OCH Ontario Consulting Corp, a subsidiary of Trees Corporation, (NEO:TREE) has entered into an agreement to buy Barnard Cann Ltd. (o/a "Camp Cannabis").
Camp owns and operates licensed retail cannabis businesses at three Ontario locations in Burlington, Milton and Kanata, with a fourth location in Gloucester expected to open soon.
Michael Klein, CEO of Trees, stated: "Camp locations across Ontario allow the TREES brand to expand our retail footprint as we build upon our strategy of being best at engaging the 'cannabis curious' consumer."
The purchase price is approximately $780,000, of which approximately $707,000 is to be satisfied on the closing date by the issuance of a demand note in favor of a representative of the vendors. Immediately following the closing of the transaction, the vendor representative shall demand payment on the demand note and direct OCH to pay such amount over to Trees, and cause Trees to:
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Issue to the vendors in accordance with their proportionate interests, an aggregate of up to 2,380,000 common shares in the capital of Trees, of which 75% of such consideration shares shall be subject to an escrow agreement pursuant to which 1/3 of such shares will be released on the six month anniversary of the closing date and the remaining 2/3 released on the twelve month anniversary of the closing date.
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Issue to the vendor representative an unsecured convertible debenture in the amount of $350,000 payable to the vendors in accordance with their proportionate interests, which convertible debenture shall bear interest at 7.5% compounding annually, payable monthly in cash, shall mature on the second anniversary of the closing date, and which shall allow for the principal owing thereunder to be convertible into common shares in the capital of Trees at the option of the vendor representative, no sooner than the first anniversary of the closing date, at a conversion price being the greater of $0.15, and the closing price of Trees' common shares at the close of trading on the date prior to the conversion date, less a 10% discount.
Completion of the proposed transaction is subject to the satisfaction of certain conditions precedent, including, but not limited to, receipt of all necessary regulatory approvals, including approval of the Alcohol and Gaming Commission of Ontario and the NEO Exchange Inc.
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