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Shell Summary for Oct. 28, 2014

2014-10-28 19:54 ET - Market Summary

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by Stockwatch Business Reporter

The TSX Venture Exchange fell 2.33 points to 788.02 Tuesday. Michael Galloro's halted capital pool shell, Black Sparrow Capital Corp. (BLC), will ask shareholders at a Dec. 1 meeting to approve a 1:10 rollback so it can then acquire Pure Natures Wellness Inc., doing business as Aphria, as its qualifying transaction. The target, founded by Ontario businessmen Cole Cacciavillani and John Cervini, already has a licence to grow, destroy and harvest medical marijuana under the new MMPR policy, and anticipates obtaining its production licence from Health Canada shortly.

After Black Sparrow rolls back 1:10, leaving it with 500,000 postconsolidated shares, the shell will issue 50,179,587 postconsolidated shares to the shareholders of Aphria, and then change its name to Aphria Inc. Mr. Cacciavillani will receive 9,944,444 shares and Mr. Cervini will receive 11,500,001, making them the largest shareholders.

In August, 2013, Aphria first applied to Health Canada to become a licensed producer under the new MMPR policy. In March, 2014, Health Canada granted the company a licence to acquire, produce and destroy medical marijuana at its greenhouses in Leamington, Ont., and in August, 2014, Health Canada granted Aphria a licence to harvest medical marijuana. What remains in Aphria's path to becoming a licensed producer is approval to transport and sell its product to patients or other licensed producers. Aphria claims that Health Canada will conduct its final inspection in 10 to 14 days, after which it will take another five to 10 business days for the government to grant the production licence, which is a requirement for Aphria to go public through Black Sparrow. Despite hundreds of applications from hopeful medical marijuana producers, the government has not granted a licence to operate under the new MMPR policy since last April, when OrganiGram Holdings Ltd. (OGI: $1.11) became the 13th licensed producer. Aphria grows 40 strains of medical marijuana at its greenhouses, and anticipates obtaining a licence to produce up to 8,000 kilograms a year. It will charge between $5 and $12 a gram, depending on the strain.

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