Auxly Cannabis Group Inc. (TSX - XLY) (OTCQX:
CBWTF) ("
Auxly" or the
"
Company"), a leading consumer packaged goods
company in the cannabis products market, announced today that it
has entered into a definitive agreement with Myconic Capital Corp.
(
NEO: MEDI) (“
Myconic”), an
investment issuer with a diversified portfolio focused on emerging
companies, pursuant to which Myconic will acquire all of the issued
and outstanding shares of KGK Science Inc. (“
KGK”)
(the “
Transaction”) for up to $16.5 million in
value comprised of:
- $12.5 million
purchase price from Myconic in the form of:
- $1.5 million in
cash payable on the closing date of the Transaction;
- $1.0 million in
cash payable six months after the closing date of the Transaction;
and
- $10.0 million in
common shares in the capital of Myconic (“Myconic
Shares”) at a price per Myconic Share of $1.55 (being
6,451,612 Myconic Shares) all to be issued on the closing date of
the Transaction, with equal tranches becoming freely tradeable on
the four, six, nine and 12 month anniversaries of the closing date
of the Transaction;
- $1.5 million
milestone payment, payable in cash or Myconic Shares, at the option
of Myconic, if KGK achieves gross revenues of $8 million in any
12-month period during the two years following the closing date of
the Transaction; and
- $2.5M credit
against future KGK services, reflected in a 10-year service
agreement between Auxly and KGK.
The Transaction is expected to close on or
around the week of June 7, 2021 and is subject to customary closing
conditions and regulatory approvals, including the approval of the
NEO Exchange.
“This agreement with Myconic is a win-win for
Auxly and its shareholders in both the short and long-term, as the
additional capital can be deployed into our core business and
accelerates Auxly’s path to profitability, while continuing our
long-standing relationship with KGK to leverage their deep clinical
expertise as we continue to bring innovative cannabis products to
market that meet our consumer promise of quality, safety and
efficacy,” said Hugo Alves, CEO, Auxly. “KGK is an outstanding CRO
that knows how to unlock value in emerging industries through
clinical work and will be an excellent fit with the team at
Myconic.”
“This is an exciting day for KGK as we look to
bring our years of experience as a leading CRO into the field of
psychedelics research, which holds great promise for helping people
overcome a wide range of illnesses,” said Najla Guthrie, President
& CEO, KGK. “We’ve gained invaluable insight from our
partnership with Auxly and look forward to continuing our
relationship and helping them bring safe and effective cannabis
products to market.”
“The investment that Myconic is making to
acquire KGK is very exciting and I look forward to welcoming the
KGK team and their valuable expertise to our company,” said Robert
Meister, Chief Executive Officer of Myconic. “On behalf of the
Board of Directors, I would like to commend Auxly on their
professionalism and transparency throughout the Transaction thus
far and look forward to our companies working together for many
years into the future, long after the closing date,” added Mr.
Meister.
With the sale of KGK, Auxly gains additional
liquidity to support the Company’s ongoing commercial operations as
it continues to expand its product offering in Canada and execute
on its business strategy.
ON BEHALF OF THE BOARD"Hugo Alves" CEO
About Myconic Capital Corp. (CSE:
MEDI)
Myconic Capital Corp is an investment issuer
with a diversified portfolio that is focused on emerging companies
active in the high-tech, real estate, cannabis, mining and health
and wellness sectors.
About Auxly Cannabis Group Inc. (TSX: XLY)
Auxly is a vertically integrated cannabis
company dedicated to bringing branded cannabis products to market
that consumers love and trust. Our team of professionals and
cannabis enthusiasts are united by a shared commitment to quality
and our consumers. We build powerful value propositions with brands
that connect and products that deliver on our consumer promise of
quality, safety and efficacy.
Learn more at www.auxly.com and stay up to date at Twitter:
@AuxlyGroup; Instagram: @auxlygroup; Facebook:
@auxlygroup; LinkedIn: company/auxlygroup/.
Investor Relations:
For investor enquiries please contact our
Investor Relations Team: Email: IR@auxly.comPhone:
1.833.695.2414
Media Enquiries (only):
For media enquiries or to set up an interview please
contact:Email: press@auxly.com
Notice Regarding Forward Looking
Information:
This news release contains certain
"forward-looking information" within the meaning of
applicable Canadian securities law. Forward-looking
information is frequently characterized by words such as "plan",
"continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed" and other
similar words, or information that certain events or conditions
"may" or "will" occur. This information is only a prediction.
Various assumptions were used in drawing the conclusions or making
the projections contained in the forward-looking information
throughout this news release. This information is only a
prediction. Various assumptions were used in drawing the
conclusions or making the projections contained in the
forward-looking information throughout this news release.
Forward-looking information includes, but is not limited to: the
receipt of the necessary regulatory approval for the Transaction
and the timing of such approval; the timing and proposed completion
of the Transaction; the Company’s execution of its product
development and commercialization strategy; consumer preferences;
political change, future legislative and regulatory developments
involving cannabis and cannabis products; and competition and other
risks affecting the Company in particular and the cannabis industry
generally.
A number of factors could cause actual results
to differ materially from a conclusion, forecast or projection
contained in the forward-looking information in this release
including, but not limited to, whether: the Transaction can be
completed on the anticipated terms and timeline; and general
economic, financial market, regulatory and political conditions in
which the Company operates will remain the same. Additional risk
factors are disclosed in the annual information form of the Company
for the financial year ended December 31, 2020 dated April 23,
2021.
New factors emerge from time to time, and it is
not possible for management to predict all of those factors or to
assess in advance the impact of each such factor
on Auxly’s business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking information.
The forward-looking information in this release is based on
information currently available and what management believes are
reasonable assumptions. Forward-looking information speaks only to
such assumptions as of the date of this release. In addition, this
release may contain forward-looking information attributed to third
party industry sources, the accuracy of which has not been verified
by Auxly. The purpose of forward-looking information is
to provide the reader with a description of management's
expectations, and such forward-looking information may not be
appropriate for any other purpose. Readers should not place undue
reliance on forward-looking information contained in this
release.
The forward-looking information contained in
this release is expressly qualified by the foregoing cautionary
statements and is made as of the date of this release. Except as
may be required by applicable securities laws, Auxly does
not undertake any obligation to publicly update or revise any
forward-looking information to reflect events or circumstances
after the date of this release or to reflect the occurrence of
unanticipated events, whether as a result of new information,
future events or results, or otherwise.
Neither Toronto Stock Exchange nor its
Regulation Services Provider (as that term is defined in
the policies of the Toronto Stock Exchange)
accepts responsibility for the adequacy or accuracy of
this release.
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