KELOWNA, BC, Oct. 25, 2018 /CNW/ - GTEC Holdings Ltd. (TSXV: GTEC) (OTC: GGTTF) ("GTEC" or the "Company") is pleased to announce that it has entered into a Definitive Agreement with F-20 Developments Corp. ("F-20") (the "Agreement") pursuant to the terms of the previously announced binding letter of intent dated July 10, 2018.
In connection with the transaction, the Parties have established a joint venture company 3PL Ventures Inc. ("3PL"), where pursuant to the shareholders' agreement, F-20 shall own 51% of the issued and outstanding Common Shares on a fully diluted basis, whereas GTEC shall own 49% of 3PL.
GTEC, through a wholly owned operational subsidiary will apply for, and transfer to 3PL, such licenses to allow 3PL to become a Health Canada Licensed Producer (the "Production Facility"). 3PL will also make an application for a Dealer's License under the Narcotics Control Act or such other license to enable 3PL to import and export cannabis and cannabis products to and from Canada. Upon GTEC successfully completing a License Transfer Agreement, F-20 shall be obligated to sell to GTEC an additional 1% of 3PL.
"Canada's cannabis supply shortage has been caused by an uptick in demand that can be attributed to legalization last week. The shortages experienced in Provinces across Canada create an opportunity for GTEC and our partners," said Norton Singhavon, Chairman and CEO of GTEC. "With this joint venture, GTEC will be operating over 120,000 sq ft. of cultivation space once construction is completed. Initial feedback from consumers and Provincial supply chains is validating the demand for premium craft cannabis in Canada and internationally – a demand that this increased capacity will allow us to serve."
On July 11th, 2018 the Parties had announced the Production Facility would have an initial phase operation size of 60,000 sq. ft. with a second phase of 180,000 sq. ft, totaling a completed operation size of 240,000 sq. ft. Upon completion of the final architectural designs, the Parties have determined the Production Facility would allow for a 134,000 sq. ft. second phase without applying for a variance. For an aggregate operation size of roughly 194,000 sq. ft. Subject to 3PL pursuing a variance, and furthermore, the respective municipality approving the application, the Company remains confident in a 180,000 sq. ft. second phase, maintaining an aggregate size of 240,000 sq. ft.
In consideration of F-20 entering into the Shareholders' Agreement, and the services to be provided by F-20 pursuant to the terms therein, GTEC has agreed to issue such number of Common Shares (the "Consideration Shares") in the authorized capital of GTEC to F-20 (calculated at a 10-day Volume Weighted Average Trading Price) in accordance with the following milestones:
- such number of Consideration Shares with an aggregate GTEC Share Value of $1,250,000.00 upon the full execution of legally binding agreements;
- such number of Consideration Shares with an aggregate GTEC Share Value of $416,666.67 upon the issuance of a building permit by the respective Municipality in respect to the improvements to the Production Facility, in accordance with the requisite building plans and specifications;
- such number of Consideration Shares with an aggregate GTEC Share Value of $416,666.67 upon the substantial completion of the Production Facility, in accordance with the requisite building plans and specifications, for the purposes of submitting an evidence package to Health Canada including, without limitation, installation of equipment required by Health Canada, security system, storage areas, and HVAC ("Substantial Completion"); and
- such number of Consideration Shares with an aggregate GTEC Share Value of $416,666.67 upon Health Canada confirming there are no deficiencies with respect to the Production Facility including construction thereof and security systems therefor.
Notwithstanding the above, one hundred percent (100%) of the Consideration Shares contemplated above will be issued to F-20 upon either of the following events:
- F-20 funding 3PL by way of a shareholder loan of at least $5,000,000 and 3PL having expended at least $5,000,000 in respect of the construction of a Production Facility; or
- if GTEC fails to submit a final evidence package to Health Canada addressing all deficiencies with respect to the Production Facility within ninety (90) days of Substantial Completion.
The Agreement is subject to approval by the TSX Venture Exchange.
F-20 is a privately held British Columbia corporation whose principals have been involved in the financing, construction, and development of licensed cannabis cultivation facilities in Canada and the U.S.
GTEC was founded in 2017 to capitalize on opportunities in the nascent and rapidly growing legal cannabis industry. GTEC is a public corporation listed on the TSX Venture Exchange and based in Kelowna, British Columbia. GTEC is focused on growing premium quality craft cannabis in purpose-built indoor facilities. GTEC currently holds a 100% interest in GreenTec Bio-Pharmaceuticals Corp., Grey Bruce Farms Inc., Zenalytic Laboratories Ltd., Falcon Ridge Naturals Ltd., Alberta Craft Cannabis Inc. and Tumbleweed Farms Corp. To view more about the company or to request our most recent corporate presentation, please visit our website at www.gtec.co.
On behalf of the board,
Founder, Chairman & CEO
Co-Founder & Vice President
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 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 board, shareholder or regulatory approvals, where applicable and the state of the capital markets. 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. The Company disclaims 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.
SOURCE GreenTec Holdings
For further information: GTEC Holdings Ltd., 1-800-351-6358, [email protected]