NIS.P CANN IS Capital Corp

TORONTO, May 11, 2023 /CNW/ - Cann-Is Capital Corp. ("Cann-Is" or the "Corporation") (TSXV: NIS.P) is pleased to provide certain updates from its press releases dated November 11, 2020, September 23, 2020 and September 21, 2021 in regards to the Corporation's proposed qualifying transaction (the "Transaction") with CWE European Holdings Inc., a company incorporated under the laws of Canada ("CWE"), pursuant to which the Corporation will acquire all of the issued and outstanding shares in the capital of CWE. When completed, the Transaction will constitute the Corporation's Qualifying Transaction, as such term is defined in the policies of the TSX Venture Exchange (the "Exchange"). The Transaction is subject to compliance with all necessary regulatory and other approvals and certain other terms and conditions. The parties executed a binding engagement agreement on May 10, 2023, which amends and restates the binding engagement agreement entered into between the parties on November 4, 2020 and further amended on September 20, 2021.

It is currently anticipated that Cann-Is will acquire CWE by way of a share exchange, or other similar form of transaction as agreed by the parties to ultimately form the resulting issuer (the "Resulting Issuer"). The final structure of the Transaction is subject to the receipt of tax, corporate and securities law advice for both Cann-Is and CWE. Upon completion of the Transaction, the Resulting Issuer will carry on the business of CWE. The parties have agreed that for the purposes of the Transaction, the valuation of Cann-Is will be $626,102 and CWE will be $6,052,000.

The Transaction is not a Non-Arm's Length Qualifying Transaction, as such term is defined in the polices of the Exchange and consequently the Transaction will not be subject to approval by Cann-Is' shareholders.

Cann-Is held a meeting of its shareholders on May 4, 2021 (the "Cann-Is Shareholders Meeting") in order to pass resolutions approving among other things, (i) the appointment of a new slate of directors and (ii) approving an amendment to the articles of the Corporation to change the name of the Corporation to "HANF Inc." or to such other name as the board of directors of the Corporation, in its sole discretion, deem appropriate (the "Name Change"). At the Cann-Is Shareholders Meeting, the shareholders approved among other things, the new slate of directors and the Name Change, such changes to take effect upon completion of the Transaction.

Currently, CWE has 51,391,967 common shares outstanding ("CWE Shares"), including 25,000,000 common shares issued to prior CWE shareholders, 3,533,775 common shares issued to prior holders of debt of CWE and 22,858,192 issued prior to the 2021 Financing (as hereinafter defined).

In contemplation of the Transaction, CWE completed a financing of $2,742,983.04 to meet the initial listing requirements of the Exchange (the "2021 Financing"). CWE engaged Florence Wealth Management Inc. (the "Agent") to act as agent in connection with the 2021 Financing and the Agent appointed selling groups consisting of other co-agents or sub-agents who are registered dealers. The 2021 Financing resulted in the issuance of 22,858,192 units in the capital of CWE (each a "2021 Unit") at a price of $0.12 per 2021 Unit. Each 2021 Unit was comprised of one (1) CWE Share and one (1) CWE Share purchase warrant (each a "Warrant"). Each Warrant entitles the holder thereof to acquire one (1) CWE Share at a price of $0.18 per CWE Share for a period of twenty-four (24) months following the closing of the 2021 Financing. In January 2023, CWE extended the term of the Warrants  to 24 months from Listing (as herein defined) and repriced the exercise price of the Warrants at a price of  $0.14.

Prior to the closing of the Transaction, CWE expects to complete a further financing of units ("2023 Units") of $1,500,000 at a price of $0.12 per 2023 Unit resulting in the issuance of a minimum of 12,500,000 per 2023 Unit. Each 2023 Unit is to consist of one CWE Share and one –half of one CWE common share purchase warrant (each whole warrant, a "CWE Warrant") each whole CWE Warrant exercisable into one CWE Share at a price of $0.14 for a period of two years from the listing of the resulting issuer's securities on the TSX Venture Exchange (the "Listing").

Pursuant to the Transaction: (i) holders of issued and outstanding CWE Shares will receive one (1) common share in the capital of the Corporation ("Cann-Is Shares") for each CWE Share (the "Exchange Ratio") held by them; and (ii) all options and warrants convertible into CWE Shares shall be exchanged, based on the Exchange Ratio, for similar securities to purchase Cann-Is Shares on substantially similar terms and conditions.

In connection with the Transaction, CWE has entered into a finder's fee agreement (the "Finder's Fee Agreement") with an arm's length party (the "Finder") for the Finder's introduction of CWE to the Corporation. Pursuant to the terms of the Finder's Fee Agreement, the parties have agreed, subject to the approval by the Exchange, to pay the Finder a fee of 1,937,600 Resulting Issuer Shares to be issued upon closing of the Transaction.

Upon completion of the Transaction and on an undiluted basis, it is expected that (i) the former shareholders of CWE will hold approximately 72.332% of the common shares in the Resulting Issuer (each a "Resulting Issuer Shares") (on a non-diluted basis), (ii) the former shareholders of Cann-Is will hold approximately 7.3% of the Resulting Issuer Shares, (iii) the investors in the  2023 Financing will hold, assuming completion of the minimum financing, approximately 17.6% of the Resulting Issuer Shares, and (iv) the Finder and others will hold approximately 2.7% of the Resulting Issuer Shares

Closing of the Transaction will be subject to a number of conditions precedent, including, without limitation:

a)  completion of mutual satisfactory due diligence investigations of CWE and Cann-Is;
b)  approval of the Transaction by the boards of directors of CWE and Cann-Is;
c)  execution of a definitive agreement effecting the Transaction;
d)  completion of the Financing;
e)  receipt of all regulatory approvals with respect to the Transaction and the listing of the Resulting Issuer Shares on the Exchange;
f)  approval of the Transaction by CWE shareholders,
g)  approval of the Name Change, and the approval of new directors by the Cann-Is shareholders; and
h)  confirmation of no material adverse change by CWE and Cann-Is.

It is anticipated that the Resulting Issuer will qualify as a Tier 2 Issuer pursuant to the requirements of the Exchange.

Sponsorship of a Transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. The Corporation intends to apply for a waiver from the sponsorship requirement in accordance with Exchange Policy 2.2.

CWE was incorporated under the Laws of Canada on May 6, 2019 as a private corporation with wholly-owned subsidiaries that operate a seed to sale Hemp business in Germany in compliance with applicable laws. CWE is selling an organic, health conscious lifestyle based on Hemp products, some containing CBD.

CWE is seeking to become the largest Hemp offline and online retailer in Germany building a controlled access to customers by opening retail locations in Germany. Currently CWE owns and operates seventeen (17) stores in the State of Bavaria in Germany through five (5) German subsidiaries. CWE has developed a private label Hemp derived CBD brand, which makes up 50% of offline retail sales. The stores are operated under the brand name "HANF" in Germany.

The Corporation's subsidiaries include:

1. DCI Cannabis Institute GmbH ("DCI"), incorporated in Germany on December 1, 2016. CWE acquired 89.4% of the share capital of DCI on July 4, 2019 pursuant to an agreement with four (4) shareholders of DCI. An arm's length German company owns the balance of the share capital, 10.6%. DCI owns and operates six (6) shops in Germany.
2. CWE Trading GmbH ("CWE-G") incorporated in Germany on April 16, 2020 as wholly owned subsidiary. CWEUG owns and operates eleven (11) shops.
3. CWE Trading EINS GmbH ("CWE-E") incorporated in Germany on August 16, 2020 as wholly owned subsidiary. CWE-E owns and operates one (1) shop and an online store.
4. CWE Trading ZWEi GmbH ("CWE-Z") incorporated in Germany on April 15, 2021 which currently operates five (5) shops.
5. CWE Holding Europe GmbH ("CWE-Europe") incorporated in Germany and incorporated for future holdings.

The following table sets out historical financial information of CWE, in each case, for the periods ended and as of the dates indicated. The selected financial information of CWE has been derived from the financial statements for the financial year ended December 31, 2021:

Upon closing of the Transaction, the board of directors of Cann-Is shall be reconstituted, to be comprised of the nominees of CWE to consist of at least three (3) members. Upon closing of the Transaction, the management, board of directors and insiders of the Resulting Issuer will be as set forth below. CWE has appointed Aaron Meckler as the Chief Financial Officer, Director, and Corporate Secretary.  

Jörn J. Follmer – Chief Executive Officer and Director

Jörn Follmer is a serial entrepreneur that has sold his company to a NASDAQ firm in 1999, built up another company to take it public at the EU-regulated market General Standard segment of Deutsche Börse in 2005. As co-founder of DCI, Jörn has consulted with Wenzel Cerveny since they met in 2016 on the campaign trail. In 2008, Jörn became an investment banker, who has since taken public more than 40 companies as official listing partner of various exchanges. Similar to his position in CWE, Jörn takes financial positions in emerging market companies. Having served on the board of directors of listed companies in Europe, he has relevant experience in going public transactions and continuous disclosure obligations. Mr. Follmer received an M.B.A. degree in 1991 from Texas Christian University.

James Lanthier – Director 

Mr. Lanthier is the Chief Executive Officer of Mindset Pharma Inc., a drug discovery and development business focused on developing novel drugs for neuropsychiatric conditions. Mr. Lanthier has held executive positions at a number of technology enabled companies; prior to Mindset, Mr. Lanthier helped found Future Fertility, a provider of artificial intelligence tools to infertility physicians. Mr. Lanthier was a member of the founding management team of Mood Media ("Mood"), the world's largest in-store media business.  Mr. Lanthier was the Chief Operating Officer of Mood from 2008 to 2013 and a non-executive Director of Mood from 2013 - 2016.  Prior to Mood, Mr. Lanthier co-founded FUN Technologies, a casual games business that he helped lead as Chief Financial Officer through its initial public offering on the Toronto and London Stock Exchanges through its eventual sale to Liberty Media. Mr. Lanthier has held board positions at a number of public companies. Mr. Lanthier serves as a member of the board and audit committee of Water Ways Technologies Inc. and a member of the board of Cann-Is. Mr. Lanthier holds an MBA from the Rotman School of Management at the University of Toronto and a BA (Honors) from Queens University.

Aaron Meckler – Chief Financial Officer and Director

Aaron Meckler is an investment banker and seasoned corporate finance professional with experience in both public and private capital markets across a wide range of sectors, including real estate, technology, esports and cannabis. He has been involved in multiple public listings, and has advised companies across both the buy and sell side M&A transactions. Mr. Meckler is presently the Co-Founder CFO and Director of Amuka Capital, a boutique investment and merchant banking firm in Toronto, Ontario. He is also currently the CFO and board member to multiple reporting issuers and public companies in Canada. Mr. Meckler holds a B.Com from York University, the Chartered Investment Manager (CIM) designation and the Fellow of CSI (FCSI) designation.

Ronnie Jaegermann – Director

Mr. Jaegermann has been a Venture Partner at Exiteam Capital Partners, an Israeli Venture Capital and Investment Advisory Firm since November 2020. Prior to that, he was a Venture Partner at Beyond-Ventures, an Israeli Venture Capital and Investment Advisory Firm since September 2019. Prior to that, Mr. Jaegermann was the Chief Executive Officer and Head of Investment Banking Advisory at Aloni Haft, a Tel Aviv-based boutique investment bank focused on fundraisings for Israeli companies in international capital markets since 2014. He has led multiple businesses in growing them from start-up to profitable companies that became take-out targets and was involved in fundraisings and public offerings for Israeli technology companies both in Europe and the USA. Mr. Jaegermann has owned a few retail and online ventures including a retail chain of 26 Lingerie shops in Israel.   Mr. Jaegermann holds a BA in Economic and Political Science from Tel Aviv University. Mr. Jaegermann serves as Chief Financial Officer of Cann-Is, an independent member of the board of directors of Adcore Inc. and a member of the board and audit committee of Water Ways Technologies Inc. Mr. Jaegermann is also a director of Reem Capital Inc.

Jerry Cerveny – Director

Jerry Cerveny is the Chief Executive Officer of DCI GmbH, which is the operating subsidiary of CWE since 2019. Between 2012 and 2019, Mr. Cerveny was the manager of a technology venture in New Zealand developing nanoparticles. Between 2003 and 2016, Mr. Cerveny held executive positions at BP Oil NZ Ltd. Between 1999-2003 he was a Manager at Shell NZ Ltd.

In connection with the Transaction, Cann-Is expects to apply to the Exchange for a waiver from the requirement to file a non-offering prospectus. Instead, Cann-Is expects to file a filing statement which will contain details regarding the Transaction, Cann-Is, CWE and the Resulting Issuer.

The Corporation is a Capital Pool Company ("CPC"). It has not commenced commercial operations and has no assets other than a minimum amount of cash. Except as specifically contemplated in the CPC Policy, as defined in the final prospectus, until Completion of the Transaction, the Corporation will not carry on any business other than the identification and evaluation of assets or businesses with a view to completing a proposed Transaction.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information release or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

NEITHER THE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

This news release contains certain forward-looking statements, including statements relating to the Transaction and certain terms and conditions thereof, the ability of the parties to complete the Transaction, the Financing, the Exchange Ratio, the Name Change, the Resulting Issuer's ability to qualify as a Tier 2 Issuer, the Corporation receiving a waiver from the Exchange for sponsorship requirements, shareholder, director and regulatory approvals, future press releases and disclosure, and other statements that are not historical facts. Wherever possible, words such as "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict" or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management as at the date hereof.

Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. As a result, the Corporation cannot guarantee that the Transaction will be completed on the terms described herein or at all. These factors should be considered carefully, and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, the Corporation cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and the Corporation assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.

SOURCE Cann-Is Capital Corp.