TORONTO, March 24, 2022 /CNW/ – Trees Corporation (NEO: TREE) (the “Company” or “Trees“), a next-now cannabis company at the intersection of community, content, and commerce, today announced amendments to its previously disclosed transaction with 1015712 B.C. Ltd. d/b/a Trees Cannabis (“101“).
Trees is pleased to announce that it has made certain amendments to the 101 transactions in connection with the acquisition of five (5) licensed retail cannabis stores located on Vancouver Island, British Columbia. Among other matters, the amendments resulted in the immediate acquisition by the Company of the Trees registered brand trademarks and clarified certain matters to govern the relationship between Trees and 101 pending the closing of the acquisition of the remaining assets upon receipt of approval from the British Columbia Liquor and Cannabis Regulation Branch (the “LCRB“).
Jeff Holmgren, President, and CFO of Trees, stated “With its high barrier of entry, Trees looks forward to soon solidifying its presence in the BC market through the closing of this transaction as a significant milestone to expanding the highly differentiated Trees brand.”
Background to the 101 Transaction
Trees entered into an asset purchase agreement with 101 in October of 2019, as amended and restated in February of 2020 and January of 2021 (the “101 Purchase Agreement“) which contemplated the purchase by Trees of up to eight retail cannabis stores in the province of British Columbia, subject to the receipt by Trees of all requisite licenses and approvals from the LCRB. 101 currently operates four retail cannabis stores in the Province of British Columbia (“BC“) with a fifth store anticipated to open in April 2022 in Victoria, BC.
Pursuant to the terms of the 101 Purchase Agreement, the consideration was to be satisfied by way of the issuance of 5,933,333 common shares in the capital of Trees (“Common Shares“). On February 10, 2021, 101 issued a secured promissory note (the “101 Note“) in favour of Trees to assist 101 in its ongoing development and operations to launch the initial 5 store locations while awaiting the closing of the asset purchase.
Amendments to the 101 Transaction
On March 24, 2022 the Company and 101 agreed to separate the terms of the transaction into two components – a share purchase component (the “Trees IP Purchase“), which is governed by the terms of a share purchase agreement dated March 24, 2022 among the Company, 101 and 11391461 Canada Ltd. (“TreesAcquireCo“) (the “Trees IP SPA“), and an asset purchase component (the “Retail Store Purchase“) which is governed by the terms of an amended and restated asset purchase agreement entered into immediately following the closing of the Trees IP Purchase (the “Retail Store APA“).
Pursuant to the Trees IP SPA, on March 24, 2022, the Company acquired all of the issued and outstanding securities of TreesAcquireCo, a company holding the “Trees” registered trademarks, including logos (the “Trees IP“) in exchange for 5,933,333 Common Shares. On closing of the Trees IP Purchase, 101 and TreesAcquireCo entered into a licensing agreement pursuant to which TreesAcquireCo has agreed to license, until the closing of the Retail Store Purchase, the Trees IP to 101 in exchange for an accruing royalty earned on gross retail sales from all of the operating retail cannabis stores subject to the Retail Store APA. In addition, the 101 Note was amended on the 101 SPA Closing Date to encompass all indebtedness owing by 101 to Trees, to add additional covenants, guarantees and default provisions and to provide that the 101 Note was no longer forgivable (the “Amended 101 Note“).
The Retail Store APA contemplates that the five (5) retail cannabis stores will be conveyed to TreesAcquireCo upon the satisfaction of all conditions precedent, including receipt of LCRB licensing approval. The purchase price paid for the assets will be equal to the amount outstanding under the Amended 101 Note on the date of closing and will be satisfied by the issuance by TreesAcquireCo of a note in favour of 101.
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 11 Trees branded storefronts in Canada, including seven (7) stores owned and operated in Ontario and four (4) stores operated in BC, subject to the closing of the acquisition of the assets of 101 pursuant to the terms of the Retail Store APA entered into between Trees and 101. The closing of the transactions contemplated by the Retail Store 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. Mr. Holmgren stated “With its high barrier of entry, Trees looks forward to soon solidifying its presence in the BC market through the closing of this transaction as a significant milestone to expanding the highly differentiated Trees brand across Canada.”
Forward-looking statements in this document include, among others, statements relating to the Trees’ expectations regarding its ability to solidify its presence in the BC market through the closing of the transactions contemplated by the Retail Store APA, the expansion of the Trees brand across Canada, , 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 expected receipt of approval from the LCRB, the completion of the transactions contemplated in the Retail Store APA 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. Such factors and risks include, among others: (a) the Company may require additional financing from time to time in order to continue its operations which may not be available when needed or on acceptable terms and conditions acceptable; (b) compliance with extensive government regulation; (c) domestic and foreign laws and regulations could adversely affect the Company’s business and results of operations; (d) the stock markets have experienced volatility that often has been unrelated to the performance of companies and these fluctuations may adversely affect the price of the Company’s securities, regardless of its operating peers; (e) adverse changes in the public perception of cannabis; (f) the impact of COVID-19; and (g) general business, economic, competitive, political and social uncertainties. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release.
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.
SOURCE Trees Corporation
For further information: Trees Corporation, Jeffrey Holmgren, President and Chief Financial Officer, Email: email@example.com