Acquisition of Whistler Medical Marijuana Corp.
On March 1, 2019, we completed the acquisition of all of the
issued and outstanding shares of Whistler Medical Marijuana Corp.
in consideration of the issuance of 13,667,933 common shares with a
deemed issuance price of $9.77. The transaction was completed by
way of a three-cornered amalgamation among the Company, Whistler
and a wholly-owned subsidiary of the Company. We are also obligated
to make milestone payments to the former Whistler shareholders in
the amounts of $10,000,000 (the “First Milestone Payment”)
and $30,000,000 (the “Second Milestone Payment”) in Common
Shares at the volume weighted average trading price of the Common
Shares on the TSX for the five trading days immediately prior to
the date of issuance. The First Milestone Payment will be issued on
the earlier of March 1, 2020 and the date on which Whistler
achieves full production. The Second Milestone Payment will be
issuable upon satisfactory licensing of Whistler’s Pemberton
Senior Advisory Services Agreement
On March 12, 2019 we entered into a senior advisory services
agreement (the “Services Agreement”) with 280 Park ACI
Holdings, LLC, of New York, New York (“ACI Holdings”), of
which Mr. Nelson Peltz is the principal, and appointed
Mr. Nelson Peltz as a strategic advisor to the Company.
Pursuant to the Services Agreement, Mr. Peltz, acting through
ACI Holdings and its partners, members, officers and employees,
provides direct guidance and advice on business strategy,
marketing, operations and business development to our executive
management, board of directors and financial advisors. The services
include direct responsibility for formulating strategic advice
regarding potential US corporate initiatives and periodic reporting
to our Board and executive management. As consideration for the
services, we granted to Mr. Peltz options to purchase
19,961,754 Common Shares exercisable at a price of $10.34 per
Common Share for a period of seven years. The options vest rateably
on a quarterly basis over a four-year period. The vesting criteria
includes acceleration of vesting of the options upon the occurrence
of certain specified events, which include the consummation of
certain defined transactions, the closing price of Common Shares
being at least $31.02 for a specified period, and the closing price
of Common Shares being at least $41.36 for a specified period. We
have entered into a Registration Rights agreement with ACI Holdings
to register these options as well as the Common Shares underlying
such options so that they may be freely transferred.
Acquisition of Chemi Pharmaceutical Inc.
On April 24, 2019, we completed the acquisition of Chemi
Pharmaceutical Inc. (“Chemi”) a privately-held,
Ontario-based laboratory specialized in providing analytic services
to pharmaceutical and cannabis industries. We acquired all of the
issued and outstanding shares of Chemi in exchange for 83,299
Common Shares issued at closing and 41,649 Common Shares payable
upon achievement of certain milestones.
Chemi has a Health Canada Drug Establishment Licence enabling it to
perform certified GMP compliant quality control analytical testing.
In addition, Chemi has received US FDA accreditation for its
facility. Acquiring Chemi with its Drug Establishment Licence
satisfies a prerequisite for applying for a Cannabis Drug Licence,
which is required for the development of cannabis therapeutics
within the global medical cannabis market.
Investment in EnWave Corporation
On April 26, 2019, we completed a $10 million equity investment in
EnWave Corporation (“EnWave”), a publicly-traded,
Vancouver-based technology company. Pursuant to the terms of a
share purchase agreement dated April 25, 2019, we purchased
5,302,227 common shares in the capital of EnWave (the “EnWave
Shares”) at a deemed price of $1.886 per share, based on the
volume weighted average trading price (“VWAP”) for EnWave’s
Shares on the TSX Venture Exchange (the “TSXV”) for the five
consecutive trading days up to and including April 22, 2019. As
consideration for the EnWave Shares, we issued to EnWave 840,576
Common Shares at a deemed price of $11.8966 per share. The EnWave
Shares represent approximately 4.91% of the issued and outstanding
common shares of EnWave on a non-diluted basis.
Letter Agreement with Hempco Food and Fiber Inc.
On April 16, 2019, we entered into a binding letter agreement
(the “Letter Agreement”) setting out the principal terms and
conditions upon which we will acquire all of the issued and
outstanding common shares of Hempco Food and Fiber Inc.
(“Hempco”) not already owned by Aurora for $1.04 per Hempco
share, payable in Common Shares at a deemed price of $12.01 per
Common Share, reflecting a valuation of approximately
C$63.4 million on a fully diluted basis. We currently own
approximately 52% of the outstanding Hempco shares.
Assuming completion of the acquisition, Hempco will become a wholly
owned subsidiary of Aurora. Hempco’s shares will be de-listed from
the TSX Venture Exchange and it is expected that Aurora will apply
to cause Hempco to cease being a reporting issuer under applicable
Canadian securities laws. The acquisition is subject to the
execution of a definitive agreement, the receipt of an independent
valuation of Hempco, receipt of all regulatory, court, and
shareholder approvals, and other customary closing conditions.
In anticipation of the acquisition, on January 15, 2019, we
invested $5.0 million in a secured convertible debenture in
Hempco. The debenture bears interest at 8% per annum and is
convertible at $1.18 per Hempco share at Aurora’s election until
January 15, 2021.