Aumento Capital V Corporation
TSX VENTURE : AMN.P

November 08, 2016 08:07 ET

Aumento Capital V Corporation Enters Into Letter Agreement With WeedMD RX Inc. for Qualifying Transaction

TORONTO, ONTARIO--(Marketwired - Nov. 8, 2016) - Aumento Capital V Corporation (TSX VENTURE:AMN.P) ("Aumento") is pleased to announce that it has signed a letter agreement (the "Agreement") with WeedMD RX Inc., a corporation existing under the federal laws of Canada ("WMD"), which outlines the terms and conditions pursuant to which Aumento and WMD will complete a transaction that will result in a reverse take-over of Aumento by the shareholders of WMD (the "Transaction"). The Agreement was negotiated at arm's length and is effective as of November 4, 2016.

The Agreement is to be superseded by a definitive merger or amalgamation agreement (the "Definitive Agreement") to be signed on or before December 31, 2016 (or such other date as may be mutually agreed in writing between Aumento and WMD). The Transaction is subject to requisite regulatory approval, including the approval of the TSX Venture Exchange (the "TSXV"). The legal structure for the Transaction will be confirmed after the parties have considered all applicable tax, securities law and accounting efficiencies.

Aumento is incorporated under the provisions of the Business Corporations Act (Ontario) with its registered and head office in Toronto, Ontario. It is a capital pool company and intends for the Transaction to constitute its "Qualifying Transaction" as such term is defined in the policies of the TSXV. Aumento is a "reporting issuer" in the provinces of Ontario, British Columbia and Alberta.

Since the Transaction is not a non-arm's length transaction, Aumento is not required to obtain shareholder approval for the Transaction.

Trading in the common shares of Aumento has been halted. It is unlikely that the common shares of Aumento will resume trading until the Transaction is completed and approved by the TSXV.

Conditions to Transaction

Prior to completion of the Transaction (and as conditions of closing, among other things):

  • The parties will prepare a filing statement in accordance with the rules of the TSXV, outlining the terms of the Transaction.
  • WMD and Aumento will enter into a Definitive Agreement in respect to the Transaction on or before December 31, 2016.
  • WMD will obtain the requisite shareholder approvals for the Transaction.
  • All requisite regulatory approvals relating to the Transaction, including, without limitation, TSXV approval, will have been obtained.

The Transaction

Pre-Closing Capitalization of Aumento

As of the date hereof, Aumento has 1,848,332 common shares ("Aumento Shares") issued and outstanding and options to acquire an aggregate of 286,332 additional Aumento Shares at an exercise price of $0.60 per Aumento Share.

Pre-Closing Capitalization of WMD

As of the date hereof, WMD's authorized capital consists of an unlimited number of common shares ("WMD Shares"), of which 36,418,573 are issued and outstanding, and another 900,000 which are contractually to be issued upon the occurrence of certain events. WMD also has outstanding securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 1,759,990 WMD Shares at an exercise price of $1.00 per share.

In addition, WMD expects to close a principal amount $7,600,000 convertible debenture unit financing (the "Convertible Debenture Financing") with a syndicate of agents led by Dundee Securities Ltd., and including Canaccord Genuity Corp. and Echelon Wealth Partners Inc. (the "Agents"). Pursuant to the Convertible Debenture Financing, WMD will issue 7,600 units (the "Units"), with each Unit to be comprised of one debenture (a "Debenture") with a principal amount of $1,000 and 1,333 warrants (the "Warrants"). Immediately prior to completion of the Transaction, the principal amount of the Debentures will be automatically convertible into common shares of WMD at a conversion price of $0.75 per share. The Warrants are exercisable into common shares of WMD at an exercise price of $1.00 per share (upon completion of the Transaction, such Warrants to be exercisable into common shares at an exercise price as adjusted by the Exchange Ratio (as defined below)) for a period of two years from the completion of the Transaction. The net proceeds from the Convertible Debenture Financing will be used for general corporate purposes and to provide working capital to the Resulting Issuer.

As partial consideration for their services, the Agents shall be issued 352,000 compensation options (the "Compensation Options"). Each Compensation Option will entitle the holder thereof to purchase one unit of WMD at an exercise price of $0.75 for a period of two years from the completion of the Transaction, with each unit being comprised of one common share of WMD and one Warrant (all as adjusted by the Exchange Ratio).

Terms of the Transaction

Aumento will acquire all of the common shares of WMD pursuant to the terms of the Definitive Agreement by exchanging 1.25 common shares of Aumento for each common share of WMD (the "Exchange Ratio").

About WeedMD RX Inc.

WeedMD is a licensed producer of medical cannabis pursuant to the Access to Cannabis for Medical Purposes Regulations (ACMPR). WeedMD operates a 25,000 square foot, scalable production facility in Aylmer, Ontario with four acres of property for future expansion. The Company is focused on providing consistent, quality medicine to the long-term care and assisted living markets in Canada through its comprehensive platform developed exclusively for that industry. WeedMD is dedicated to educating healthcare practitioners and furthering public understanding of the role medical cannabis can play as a viable alternative to prescription medication in relieving a variety of chronic medical conditions and illnesses.

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. Aumento is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the TSXV, however, there is no assurance that an exemption is available or that Aumento will ultimately obtain an exemption if one is available. Aumento intends to include any additional information regarding sponsorship in a subsequent press release.

All information contained in this news release with respect to Aumento and WMD was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Aumento will issue additional press releases related to the final legal structure of the Transaction, officers and directors of the resulting issuer, sponsorship and other material information as it becomes available.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Convertible Debenture Financing; future developments; use of funds; and the business and operations of the resulting issuer after the proposed transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive shareholder or regulatory approvals; and the results of continued development, marketing and sales. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Aumento and WMD disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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