Danbel Ventures Inc. and MariCann Inc. Announce Letter Agreement Relating to Reverse Takeover Transaction and Closing of Financing

Danbel Ventures Inc. is pleased to announce that it has entered into a binding letter agreement (the “Letter Agreement“) with MariCann Inc. (“MariCann“), to acquire a 100% interest in MariCann which will constitute a reverse takeover of Danbel by the shareholders of MariCann (the “Transaction“). As presently contemplated, it is expected that the Transaction will be completed by way of a merger under the Business Corporations Act (Ontario) or similar business combination transaction. The parties intend to apply for listing of the Resulting Issuer’s common shares on the TSX Venture Exchange (“TSXV“), with such listing to be effective concurrently with the completion of the Transaction (the “Listing Date“).
About MariCann
MariCann is a vertically integrated producer and distributor of marijuana for medical purposes. The company was founded in 2013 and is based in Langton, Ontario where it operates a cultivation, marijuana extraction and distribution business under federal licence from the Government of Canada. As one of 36 companies with a federal licence to cultivate cannabis and one of 22 independent licensed producers with a federal licence to process and distribute cannabis, MariCann services a patient base with more than 3,000 active patients. MariCann is currently undertaking an expansion of the cultivation and support facilities to support existing and future patient growth.
Terms of the Transaction
As part of the Transaction, Danbel will seek shareholder approval for the following: (i) the Transaction, (ii) a change of its name as determined by MariCann (the “Resulting Issuer“), (iii) a consolidation of its common shares at a ratio of 1 new common share for such number of Danbel shares (the “Consolidation“) that results in Danbel having a maximum of 1,250,000 post-Consolidation common shares at a deemed price of $1.00 per share outstanding on a fully diluted basis on the closing date, (iv) the election of five (5) new board members who will replace the existing board members and take office upon completion of the Transaction; and (v) all such other ancillary matters as may be required. In addition, all current outstanding debt of Danbel will be settled by way of issuance of 5,500,000 common shares prior to closing and all unexercised incentive stock options of Danbel will be cancelled immediately prior to the closing of the Transaction.
Pursuant to the terms of the Transaction, each issued and outstanding common share of MariCann will be exchanged for one (1) common share of the Resulting Issuer. In addition, all outstanding incentive stock options and purchase warrants of MariCann will be exchanged for an option or warrant of the Resulting Issuer on equivalent terms after having given effect to all of the transactions contemplated by the Transaction.
MariCann completed a $22,500,000 financing on the date hereof (the “Financing“) with Dundee Securities Ltd. (the “Agent“). Pursuant to the terms of the Financing, MariCann issued 22,500 units (the “Units“), with each Unit comprised of one senior unsecured convertible debenture with a principal amount of $1,000 (a “Debenture“) and 500 common share purchase warrants (the “Warrants“). Immediately prior to completion of the Transaction, the principal amount of the Debentures will be converted into common shares of MariCann at a conversion price of $1.00 per share and subsequently be exchanged for common shares of the Resulting Issuer pursuant to the Transaction. The Warrants will similarly be exchanged pursuant to the Transaction or will otherwise be exercisable into common shares of the Resulting Issuer at an exercise price of $1.25 per share for a period of two years from the Listing Date, subject to an accelerated expiry in the event that the volume weighted average price of the Resulting Issuer common shares for any 20 consecutive trading days equals or exceed $1.90.
As partial consideration for their services, the Agent was issued 900,000 compensation options (the “Compensation Options“). Each Compensation Option will be exchanged pursuant to the Transaction or will otherwise be exercisable to purchase one unit of the Resulting Issuer at an exercise price of $1.00 for a period of two years from the Listing Date. Each unit will be comprised of one common share and one common share purchase warrant of the Resulting Issuer, with each warrant entitling the holder to acquire one common share of the Resulting Issuer for a period of two years from the Listing Date.
Upon completion of the Transaction, it is anticipated that the Resulting Issuer will have approximately 68,701,298 Resulting Issuer common shares issued and outstanding, which includes the conversion of the Debentures issued under the Financing. It is also anticipated that there will be 16,536,355 warrants and stock options of the Resulting Issuer outstanding, exercisable into 16,536,355 Resulting Issuer common shares and 900,000 Compensation Options outstanding.
The completion of the Transaction will be subject to, among other things, the execution of definitive documentation, the completion of all necessary due diligence and the receipt of any required shareholder, TSXV or other regulatory approvals. Additional information with respect to the Transaction will be provided in a subsequent news release once further terms are settled and a definitive agreement is entered.
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