EDMONTON, AB, June 2, 2021 /CNW/ - Nova Cannabis Inc. (the
"Company" or "Nova") (TSXV: NOVC), today
announced several business developments intended to accelerate the
Company's growth, including:
- Entering into two conditional asset purchase agreements to
acquire a total of six retail cannabis locations in Ontario, which will be operated under the
"Value Buds" banner;
- Acquiring the Queen Street West "Nova Cannabis" store and
converting it to the "Value Buds" banner;
- Opening two additional "Value Buds" stores in Toronto;
- Is in the process of applying to graduate to the Toronto Stock
Exchange ("TSX") from the TSX Venture Exchange
("TSXV");
- Adopting an equity incentive plan to tie management
compensation to the performance of the common shares of Nova
("Shares"); and
- Retaining new investor relations and marketing advisory
firms.
Growth in Ontario: On Track
to open at least 30 Value Buds stores in 2021
Nova has entered into 21 lease agreements for new
retail locations across Ontario that will serve the communities where
the value-conscious cannabis consumer works, shops, and lives. Nova
anticipates all of these locations will be built and ready to
open by the end of 2021 (with stores operating as soon as Retail
Store Authorizations ("RSAs") and approvals have been
obtained from the Alcohol and Gaming Commission of Ontario ("AGCO")). An additional
30 plus locations in Ontario are
in various stages of due diligence and negotiation with
landlords.
Nova has also signed two asset purchase agreements to acquire a
total of six retail store locations in Ontario from two separate entities (the
"Transactions"). All six of these stores have received RSAs
from the AGCO and will open to the public upon receiving approval
to open from the AGCO.
"We are aggressively executing against our plan to expand the
Value Buds banner this year and the acquisition of these six
locations in Ontario provides us
greater speed to market and compliments our organic expansion
plans," said Darren Karasiuk, CEO of
Nova. "Each of the six locations has been issued a conditional RSA
and work will begin immediately upon closing the Transactions to
convert the stores to the Value Buds banner, and to obtain approval
to open from the AGCO, just in time to take full advantage of the
anticipated summer demand."
Total consideration payable on closing, for all six locations,
will be $0.8 million in cash and
$1.1 million in Shares, based on the
10-day volume weighted average price (VWAP) of the Shares on
June 1, 2021. Completion of the
transactions are conditional upon Nova's satisfaction of its due
diligence review, obtaining all necessary third-party approvals and
consents, including TSXV approval of the Transactions and listing
of the Shares, and other customary conditions for transactions of
this nature.
Acquisition of Queen Street West "Nova Cannabis" and
Conversion to "Value Buds"
On May 11, 2021, the Company
completed the acquisition of the "Nova Cannabis" store located at
499 Queen Street West, Toronto,
which was previously operated under an agreement between a
subsidiary of the Company and the license holder who obtained one
of the first 25 retail store authorizations in Ontario via the Ontario lottery process (the
"Applicant"). On November 29,
2020, the Applicant exercised its option under the agreement
to require Nova to purchase the assets of the store for
$1.0 million, plus customary
adjustments. On May 14, 2021, the
Company converted the store to the "Value Buds" banner.
Two New Value Buds Stores Opened in Toronto
On May 14, 2021, the Company
opened Value Buds Lansdowne, at 1287 Bloor Street West,
Toronto, and, on May 19th, opened Value Buds Queen
Street East, at 728 Queen Street East, Toronto.
"As previously announced, the conversion of our Nova Cannabis
stores in Alberta to the Value
Buds banner is proceeding at or better than expectations, and early
results are proving out our thesis that there is significant demand
for a value-focused cannabis retailer", noted Karasiuk. "Between
our acquisition of six soon to open locations, the three
Toronto locations we opened in May
and our robust pipeline of stores under development, we are well on
track to have a minimum of 30 Value Buds stores open in
Ontario, and a minimum 60 cannabis
retail stores operating in Alberta
and Saskatchewan by year end
2021."
Application for Graduation to TSX
The Company is pleased to announce that it is in the process of
applying for graduation from the TSXV to the TSX. Listing on the
TSX is subject to the Company fulfilling all requirements of the
TSX. The TSX is currently in the process of reviewing the Company's
initial application documents.
Adoption of 2021 Equity Incentive Plan
On May 17, 2021, the Company's
board of directors (the "Board") adopted a new equity
incentive plan (the "2021 Equity Incentive Plan"). The
purpose of the 2021 Equity Incentive Plan is to develop senior
management's interests in the Company's growth by providing them
with an opportunity to acquire proprietary interests in Nova, to
attract and retain valuable individuals to the Company using a
competitive method of compensation, and to align the interests of
senior management with the interests of shareholders by applying a
compensation mechanism which will promote maximized distributions
to shareholders and long-term growth.
The maximum number of Shares available for issuance from
treasury pursuant to the exercise or redemption, as applicable, of
awards granted under the 2021 Equity Incentive Plan, together with
Shares issuable pursuant to all other security-based compensation
arrangements of the Company, shall not exceed 10% of the total
issued and outstanding Shares (calculated on a non-diluted basis).
In accordance with the foregoing, for so long as the Shares remain
listed on the TSXV, the number of Shares available for issuance
from treasury pursuant to the exercise or redemption, as
applicable, of awards granted under the 2021 Equity Incentive Plan,
together with Shares issuable pursuant to all other security-based
compensation arrangements of the Company, shall be 5,668,568.
The types of awards available under the 2021 Equity Incentive
Plan include options, restricted share units, performance share
units, deferred share units, and dividend-equivalent rights.
The TSXV has conditionally approved the 2021 Equity Incentive
Plan subject to, among other things, the receipt of disinterested
Shareholder approval at the next annual and special meeting of the
shareholders of the Company to be held on June 22, 2021 (the "Meeting"). Further
details regarding the 2021 Equity Incentive Plan are included in
the management information circular of the Company which has been
delivered to shareholders and filed on SEDAR in connection with the
Meeting.
Retention of Investor Relations and Marketing Firms
Nova has also announced that it has retained the services of
Loderock Advisors Inc. ("Loderock Advisors") to provide
strategic investor relations and capital markets communication
services to the Company, and have retained Hybrid Financial Ltd.
("Hybrid Financial") to provide marketing services to the
Company.
LodeRock Advisors is a group of senior capital markets
communications executives who develop and execute communications
programs in order to help companies achieve their capital markets
objectives and capture the full potential of their public listing.
The engagement of LodeRock Advisors remains subject to the approval
of the TSXV. Under the terms of the agreement with LodeRock
Advisors, which will continue until either party has terminated the
agreement upon thirty days' notice, Nova will pay LodeRock Advisors
a monthly fee of $12,000 for ongoing
strategic communication services. At the time of this agreement
neither LodeRock Advisors, nor its principals, have any direct or
indirect interest in any Shares.
Hybrid Financial is a sales and distribution company that has
been engaged to heighten market and brand awareness for Nova and to
broaden the Company's reach within the investment community. Using
a data driven approach, Hybrid Financial provides its clients with
comprehensive coverage of both American and Canadian markets.
Hybrid Financial has agreed to comply with all applicable
securities laws and policies of the TSXV, and any other exchange
upon which the Shares are traded, in providing its services. Hybrid
Financial has been engaged by the Company for an initial period of
six months (the "Initial Term"), which Initial Term shall be
renewed automatically for successive periods thereafter, unless
terminated by the Company in accordance with the agreement. Hybrid
Financial will be paid a monthly fee of $15,000, plus applicable taxes, during the
Initial Term.
ABOUT NOVA CANNABIS INC.
Nova is one of Canada's largest
and fastest growing cannabis retailers with a goal to disrupt the
cannabis retail market by offering a wide range of high-quality
cannabis products at every-day best value prices. The Company
currently operates 54 locations across Alberta, Ontario, and Saskatchewan primarily under its Value Buds
and Nova Cannabis banners. The Company is majority owned by Alcanna
Inc. (TSX: CLIQ).
Nova's common shares trade on the TSX Venture Exchange under the
symbol "NOVC".
Additional information about Nova Cannabis Inc. is available at
www.sedar.com and the Company's website at www.novacannabis.ca.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements or
information (collectively "forward-looking statements")
within the meaning of applicable securities legislation.
Forward-looking statements are typically identified by words such
as "continue", "anticipate", "will", "should", "plan", "intention",
and similar words suggesting future events or future performance.
All statements and information other than statements of historical
fact contained in this news release are forward-looking statements.
In particular, this news release contains forward-looking
statements pertaining to: Nova's retail cannabis business strategy,
including organic growth and strategic acquisitions; Nova's
discount pricing model; the conversion of Nova Cannabis stores to
the Value Buds banner and the timing thereof; the Company's 2021
objectives, including planned construction of new stores, timing of
new store openings, evaluation of potential sites and sales growth,
particularly in the Value Buds banner; the ability of the Company
to obtain government licenses for its new stores; and expectations
as to consumer demands.
With respect to forward-looking statements contained in this
news release, the Company has made assumptions regarding, among
other things: the Company's ability to identify locations for,
construct and open, new stores and the cost related thereto; the
availability of hardware and equipment for those stores; government
regulation and applicable laws will not change in a manner adverse
to the Company; receipt of necessary regulatory approvals to open
new stores; the Company's ability to obtain leases for new sites
and attract the necessary personnel to operate new stores; the cost
of converting existing stores to the Value Buds banner; demand for
the products the Company sells; other factors that will drive sales
growth in the Value Buds banner; availability of acquisition
opportunities; sustainability of competitors' businesses and
competition in the retail cannabis industry, including from the
illicit cannabis market; consumer demands; and factors that
influence consumer behavior.
Although the Company believes that the expectations reflected in
the forward-looking statements, and the assumptions on which such
forward-looking statements are made, are reasonable, there can be
no assurance that such expectations and assumptions will prove to
be correct, especially given the unprecedented uncertainty of the
full extent and impact of COVID-19. Readers should not place undue
reliance on forward-looking statements included in this news
release. Forward looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that
may cause actual performance and financial results to differ
materially from any estimates, forecasts or projections. These
risks and uncertainties include, among other things, the duration
and severity of the COVID-19 pandemic on the business, operations
and financial condition of the Company; the risk that Nova will be
unable to execute its strategic plan and growth strategy, as
planned, without significant adverse impacts from various factors
beyond its control; dependence on suppliers; potential delays or
changes in plans with respect to capital expenditures and the
availability of capital on acceptable terms; risks inherent in the
retail cannabis industry; competition for, among other things,
customers, supply, capital and skilled personnel; changes in labour
costs and markets; incorrect assessments of the value of
acquisitions; general economic and political conditions in
Canada (including Alberta and Ontario), and globally; industry conditions,
including changes in government regulations; fluctuations in
foreign exchange or interest rates; unanticipated operating events;
failure to obtain regulatory and third–party consents and approvals
when required; changes in tax and other laws that affect us and our
shareholders; the potential failure of counterparties to honour
their contractual obligations; stock market volatility; and the
other factors described in the Company's public filings available
at www.sedar.com. Readers are cautioned that this list of risk
factors should not be construed as exhaustive.
The forward-looking statements contained in this news release
are made as of the date hereof. Except as expressly required by
applicable securities legislation, Nova does not undertake any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. The forward-looking statements contained in this news
release are expressly qualified by this cautionary statement.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
SOURCE Nova Cannabis Inc.