Fiore Cannabais Ltd. (FIORF)

[LongNDeep2]

LIHT NEWS

https://www.newsfilecorp.com/release/45019

Kelowna, British Columbia--(Newsfile Corp. - May 24, 2019) - Liht Cannabis Corp. (CSE: LIHT) (OTCQX: LIHTF) ("Liht" or the "Company"), a licensed cannabis cultivator and producer, is pleased to announce that it has executed a letter of intent to reach an agreement in principle (the "Agreement"), dated April 17, 2019, whereby the Company, or its wholly-owned subsidiary, will seek to acquire all or substantially all of the equity interests of the ACC Group of Companies ("ACC"), a Nevada-based group of companies licensed for cannabis cultivation and well-known for its award-winning cannabis cultivars. Liht management anticipates the execution of a definitive agreement (the "Definitive Agreement") to acquire ACC will take place on or prior to June 15, 2019, with the closing of the transaction (the "Closing") anticipated to follow shortly thereafter upon the satisfaction of such terms and conditions precedent to the Closing, which are customary for transactions of this nature. Following the completion of the transaction contemplated in the Agreement (the "Proposed Transaction"), the Company will integrate ACC while rebranding itself as "Citation Growth Corp.", reaffirming its status as a true multi-state operator.

Rahim Mohamed, CEO of Liht, commented, "We believe the accretive benefits derived from the acquisition of ACC, which include the team's advanced cannabis seed genetics program, will provide Liht with an experienced and operationally diverse industry partner with which to progress our proprietary cultivation program - furthering Liht's stated mission to continually set new industry standards for quality, cost, and margin, in every jurisdiction in which we operate." Mr. Mohamed continued, "Liht anticipates the superior quality, capacity, and reputation afforded by the acquisition of ACC will accelerate our Nevada program and position Liht to become the pre-eminent cannabis cultivator and producer in the state."

Upon completion of the Proposed Transaction, the Company anticipates that it will have completed a strategic alignment in its Nevada operations to become a dominant cultivator and distributor of premium cannabis products to Nevada's significant and vibrant medical and recreational markets. Liht believes the unparalleled agronomic ability and cutting-edge cannabis marketing infrastructure offered by the acquisition of ACC will bring an additional wealth of comprehensive cannabis experience and synergies to a Liht team that is, itself, already steeped in expert organic growing methodologies.

Following the Closing of the Proposed Transaction, Liht anticipates that the acquisition of ACC will:

create one of the largest license holders in the State of Nevada, with an estimated, consolidated licensed footprint for the combined entity of up to 566,000 ft2, consisting of up to 550,000 ft2 in cannabis cultivation space and up to 16,000 ft2 in processing space for cannabis concentrates and edibles, assuming the successful completion of all proposed site phases, with an estimated capital expenditure requirement for the combined entity of approximately US$90.0MM;
significantly enhance Liht's Nevada operations by combining the Company's comprehensive experience in organic cultivation techniques with ACC's award-winning seed genetics program, fostering a new, premium cannabis powerhouse in the State of Nevada, and any such other jurisdictions it may enter, as regulations and legislation may permit;
Opportunity to build upon ACC's successful CY2018 unaudited financial performance, where it achieved revenue of US$7.9MM, gross margin of 57%, adjusted EBITDA of US$1.0MM, and adjusted EBITDA margin of 12.8%;
provide the Company with an ACC management-estimated, annualized approximately US$115MM in additional forward-looking revenue, at an ACC management-estimated, annualized EBITDA margin of approximately 35.0%, assuming the completion of all proposed phases and maximum operational efficiencies being realized, with an estimated capital expenditure requirement of approximately US$50.0MM; and
enhance the Company's current suite of portfolio products with the addition of three (3) new, established brands within the State of Nevada, which include BluntBox, Garden of Weeden, and Superior, complementing Liht's established FIORE cannabis flower brand.
Howard Misle, who will be joining Liht as the Company's CEO upon the Closing of the Proposed Transaction, remarked, "ACC has been pleased to observe the significant traction and rapid growth achieved by the Liht team since its entrance into the Nevada cannabis market, while also noting Liht's reputation is quickly becoming synonymous with success, innovation, and high-quality production." Mr. Misle added, "In electing to partner with Liht and its experienced management team, ACC believes it will gain the expanded platform and capital markets support network necessary to leverage our collective success, allowing for an eye toward future growth outside of the State of Nevada." Following the appointment of Howard Misle as CEO, Rahim Mohamed will serve as President of the Company.

Terms of the Proposed Transaction

Pursuant to the terms of the Agreement, Liht shall, prior to the Closing, consolidate its common shares on a four (4) to one (1) basis (the "Post-Consolidation Shares") and complete a change in name to "Citation Growth Corp." and request assignment of a new trading symbol as may be mutually agreed upon between Liht and ACC and as approved by the Canadian Securities Exchange ("CSE").

Upon the Closing, it is proposed that the Company will issue an aggregate 35,000,000 Post-Consolidation Shares (the "Consideration Shares") to the former securityholders of the parent ACC entity, which amount shall be inclusive of approximately 11,500,000 in Post-Consolidation Shares issuable upon the conversion of the ACC Amended Notes (as defined below).

The parent ACC entity currently has approximately US$15,000,000 in convertible notes (the "Notes") outstanding. As a condition of the Proposed Transaction, the holders of the Notes will have to agree to restructure the Notes such that all principal and interest outstanding at the time of Closing will convert into units comprised of one (1) Consideration Share and one (1) Post-Consolidation Share purchase warrant (the "Amended Warrants"), with each full Amended Warrant exercisable at C$2.50 per Post-Consolidation Share for a period of twenty-four (24) months following the Closing (the "ACC Amended Notes"). The Amended Warrants will contain an acceleration provision such that in the event the volume weighted average trading price of the Post-Consolidation Shares on the CSE is greater than C$3.50 for a period of ten (10) consecutive trading days, the Company may, upon providing notice to the holders of the Amended Warrants, accelerate the expiry of the Amended Warrants to a period that is thirty (30) days from the date such notice is given.

All Consideration Shares (including Post-Consolidation Shares issuable upon the exercise of the Amended Warrants) issued to management of ACC pursuant to the Proposed Transaction will be subject to three (3) year escrow provisions ("Escrow") substantially similar of those that are required for an emerging issuer under National Policy 46-201 Escrow for Initial Public Offerings. All other Consideration Shares, including any Consideration Shares issued in exchange for outstanding convertible securities in the parent ACC entity, shall be subject to resale restrictions which will not allow for any resale or transfer until the date that is four (4) months and one (1) day following completion of the Proposed Transaction.

Further, subject to the policies of the CSE and applicable securities legislation, the Company and ACC will negotiate in good faith to implement a management incentive plan allowing for the issuance of up to US$10,000,000 in Post-Consolidation Shares, based upon the achievement of certain performance milestones for each its Canadian and United States ("US") operations, to be defined in further detail in the Definitive Agreement.

Additional details regarding the Proposed Transaction will be provided in a comprehensive press release if and when the parties enter into the Definitive Agreement. The Definitive Agreement will incorporate the principal terms of the Proposed Transaction described herein, as same may be modified by agreement between the Company and ACC, and in addition, such other terms and provisions of a more detailed structure and nature as the parties may agree upon after receiving further tax, legal, securities, regulatory, and financial advice from their respective advisors. The Proposed Transaction is subject to customary conditions for a transaction of this nature, which includes all necessary securityholder and corporate approvals, third-party consents, permits, including those of governmental authorities, and the approval of the CSE, if required. The Proposed Transaction remains subject to the negotiation and execution of the Definitive Agreement and the satisfactory completion of due diligence.

Concurrent Equity and Debt Financing

Concurrent with the Closing of the Proposed Transaction, the Company has agreed to undertake an equity financing of up to US$10MM, along with a potential debt financing of up to US$17MM secured against the Company's North Las Vegas assets. Further, the Company and ACC may elect to jointly pursue an additional unsecured non-dilutive debt financing of up to US$7MM, for further development of ACC's Pahrump, Nevada licensed assets.

About Liht Cannabis Corp.

Liht Cannabis Corp. is a publicly traded company that has been investing in the medical and recreational cannabis space since 2014. Liht has rapidly expanded its operating portfolio to include cultivation, production, and dispensary locations in key North American state-legal jurisdictions, such as Washington State, Nevada, and California, and is seeking expansion opportunities worldwide.

www.lihtcannabis.com

About the ACC Group of Companies

ACC is a group of privately held companies that have held indoor cannabis cultivation licensing in the State of Nevada since 2014. Primarily located in Las Vegas, Nevada, ACC prides itself on its expansive collection of premium cannabis cultivars and its innovative seed genetics program.

For Further Information:

Rahim Mohamed, CEO
[e-mail]
[phone]

Social Media:
www.twitter.com/lihtcannabisco
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