PureK Holdings Corp. (the "
Company") (TSX
Venture: PKAN), formerly AF1 Capital Corp., is pleased to announce
that it has completed its previously announced qualifying
transaction (the “
Qualifying Transaction”)
pursuant to the policies of the TSX Venture Exchange
(“
TSXV”). For additional information about the
Qualifying Transaction, please see the Company’s news release dated
November 23, 2020 and the filing statement of the Company dated
November 20, 2020 (the “
Filing Statement”), which
are available at www.sedar.com.
Trading in the common shares of the Company (the
“Common Shares”) is expected to commence on the
TSXV under the symbol “PKAN” on or about December 10, 2020
following the issuance by the TSXV of its final bulletin in respect
of the Qualifying Transaction.
The Qualifying Transaction was completed in
accordance with the terms of the previously announced business
combination agreement dated November 20, 2020 (the
"Business Combination Agreement") among the
Company, Heavenly Rx Ltd. ("Heavenly"), Heavenly
Rx, LLC ("Heavenly Subco"),
PureKana, LLC ("PureKana"), Cody J. Alt and Jeff
Yauck (the "PureKana Founders").
Pursuant to the terms of the Business
Combination Agreement:
- The
Company: (a) amended its articles and notice of articles to
create a series of convertible preferred shares (the
"Series 1 Preferred Shares"); (b) consolidated
its issued and outstanding Common Shares on the basis of 40
existing Common Shares for one consolidated Common Share (the
"Consolidation"); and (c) changed its name to
"PureK Holdings Corp.";
- The
parties completed a triangular merger among the Company, a
subsidiary of Heavenly Subco ("Heavenly LLC 2")
and a wholly-owned subsidiary of the Company ("AF1
Subco"), each formed under the laws of Delaware,
whereby Heavenly LLC 2 merged with and into AF1 Subco under the
Delaware Limited Liability Company Act, with AF1 Subco continuing
as the surviving corporation (the
"Merger");
- Heavenly
indirectly received 4,000,000 post-Consolidation Common Shares and
the PureKana Founders received an aggregate of 2,818,125
post-Consolidation Common Shares pursuant to the Merger, each at a
deemed price of US$8.00 per share. The PureKana Founders also
receive an aggregate of 1,025,000 Series 1 Preferred Shares, each
at a deemed price of US$8.00 per share; and
- The
Company indirectly acquired a 50.1% interest in PureKana.
AF1 Subco is a wholly-owned subsidiary of the
Company. In connection with the Merger, the Company indirectly
assumed Heavenly Subco’s obligations under outstanding promissory
notes held by the PureKana Founders in the aggregate principal
amount of US$6,934,298.
Immediately following the Merger, Heavenly
distributed to its shareholders an aggregate of 1,349,934
Common Shares, and contributed to certain arm's length third
party limited partnerships an aggregate of 2,050,000 Common
Shares, and the PureKana Founders sold the 1,025,000 Series 1
Preferred Shares to arm's length parties for aggregate gross
proceeds of US$8,200,000.
As a result of the Merger and following the
completion of the Consolidation, the Company has approximately
7,005,626 Common Shares and 1,025,000 Series 1 Preferred
Shares outstanding and has reserved for issuance 12,500 Common
Shares pursuant to stock options and 7,500 Common Shares pursuant
to agent’s options.
The board of directors of the Company now
consists of four directors: Paul Norman, Jeff Yauck, Cody Alt and
Michael Galloro. The officers of the Company are Kathy Casey (Chief
Executive Officer) and Brian Meadows (Chief Financial Officer and
Corporate Secretary). The directors and officers of the Company, as
a group, beneficially own, or control or direct, directly or
indirectly, 2,890,907 Common Shares, which are subject to escrow
restrictions as further described in the Filing Statement.
Early Warning Disclosure Pursuant to
National Instrument
62‐103
In connection with the Qualifying Transaction,
each of Jeff Yauck and Cody Alt acquired ownership, control or
direction over Common Shares requiring disclosure pursuant to the
early warning requirements of applicable securities laws.
Prior to the completion of the Qualifying
Transaction, each of Jeff Yauck and Cody Alt had no ownership of,
or exercised control or direction over, any voting or equity
securities of the Company. In connection with the Qualifying
Transaction, each of Jeff Yauck and Cody Alt acquired ownership of
1,409,063 Common Shares representing approximately 20.1% of the
issued and outstanding Common Shares on a non-diluted basis and
12.9% on a fully diluted basis in accordance with the terms of the
Merger.
Each of Jeff Yauck and Cody Alt: (i) acquired
the Common Shares in connection with the Qualifying Transaction;
(ii) holds the Common Shares for investment purposes; and (iii)
does not have any current intentions to increase or decrease his
beneficial ownership or control or direction over any additional
securities of the Company. Each of Jeff Yauck and Cody Alt may,
from time to time and depending on market and other conditions,
acquire additional Common Shares through market transactions,
private agreements, treasury issuances, convertible securities or
otherwise, or may sell all or some portion of the Common Shares
they each own or control, or may continue to hold the Common
Shares.
Copies of the early warning reports may be
obtained from Brian Meadows, Chief Financial Officer, PureK
Holdings Corp., +1 (855) 553-7441, ir@purekana.com.
About PureK Holdings
Corp.
PureK Holdings Corp. indirectly owns a 50.1%
equity interest in PureKana, LLC. PureKana is recognized as a Top
10 cannabidiol ("CBD") brand in the United States
and has operated a profitable direct-to-consumer online business
since its inception in 2017. Its product lineup includes high
quality CBD that can be consumed in the form of tinctures,
capsules, topicals, patches, and gummies. PureKana's brand and
direct-to-consumer marketing expertise has helped to establish
PureKana as one of the leading online CBD brands in the United
States. The online presence is now being expanded into broader
retail outlets. PureKana operates legally in the jurisdictions
where it carries on business.
For further information:
Brian MeadowsChief Financial OfficerPh: +1 (855) 553-7441Email:
ir@purekana.com
Forward-Looking Information
Certain statements contained in this news
release, such as the anticipated trading day on the TSXV,
constitute "forward-looking information" as such term is used in
applicable Canadian securities laws. Forward-looking information is
based on plans, expectations and estimates of management at the
date the information is provided and is subject to certain factors
and assumptions, including, that the Company’s financial condition
and development plans do not change as a result of unforeseen
events and that the Company obtains regulatory approval.
Forward-looking information is subject to a variety of risks and
uncertainties and other factors that could cause plans, estimates
and actual results to vary materially from those projected in such
forward-looking information. Factors that could cause the
forward-looking information in this news release to change or to be
inaccurate include, but are not limited to, the risk that any of
the assumptions referred to prove not to be valid or reliable, that
occurrences such as those referred to above are realized and result
in delays, or cessation in planned work, that the Company’s
financial condition and development plans change, and delays in
regulatory approval, as well as the other risks and uncertainties
applicable the CBD industry and to the Company as set forth in the
Company’s Filing Statement in respect of the Qualifying Transaction
filed under the Company’s profile at www.sedar.com. The Company
undertakes no obligation to update these forward-looking
statements, other than as required by applicable law.
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 press release.
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