RE:RE:RE:HARY. HALT yahooooooBRINGEROFLIGHT wrote: I would be very interested in what Red Booze Nose Deer has to say after the NEWS!!!! Please give us your expertise Red Booze. Many of us awaiting
OK__looks like FINALLY Management have got the SHIP set loose from the
Dock Moorings__basically a YEAR LATE from the Work Sheet MANAGEMENT
put out in the Form 2A LISTING STATEMENT dated October 5th, 2018.
The One SIGNIFICANT CHANGE is that rather than Constructing a Building/Warehouse
Management have Entered into LEASING a Place in Abbotsford__from some Group or
Company related to Management__this is NOT very clearly spelled out in the recent
News Releases and Company Updates?
The OTHER Signficant Change is that in the NOW Almost 2 YEARS since the RTO fall
of 2018__pretty much ALL of the almost $4 Million raised with the Original 35 Cent
Placement has been Burned UP__as Virtually NO Revenues came in the Past 2 years.
HIMI has also entered into a verbal non-binding option-to-lease agreement with Nicolas Brusatore, regarding a one-acre premises located on the Agricultural Land Reserve in Abbotsford, British Columbia. HIMI intends to construct a 6,000 ft manufacturing facility (the “HIMI Facility”) on the property. Under the proposed lease terms, Mr. Brusatore bears responsibility for construction of the HIMI Facility while HIMI is responsible for upgrades to the HIMI Facility and all safety and security requirements imposed by governmental authorities under applicable licensing requirements. Use of the property, including construction of the HIMI Facility, is subject to definitive agreements regarding the lease terms and receipt of all regulatory approvals from governmental authorities of HIMI’s ability to manufacture and distribution tobacco at that location.
If HIMI does not enter into a definitive lease agreement, or if the required regulatory approvals are not granted, HIMI intends to find another suitable premises to commence its manufacturing and distribution operations.
3.2 Significant Acquisitions and Dispositions
Harrys
On January 22, 2018, Harrys entered into a definitive agreement with HIMI (the “Share Exchange Agreement”), to carry out the transaction initially announced on December 22, 2017, following the signing of the letter of intent between Harrys and HIMI. Pursuant to the Share Exchange Agreement, Harrys acquired all of the HIMI Shares in exchange for the issuance of Harrys Shares and the advancement of the Loan (as defined below), as further described below (the “Acquisition”). Completion of the Acquisition resulted in a fundamental change under the policies of the CSE.
In consideration for all of the issued securities of HIMI, the HIMI Shareholders received, on a pro rata basis, 28,500,100 Harrys Shares (“Payment Shares”) at a deemed price of $0.35 per Harrys Share and on a 1:1 basis and Harrys advanced an interest-bearing loan in the aggregate principal amount of $2,400,000 (of a total of up to $2,500,000) at an annualized interest rate of five percent for a term of one year (the “Loan”). The Loan was secured by a general security agreement on all of HIMI’s personal property, present and future, tangible and intangible and intangible.
Michael Young was both an officer and director of Harrys and a shareholder of HIMI prior to the
Acquisition, therefore, the Acquisition was a Related Party Transaction. The Issuer has scrutinized such Acquisition, in accordance with the provisions of the BCBCA and MI 61-101 and confirmed that the Acquisition is exempt from the provisions of MI 61-101. The Board of Directors, excluding Mr. Young who abstained from voting on the matter, unanimously approved the Acquisition.
The Acquisition closed on October 4, 2018 (the “Effective Date”). On completion of the Acquisition, Harrys assumed the business of HIMI, being the sales and distribution of tobacco
cigarettes (see Section 3.1 “General Business” – HIMI).
Significant Events Milestones
The following table outlines how the Issuer will achieve the objectives enumerated above.
Timeline from date of
Milestone Anticipated Cost Listing Statement
Enter definitive lease agreement for HIMI facility to $10,000 September 2018
be located in Abbotsford, BC, (or look for other site
for a lease opportunity)
File registered trademarks for “Harry’s” mark, logo $5,000 October 2018
and packaging design
Obtain necessary licences to manufacture and $50,000 September 2019
distribute tobacco products from Health Canada and
other governmental authorities
Complete construction of HIMI Facility $1,175,000 February 2019
Establish relationships with industry personnel N/A May 2019
Secure tobacco supply agreements for start-up $110,000 June 2019
material at new location
Develop operational organizational structure and hire N/A June 2019
key personnel for operational execution of
manufacturing and distribution activities
Start selling Harrys manufactured tobacco products N/A November 2019
to clients
Other than as described in this Listing Statement, there are no other significant events or milestones
that must occur for the Issuer’s business objectives to be accomplished. However, there is no
guarantee that Harrys will meet its business objectives or milestones described above within the
specific time periods, within the estimated costs or at all. Harrys may, for sound business reasons,
reallocate its time or capital resources, or both, differently than as described above.
HIMI
For the 12-month period prior to the date of this Listing Statement, the following securities of
Harrys were sold:
Non-brokered private placement of 16,500,000 common shares of HIMI at a price of
$0.005 per unit for gross proceeds of $82,500 on November 30, 2017.
Non-brokered private placement of 12,000,000 common shares of HIMI at a price of $0.02
per unit for gross proceeds of $240,000 on December 12, 2017.
The table below includes the details of escrowed securities that will be held by Principals of the
Issuer upon the completion of the Acquisition:
Name of Designation of Class Number of Securities
Securityholder Held in Escrow Held in Escrow Percentage of Class
Kevin Edward Francis Common Shares 8,166,698.66 10.49%(1)
Kohanik
Ashley Francis Harry Common Shares 8,166,698.67 10.49%(1)
Harinder Singh Dhesi Common Shares 8,166,698.67 10.49%(1)
(1)
Gold Medal Performance Common Shares 1,040,000 1.29%
Corp.(2)
Michael Young(3) Common Shares 40,000 0.05%(1)
Notes:
(1) The total issued and outstanding Harrys Shares is 77,816,358.
(2) Gold Medal Performance Corp. is a company controlled by Michael Young, CFO and Director of Harrys.
(3) Michael Young is the beneficial holder of an aggregate of 1,395,000 escrowed securities (1,080,000 Issuer Shares).
The Issuer also has voluntary escrow agreements in the form provided in NP 46-201. Escrow
releases will be scheduled at periods specified in NP 46-201 for emerging issuers, that is, 10% will
be released upon completion of the Acquisition followed by six subsequent releases of 15% each
every six months thereafter.
Name of Designation of Class Number of Securities
Securityholder Held in Escrow Held in Escrow Percentage of Class
Glenn Allen Soderberg Common Shares 500,002 0.64%(1)
Aboriginal Import Export Common Shares 2,000,000 2.57%(1)
Ltd.
Larry Marsall Common Shares 250,000 0.32%(1)
Rob Gerling Common Shares 250,000 0.32%(1)
As of April, 2018
Total Assets - 14,058,122
GoodWill - 10,045,921
3. Pro Forma Adjustments and Assumptions
The pro forma financial statements incorporate the following pro forma assumptions:
(a) As consideration for 100% of the outstanding shares of HIMI, Harrys will issue 28,500,100 common
shares to HIMI shareholders with an estimated fair value of $9,975,035.
The preliminary allocation of estimated consideration transferred is subject to change and is
summarized as follows:
Purchase price
28,500,100 common shares at $0.35 per share $ 9,975,035
$ 9,975,035
Fair value of HIMI’s net assets acquired
Cash $ 53,681
Accounts receivable 459,428
Prepaid expenses 300,000
Property, plant and equipment 1,617,304
Goodwill 10,045,921
Accounts payable (35,706)
Wages payable (27,186)
Loan payable (2,438,107)
Due to shareholders (300)
$ 9,975,035
The pro forma adjustments and allocations of the estimated consideration transferred are based in part
on estimates of the fair value of assets to be acquired and liabilities to be assumed. The final
determination of the consideration transferred and the related allocation of the fair value of the HIMI net
assets to be acquired pursuant to the Transaction will ultimately be determined after the closing of the
transaction. It is likely that the final determination of the consideration transferred and the related
allocation of the fair value of the assets acquired and liabilities assumed will vary from the amounts
present in the unaudited pro forma consolidated financial information and that those differences may be
material.
(b) The $2,400,000 loan and related accrued interest from Harrys to HIMI is eliminated upon consolidation.
(c) Represents the elimination of the historical equity of HIMI and recognition of goodwill associated with
the acquisition of $ 10,045,921 as described in Note 3(a).
(d) The total cash transaction costs which are expected to be incurred for the acquisition amounts to
$65,000 which includes accounting and legal fees.