Atlas Blockchain enters LOI to acquire Isracann
ATLAS BLOCKCHAIN Group Inc. has entered into a non-binding letter of intent dated Oct. 8, 2018, between the company and Isracann Biosciences Inc., a private B.C. company. Operationally located in Israel, Isracann aims to embark on an industrial-scale cannabis farming enterprise targeting both domestic and international commercial opportunities. With three agreements in place, the venture holds rights to over 580,000 square feet of prime agricultural land with pre-existing production permits equivalent to Canadian ACMPR (Access to Cannabis for Medical Purposes Regulations) cultivation licensing. Israel has been a leader in cannabis research for over 50 years and further enjoys extremely favourable climatic conditions, both of which strategically factor into premium product development opportunities. Being proximally located to Europe’s undersupplied markets ideally situates Isracann with potential access to a consumer base, which, based on population alone, is larger than the size of the United States and Canada combined.
The letter agreement contemplates a proposed business combination transaction pursuant to which the company will acquire all the issued and outstanding common shares of Isracann in exchange for common shares of the company. The acquisition is an arm’s-length transaction and is expected to constitute a fundamental change under the policies of the Canadian Securities Exchange. Details of the acquisition Pursuant to the terms of the letter agreement, shareholders of Isracann will receive one Atlas share for each Isracann share held at the closing of the acquisition. It is currently anticipated that 43.48 million Atlas shares will be issued pro rata at a deemed price of 50 cents per Atlas share to the shareholders of Isracann.
In addition, each common share purchase warrant issued and outstanding, entitling holders to acquire Isracann shares, will be exchanged for one common share purchase warrant of the company on financially identical terms. It is currently expected that an aggregate of 28 million replacement warrants will be issued to the holders of Isracann warrants. The letter agreement sets out certain terms and conditions pursuant to which the acquisition will be completed. The acquisition remains subject to certain closing conditions, including, without limitation, the: (a) completion of customary due diligence, (b) negotiation and execution of a definitive agreement, (c) completion of a concurrent equity financing to raise aggregate minimum gross proceeds of $5-million and up to $15-million, (d) receipt of all required regulatory and third party approvals and, if applicable, the approval of the shareholders of the company and Isracann, respectively. There can be no guarantees that the acquisition will be completed as contemplated or at all. The company anticipates that certain of the Atlas shares issued pursuant to the acquisition may be subject to escrow requirements and hold periods required by CSE policies and applicable securities laws.
Prior to closing, the company will consolidate its issued and outstanding share capital on a one-new-Atlas-share-for-three-old-Atlas-share basis. The Atlas shares to be issued in connection with the acquisition, the concurrent offering and otherwise detailed in this press release will be issued on a postconsolidated basis. Concurrent financing Prior to the closing, Atlas and/or Isracann will complete a brokered and/or non-brokered offering of securities for gross proceeds of up to $15-million. Terms, including pricing, will be determined in the context of the market and will be announced by separate press release in due course. Closing of the concurrent offering is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including the approval of the CSE.
All securities issued in connection with the concurrent offering will be subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities laws. A finder’s fee may be paid in connection with the concurrent offering to eligible arm’s-length finders in accordance with CSE policies. The aggregate net proceeds from the concurrent offering will be used to complete the acquisition and to provide general working capital.
In connection with the acquisition, Atlas will advance $3-million to Isracann to finance Isracann’s working capital requirements for completion of the acquisition. The bridge loan will carry interest at a rate of 10 per cent per annum, payable annually in arrears, and will be secured by a general security agreement over all of the assets of Isracann. Assuming completion of the acquisition, the bridge loan will be forgiven on closing. Completion of the acquisition of Isracann Biosciences is subject to a number of conditions, including, but not limited to, shareholder consent and approval of the Canadian Securities Exchange as required.
About Isracann Biosciences Inc.
Isracann is an Israeli-based cannabis company, focused on becoming a premier cannabis producer offering low-cost production targeting undersupplied, major European marketplaces. Based in Israel’s agricultural sector, Isracann will leverage its development within the most experienced country in the
world with respect to cannabis research. The company has secured agreements with three licensed Israeli producers for medicinal marijuana cultivation. Disclosure and caution Further details about the proposed acquisition and the concurrent offering will be provided in a comprehensive press release issued upon the entering into of the definitive agreement and in the disclosure document to be prepared and filed in respect of the acquisition. Investors are cautioned that, except as disclosed in the disclosure document, any information released or received with respect to the acquisition may not be accurate or complete and should not be relied upon.
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