TORONTO, ON – July 13, 2022 – Trees Corporation (NEO:TREE) (the “Company” or “Trees”), a next-now cannabis company at the intersection of community, content, and commerce, is pleased to announce that it has completed its acquisition (the “Acquisition”) of 100% of the equity interests of 2707461 Ontario Ltd. (“Camp”) from Barnard Cann Ltd. (the “Vendor”). Camp operates one licensed retail cannabis store in Burlington, Ontario, located in the heart of Burlington at the intersection of Guelph Line and New Street. Operational since February 2020, this location was a round 2 licence lottery winner, one of the earliest entrants to the Burlington community and has since established a strong loyalty among Burlington shoppers.
Michael Klein, CEO of Trees and Jeff Holmgren, President of Trees jointly said “We are thrilled to add Camp Cannabis in Burlington to our growing portfolio of successful Trees branded storefronts in Ontario, now counting 13 stores nation wide. With plans to ramp up our acquisition pace in the months ahead while also leveraging the strength of the cannabisMD.com platform, Trees will continue to reach and educate new consumers across ever broadening consumer segments and need states.”
As previously disclosed in the Company’s news release dated March 28, 2022, the Company had entered into an agreement to purchase all of the issued and outstanding shares of the Vendor (which included 3 additional stores in Ontario) however, Trees and the Vendor agreed to mutually terminate this previous agreement in place of a new agreement to acquire Camp, a subsidiary of the Vendor, which operates a round 2 lottery store at 3007 New Street, Burlington ON.
The purchase price payable in connection with the Acquisition was paid as follows:
- $25,000 in cash to the Vendor;
- A credit against the purchase price for $50,000 previously advanced to the Vendor by Trees; and
- Any working capital deficiency or excess paid in accordance with the SPA.
Camp has debts (in addition to normal course working capital liabilities) in the amount of approximately $380,000, comprised of (a) $300,000 owing to Trees pursuant to a grid promissory note dated March 11, 2020, as amended, and (b) approximately $80,000 owing to a third party vendor.
On closing, a further debt in the amount of $350,000 owing by the Vendor to a creditor (the “Creditor”) was terminated in exchange for the issuance by Trees of an unsecured convertible debenture in the amount of $180,000 payable to the Creditor (the “Convertible Debenture”). The Convertible Debenture bears interest at 7.5% compounding annually, payable monthly in cash, matures on the second anniversary of the closing date, and allows for the principal owing thereunder to be convertible into common shares in the capital of Trees (“Debenture Shares”) at the option of the Creditor, no sooner than the first anniversary of the closing date, at a conversion price being the greater of (X) $0.15, and (Y) the closing price of Trees’ common shares at the close of trading on the date prior to the conversion date, less a 10% discount.
Trees is a cannabis company at the intersection of community, content, and commerce. Publicly traded, Trees offers a differentiated retail experience, combined with digital platforms that aim to educate and amplify, unlocking emerging consumer segments and need states that allows Trees to uniquely engage the 360 cannabis consumer. The company has 13 Trees branded storefronts in Canada, including eight (8) stores owned and operated in Ontario and five (5) stores operated in BC, subject to the closing of the acquisition of the assets of 101 pursuant to the terms of the third amended and restated asset purchase agreement between Trees and 101 (the “APA”). The closing of the transactions contemplated by the APA is subject to certain conditions precedent, including the receipt of certain licensing approvals and related regulatory consents.
Cautionary Note Regarding Forward-Looking Statements
This press release contains statements that constitute “forward-looking information” (“forward-looking information”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking information and are based on expectations, estimates and projections as at the date of this news release. Any statement that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information.
Forward-looking statements in this document include, among others, statements relating to the closing of the transactions contemplated by the APA, expectations regarding the Company’s ability to unlock and capture emerging consumer segments across its platforms, expectations regarding the Company’s ability to engage its customers and new consumer segments and need states, the expectation that the Company will be successful in its growth strategy, and other statements that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking information contained in this news release represents the expectations of the Company as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. The Company undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.
The NEO Exchange has neither approved nor disapproved the contents of this press release and accepts no responsibility for the adequacy or accuracy of this release.
For more information, please contact:
President and Chief Financial Officer