Acquisition of Cannabis Permit FOR WEST African Country & Change of Business Update
VATIC VENTURES CORP.
1500-1040 WEST GEORGIA STREET
VANCOUVER, BC V6E 4H1
CANADA
PHONE: (778) 373-6972
FAX: (604) 689-1288
EMAIL: [email protected]
ACQUISITION OF CANNABIS PERMIT FOR WEST AFRICAN COUNTRY &
CHANGE OF BUSINESS UPDATE
Vancouver, B.C., November 6, 2019 - Vatic Ventures Corp. (the "Company" or "Vatic") (TSXV: VCV;
OTCBB: VTTCF; FWB: V8V3) wishes to provide an update on its change of business (“COB”) announced
in its March 19, 2019 news release. From February 21, 2019, when trading in the shares of the Company
was halted at the request of the Company , to the date hereof, the Company has been carrying out due
diligence in order to secure a valid and viable opportunity in the cannabis industry, which has delayed its
COB. As a result of its due diligence, it is no longer pursuing the original opportunities as announced in the
March 19, 2019 news release (the “Original Permit Transaction”).
Cannabis Permit Acquisition
Vatic is pleased to announce that on October 31, 2019 it signed a binding letter of intent (the “LOI”) for a
share exchange to acquire Indian Ocean Organics Ltd. (“Indian Ocean”) which has the right to acquire 70%
of a company which holds an exclusive permit for the exploration, cultivation, production, transport and
export of THC, CBD and its derivative medicinal plants and seeds (the “Permit”) in a west African country
(the “Permitted Jurisdiction”). Indian Ocean is an arm’s length private company incorporated pursuant to
the laws of the Province of British Columbia, Canada. It is intended that the LOI will be r eplaced by a
formal agreement in due course (the “Share Exchange Agreement”).
On October 9, 2019, Indian Ocean signed a memorandum of understanding (“MOU”) with Global
Medicinals Ltd. and Partners (“Global Medicinals”) and its major shareholder Kingsley Pungong (the
“Major Shareholder”) for the right to acquire 70% of the issued shares of Global Medicinals, the holder of
the Permit, which was issued by the government of the Permitted Jurisdiction on April 4, 2019. Global
Medicinals is a private company incorporated in the Permitted Jurisdiction. Under the MOU, Indian Ocean,
Global Medicinals and the Major Shareholder (the "Parties") will enter into a definitive agreement (the
“Definitive Agreement”) whereby Indian Ocean will acquire 70% of the issued shares of Global Medicinals
to develop the Permit for the cultivation, production, harvesting, processing marketing and export of
cannabis for medicinal and scientific purposes.
The signing of the D efinitive Agreement will coincide with the COB. The proposed transaction is arm’s
length and complying with the terms of the LOI and the Share Exchange Agreement and the MOU will
constitute a change of business (“COB”) for Vatic as that term is defined by the policies of the TSX Venture
Exchange (the “Exchange”).
T. Barry Coughlan, CEO, commented: "This exclusive permit to cultivate and export medical cannabis
presents an excellent opportunity to be at the forefront of one of the fastest growing industries in the world
with a program that will establish the Company as a leading source for legally grown, high quality medical
cannabis. Forward thinking companies are securing their long term position with naturally grown, high
volume, low cost cultivation programs and Vatic believes that by 2022 Europe will become the world’s
largest market for medical marijuana and finding reliable, legal supply routes will be key to capturing
market share."
Permit Details
The Permit authorizes the exploration, cultivation, production, storage, transportation and exportation of
seeds and medicinal plants containing tetrahydrocannabinol (THC), CBD and their derivatives in the
Permitted Jurisdiction. It also includes the right to develop the production of seeds, including nursery and
greenhouse operations for seed parents and strain varieties.
The Permit holder is authorized to build processing facilities to prepare finished herbal products for export
in the form of vaping cartridges, edibles (lozenges, gummies), topicals (creams, balms and patches), pills,
and syrups. The Permit holder is authorized to enhance its nursery facilities and import starting materials
(seed, seedlings and cultivars), and has exclusive rights to export and sell the finished product for a period
of three years, renewable. The holder is authorized to make herbal medical products available for sale
nationally and for the benefit of the population according to the regulations in force in the Permitted
Jurisdiction.
Vatic – Indian Ocean Share Exchange Agreement Details
1. Indian Ocean and Green Ocean Organics Ltd.(“Green Ocean”) , the sole shareholder of Indian Ocean ,
have agreed to enter into the Share Exchange Agreement with Vatic for the purchase by Vatic of 100%
of the issued and outstanding shares of Indian Ocean (the “Shares”) which will include the assumption
by Vatic of the obligations of Indian Ocean to issue certain shares to various parties as outlined below.
Green Ocean is controlled by Tim Rogers, its sole shareholder. Upon completion of the COB Vatic
will, in accordance with the policies of the Exchange, be classified as a company in the life sciences.
The assets of Indian Ocean (collectively referred to as the “Rights”) include:
(a) The right to acquire 70% of Global Medicinals with the resulting rights associated with the Permit
including any other cultivation land that Indian Ocean or Global Medicinals secures, including any
agreements Indian Ocean or Global Medicinal signs for permits or rights in other countries; and
(b) The right to fund the Distribution Initiative and to acquire the rights associated with the Distribution
Initiative.
2. Vatic will, on the closing of the COB (the “Closing”), complete the following:
(a) Share Issuance to Green Ocean: Vatic will issue 33,333,333 common shares of Vatic at a deemed
price of $0.075 per share with a value of Cdn$2,500,000 in exchange for 33,333,333 common
shares of Indian Ocean held by Green Ocean;
(b) Unit Issuance to Holders of Subscription Receipts: Indian Ocean has received funds from various
investors and has issued subscription receipts (the “Subscription Receipts”) to such investors which
can be converted into units of Indian Ocean (the “Company U nits”) each such Indian Ocean Unit
being comprised of one common share and one -half of a share purchase warrant with each whole
warrant entitling the holder to acquire a further common share of Indian Ocean for $0.10 for a
period of two years from the date the subscription receipts are converted to Indian Ocean Units.
There are currently 8,665,600 Subscription Receipts outstanding that were issued at a price of
$0.075 per Subscription Receipt. On closing of the COB Vatic will issue units (“Vatic Units”) to
holders of Subscription Receipts, such units to have the same characteristics as Indian Ocean Units.
In the event that Indian Ocean requires further funding prior to the Closing (“Pre Closing Funding”)
such funds advanced to Indian Ocean will result in additional Subscription Receipts being issued
and on Closing Vatic will, subject to regulatory approval, issue Vatic Units on conversion of such
additional Subscription Receipts;
(c) R7 Capital Ventures Ltd.: Indian Ocean owes R7 Capital Ventures Ltd. (“R7”) a fee of 500,000
common shares for the introduction of Global Medicinals and the Permit and will owe a further
500,000 common shares on the successful addition of a project in a second country. On Closing
Vatic will assume Indian Ocean’s obligations to R7; and
(d) Milestone Shares: Under the MOU between Indian Ocean , Global Medicinals and the Major
Shareholder, subsequent to the signing of the D efinitive Agreement the shareholding of Global
Medicinals will be 70% in the name of Indian Ocean and 30% in the name of Globa l Medicinals'
remaining shareholders. In consideration of the transfer of 70% of the shares of Global Medicinals
to Indian Ocean, the Major Shareholder will receive up to a total of 5,000,000 common shares of
Indian Ocean, or of such company as will acqui re or will have acquired Indian Ocean, in staged
milestones disclosed in the MOU transactions details hereunder.
3. Conditions Precedent for Vatic: The obligations of Vatic to proceed with the transaction will be subject
to satisfaction of its due diligence and the following conditions precedent:
(a) execution of the Share Exchange Agreement;
(b) Indian Ocean owning the Rights;
(c) Vatic being satisfied with its due diligence including but not limited to its review of the financial
status of Indian Ocean and Global Medicinals, the political environment in Permitted Jurisdiction
and the regulatory environment in the Permitted Jurisdiction as it relates to the marijuana industry;
(d) the issuance of any applicable national regulatory legislation related to the permit and the cannabis
industry;
(e) Indian Ocean owning 70% of the issued and outstanding shares of Global Medicinals;
(f) Vatic having received any required regulatory or shareholder approval for the transaction;
(g) Vatic having completed the COB Financing (defined below); and
(h) any other conditions customary in transactions similar to the transaction.
Indian Ocean – Global Medicinals MOU Transaction Details
Under the MOU between Indian Ocean and Global Medicinals, subsequent to the signing of the Definitive
Agreement the shareholding of Global Medicinals will be 70% in the name of Indian Ocean and 30% in the
name of Global Medicinals' remaining shareholders. In consideration of the transfer of 70% of the shares
of Global Medicinals to Indian Ocean, the Major Shareholder will receive a total of up to 5,000,000
common shares of Indian Ocean, or of such company as will acquire or will have acquired Indian Ocean,
in staged milestones, as follows:
1. 500,000 shares on the transfer of 70% of the shares of Global Medicinals to Indian Ocean;
2. 2,000,000 shares on the issuance of any applicable national regulatory legislation related to the permit
and the cannabis industry, and the completion of the first harvest cycle; and
3. 2,500,000 shares on the issuance of an export license to export the harvested product.
The Parties will collaborate to establish and implement country compliance, GACP and GMP certification
protocols and establish a Medical Marijuana Country brand. The Parties will collaborate to form a country
strategy for the purpose of attracting foreign companies to the Permitted Jurisdiction to develop Cannabis-
related products as well as other agricultural cultivation programs. Laboratory testing will be implemented
on a contractual basis and will function as a compulsory testing program for every c annabis-related
cultivation project, and, with government approval, other agricultural projects. Global Medicinals will be
the issuer of a certificate of compli ance and accreditation for product export on behalf of the Ministry of
Health in the Permitted Jurisdiction.
Upon the earlier of Indian Ocean’s completion of its technical and legal due diligence to its satisfaction or
the signing of the Definitive Agreement, Indian Ocean will commence organizing the resources needed for
mobilization, testing, construction, travel, administrative fees, compliance, certification, consultants, seed
generation, branding, extraction and the cultivation of up to 1,000 hectares of medicinal cannabis.
Indian Ocean will implement the pilot project (“Phase 1”) within 120 days from the date of signing of the
Definitive Agreement. Phase 1 will include the secondment of staff to the venture by Indian Ocean to
implement the pilot project including the application for work permits for expatriate staff and the
construction of initial infrastructure at the venture site, sufficient to implement the pilot project, which will
be up to 5 acres. Indian Ocean will provide, on a carried interest basis, funding and technical assistance for
the development of the Permit and any other necessary activities as agreed between the Parties that may be
relevant to the operations of Indian Ocean from time to time including sourcing and supplying the se eds
and or cultivars required for cultivation, bringing the know -how, expertise and management to install the
state-of-the-art farming practices to cultivate medicinal cannabis strictly for the purpose of export only
through supply agreements which will be in place to export the dried flowers, oils and CBD/THC produced.
Sidecar Financing
In order to provide Vatic with working capital to progress its business prior to completion of the COB,
funds are being raised through Indian Ocean. Indian Ocean was incorporated on March 18, 2019. In addition
to the Permit in the west African country, Indian Ocean is negotiati ng for cannabis permits in other
countries.
Indian Ocean has received funds from various investors and has issued subscription receipts (the
“Subscription Receipts”) to such investors which can be converted into units of Indian Ocean (the “Indian
Ocean Units”) each such Indian Ocean Unit being comprised of one common share and one-half of a share
purchase warrant with each whole warrant entitling the holder to acquire a further common share of Indian
Ocean for $0.10 for a period of two years from the date the subscription receipts are converted to Indian
Ocean Units. There are currently 8,665,600 Subscription Receipts outstanding that were issue d at a price
of $0.075 per Subscription Receipt. On closing of the COB Vatic will issue units (“Vatic Units”) to holders
of Subscription Receipts, such units to have the same characteristics as the Indian Ocean Units. In the event
that Indian Ocean require s further funding prior to the Closing (“Pre Closing Funding”) such funds
advanced to Indian Ocean will result in additional Subscription Receipts being issued and on Closing Vatic
will, subject to regulatory approval, issue Vatic Units on conversion of such additional Subscription
Receipts. Funds raised by Indian Ocean have been loaned to Vatic for due diligence.
Indian Ocean has agreed to assume responsibility for the advance of a US$150,000 deposit made by the
Company as part of the Original Transaction and has, to date, repaid $75,000 of the amount advanced.
Concurrent Private Placement Financing
In conjunction with this COB transaction Vatic will be conducting a non- brokered private placement
financing in an amount sufficient to enable it to fund the business of the Company and to execute on its
business plan which is currently being prepared (the “COB Financing”). The amount required to be raised
and the terms of the COB Financing will be determined by Vatic and established and announced at a later
date.
Subsequent News Release
Vatic will disseminate a subsequent news release prior to the shares of the Company being reinstated for
trading. The subsequent news release will address various outstanding issues including: the name(s) of the
jurisdiction(s) Indian Ocean is doing business in; biographies on the management of Indian Ocean and on
any new directors of the Company; and the details of the proposed financing of Indian Ocean and the
proposed Company financing to be completed in conjunction with the closing of the COB.
Regulatory Matters
The Company may be required to obtain shareholder approval and may be required to engage a Sponsor
(as that term is defined by Exchange policy) for the proposed transaction. Further information on th ose
issues will be provided in a subsequent news release.
Completion of the proposed COB transaction is subject to a number of conditions, including but not limited
to, Exchange acceptance. Where applicable, the transaction cannot close until the required shareholder
approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Trading in the securities of Vatic Ventures Corp. should be considered highly speculative. The TSX Venture
Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved
nor disapproved the contents of this news release.
ON BEHALF OF THE BOARD OF DIRECTORS OF VATIC VENTURES CORP.
"T. Barry Coughlan"
T. Barry Coughlan, CEO & Director
For further information please contact:
T. Barry Coughlan, CEO and Director
"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
The information contained herein contains "forward-looking statements" within the meaning of applicable
securities legislation. Forward -looking statements relate to information that is based on assumptions of
management, forecasts of future results, and estimates of amounts not yet determinable. Any statements
that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events
or performance are not statements of historical fact and may be "forward-looking statements." Forward-
looking statements are subject to a variety of risks and uncertainties that could cause actual events or
results to differ from those reflected in the forward -looking statements. Investors are cautioned against
attributing undue certainty to forward-looking statements. These forward-looking statements are made as
of the date hereof and the Company does not assume any obligation to update or revise them to reflect new
events or circumstances. Actual events or results could differ materially from the Company's expectations
or projections.