VANCOUVER, Aug. 27, 2019 /CNW/ - GrowMax Resources Corp.
(TSXV: GRO) ("GrowMax" or the "Company") is
pleased to announce, further to its news release on August 12, 2019, a proposed change of business
from mineral exploration to an investment issuer (the "Proposed
COB") under the rules of the TSX Venture Exchange (the
"TSXV"). The shareholders of the Company has approved
the Proposed COB at the annual general and special meeting on
August 7, 2019 (the
"Meeting").
After a thorough review of the Company's resources and strategic
options, and given the expertise and skill sets of the Company's
directors, the Board has determined that the optimal allocation of
the Company's working capital would be within the framework of an
investment company.
Subject to receipt of all regulatory approvals, including
approval of the TSXV of the Proposed COB, the Company will become a
Tier 1 Investment Issuer.
Trading in the common shares of the Company has been halted and
will remain halted pending review of the Proposed COB by the
TSXV.
Summary of the Proposed COB
Upon completion of the Proposed COB, the Company's primary focus
will be to seek long-term capital growth by making investments in
early stage or undervalued companies.
In connection with the Proposed COB, the Company has adopted an
investment policy (the "Investment Policy") to govern its
investment activities and investment strategy. A copy of the
Investment Policy was attached to the Company's management
information circular dated July 2,
2019. A description of the Investment Policy follows.
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Investment
Strategy
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The Company may
invest in equity, debt and convertible securities, which the
Company intends will be acquired and held both for long‐term
capital appreciation and shorter‐term gains. The Company will try
to identify companies that have potential, strong management teams
and/or are involved with a segment of the market that is consistent
with or otherwise complimentary to the Company's macro position. A
key aspect of the Company's investment strategy will be seeking
undervalued companies backed by strong management teams and solid
business models that can benefit from macro‐economic
trends.
The Company will
invest in concentrated, long‐term positions in public companies.
The Company may invest in securities of issuers in special
situations, including event‐driven situations such as assuming a
controlling or joint‐controlling interest in an invested company,
which may also involve the provision of advice to management and/or
board participation.
The Company's
investment strategy will also include structuring and initiating
deals focused on particular resources, themes, or regions as well
as launching the development of businesses in select industries by
providing assistance with the hiring of management teams, providing
seed capital and facilitating the transition of such private
companies to the public market.
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Implementation
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Prospective
investments will be channelled through the Investment Committee.
The Investment Committee will initially be comprised of Kulwant
Malhi and Michael Sadhra.
Once a decision has
been reached to invest in a particular situation, a short summary
of the rationale behind the investment decision will be prepared by
the Investment Committee and submitted to the Board. All
investments shall be submitted to the Board for final approval. The
Investment Committee will select all investments for submission to
the Board and monitor the Company's investment portfolio on an
ongoing basis, and will be subject to the direction of the
Board.
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Investment
Evaluation Process
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In selecting
securities for the investment portfolio of the Company, the
Investment Committee will consider various factors in relation to
any particular issuer, including:
• inherent value of
its assets;
• proven management, clearly-defined management objectives and
strong technical and professional support;
• future capital requirements to develop the full potential of its
business and the expected ability to raise the necessary
capital;
• anticipated rate of return and the level of risk;
• financial performance; and
• exit strategies and criteria.
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Conflicts of
Interest
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The Company has no
restrictions with respect to investing in companies or other
entities in which a member of the Company's management or Board may
already have an interest or involvement. In the event that a
conflict is determined to exist, the Company may only proceed after
receiving approval from disinterested members of the Board. The
Company is also subject to the "related party" transaction policies
of the TSXV, which mandates disinterested shareholder approval for
certain transactions.
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Monitoring and
Reporting
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The Company's Chief
Financial Officer shall be primarily responsible for the reporting
process whereby the performance of each of the Company's
investments is monitored. Quarterly financial and other progress
reports shall be gathered from each corporate entity, and these
shall form the basis for a quarterly review of the Company's
investment portfolio by the Investment Committee. Any deviations
from expectation will be investigated by the Investment Committee
and, if deemed to be significant, reported to the Board.
A full report of the
status and performance of the Company's investments is to be
prepared by the Investment Committee and presented to the Board at
the end of each fiscal year.
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Amendment of
Investment Policy
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The Company's
Investment Policy may be amended with approval from the
Board.
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Board and Management
In light of the new strategic direction of the Company, the
Board and Management was reconstituted in March 2019 and is made up of the following
directors and executive officers: Kulwant Malhi, Chief Executive Officer and
Director, Alfred Wong, President and
Director, Michael Sadhra, Director,
and Bala Reddy Udumala, Director.
Please see the Company's management information circular dated
July 2, 2019 for further details on
each of the directors and officers.
Return of Capital
The Company wishes to clarify that the special dividend
announced on August 16, 2019 is the
return of capital (the "Return of Capital") the shareholders
voted upon on at the Meeting. Following the Return of Capital on
September 5, 2019, the Company is
expected to have working capital sufficient to meet its strategic
objectives.
Corporate Update
The Company is pleased to announce that it has made investments
in Quality Green Inc., Sweet Earth Holdings Corporation, and
Hempfusion, Inc.
Quality Green Inc. is a licensed cultivator of
marijuana based in Ontario, Canada
and is currently constructing a 100,000 square foot indoor facility
at a cost of approximately 15 million and completion of the first
phase scheduled for late fall 2019. Founded in 2013,
Quality Green strives for the perfect trifecta of optimized
production efficiency, best practices, and standards, to result in
the finest product. With an extensive expansion plan and a clear
vision across all channels of their business, Quality Green is
poised to capture vast opportunities within the cannabis space.
With considerable momentum and a team focused on delivering on
strategy and innovation, Quality Green demonstrates its commitment
to owning its position as a leading cannabis producer. Quality
green is anticipating a public listing in fall of 2019
Sweet Earth Holdings Corporation is a licensed
cultivator of hemp having in excess of 1000 acres of hemp
cultivation capacity with 100 acres currently seeded and growing.
In addition to cultivation, Sweet Earth has full extraction
capacity and equipment and a suite of proprietary hemp-based CBD
products. Sweet Earth currently has active cultivation in
Oregon State, USA, and has agreement to acquire cultivation
lands in California, USA,
Columbia, and Spain. Sweet Earth has an experienced
management team having over 25 years experience in cultivation.
Sweet Earth anticipates a public listing in fall of 2019.
Hempfusion. Inc. is a premium CBD Wellness brand with
distribution to over 3400 retailers across 47 states in the
USA. Hempfusion is engaged in the
advancement of therapeutic benefits of industrial hemp extract
while maintaining the highest level of compliance in the industry.
Hempfusion's wide variety or 30 products are sources form only the
highest quality phyto compounds manufactured under the strictest
cGMP standards to achieve maximum efficacy and safety. Hempfusion's
primary focus is formulating and marketing premium consumer
specific product lines with various delivery methods, across
multiple distributor platforms. The Company's products are based on
proprietary Whole Food Hemp Complex and are available through
independently owned ad national chain health food stores. It is
anticipated that Hempfusion will publicly list on a Canadian
exchange in latter part of 2019.
The Investments in Quality Green, Sweet Earth, and Hempfusion
together with the investment in First Responder Technologies
announced on August 12, 2019, are in
line with the Company's business focus on early stage investments
in growth sectors and near term liquidity for the Company. Both
Quality Green and Sweet Earth are arm's length to the Company. The
Company will be seeking to complete the industry reclassification
on the TSX Venture Exchange based on both shareholder response to
the proposed change in business and the expansion of the TSX
Venture Exchange listing criteria to allow for United States based hemp/CBD producers.
Litigation
The Company also announces that a claim has been made in the
Alberta Court of Queen's Bench
against the Company by Jorge Lau
Yook ("Lau") for payments purportedly owing under a
Rights Transfer Agreement made between the Company, its Peruvian
subsidiary and Lau. The claim is for US $1.5 million in relation to property
payment. The Company has not filed a statement of defense but
intends to assess its liability under the Rights Transfer Agreement
and its claims against Lau in relation thereto.
Forward-looking information
This press release contains "forward-looking information" within
the meaning of applicable Canadian securities legislation.
Generally, forward-looking information can be identified by the use
of forward-looking terminology such as "plans", "expects" or "does
not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will be taken", "occur" or "be achieved". Forward-looking
information is subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, performance or achievements of GrowMax, as the case may
be, to be materially different from those expressed or implied by
such forward-looking information. Although GrowMax has attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
information, there may be other factors that cause results not to
be as anticipated, estimated or intended. There can be no assurance
that such information 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 information. GrowMax does not undertake
to update any forward-looking information, except in accordance
with applicable securities laws.
Completion of the Proposed COB is subject to a number of
conditions, including but not limited to, Exchange acceptance and
if applicable, disinterested shareholder approval. Where
applicable, the Proposed COB cannot close until the required
shareholder approval is obtained.
There can be no assurance that the Proposed COB will be
completed as proposed or at all.
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.
SOURCE GrowMax Resources Corp.
