EXMceuticals Inc. Announces Transformational Merger with Global Cannabinoids and Launches Concurrent Equity Financing

ID: 1565287
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VANCOUVER, BRITISH COLUMBIA, March3rd, 2021 - EXMceuticals Inc. (CSE: EXM) (FSE: A2PAW2) (the "Company" or "EXM"), ) an emerging bio-sciences company specializing in the production of unique cannabinoid formulations, is pleased to announce: i) a proposed merger (the Merger) with Global Cannabinoids (GC), a leading B2B US distributor of bulk and wholesale hemp derived cannabinoids and finished products; and (ii) a best-efforts, private placement (the Private Placement) of up to C$6.0 million (collectively, the Transaction). This Transaction will create a leading company in the distribution of hemp and cannabinoid-based products (the Resulting Issuer). Following the completion of the Merger, the Resulting Issuer will operate under the GCs corporate name.

The Transaction brings together GC, which is a leading US-based online platform for the distribution of premium wholesale American hemp oil, extract, isolates and finished products with EXM, which will allow the Resulting Issuer to conceivably expand beyond the US and import, export, research and refine cannabinoids and cannabis-based products through EXMs Portugal hub into the European Union.

EXM could not be more excited to be combining operations with GC. As pioneers in the industry, the management team at GC have built a very impressive business footprint and distribution network while generating meaningful revenue. GC provides B2B customers with products and services that deliver an unmatched level of consistency and quality in the fastest possible time. We feel enormous growth opportunities exist in the US marketplace and beyond, with EXMs operations in Portugal providing an immediate springboard to access the entire emerging European marketplace, for all legal cannabinoids commented Jonathan Summers, CEO of EXM.

The team at EXM shares the same vision for the future as we do. GCs commitment to quality, consistency and best in class pricing, combined with EXMs global reach, will allow for rapid expansion to customers in emerging markets. We are incredibly excited for the opportunities ahead! stated GCs Chief Executive Officer Kelly Ann Lewis-Bortman.



Together, the US and Vancouver based companies will be focusing on expanding their footprint worldwide catering to hemp, CBD and ultimately cannabis-based products. The combined teams deep global network will complement the organic cost saving synergies of the Merger as well as continue pursue market share in the projected $123 billion CBD market by 2027 https://www.researchandmarkets.com/
.

Proposed Transaction

EXM has entered into an exclusive non-binding letter of intent (the LOI) effective February 28, 2021 with GC, pursuant to which the parties propose to effect a business combination whereby EXM and GC would combine their respective businesses. Pursuant to the LOI, the parties will work to prepare and execute a definitive transaction agreement (the Definitive Agreement). The Definitive Agreement is expected to provide for the combination of EXM and GC through the issuance of an aggregate of 168,000,000 common shares of EXM (EXM Shares). The Parties have agreed to exclusivity, and completion of the Merger will be subject to customary closing conditions to be set forth in the Definitive Agreement. EXM and GC expect to enter into a Definitive Agreement within the next 30 days and close on the Transaction in Q2 2021.

After giving effect to Definitive Agreement, the holders of GC will own approximately 66% of EXMs issued and outstanding shares on a pro forma basis and existing EXM shareholders will hold approximately 33% of EXMs issued and outstanding shares on a proforma basis. The Merger will constitute a fundamental change of the Company under the policies of the Canadian Stock Exchange (CSE). EXM is an arms length party to GC.

Highlights of The Transaction

Management believes the terms of the Merger are highly accretive to the Resulting Issuer and will lead to establish strong revenues and cash flow from operations positioning the Resulting Issuer to be a global leader in the hemp-based CBD wholesale market and beyond.

- Market Opportunity: Positions the Resulting Issuer to capitalize on the expected $123 billion global CBD industry by 2027 with a unique digital platform for the global distribution of cannabinoid based products1
- Global Focus: GCs strong U.S. sales channels combined with EXMs existing assets and license in Portugal establishes growing global revenue capabilities and vertical supply chain in the emerging EU cannabinoid market
- Online CBD Leader: GC currently services over 70,000 customers across with its over 1,000 product SKUs in 2020
- Customer Focused Data: Distribution network for bulk wholesale and nationally recognized CBD brands across a wide array of customers provides valuable data, consumer insights, and product knowledge as global companies look to enter the cannabis marketplace
- Strong Sales Profile: GC generated sales of approximately C$16 million in 2020 (unaudited)
- No long term debt

Luminous Capital acted as corporate finance advisors to both GC and EXM on the Transaction.

Resulting Issuer Leadership Team

The Resulting Issuer will be led by a best-in-class management team and Board of Directors, with strong track records in consumer packaged-goods, distribution and cannabis experience globally. Upon completion of the Merger, GCs current Chief Executive Officer, Kelly Ann Lewis-Bortman, will lead the Resulting Issuer and management team as the Chief Executive Officer. Jonathan Summers will be appointed the chairman of Resulting Issuer. The combined Board of Directors will consist of a total of 5 members, 3 of which, including Mrs. Bortman, are current GC directors and two of which will be from EXM, including Jonathan Summers. EXMs Chief Financial Officer, Mike Kinley, will continue as the Chief Financial Officer of the combined entity.

Additional senior leadership positions at the Resulting Issuer will be named at a later date.

Private Placement

The Company, concurrent with the Merger, is conducting the Private Placement of units on a best-efforts basis at a price of C$0.15 per unit (the Units) for aggregate gross proceeds of up to C$6.0 million.

Each Unit will consist of: (i) one EXM Share; and (ii) and one half EXM Share purchase warrant (each, a "Warrant"). Each Warrant will entitle the holder to purchase a EXM Share at an exercise price of C$0.25, at any time up to 24 months following the date of issuance; provided that if, at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the CSE, or other principal exchange on which the EXM Shares are listed, is greater than C$0.50 for 10 consecutive trading days, the Company may, within 10 business days of the occurrence of such event, deliver a notice to the holders of Warrants (the "Acceleration Right") accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice (the "Accelerated Exercise Period"). Any unexercised Warrants will automatically expire at the end of the Accelerated Exercise Period.

The net proceeds of the Private Placement are expected to be used to fund the Merger, the pro forma business plan of the Resulting Issuer and for general corporate purposes.

The Units to be issued in the proposed Private Placement will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), any state securities laws or the securities laws of any other jurisdiction. Unless they are registered, the Units may be offered only in transactions that are exempt from registration under the Securities Act, any state securities laws or the securities laws of any other jurisdiction or in a transaction not subject such securities laws.

Additional information regarding the Transaction, GC, the financial statements of GC and pro forma financial statements of the Company, after giving effect to the Transaction, will be made publicly available by EXM in due course, including pursuant to a listing statement to be filed on SEDAR in connection with the Transaction at www.sedar.com.

Forward Looking Statements

This news release contains certain statements or disclosures relating to EXM that are based on the expectations of its management as well as assumptions made by and information currently available to EXM which may constitute forward-looking statements or information (forward-looking statements) under applicable securities laws. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that EXM anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking statements. In some cases, forward-looking statements can be identified by the use of the words expect, anticipates, may, proposes, believes, will and similar expressions. In particular, but without limiting the foregoing, this news release contains forward-looking statements pertaining to the following: completion of the Merger and the Private Placement (including the terms and timing thereof, if at all), the Resulting Issuer future successful if the proposed Transaction closes, and the pro forma and other potential future combined metrics of the Resulting Issuer.

The forward-looking statements contained in this news release reflect several material factors and expectations and assumptions of EXM including, without limitation: that EXM will continue to conduct its operations in a manner consistent with past operations; the general continuance of current or, where applicable, assumed industry conditions; availability of debt and/or equity sources to fund EXMs capital and operating requirements as needed; and certain cost assumptions.

EXM believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct. The forward-looking statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements including, without limitation: general economic, market and business conditions; increased costs and expenses; reliance on industry partners; access to appropriate capital, risks related to cannabis price fluctuations and a significant expansion in COVID-19 restricting or prohibiting EXMs operations or significantly impacting EXMs supply chain. Readers are cautioned that the foregoing list of factors is not exhaustive and are cautioned not to place undue reliance on these forward-looking statements.

The forward-looking statements contained in this news release are made as of the date hereof and EXM undertakes no obligations to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

ON BEHALF OF THE BOARD OF DIRECTORS OF EXMCEUTICALS INC.

Jonathan Summers, Chairman and Chief Executive Officer
For further information, contact:
Investor Relations
Email: investors(at)exmceuticals.com
Tel : 1-403-554-1562

Media Enquiries:
Email: media(at)exmceuticals.com

FOR MORE UPDATES ON THE COMPANY

Follow us on Twitter: https://twitter.com/EXMceuticals
Follow us on LinkedIn: https://www.linkedin.com/company/exmceuticalsinc/




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Date: 03/03/2021 - 10:31
Language: English
News-ID 1565287
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