-NMC Stock Split basis), and a brokered private placement (the "Brokered Private Placement", and together with the Non-Brokered Private Placement, the "Equity Offerings") of up to 25,340,000 subscription receipts (each, a "Subscription Receipt") at a subscription price of $0.25 per Subscription Receipt, for aggregate gross proceeds of approximately $10.8 million. In connection with the Brokered Private Placement, NMC will enter into an agency agreement with Haywood Securities Inc. ("Haywood"), and PI Financial Corp., as co-lead agents, Echelon Wealth Partners and INFOR Financial Inc. (collectively, the "Agents") to sell the Subscription Receipts on a best-efforts basis. It is expected that the net proceeds received from the Equity Offerings will be used for the expansion of NMC's greenhouse production facilities and for general corporate purposes.

The gross proceeds of the Brokered Private Placement, less: (A) fifty percent of the Agents' cash fees (as described below); (B) certain expenses of the Agents; and (C) fifty percent of the gross proceeds of the Brokered Private Placement, which are to be paid to NMC net of the corporate finance fee (as described below) and certain other payables which will be paid as directed by NMC, will be deposited in escrow (such funds, collectively with all interest earned thereon, the "Escrow Funds") until the satisfaction of certain release conditions, including all conditions precedent to the Amalgamation, have been met (the "Release Conditions").

Upon the satisfaction of the Release Conditions, each Subscription Receipt will be converted into one NMC Common Share (on a post-NMC Stock Split basis) without payment of any additional consideration or further action on the part of the holder thereof; and at the effective time of the Amalgamation, each NMC Common Share will be exchanged for one Carlaw Common Share (on a post-Carlaw Stock Split basis).

In the event that the Release Conditions have not been satisfied prior to 120 days following the closing of the Brokered Private Placement, or NMC advises the Agents or announces to the public that it does not intend to satisfy the Release Conditions or that the Proposed Transaction has been terminated, the aggregate issue price of the Subscription Receipts shall be returned to the applicable holders of the Subscription Receipts together with their pro rata portion of any interest earned thereon (net of any applicable withholding taxes), and such Subscription Receipts shall be automatically cancelled and be of no further force and effect. NMC will be responsible and liable to the holders of the Subscription Receipts for any shortfall between the aggregate issue price of such Subscription Receipts and the Escrow Funds.

In connection with the Brokered Private Placement, the Agents will be entitled to receive a cash fee equal to 7% of the aggregate gross proceeds of the Brokered Private Placement. The Agents will also be entitled to receive such number of compensation options equal to 7% of the number of Subscription Receipts issued by NMC (each, an "Equity Compensation Option") each being exercisable for one NMC Common Share at a price of $0.25 per share for a period of two years from the date the Release Conditions are satisfied. In connection with the Amalgamation, each Equity Compensation Option will be exchanged into one compensation option of the Resulting Issuer. In addition, the Agents will also receive a corporate finance fee of $150,000 plus applicable taxes and an additional 675,000 Equity Compensation Options.

NMC Convertible Debenture Offering

Concurrently with the closing of the Brokered Private Placement, NMC also intends to complete a private placement (the "Debenture Offering") of 10,000 debenture units (the "Debenture Units") for aggregate gross proceeds $10,000,000, each Debenture Unit consisting of (i) a $1,000 principal amount senior unsecured convertible debenture of NMC maturing two years from the date of issue and bearing interest at 10.0% per annum (a "Debenture"); and (ii) common share purchase warrants (each, a "Warrant") exercisable for up to 3,333 NMC Common Shares at an exercise price per share of $0.35 for a period of two years from the date of issue. The Debentures will be convertible into that number of NMC Common Shares computed on the basis of the principal amount of the Debentures divided by the conversion price of $0.30 per share at the holder's option or upon mandatory conversion at the request of NMC in the event that at any time following four months plus one day following the Amalgamation, for any ten consecutive trading days, the volume weighted average closing price of the NMC Common Shares on the TSXV is greater than $0.60. Upon conversion of the Debentures, the holder shall also receive a cash payment equal to the additional interest amount that such holder would have received if it had held the Debentures for the period of one year from the date of conversion provided that such period shall not extend past the maturity date of the Debentures.

The gross proceeds of the Debenture Offering will be deposited in escrow (such funds, collectively with all interest earned thereon, the "Debenture Escrow Funds") until the satisfaction of certain release conditions, including all conditions precedent to the Amalgamation, have been met (the "Debenture Escrow Release Conditions"). In connection with the Amalgamation, the Debentures and the Warrants will be exchanged for debentures and warrants of the Resulting Issuer having substantially the same terms and maturing or expiring, as applicable, two years from the date the Debenture Escrow Release Conditions are satisfied.

In connection with certain financial advisory services provided by Haywood in connection with the Debenture Offering, Haywood will be entitled to receive a cash fee of $500,000 plus applicable taxes as well 2,333,333 compensation options (each, an "Debenture Compensation Option") each being exercisable for one NMC Common Share at a price of $0.30 per share for a period of two years from the date the Release Conditions are satisfied. In connection with the Amalgamation, each Debenture Compensation Option will be exchanged into one compensation option of the Resulting Issuer.

The securities issued in connection with the Equity Offerings, the Debenture Offering and the Amalgamation have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States unless an exemption from registration is available. This news release is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of NMC or Carlaw in any jurisdiction.

About Natural MedCo

NMC received its license on July 22, 2016 under the Marihuana for Medical Purposes Regulations (MMPR), and is now a licensed producer of dried cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR). NMC is led by a team of agricultural experts and has a 120,000 sq. ft. scalable greenhouse production facility located in Middlesex County, Ontario with 32 acres of adjacent land for future expansion. NMC is a private corporation existing under the Business Corporations Act (Ontario). 

Ownership of Natural MedCo

As of the date hereof, 161,591,414 NMC Common Shares are issued and outstanding, of which NMC's founders, Melinda Rombouts and David Burch, together own 52% and, subject to approval of the TSXV, Ravi Sood, a director of Carlaw, owns 1%. Such number of NMC Common Shares were adjusted pursuant to the NMC Stock Split.

Selected Financial Information of Natural MedCo

The following table sets forth selected historical financial information for NMC. The financial statements of NMC have been prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. The annual financial information of NMC set forth below has been audited while the financial information for the three month period ended January 31, 2018 has been reviewed by NMC's auditor but has not been audited.

       
Income Statement Data 3 month period ended
January 31, 2018
($)
Year ended
October 31, 2017
($)
Year ended
October 31, 2016
($)
Total income - - -
Net income (loss) (602,800) (1,241,034) (370,132)


Balance Sheet Data As at
January 31, 2018
($)
As at
October 31, 2017
($)
As at
October 31, 2016
($)
Total assets 5,350,767 2,067,680 1,609,372
Total liabilities 3,146,933 4,254,921 2,555,579
Shareholders' equity 2,203,834 (2,187,241) (946,207)
       

Directors, Officers and Insiders of the Resulting Issuer

Upon completion of the Proposed Transaction, the board of directors of Carlaw (at such time, the Resulting Issuer) will be comprised of Melinda Rombouts, Ravi Sood, Clark Moeller, Jonathan Pollack, Michael Young and Dr. Mehraneh Ebrahimi. Brief biographies for the proposed directors, officers and insiders of the Resulting Issuer are set out below:

Melinda Rombouts, President, Chief Executive Officer and Director

Prior to founding NMC, Ms. Rombouts was the president, manager and owner of numerous large scale businesses producing agricultural food and pharmaceutical related products. Through this experience, she has gained extensive plant knowledge crucial to the growth of a healthy plant and essential to producing a high quality product free of pests, contamination and disease. Ms. Rombouts has grown hundreds of varieties of plants and has superior knowledge in terms of pest identification, fertilizer usage, alternative pest control, plant handling and care. She has experience with quality assurance program development, implementation and improvement with strict adherence to the regulations governing the pharmaceutical industry and the development, implementation and improvement of Good Manufacturing Practices ("GMP") program for the production of Spirulina by LG Ranch and plant products by MND Greenhouses. Ms. Rombouts received her Bsc. and BA from the University of Waterloo with a specialization in Plant Biology and Microbiology, and has also completed various specialized training courses related to GMP.

Dave Burch, Director of Natural MedCo (operating subsidiary of the Resulting Issuer)

Dave Burch has over 40 years of growing experience of a wide variety of crops as owner of David Burch Farms, MND Greenhouses and The Flower Ranch. Mr. Burch possesses a unique ability to diagnose and maintain the health of a wide variety of plants as well as maintain a healthy crop through the use of natural pesticides and controlled environment. He has been a grower his entire life and since owning The Flower Ranch, he has branched into becoming an expert in modern pest control techniques, identifying growing issues and improving production methods. As leader in the hands-on production of our alternative products, he has gained a unique perspective in growing untraditional crops.

Jacqueline Scott, Chief Financial Officer

Ms. Scott's previous work experience includes five years as Chief Financial Officer for a manufacturer of agricultural products in Petrolia, Ontario and 20 years as Chief Financial Officer for Sydenham Community Credit Union (now Mainstreet Credit Union) in Strathroy, Ontario. She also previously acted as member of the board and Treasurer for both Participation House Support Services, London and WOTCH (now CMHA Middlesex). Ms. Scott holds a Certified General Accountant designation and graduated with a B.Mathematics from the University of Waterloo.

Ravi Sood, Director

Mr. Sood is the managing director of Signal 8 Limited based in Toronto, Canada. Mr. Sood has been a founder of and the principal investor in several businesses in emerging markets and currently serves as Executive Chairman and Director of Galane Gold Ltd. and Blockchain Power Trust and as a director of Feronia Inc. and ICC Labs Inc. He was the founder and Chief Executive Officer of Navina Asset Management Inc., a global asset management firm headquartered in Toronto, Canada. Mr. Sood led the investment activities of Navina and its predecessor company, Lawrence Asset Management Inc., from its founding in 2001 until he sold the firm in 2010. Mr. Sood was educated at the University of Waterloo (B.Mathematics) where he was a Descartes Fellow and the recipient of numerous national awards.

Clark Moeller, Director

Mr. Moeller lives in Wichita, Kansas and is the head of EQ Development, a company focused on private equity investments. With a background in lodging, commercial and residential real estate development, Mr. Moeller also has extensive experience in business operations across a wide variety of segments. Mr. Moeller has broad experience in the cannabis industry with investments in Canada and the Colorado market. Mr. Moeller graduated with honors and received his B.A. in United States History from the University of Kansas.

Jonathan Pollack, Director

Jonathan Pollack is the President of The JMP Group, a private investment and consulting firm. He is also a director of several public and private companies including CECO Environmental Corp. Mr. Pollack also served as a director of API Technologies Corp., Pinetree Capital Ltd., Hanfeng Evergreen Inc. and Lifebank Corp.

Previously, he served as Executive Vice President of API Technologies Corp., a leading provider of RF/microwave, microelectronics and security technologies for critical and high-reliability applications from 2009 and as a director from 2007 until January 2011 when it was sold. From March 2005 through its sale in 2009, he served as the Chief Financial Officer and Corporate Secretary of Kaboose Inc. Prior thereto, he worked in investment banking in New York.

Mr. Pollack received a Master's of Science in Finance from the London School of Economics and a Bachelors of Commerce from McGill University. He sits on the board of several philanthropic organizations including the Mt. Sinai Hospital Foundation, the Crescent School Foundation, and the Sterling Hall School.

Michael Young, Director

Mr. Young has extensive senior level executive management and trading experience in the Canadian and U.S. capital markets. He is currently Managing Partner of Cottingham Capital LLC, a property investment and development company. Throughout his career in finance and banking, he has built a strong network of Canadian, American and international investors. Most recently, he held the position of Managing Director and Co-Head of Trading for GMP Securities L.P. in Toronto, a leading independent investment dealer headquartered in Toronto, providing investment banking, institutional sales and trading and research to a global client base. Previously he established and ran the Equity Capital Markets desk for GMP Capital in New York City. Mr. Young began his career as an Equities Trader at GMP Securities L.P. in 2003. He was quickly promoted to Director and soon after became one of the youngest Managing Directors at the company in the firm's history. Mr. Young is an active sponsor of the Northern Bursary which provides post-secondary scholarships for high school graduates in Thunder Bay, Ontario.

Dr. Mehraneh Ebrahimi, Director

Is the head of academic research of her family's investment office, which holds various interests in agricultural, real estate and private equities. Prior to that, she has taught at Western University in Ontario, where she received her PhD in World Literature. Speaking four languages and conducting research on the role of the disenfranchised, women, and minorities in world affairs have helped Dr. Ebrahimi understand the unique international cultural kaleidoscope of Canada. She is the recipient of several teaching awards and scholarships and the author of a forthcoming book entitled Women, Art, and Literature in Diaspora. Her diverse experiences both academic and managerial shape her understanding of business and social life, especially women and immigrants.

Richard Kimel, Corporate Secretary

Mr. Kimel is a partner at the law firm of Aird & Berlis LLP. Mr. Kimel practices in the areas of corporate finance and corporate/commercial law with considerable experience in mergers and acquisitions (cross-border and domestic) of both public and private corporations, public offerings (both initial and secondary), private placement financings (including debt and equity offerings), hedge fund formations and financings, corporate governance matters, and the formation and completion of qualifying transactions for companies established under the TSXV Capital Pool Company program. Mr. Kimel acts as corporate counsel for numerous companies listed on the Toronto Stock Exchange and the TSXV. Mr. Kimel also acts as a director or officer for a number of his publicly listed clients. Mr. Kimel received his LL.B. from the University of Toronto and an Honours degree in Business Administration from the Richard Ivey School of Business at the University of Western Ontario.

Significant Conditions to Closing

The Brokered Private Placement and Debenture Offering are conditional upon each other. The completion of the Proposed Transaction is subject to a number of conditions precedent, including but not limited to: (a) obtaining necessary third party approvals (including the TSXV); and (b) successful completion of the Equity Offerings and Debenture Offering. There can be no assurance that the Proposed Transaction, the Equity Offerings or Debenture Offering will be completed as proposed or at all.

Sponsorship

It is expected that the Amalgamation will be exempt from the sponsorship requirements of the TSXV.

Arm's Length Transaction

The Amalgamation constitutes an "Arm's Length Transaction" within the meaning of the policies of the TSXV.

About Carlaw Capital V Corp.

Carlaw is a capital pool company formed under the TSXV Capital Pool Company program. Material information about Carlaw can be found on SEDAR under Carlaw's issuer profile at www.sedar.com.

Ownership of Carlaw Capital V Corp.

The current issued and outstanding share capital of Carlaw consists of 3,180,000 Carlaw Common Shares, options to purchase up to 320,000 Carlaw Common Shares pursuant to Carlaw's stock option plan and charitable options to purchase up to 40,000 Carlaw Common Shares. Such Carlaw securities will be adjusted pursuant to the Carlaw Stock Split.

Completion of the Proposed Transaction, Equity Offerings and Debenture Offering are subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable, disinterested shareholder approval. Where applicable, the Proposed 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 Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Carlaw should be considered highly speculative.

The TSXV has in no way passed upon the merits of the Proposed Transaction, the Equity Offerings or the Debenture Offering has neither approved nor disapproved the contents of this news release. Neither the TSXV nor its Regulation Service Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Certain statements in this press release constitute forward-looking information. All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Carlaw's future, strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Carlaw's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements.

Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to: Carlaw and NMC's ability to obtain any requisite regulatory or shareholder approvals, and to complete the Proposed Transaction, the Equity Offerings and/or the Debenture Offering on terms favourable to Carlaw and/or NMC, as applicable, or at all. Additional information identifying risks and uncertainties is contained in the Carlaw's filings with Canadian securities regulators, and available at www.sedar.com. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Carlaw. These forward-looking statements are made as of the date of this press release and the Carlaw assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.

   
For additional information, please contact:
   
Amar Bhalla Melinda Rombouts
CEO, CFO and Corporate Secretary President and CEO
Carlaw Capital V Corp. Natural MedCo
Telephone: (416) 922-9060 Telephone: (855) 628-6337

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