TORONTO, Nov. 27, 2019 /CNW/ - PRESS RELEASE - SOL Global Investments Corp.'s portfolio company CannCure Investments Inc., owner/operator of the licensed Florida medical marijuana treatment center One Plant (previously named as 3 Boys Farms) and proposed purchaser of the famed California craft cannabis cultivator ECD Holdings, Inc., d/b/a Northern Emeralds, has announced it has entered into a mutual termination agreement and promissory note with MCP Wellness to terminate the binding letter of intent dated April 23, 2019 whereby the company was to acquire 100% of the stock of MCP Wellness for $35 million in cash and US$115 million in equity consideration in CannCure.
MCP is the Merida Capital Partners affiliate that owns the rights to own three Michigan cultivation licenses, a processing license, nine licensed and operating provisioning centers (dispensaries), and six additional dispensary licenses, giving it the largest retail footprint in the state of Michigan.
Both MCP and the company have recognized that current market conditions do not support a transaction of this size, and both parties and their respective shareholders are better served focusing capital and resources on building out their respective businesses. SOL Global will remain focused on the scale up of its rapidly expanding Florida operations via One Plant Florida, and MCP will focus on opening additional dispensaries and launching a cultivation facility in Michigan.
Together, SOL Global and MCP have determined that though they are terminating their LOI to merge due to ongoing market conditions, they will continue to work together towards finalizing a strategic licensing agreement whereby MCP Wellness would engage Northern Emeralds to provide cultivation and processing standard operating procedures to MCP for a to be agreed upon royalty (subject to the receipt of all regulatory approvals). As MCP Wellness builds its cultivation footprint to go with its nine operating dispensaries, a strategic agreement with Northern Emeralds to introduce the highest quality flower possible will be instrumental in establishing it as one of the largest vertically integrated operations in Michigan.
As part of the amicable termination, the $12.5 million advanced by SOL Global and its wholly owned subsidiary CannCure to MCP Wellness will be repaid in full over the next 12 months in monthly installments and two balloon payments at the six- and 12-month time frames. While the promissory note is outstanding, CannCure will have the option to acquire certain assets from MCP Wellness, convert any amounts due into stock in the Michigan operator, or complete the originally contemplated transaction on substantially similar terms. Any transactions contemplated herein are subject to regulatory approval.
The company wishes to announce that the board of directors have resolved to change the company's fiscal year-end from March 31 to Nov. 30, effective immediately. By moving the company's reporting cycle to a non-calendar quarter basis, the company aims to reduce the time constraints and administrative expenses associated with having the same calendar quarterly reporting cycle as most other reporting issuers and to align its financial year-end with other related corporations. The notice for the year-end change required under National Instrument 51-102 has been filed under the company's profile on www.sedar.com.
As a result, the company will report audited financial results for an eight-month transitional fiscal year from April 1, 2019 to Nov. 30, 2019 with a comparative of twelve-month audited financial statements from April 1, 2018 to March 31, 2019. Afterwards, the company will revert to a customary quarterly reporting calendar based on a Nov. 30 year-end, with fiscal quarters ending on the last day in February, May, August and November each year. The change in the company's financial year end is subject to approval by the Canada Revenue Agency.