Red Oak Announces LOI to Acquire 100% of CB Holding Group Corp., a Company Entering Into the Cannabis Vaporizer Distribution Market
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES
OR FOR DISSEMINATION IN THE UNITED STATES.
Red Oak Announces LOI to Acquire 100% of CB Holding Group Corp., a Company
Entering Into the Cannabis Vaporizer Distribution Market
VANCOUVER, BRITISH COLUMBIA-- July 13, 2018 – RED OAK MINING CORP.
(TSX.V: ROC.H) (the “Corporation” or “Red Oak”) is pleased to announ ce that it has entered
into a Letter of Intent (“ LOI”) dated July 12, 2018 with CB Holding Group Corp. (“ CBH”).
CBH is a Nevada corporation, that will operate a vaporizer pen distribution and sale business
through a wholly owned California subsidiary (the “ California Subsidiary”), with an Exclusive
Distribution Agreement in the State of Calif ornia, and through a wholly owned Nevada
subsidiary, (the “Nevada Subsidiary”) with an Exclusive Distribution Agreement in the State of
Nevada, allowing for the distribution and sale of vaporizers. Red Oak and CBH plan to enter into
a definitive Share Exchange Agreement (the “ Definitive Agreement”) whereby all outstanding
securities of CBH will be exchanged for securities of Red Oak (the “ Transaction”), which will
constitute a reverse takeover by CBH and a change of business of the Corporation from mining
to the production and sale of vaporizers for cannabis and CBD . The final structure of the
Definitive Agreement is subject to applicable co rporate, securities and tax considerations. The
Transaction is an arm’s length transaction.
On closing of the Transaction, it is anticipated that Red Oak will carry on with sale of CBH’s
vaporizer pens. In connection with the completion of the Transaction, the Corporation intends to
delist its securities from the TSX Venture Exchange (the “ TSXV”) and seek listing of the same
on the Canadian Securities Exchange (the “CSE”). Red Oak plans to change its name on closing
of the Transaction. All dollar amounts are in Canadian unless otherwise specified.
About CB Holding Group Corp.
CBH is a Nevada corporation. CBH’s business on closing of the Transac tion will focus on the
design, formulation, infusion through proprietary process and sale of vaporizer pens in
California, through the Californi a Subsidiary. Subsequent to the development of CBH’s
California operations, it will also engage in a similar business in Nevada through the Nevada
Subsidiary.
CBH is a special purpose vehicle formed on June 29, 2018 for the pur pose of effecting the
Transaction. CBH’s business in California was operated by CBH’s affiliate Caesarbrutus
California, LLC (“ Caesarbrutus”) pursuant to an Exclusive Distribution Agreement to sell
vaporizer pens in California from Goodness 4 Life, LLC (“ Goodness 4 Life”). Goodness 4 Life
and Caesarbrutus have cancelled their agreemen t and as of July 1, 2018, it has been replaced
with an identical Exclusive Distribution Agreement between Goodness 4 Life and CBH’s
California Subsidiary. In consideration of be ing granted the exclusive rights and license to
distribute and sell the vaporizers, the California Subsidiary has agreed to pay a 2% royalty on net
profits to Goodness 4 Life. It has been represente d that Goodness 4 Life is the holder of all city
and state licenses required in California for an en tity to distribute and sell vaporizer pens infused
with cannabis extracts. CBH will act as the fulfiller of the orde rs, with Goodness 4 Life picking
up the pens from a licensed laboratory for delivery directly to the buyers. In connection with the
Transaction, CBH will then carry on the busines s formerly being carried on by the Caesarbrutus
through CBH’s California Subsidiary.
Caesarbrutus has recently processed purchase or ders for 225,000 vaporizer units for distributor
pick-up in August. Purchase orders from di stributors continue to be received by CBH. The
Company intends to enter the Nevada market through a similar structure that will also be subject
to a 2% royalty on net profits.
About Caesarbrutus California, LLC
Caesarbrutus California, LLC was established in June 2017 by members of the former
management team of Grenco Science, LLC (“ Grenco”), a leader in vaping technology and
founders of the well-known G Pen product lines. Caesarbrutus conducts various cannabis related
businesses and the business rational for this pr oposed Transaction is to take Caesarbrutus’
vaporizer business public.
Since inception in June 2017, Caesarbrutus has generated approximately US$17,500,000 in
revenues (excluding the 225,000 unit order for A ugust delivery), with a gross margin of
approximately US$4,000,000 from the sale of two se parate vaporizer brands in the State of
California (based on unaudited financial statements provided to Red Oak).
The two vaporizer brands include Socal Supreme and SoFloGrow. Both brands use a proprietary
infusion process, including organic terpenes for smooth flavors to produce an incredibly smooth
draw combined with discreetness. The Corpora tion believes annual revenues will increasingly
grow given the demand for vaporizers as they remove many of the risks of smoking. In addition
cannabis consumers are continually transitioning to the use of vaporizers given their many
perceived benefits. Upon completion of the Trans action it is anticipated that Red Oak’s current
management will resign and that CBH and Re d Oak will appoint repr esentatives with the
requisite experience to manage the issuer exis ting on the completion of the Transaction (the
“Resulting Issuer ”) in order to satisfy the requirements of the CSE. Additionally, upon
completion of the Transaction, the board of directors of the Resulting Issuer will be comprised of
1 nominee from Red Oak and 4 from CBH.
Strategic Partnership with Crockett Family Farms, Award Winning Breeder and Grower
Dave Crockett is currently CEO of Crockett Family Farms, a 3r d generation family run farming
business with high regard both in the US and Inte rnationally. Mr. Crockett is a proposed director
of the Resulting Issuer. Crockett Family Farms is working closely with the California and
Nevada Subsidiaries, to jointly design and offer new cannabis products.
Mr. Crockett is one of the world’s most successf ul and respected cannabis breeders. Originally
hailing from California’s Sierra Nevada mountains, he is a third-generation cannabis farmer with
a talent for developing deliciously fruity phenot ypes, most notably his best-selling Strawberry
Banana, and his citrusy breakout strain Tangie, which early on earned him the nickname “Tangie
Man.”
With the support of industry giant’s DNA Genetics, who he partnered with in 2010, Crockett’s
Tangie strain won over 20 awards in two years transforming the humble farmer into a full-
fledged “pot star” practically overnight. So much so that in 2012 Crockett went solo, founding
his own genetics company, Crockett Family Farms. Based out of California’s Central Coast
region, Crockett Family Farms (which, as the na me suggests, is family owned and run) has
produced some of the finest quality flowers and seeds in the nation, earning them induction into
High Times magazine’s prestigious Seedbank Hall of Fame in 2017. In fact, over the past several
years, their genetics have won over 100 differe nt awards from nearly every major cannabis
competition in the world and are currently carried in around half of all the dispensaries in
California.
Recently named one of High Times’ 100 Most Infl uential People in Cannabi s, Mr. Crockett and
his team have built and managed gardens of ev ery shape, scale, and scope from multi-million
dollar high-tech indoor operations to bare-bone s greenhouse grows. Whet her through his own
brand or under the umbrella of DAD Consultancy (a new joint venture with his old DNA
partners), Mr. Crockett offers a dvice and assistance to cannabis companies, brands and growers
everywhere (including Loudpack Farms, among others) that allows them to take their businesses
to the next level. Grower, breeder, consultant , and even hydroponic store owner, Mr. Crockett is
an award-winning agricultural entr epreneur with the knowledge, experience, and vision needed
to thrive in the ever-expanding and evolving legal cannabis industry.
Potential Vertical Integration
CBH is currently examining ways to reduce unit production costs to increase profitability.
Cannabis oil cartridges for vaporizer units are current ly sourced from third parties in the State of
California. CBH is currently ex amining other sublicense agreem ents where will it would be
eligible to source third party trim to produce cannabis oil to achieve vertical integration. It is
predicted this vertical integration strategy co uld cut current unit pro duction costs in half,
resulting in higher potential profitability.
Proposed Directors and Officers of Resulting Issuer
It is proposed that the following individuals will be appointed as directors and officers of the
Resulting Issuer, in addition to a minimum of two additional directors:
Mary Hayca Bunevacz, Executive Chairman, Board of Directors
Ms. Bunevacz is currently Chief Operating Officer of Caesarbrutus California, LLC. Prior to
joining Caesarbrutus, she had been in th e vaporizer industry si nce 2008 beginning with
electronic cigarettes to cannabis vaporizers. In 2012, she became Director of Operations for
Grenco Science, the company that brought the famous G Pen vaporizer to the public. She led day
to day operations of the company, as well as developed and maintained relationships with
distributors, retailers and manuf acturers both locally and in China. Ms. Bunevacz holds a
Bachelor’s degree in Global Studies, from University of California Santa Barbara.
Jaitegh Singh, CEO & Director
Mr. Singh is currently CEO of Caesarbrutus and ma nages all aspects of the business at an
enterprise level. Professionally, he is an attorn ey licensed to practice in Florida, New Jersey,
New York, Colorado, and the US Di strict Courts. Prior to join ing Caesarbrutus, he gained
valuable experience in acquisitions and dispositions in a wide range of industries, including those
that are highly regulated, such as the legal cannabis industry. A key component of his success is
his broad understanding of the corporate governance aspects of cannabis related transactions. Mr.
Singh is known for helping take one of the firs t American based cannabis companies public on
the US markets. He has helped take numerous companies public in the past 5 years. Jaitegh holds
a Doctorate degree from Shepard Broad Law Cent er along with Post-Doctorate Education from
the University of Mississippi and the University of Cambridge.
David Crockett, Director
Mr. Crockett is currently CEO of Crockett Family Farms, a 3rd generation family run farm with
high regard both in the US and internationally. Crockett Farms is based on both achieving higher
quality and reliable genetics and superior medici ne for patients as well as acting as connoisseurs
through the sale of its intellectual property protected strains.
Financial Information of CBH
CBH was incorporated on June 29, 2018 and is pr eparing its audited financial information which
will be disclosed onc e completed in an updated news release. CBH intends to obtain and file
carve out financial information for the predecessor vaporizer business carried on by Caesarbrutus
California, LLC.
Share Exchange Transaction
On closing of the Transaction, Red Oak expects to issue to the shareholders of CBH a total of
approximately 67,334,902 common shares in exchange for 100% of the outstanding shares of
CBH, prior to the financings described below.
The completion of the Transaction is subject to a number of conditions, including but not limited
to, the execution of the Definitive Agreement, co mpletion of satisfactory due diligence including
the delivery and satisfactory review of the audite d financial statements of CBH and the audited
carve out financial statements from Caesarbrutus, completion of the Offering (as defined below),
completion of the name change, approval of th e listing of Red Oak’s s ecurities on the CSE and
approval to delist the same from the TSXV, and the approval of the Transaction by each of the
TSXV, CSE and the board of directors and sh areholders of each of Red Oak and CBH (if and as
applicable). The LOI contains customary deal support provisi ons, including a break fee of
US$750,000 payable by CBH to Red Oak if the proposed Transaction is not completed in certain
circumstances. In addition the LOI contains mutual customary exclusivity and non-solicitation
covenants that expire October 30, 2018.
Red Oak Working Capital Financing
In connection with the Transaction, Red Oak announces a “part and parcel” private placement in
the amount of $300,000 (the “1st Placement”). It is intended that the Offering will consist of the
issuance of up to 1,000,000 Red Oak units (each a “ Unit”) at a price of $.30 per Unit for gross
proceeds of up to $300,000. Each Unit will be comprised of one common share of the
Corporation and one full common share pur chase warrant (each whole warrant a “ Warrant”).
Each Warrant will entitle the holder to acquire one additional common share of the Corporation
at an exercise price of $.50 for a period of three years.
Red Oak intends to use the proceeds of the 1st Placement to fund the costs of the Transaction and
for general working capital. Any securities issued in connection with the 1 st Placement will be
issued by private placement under securities exempti ons and will be subject to a four month and
one day statutory hold period pursuant to appli cable securities laws. The Corporation will not
issue a prospectus with respect to the 1st Placement.
Bridge Financing
Prior to and/or concurrent with the completi on of the Proposed Transaction, CBH will use its
best efforts to complete a private placement (the “ CBH Placement”) of (i) Secured Notes
bearing an annual interest rate of 15% in terest paid quarterly in arrears (the “ Notes”) and (ii) a
minimum 60% warrant coverage exerci sable into shares of CBH (the “ Warrants”), for
maximum gross proceeds of up to $3,250,000. U pon closing of the Transaction, Red Oak
proposes to repay the Notes using the proceeds of the Transaction Financing (defined below),
and all Warrants issued in connection with the CBH Placement will automatically be exchanged
for warrants of Red Oak exercisable to acquire shar es of the Resulting Issuer at an exercise price
of between $0.35 and $0.40 for a minimum period of three years.
Concurrent Transaction Financing
In connection with the closing of the Transa ction, Red Oak intends to complete a brokered
private placement in the range of $10,000,000 to $15,000,000 on terms to be negotiated between
Red Oak, CBH and the agent (the “Transaction Financing”).
The securities to be issued in connection with the Transaction and the Offering have not been
and will not be registered under the United Stat es Securities Act of 1933, as amended (the “ U.S.
Securities Act”) or any state securities laws and may not be offered or sold within the United
States or to U.S. Persons (as de fined in Regulation S promulgated under the U.S. Securities Act)
unless registered under the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.
Unless agreed between the Corporation and CBH, the LOI will terminate on the execution of the
Definitive Agreement. The Corporation will provi de a summary of CBH’s significant financial
information in due course.
About Red Oak
Red Oak is currently listed on the NEX boa rd of the TSXV and has no business activity.
Subsequent to completing the Transaction, the Corporation will operate in the cannabis sector.
Trading Update
The Corporation will issue a more comprehensiv e news release upon executio n of the Definitive
Agreement.
Trading of the Corporation’s shares will remain halted until completion of the Transaction or
until satisfactory documentation is filed with the TSXV and /or CSE. Additional information
about the Transaction will be provided by way of a subsequent news release.
Completion of the Transaction is subject to a number of conditions, including TSXV acceptance
and shareholder approval, if applicable. The Transaction cannot close until the required
approvals are obtained. There can be no assuran ce that the Transaction will be completed as
proposed or at all.
Investors are cautioned that, except as disclosed in the disclosure document to be prepared in
connection with the Transaction, any information released or received with respect to the
Transaction may not be accurate or complete and should not be relied upon. Trading in the
securities of Red Oak Mining Corp. should be considered highly speculative.
ON BEHALF OF THE BOARD OF RED OAK MINING CORP.
(Signed) “Jay Roberge”
Jay Roberge
Chief Executive Officer
For further information contact:
Scott Eldridge
Investor Relations Consultant
604-722-5381
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has
neither approved nor disapproved the contents of this press release.
Reader Advisory
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains “forward-looking information” within the meaning of applicable securities laws
relating to the proposal to complete the Transaction and associated transactions, including statements
regarding the terms and conditions of the Transaction, the Offering and the outlook of the business of
Patriot. Although the Corporation believes in light of the experience of its officers and directors, current
conditions and expected future developments and other factors that have been considered appropriate that
the expectations reflected in this forward-looking information are reasonable, undue reliance should not be
placed on them because the Corporation can give no assurance that they will prove to be correct. Actual
results and developments may differ materially from those contemplated by these statements depending on,
among other things, the risks that the parties will not proceed with the Transaction, the Offering and
associated transactions, that the ultimate terms of the Transaction, the Offering, and associated transactions
will differ from those that currently are contemplated, and that the Transaction, the Offering and associated
transactions will not be successfully completed for any reason (including the failure to obtain the required
approvals or clearances from regulatory authorities). The terms and conditions of the Transaction may
change based on the Corporation’s due diligence and th e receipt of tax, corporate and securities law advice
for both the Corporation and CBH. The statements in this press release are made as of the date of this
release. The Corporation undertakes no obligation to comment on analyses, expectations or statements
made by third-parties in respect of the Corporation, CBH, their securities, or th eir respective financial or
operating results (as applicable).
This press release does not constitute or form a part of any offer or solicitation to purchase or subscribe for
securities in the United States. The securities referred to herein have not been and will not be registered under
the Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of
any state or other jurisdiction in the United States, and may not be offered or sold, directly or indirectly,
within the United States or to, or for the account or benefit of, U.S. persons, as such term is defined in
Regulation S under the Secu rities Act (“Regulation S”), except pursuant to an exemption from or in a
transaction not subject to the registration requirements of the Securities Act.