Bhang Inc. (CSE: BHNG) (OTCQX: BHNGF), a global cannabis CPG brand company with an award-winning portfolio of products, announced today that the Company has completed a number of transactions with Cannabis Growth Opportunity Corporation (CSE: CGOC).
Pursuant to a settlement agreement dated July 17, 2020 (the "Settlement Agreement"), the Company and CGOC have settled two convertible promissory notes in the aggregate principal amount of CAD $600,000 (collectively, the "Notes") by the Company issuing to CGOC a total of 6,666,667 subordinate voting shares of Bhang ("Shares"), at a deemed price of $0.09 per share. Furthermore, CGOC has settled and released all other rights and remedies available under its forbearance agreement with Bhang entered into on April 22, 2020 and prior financings in exchange for a lump sum payment of $1,152,857 which was satisfied by the Company with (i) the issuance of 12,809,524 Shares, at a deemed price of $0.09 per share, and (ii) the issuance of warrants for the purchase of 5,261,905 Shares, exercisable for a period of 24 months from the date of issuance at an exercise price of $0.15 per share.
The Company and CGOC also entered into an operating credit facility (the "Credit Facility") whereby CGOC shall provide up to the aggregate principal amount of CAD $1,000,000 to Bhang for general working capital purposes. The Credit Facility bears an interest rate of 8% per year and will mature 36 months from the date of entry. The Credit Facility is secured by a charge on all of the current and future assets of the Company and its subsidiaries pursuant to general security agreements. All advances and accrued interest on the Credit Facility are convertible into Shares at a price of $0.15 per share. In connection with the Credit Facility, the Company issued to CGOC warrants for the purchase of 6,666,667 Shares, exercisable for a period of 24 months from the date of issuance at an exercise price of $0.15 per share. As of the date hereof, CGOC has advanced a total of $256,087, of which, $197,435 was advanced as cash and $58,652 of accrued interest on the Notes was rolled into the Credit Facility.
Jamie L. Pearson, Bhang's President and CEO commented, "It is great to have a partner in CGOC with their extensive experience investing in cannabis companies. We fit well in their portfolio and are grateful to have CGOC's vote of confidence. They believe in our brand, our executive team and the strategy for growth we have initiated for Bhang's future to the degree they have committed significant capital resources to supporting our plan. Sean Conacher's vision for CGOC and Bhang together resonated with our Board and we believe this transaction is a true win-win."
Related Party Transaction
CGOC is an insider of the Company as it owns greater than 10% of the subordinate voting shares of the Company. Accordingly, the above mentioned transactions together represent a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on an exemption from the formal valuation requirements of MI 61-101 available on the basis of the securities of the Company not being listed on specified markets, including the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ or certain overseas stock exchanges. The Company is also relying on the exemption from minority shareholder approval requirements under MI 61-101 as neither the fair market value of the transaction, or the consideration paid, exceed 25% of the Company's "market capitalization" (as defined in MI 61-101). The Company did not file a material change report more than 21 days before the expected closing of the transaction as the details of the transaction was not settled until shortly prior to closing.
About Bhang
Bhang is committed to making the fairly enjoyable ridiculously fun. For over a decade Bhang has delivered exceptional sensory experiences to consumers through its extensive portfolio of over 50 master-chef created cannabis, CBD and terpene products including gourmet chocolates, pre-rolls, CBD isolate, and Hempsticks™. Bhang's highly-awarded chocolates are among the top-selling edibles in 7 US states and the #1 and #2 edible of Canada. Bhang's CBD products are globally-distributed and are known for being safe, efficacious and delicious. Learn more at www.bhangnation.com and purchase our high-quality CBD products at www.bhangcbd.com. Live Life with a Bhang!
About CGOC
CGOC is an investment corporation that offers unique global exposure to the emerging global cannabis sector. CGOC's main objective is to provide shareholders long-term total return through its actively managed portfolio of securities, both public and private, operating in, or that derive a portion of their revenue or earnings from products or services related to the cannabis industry.
