Mr. Norton Singhavon
GTEC HOLDINGS FINALIZES AGREEMENT WITH F-20 TO DEVELOP 194,000 SQ. FT. INDOOR CULTIVATION FACILITY
GTEC Holdings Ltd. has entered into a definitive agreement with F-20 Developments Corp. pursuant to the terms of the previously announced binding letter of intent dated July 10, 2018.
In connection with the transaction, the parties have established a joint venture company, 3PL Ventures Inc., where pursuant to the shareholders' agreement, F-20 shall own 51 per cent of the issued and outstanding common shares on a fully diluted basis, whereas GTEC shall own 49 per cent of 3PL.
GTEC, through a wholly owned operational subsidiary, will apply for, and transfer to 3PL, such licences to allow 3PL to become a Health Canada licensed producer (the production facility). 3PL will also make an application for a dealer licence under the Narcotics Control Act or such other licence to enable 3PL to import and export cannabis and cannabis products to and from Canada. Upon GTEC successfully completing a licence transfer agreement, F-20 shall be obligated to sell to GTEC an additional 1 per cent of 3PL.
"Canada's cannabis supply shortage has been caused by an uptick in demand that can be attributed to legalization last week. The shortages experienced in provinces across Canada create an opportunity for GTEC and our partners," said Norton Singhavon, chairman and chief executive officer of GTEC. "With this joint venture, GTEC will be operating over 120,000 square feet of cultivation space once construction is completed. Initial feedback from consumers and provincial supply chains is validating the demand for premium craft cannabis in Canada and internationally -- a demand that this increased capacity will allow us to serve."
On July 11, 2018, the parties had announced the production facility would have an initial-phase operation size of 60,000 square feet with a second phase of 180,000 square feet, totalling a completed operation size of 240,000 square feet. Upon completion of the final architectural designs, the parties have determined the production facility would allow for a 134,000-square-foot second phase without applying for a variance. For an aggregate operation size of roughly 194,000 square feet. Subject to 3PL pursuing a variance and furthermore, the respective municipality approving the application, the company remains confident in a 180,000-square-foot second phase, maintaining an aggregate size of 240,000 square feet.
In consideration of F-20 entering into the shareholders' agreement and the services to be provided by F-20 pursuant to the terms therein, GTEC has agreed to issue such number of common shares in the authorized capital of GTEC to F-20 (calculated at a 10-day volume-weighted average trading price) in accordance with the following milestones:
Such number of consideration shares with an aggregate GTEC share value of $1.25-million upon the full execution of legally binding agreements;
Such number of consideration shares with an aggregate GTEC share value of $416,666.67 upon the issuance of a building permit by the respective municipality in respect to the improvements to the production facility, in accordance with the requisite building plans and specifications;
- Such number of consideration shares with an aggregate GTEC share value of $416,666.67 upon the substantial completion of the production facility, in accordance with the requisite building plans and specifications, for the purposes of submitting an evidence package to Health Canada, including, without limitation, installation of equipment required by Health Canada, security system, storage areas and HVAC (heating, ventilation and air conditioning);
Such number of consideration shares with an aggregate GTEC share value of $416,666.67 upon Health Canada confirming there are no deficiencies with respect to the production facility, including construction thereof and security systems therefor.
Notwithstanding the above, 100 per cent of the consideration shares contemplated herein will be issued to F-20 upon either of the following events:
F-20 financing 3PL by way of a shareholder loan of at least $5-million and 3PL having expended at least $5-million in respect of the construction of a production facility;
If GTEC fails to submit a final evidence package to Health Canada addressing all deficiencies with respect to the production facility within 90 days of substantial completion.
The agreement is subject to approval by the TSX Venture Exchange.
About GTEC Holdings Ltd.
GTEC was founded in 2017 to capitalize on opportunities in the nascent and rapidly growing legal cannabis industry. GTEC is focused on growing premium-quality craft cannabis in purpose-built indoor facilities. GTEC currently holds a 100-per-cent interest in GreenTec Bio-Pharmaceuticals Corp., Grey Bruce Farms Inc., Zenalytic Laboratories Ltd., Falcon Ridge Naturals Ltd., Alberta Craft Cannabis Inc. and Tumbleweed Farms Corp.
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