CRAFT 1861 GLOBAL HOLDINGS INC. ANNOUNCES LETTER OF INTENT TO DIVEST PLANT-TOUCHING OPERATIONS IN NEW MEXICO

ALBUQUERQUE, N.M., July 26, 2023 /CNW/ - CRAFT 1861 Global Holdings Inc. (Cboe Canada/NEO: HUMN) (Cboe Canada/NEO: HUMN.WT.A) ("Craft") is pleased to announce that its wholly owned subsidiary, CRAFT 1861 Global Inc. (the "Company" or "Craft Global"), and RKA, LLC ("RKA") have entered into a binding letter of intent (the "Letter of Intent") which sets out the principal terms upon which it is proposed that Craft Global will divest and transfer its "plant touching" operations in New Mexico to RKA (the "Transaction"). RKA is at arm's length to Craft.

The Company currently exercises capital and management control of Healthy Education Society ("HES"), a State of New Mexico incorporated not-for-profit that holds the State of New Mexico Cannabis Control & Regulatory License Division Vertically Integrated Licensure, pursuant to an exclusive management agreement with HES.

Pursuant to the Transaction:

• RKA will assume capital and management control of HES in exchange for the assumption of approximately $2.7 million of liabilities.
  
  
  
• The Company will enter into a licensing agreement with RKA relating to certain trademarks used in HES's operations on terms to be negotiated.
  
  
  
• The Company will be granted a right of first refusal to reacquire capital and management control of HES.
  
  
  
• Upon the occurrence of an unconditional triggering event, the Company shall have the right, but not the obligation, to reacquire capital and management control of HES from RKA at a 25% premium to the Transaction price.

All currency references used in this news release are in U.S. currency unless otherwise indicated.  

Completion of the Transaction is currently expected to occur as soon as feasibly possible and will be further announced as the Transaction advances.

The Transaction remains subject to completion of satisfactory negotiation of definitive agreements, the satisfaction or waiver of certain customary conditions, including, among other things, receipt of all required third party consents and regulatory approvals.

The board of directors of each of RKA and Craft Global have approved the Letter of Intent and determined that the Transaction is in the best interests of their respective shareholders and companies.

About RKA

RKA, LLC is a private New Mexico-based company focused on corporate & business management services assists "middle management personnel" to acquire and manage day to day operations of their respective existing companies, in the services sectors.  

Forward Looking Statements

This news release may contain forward–looking information within the meaning of applicable securities legislation, which reflects the Company's current expectations regarding future events. The words "expect", "aim", "believe", and similar expressions or words suggesting future outcomes are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding future events and operating performance. Specific forward-looking information contained in this news release includes, but is not limited to statements concerning the structure of the Transaction, the terms, conditions and completion of the Transaction and satisfaction or waiver of conditions precedent to the Transaction.

Forward-looking statements reflect management's current beliefs, expectations and assumptions and are based on information currently available to management, management's historical experience, perception of trends and current business conditions, expected future developments and other factors which management considers appropriate. With respect to the forward-looking statements included in this news release, the Company has made certain assumptions with respect to, among other things; that CRAFT Global will meet its future objectives and priorities; CRAFT Global will have access to adequate capital to fund its future projects and plans; that CRAFT Global future projects and plans will proceed as anticipated; as well as assumptions concerning legislative frameworks, general economic and industry growth rates, prices, currency exchange and interest rates, competitive intensity, future pandemics or other material outbreaks of disease, safety issues, recalls, and no unplanned material changes in CRAFT Global facilities, equipment or customer and employee relations. Forward–looking information is based on a number of assumptions, opinions, and estimates and is subject to a number of risks and uncertainties, many of which are beyond the Company's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to: limited long-term data with respect to the efficacy, side effects and safety of category products; uncertainties regarding U.S. hemp regulation; product recalls; failure or deterioration of quality control systems; limited shelf life of products; limited operating history; CRAFT Global ability to successfully manage its growth; CRAFT Global ability to achieve or maintain profitability; the popularity of CRAFT Global brand portfolio; future outbreaks of infectious diseases; potential future sales of shares; execution of CRAFT Global business strategies; reliance on management and conflicts of interest; competition; risks relating to new, well-capitalized entrants developing large-scale operations; reliance on key inputs; dependence on suppliers and skilled labour; CRAFT Global ability to obtain high quality product for its growth needs; climate change; litigation; reliance on third-party distributors; intellectual property risks; protection of trade secrets; fraudulent or illegal activity by employees, contractors and consultants; information technology systems and cyber-attacks; security breaches; high bonding and insurance costs; costs and requirements of being a public company and risks associated with failure to comply with such requirements; no planned dividends; future acquisitions or dispositions; U.S. federal income tax; net operating loss limitations; withholding tax on dividends; risk of U.S. tax classification as a U.S. real property holding company; market price volatility; sales of a substantial number of Subordinate Voting Shares; future equity financings; loss of foreign private issuer status; limitations on certain remedies; global financial conditions; impairment of goodwill and intangible assets; CRAFT Global ability to comply with regulatory requirements; regulatory restrictions on international sales of CRAFT Global products; lack of clarity regarding the future of hemp regulation; designation of cannabinoids as an impermissible adulterant; Federal Trade Commission enforcement actions; difficulty accessing capital and banking services; differing regulatory requirements across jurisdictions; heightened scrutiny by regulators; risks relating to expansion into other markets; restrictions on deductions of certain expenses; enforceability of contracts; contractual right of action; and retention of key personnel, as well as the factors discussed under "Risk Factors" in the Company's annual information form.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. Accordingly, undue reliance should not be placed on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents the Company's expectations as of the date of this news release and are subject to change after such date. The Company does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

This news release is not an offer of securities for sale in the United States, and the securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration. The securities have not been and will not be registered under the United States Securities Act of 1933.

Cboe Canada/NEO Exchange is not responsible for the contents of a Listed Issuer's press release.

SOURCE CRAFT 1861 Global Holdings Inc.

CRAFT 1861 Global Holdings Inc., Attn: Investor Relations, [email protected], [phone]