Zenabis Provides Update on Plan of Arrangement, Engages Investment Marketing Firm

Published: February 7, 2019

Zenabis Provides Update on Plan of Arrangement, Engages Investment Marketing Firm

Zenabis Global Inc. provided an update on the expected tax impact of the Plan of Arrangement completed on January 8, 2019, and announced that it has engaged an investment marketing firm to help increase Zenabis’ profile with the investment community.

Plan of Arrangement

Zenabis advises that in connection with the exchange of Bevo Shares for Zenabis Shares and CubicFarm Shares as part of the Plan of Arrangement completed on January 8, 2019, Zenabis has determined that the fair market value of each CubicFarm share distributed on the exchange was equal to $0.15. This determination, however, is not binding on the Canada Revenue Agency. Further, Zenabis has determined that the paid-up capital of each Bevo Share immediately before the exchange was greater than this determined fair market value of each Bevo Share.  As a result, Bevo Shareholders should not have realized a deemed dividend on this exchange.

Bevo Shareholders are encouraged to review the tax discussion outlined in Bevo’s Management Information Circular dated November 23, 2018 as to the general tax consequences in respect of the Plan of Arrangement and the statements above are subject to the qualifications therein.  This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular Bevo Shareholder. As noted in the Management Information Circular, Bevo Shareholders should consult their own tax advisors for advice with respect to their particular circumstances including, where relevant, the application and effect of the income and other taxes of any country, province, territory, state or local tax authority.  All capitalized terms used above have the meanings given to them in the Management Information Circular.

Investment Marketing Services

Zenabis also announced that it has entered into an agreement with Hybrid Financial Ltd. pursuant to which Hybrid Financial will provide investment marketing services to Zenabis.

Founded in 2011, Hybrid Financial is a high impact sales & distribution company working on behalf of clients in the financial services industry. Its unique approach helps it effectively and efficiently build brands and launch products on behalf of its small, medium and large clients. With offices in both Toronto and Montreal, Hybrid offers comprehensive coverage of both the Canadian and U.S. markets.  Other than pursuant to the Agreement, Zenabis has no relationship with Hybrid Financial.

Hybrid Financial has been engaged for an initial term of six months commencing February 5, 2019 (the “Initial Period”). On expiry of the Initial Period, the Agreement shall be automatically renewed on a monthly basis.  As consideration for providing the services, Zenabis is required to pay Hybrid Financial a monthly fee of C$20,000 plus applicable taxes.  In addition, Zenabis is granting Hybrid Financial 150,000 options under Zenabis’ stock option plan, having a three-year term at an exercise price equal to the $4.45 (the closing market price per Zenabis share on February 4, 2019). In accordance with applicable TSXV rules, such options shall vest quarterly over the first year of the term of the Agreement. If the Agreement is terminated for any reason, all unvested options shall immediately expire.

Zenabis is making the required filings with the TSXV to implement the Agreement.

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