Angus Ventures and AAA Medic Montreal Enter Into Letter of Intent for a Business Combination

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MONTREAL, Sept. 04, 2018 (GLOBE NEWSWIRE) -- Angus Ventures Inc. (“Angus” or the “Company”) (TSXV: GUS.P) and AAA Medic Montreal Inc. (“AAA Medic”) are pleased to announce that they have entered into a binding letter of intent (“LOI”) to complete a business combination transaction (the “Transaction”). Upon completion of the Transaction, the combined entity (the “Resulting Issuer”) will continue to carry on the business of AAA Medic, a vertically integrated cannabis company incorporated under the Canada Business Corporations Act. The closing of the Transaction is subject to the receipt of all necessary regulatory and third party consents and approvals, including without limitation, the listing of the common shares of the combined entity (the “Resulting Issuer Shares”) on the TSX Venture Exchange (the “TSXV”) and the concurrent delisting of the common shares of Angus (the “Angus Shares”) from the TSXV. The Transaction is expected to close in Q1 2019. All figures are stated in Canadian dollars unless otherwise noted.

About AAA Medic

AAA Medic was incorporated on November 14, 2013 to carry on the business of cultivating, distributing and selling cannabis for the medical market, as well as the recreational market, once legalized.  AAA Medic is focusing its activities in the province of Quebec with its head office located in the City of Montreal.

As a first step to conduct its business, AAA Medic applied to Health Canada for a license to produce and sell cannabis for its 10,000 square foot facility in Laval, Quebec.  Health Canada has acknowledged receipt and issued a confirmation of readiness for pre-license inspection once construction is complete. The construction of the facility, which was initiated on August 6^th, 2018 will require initial capital of approximately $4 million. The construction is expected to be completed in the first quarter of 2019.  AAA Medic has since decided to change the vocation of this facility from production to processing.  In consultation with industry experts and Health Canada, a request will be submitted to reflect this change.  The license to process from Health Canada is expected in a quicker timeframe following the completion of construction with the license to sell to follow shortly thereafter.

AAA Medic also intends to expand its operations by building a second and much larger cannabis facility located in the municipality of Sainte-Luce in the Bas Saint-Laurent region, near Rimouski, Quebec. The Sainte-Luce facility will be 150,000 square feet combining both greenhouse and indoor growing processes for the production of cannabis. This facility will also include an area designated for the extraction of cannabis oils.  On July 3^rd, 2018, AAA Medic filed with Health Canada an application for a license to produce and sell cannabis for the Sainte-Luce facility.  A separate application (as required by Health Canada) will be submitted for cannabis processing which includes the right to extract cannabis oils as well as other processing related activities.  The cost of the Sainte-Luce facility is expected to be $35 million with a construction start date targeted for the second half of 2019.

AAA Medic has also entered into several binding letters of intent with numerous strategic partners to increase production capacity as well as acquire expertise in cannabis oil extraction and product testing and development.  The strategic partners are as follows:

• First Nations: AAA Medic will acquire 51% of the production business from a 34,000 square foot, two-floor facility located in Kanesatake, Quebec that is estimated to produce 3.5 million grams of dried bud at full capacity.  The facility has full support of the Mohawk Band Council.  An application will be made to Health Canada for a license to produce and sell cannabis at the facility in the early fall of 2018.  
• Craft Growers Network: A group representing a network of craft growers has undertaken to use its commercial best efforts to negotiate and execute agreements with such craft growers pursuant to which AAA Medic will acquire exclusivity of their cannabis production as well as obtain ownership of their cannabis genetics once they are licensed by Health Canada.  Each craft grower is expected to average approximately 400,000 grams of cannabis production per year.  The network expects to have a minimum of 6 craft growers signed on before the end of 2018.   
• Extracts & Derivatives Experts:  AAA Medic will set up a subsidiary (70% owned by AAA Medic) with a group possessing expertise in oil extractions as well as other refinement techniques to produce high quality, pure cannabis oils containing full terpene profiles.  The subsidiary will apply to Health Canada for a cannabis processing license post October 17^th, 2018. The subsidiary will operate a 10,000 square foot facility wholly owned by AAA Medic.  Health Canada has already approved the construction of the facility, originally intended to cultivate cannabis.  Under the processing license, the facility will be additionally used for packaging as well as product development of edibles, vape pens, topical creams, and other cannabis infused derivatives.

As of June 30, 2018, AAA Medic had assets of approximately $2.1 million (unaudited) and liabilities of approximately $0.4 million (unaudited).

Terms of the Transaction

As of the date hereof, the following Angus securities are issued and outstanding: (i) 18,946,180 Angus Shares; (ii) 113,820 Angus warrants; and (iii) 1,128,000 Angus stock options, for a total of 20,188,000 Angus Shares on a fully diluted basis. As of the date hereof, the following AAA Medic securities are issued and outstanding: (i) 44,535,000 common shares of AAA Medic (“AAA Medic Shares”); (ii) 4,005,000 stock options; (iii) and an additional 775,000 stock options to be issued prior to the closing of the Transaction, for a total of 49,315,000 AAA Medic Shares on a fully diluted basis.

The Transaction is expected to be completed by way of a three-cornered amalgamation between AAA Medic and Angus, pursuant to which all of the issued and outstanding common shares of AAA Medic will be converted into Resulting Issuer Shares on the basis of 1.1 Resulting Issuer Share for each AAA Medic Share.

The terms of the Transaction will also provide that all issued and outstanding AAA Medic stock options will be exchanged for stock options of the Resulting Issuer on equivalent terms, subject to adjustment to reflect the exchange ratio under the Transaction.

It has been agreed by both AAA Medic and Angus that the proposed structure may be revised to accommodate tax considerations, accounting treatments and applicable legal and regulatory requirements.

Prior to the completion of the Transaction, AAA Medic will complete a private placement financing (the “Private Placement”) to secure gross proceeds of up to $9 million on a commercially reasonable efforts basis.  The proceeds from the Private Placement will be used for the construction of the Laval and First Nations facilities as well as provide funding for working capital and consultants.

The following table sets forth the pro forma capitalization of the Resulting Issuer, on a fully diluted basis, after giving effect to the Transaction but without taking into account the Private Placement:

1. This number results from the conversion into Resulting Issuer Shares, on a 1.1 for 1 basis, of the 44,535,000 AAA Medic Shares currently outstanding, the 13,450,000 AAA Medic Shares which are expected to be issued to the strategic partners of AAA Medic prior to the closing of the Transaction and the 4,780,000 stock options of AAA Medic, which will be outstanding at the closing of the Transaction.
2. These numbers do not take into account any AAA Medic Shares that will be issued under the Private Placement 
3. It is expected that immediately following the closing of the Transaction but without taking into account any AAA Medic Shares that will be issued under the Private Placement, the Board and Management of AAA Medic will own approximately 36% of the total number of Resulting Issuer Shares outstanding on a fully diluted basis.

A meeting of Angus shareholders will be held prior to the closing of the Transaction to obtain shareholder approval for: (i) the Transaction; (ii) the listing of the Resulting Issuer Shares on the TSXV; (iii) the concurrent delisting of the Angus Shares from the TSXV; and (iv) the changing of the name of Angus to “AAA Medic Montreal Corp”.

Angus will also seek approval for new board members of Angus (“Board Members”) who will replace the existing board members and be the directors of the Resulting Issuer upon the closing of the Transaction.  In connection with the Transaction, the directors of Angus will step down from the Company's board of directors in favour of nominees of AAA Medic, namely Mr. Renaud Adams, Mr. Luc Mainville, Mr. Mario Maillet and Mr. Scott Jardin. AAA Medic may appoint a maximum of two more directors and Angus will have the right to appoint one director, all directors to be appointed upon the closing of the Transaction. In addition, Mr. Patrick Langlois will step down as the President, Chief Executive Officer and Chief Financial Officer. It is expected that Scott Jardin will be named as President and Chief Executive Officer; Nicole Veilleux will be named Chief Financial Officer; and Ryan Veli will be named Chief Operating Officer of the Resulting Issuer:

Renaud Adams: Mr. Adams has over 25 years of executive experience and a proven business track record in publicly traded companies. He was the President & CEO of Richmont Mines until it was acquired by Alamos Gold in 2017. He currently serves on the Board of Directors for Ascendant Resources and GT Gold Corporation.  Additionally, Mr. Adams currently holds the largest shareholder position in AAA Medic.

Luc Mainville: Mr. Mainville has over 25 years of executive experience in publicly traded and private companies. He currently serves on four Board of Directors in wellness and pharmaceutical industries. He has extensive experience in capital markets, equity financing, licensing and mergers and acquisitions.

Mario Maillet: Mr. Maillet has over 20 years of executive experience in production, marketing and branding in the food industry. He was the CEO at Atoka Cranberries Ltd, an Ocean Spray division which is the largest producer of cranberries in Québec. Mr. Maillet is also a certified Agronomist and has consulted for the New Brunswick Department of Agriculture.

Scott Jardin: Mr. Jardin has over 10 years of experience as a CPA and consultant. Prior to starting his position as President & CEO, Mr. Jardin was Associate Director of Administration and Finance for two research centres in cancer research and human genetics at McGill University.

Nicole Veilleux: Ms. Veilleux is a CPA with substantial financial leadership experience in publicly traded companies, serving as Vice-President of Finance at Richmont Mines until its acquisition by Alamos Gold in 2017.

Ryan Veli: Mr. Veli has a diverse background in IT, Education, and Management. He served in the US Military as a Military Police Officer and later in Information Operations. He has taught Information Technologies at McGill University and several colleges.

The transaction terms outlined in the LOI are binding on the parties and the LOI is expected to be superseded by a definitive agreement (the “Definitive Agreement”) to be signed between the parties on or before September 27, 2018.    

The Transaction is subject to a number of conditions, including, but not limited to:

• regulatory approval, including the approval of the TSXV;
• the approval of the Definitive Agreement and the Transaction by the board directors of each of Angus and AAA Medic;
• the completion of due diligence investigations to the satisfaction of each of Angus and AAA Medic;
• the receipt of all required shareholder approvals;
• the completion of the Private Placement for minimum gross proceeds of $5 million; 
• Angus having $1.5 million in cash and no debts and liabilities at the closing of the Transaction; 
• the Resulting Issuer being in compliance with the initial listing requirements of the TSXV; and 
• the satisfaction of other customary closing conditions.

Sponsorship may be required by the TSXV unless exempt in accordance with the TSXV policies. The Company intends to apply for an exemption from the sponsorship requirements. There is no assurance that an exemption from this requirement will be obtained. 

Further Information

Angus and AAA Medic will provide further details in respect of the Transaction including a summary of financial information in due course once available by way of press release. Trading in Angus Shares has been halted pursuant to the policies of the TSXV. 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 released or received with respect to the Transaction may not be accurate or complete and should not be relied upon.

All information contained in this press release with respect to AAA Medic, its business and proposed corporate reorganization and financing was supplied by AAA Medic for inclusion herein. Angus has not conducted due diligence on the information provided and does not assume any responsibility for the accuracy or completeness of such information.

Trading in the securities of Angus Ventures Inc. should be considered highly speculative. The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

For more information, please contact:

Renaud Adams
Chairman & Founder
AAA Medic Montreal Inc.
Tel. +1 (514) 954-4466 ext. 100
radams@aaa-medic.com 

Scott Jardin
President and Chief Executive Officer
AAA Medic Montreal Inc.
Tel.: +1 (514) 954-4466 ext. 103
sjardin@aaa-medic.com 

Patrick Langlois
President and Chief Executive Officer
Angus Ventures Inc.
Tel.: +1 (416) 807-1311

Dennis Peterson
Director
Angus Ventures Inc.
Tel.: +1 (416) 777-6772
dhp@petelaw.com 

Forward Looking Information

This news release contains certain forward-looking statements that reflect the current views and/or expectations of management with respect to performance, business and future events, including but not limited to express or implied statements and assumptions regarding the Company’s intention to negotiate for or complete the Transaction. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Company operates. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. In particular, there is no guarantee that the parties will successfully negotiate and enter into the Definitive Agreement or complete the Transaction contemplated herein, that the Company’s due diligence will be satisfactory or that the Company will obtain any required shareholder or regulatory approvals, including the listing of the Resulting Issuer Shares on the TSXV and the concurrent delisting of the Angus Shares from the TSXV. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. Not for distribution to U.S. newswire services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws.