EXMceuticals Inc. Announces Signing of the Definitive Business Combination Agreement with Global Cannabinoids

Published: May 12, 2021

EXMceuticals Inc. Announces Signing of the Definitive Business Combination Agreement with Global Cannabinoids

EXMceuticals Inc., an emerging bio-sciences company specializing in the production of unique cannabinoid formulations, is very pleased to announce: (i) the signing of the definitive business combination agreement (the “Merger”) with Global Cannabinoids (“GC”), a leading B2B US distributor of bulk and wholesale hemp derived cannabinoids and finished products; and (ii) a best-efforts, private placement (the “Private Placement”) of up to C$6.0 million (collectively, the “Transaction”). This Business Combination fueled by new capital will create a company (the “Combined Company”) in the fast-growing business segment of hemp and cannabinoid-based products distribution. Following the completion of the Business Combination, the Combined Company will operate under GC’s corporate name.

The Business Combination brings together GC, which is a US-based online platform for the production, manufacture and distribution of premium wholesale hemp oil, extract, isolates and finished products with EXM, which will allow the Combined Company to expand globally with EXM’s existing Portugal hub to import, research, refine and export cannabinoids and cannabis-based products into and throughout the European Union.

“We are excited to have reached agreement on the definitive terms of our merger with EXM, and this will accelerate our expansion. Over the last three years Global Cannabinoids has grown into a meaningful company, with a material customer roster, distributing many different Hemp products. The US market offers us enormous room to grow further from here, and we can now also push quickly into other rapidly growing markets for additional sales, in particular Europe. We are committed to making the combined company a significant part of the emerging multi-billion dollar CBD and cannabis market opportunity ” stated GC’s Chief Executive Officer Kelly Ann Lewis-Bortman.”

“The combination with GC is clearly a transformational transaction for EXM. The enlarged Global Cannabinoids will benefit from an accelerated expansion into European distribution, as well as a business footprint encompassing both hemp and cannabis.” commented Jonathan Summers, CEO of EXM.

With a new global focus and reach, the Combined Company will focus on expanding their footprint worldwide catering to hemp, CBD and ultimately cannabis-based products. The combined team’s deep global network will complement the organic cost saving synergies of the Business Combination as the Combined Company continues to pursue market share in the projected $123 billion CBD market by 2027.1

Proposed Transaction
GC has signed a definitive business combination agreement (the “BCA”) effective May 4, 2021 with EXM. The Definitive Agreement provides for the creation of a partnership between EXM and GC (“Global-EXM”) and the contribution by EXM and GC of all of their respective assets and liabilities (including all subsidiaries) to the Global-EXM in exchange for units of Global-EXM. The units (the “Global-EXM Exchangeable Units”) issued to the members of GC in exchange for the contribution of GC’s assets shall be exchangeable at the option of such holders, from time to time, for an aggregate of 168,000,000 common shares of EXM (“EXM Shares”). Prior to any exercise, EXM shall issue to the members of GC, 168,000 proportionate voting shares of EXM (the “Proportionate Voting Shares”) where each Proportionate Voting Share shall carry 100 votes at any meeting of the shareholders of EXM, no economic interest in EXM and shall be cancelled on a proportionate basis upon any exchange of the Global-EXM Exchangeable Units for EXM Shares.

The Transaction will result in EXM holding approximately 33% of Global-EXM and the members of GC holding approximately 66% of Global-EXM. After giving effect to Definitive Agreement and not including any securities to be issued pursuant to the Private Placement, the holders of GC will hold 66% of the votes at EXM (through the Proportionate Voting Shares) on a pro forma basis and existing EXM shareholders will hold approximately 33% of the votes at EXM (through their continued ownership of EXM Shares) on a pro-forma basis. EXM and GC expect to close the Transaction before the end of the year.

The Transaction has been unanimously approved by the Board of Directors of EXM and the members of GC. The BCA provides for certain customary provisions, including covenants in respect of non-solicitation of alternative transactions, a right to match superior proposals, US$500,000 reciprocal termination fees under certain circumstances.

The Transaction is an arm’s length transaction and is subject to a number of conditions customary to transactions of the nature of the Transaction, including, but not limited to: (i) the receipt of required regulatory approvals, including, but not limited the approval of the Canadian Securities Exchange (the “CSE”); (ii) the completion of a change in the name of EXM to “Global Cannabinoids Ltd” or such other name as may be requested by GC and acceptable to the application regulatory authorities; and (iii) the completion of the Board and Management reconstitution (as further described below).

There can be no assurance that any one or more of the matters to be undertaken in connection with the transaction will be completed as proposed or at all. In particular, the proposed CSE listing is subject to meeting the initial listing requirements and obtaining the approval of the CSE. Additional details of the Transaction will be available in materials to be communicated in the listing statement being prepared in connection with the Transaction and any meeting materials should a meeting of the EXM Shareholders be required to approve any matters in connection with the Transaction. Readers are cautioned that, except as disclosed therein, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied on.

Highlights of The Transaction
Management believes the terms of the Business Combination are accretive to the Combined Company and expect that revenue from combined operations will position the Combined Company to be a global participant in the hemp-based CBD wholesale market and beyond.

  • Market Opportunity: Positions the Combined Company to capitalize on the expected $123 billion global CBD industry by 20272 with a digital platform for the global distribution of cannabinoid-based products.
  • Global Focus: GC’s sales channels combined with EXM’s existing assets and licenses in Portugal establishes growing global revenue capabilities and vertical supply chains in the emerging EU cannabinoid markets.
  • Online CBD Presence: GC currently services approximately 60,000 customers across the US with over 1,000 product SKUs in 2020.
  • Customer Focused Data: Distribution network for bulk wholesale and nationally recognized CBD brands across a wide array of customers provides valuable data, consumer insights, and product knowledge as global companies look to enter the cannabis & cannabinoid marketplace.
  • Strong Sales Profile: GC generated sales of approximately $13 million in 2020 (unaudited) despite the disruptive effects of the global pandemic.

Luminous Capital acted as corporate financial advisors to both GC and EXM on the Transaction.

Combined Company Leadership Team
The Combined Company will be led by a management team and Board of Directors, with strong track records in consumer packaged-goods, distribution, and cannabis experience globally. Upon completion of the Business Combination, GC’s current Chief Executive Officer, Kelly Ann Lewis-Bortman, will lead the Combined Company and management team as the Chief Executive Officer. Jonathan Summers will be appointed the Chairman of Combined Company. The combined Board of Directors will consist of a total of five members, three of which, including Mrs. Bortman, are current GC directors and two of which will be from EXM, one of which will be Jonathan Summers. EXM’s Chief Financial Officer, Mike Kinley, will continue as the Chief Financial Officer of the combined entity.

Additional senior leadership positions at the Combined Company will be named at a later date.

Recent News

View All News Items

Latest Article

How Database Integrations Can Improve Every Step in Your Cannabis Supply Chain Labeling

How Database Integrations Can Improve Every Step in Your Cannabis Supply Chain Labeling

At any step in the cannabis supply chain, your labeling system should allow for full control and traceability, from seed to sale. Implementing lean principles and labeling best practices across the cannabis supply chain can help you streamline your seed-to-sale labeling process and help you gain control.

Click below to read the full blog and learn how to reduce waste, cut costs, and gain efficiency with cannabis labeling: https://bit.ly/2KwZ5IQ

Read Article