Mpx facebook page. FORM 7 – MONTHLY PROGRESS REPORT
January 2018
1. Provide a general overview and discussion of the development of the Issuer’s business and
operations over the previous month. Where the Issuer was inactive disclose this fact.
The Issuer, through its wholly owned subsidiaries in the U.S., provides substantial management,
staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to
two medicinal cannabis enterprises in Arizona operating under the Health for Life (dispensaries)
and the award-winning Melting Point Extracts (high-margin concentrates wholesale) brands. The
successful Health for Life brand operates in the rapidly growing Phoenix Metropolitan Statistical
Area.
The recently acquired GreenMart of Nevada NLV, LLC (“GreenMart”) is an award winning
licensed cultivation, production and wholesale business, licensed for both the medical and “adult
use” sectors in Las Vegas, Nevada, and is already selling wholesale into the Nevada medical
cannabis market. GreenMart has also optioned suitable locations and intends to enter the highermargin
retail arena by applying for at least two dispensary licenses in the Las Vegas market which
will operate under the “Health for Life” brand.
The Issuer owns a controlling interest in assets in Massachusetts that support cultivation,
production and up to three dispensaries and manages three full service dispensaries and one
producer in Maryland.
The Issuer also leases a property in Owen Sound, Ontario, for which an application to Health
Canada has been made for a cannabis production and sales license. In addition, the Issuer will
continue its efforts to develop its legacy nutraceuticals business.
Completed Acquisitions
Further Expansion into Maryland
The Issuer, through its indirect wholly-owned subsidiary, S8 Management, LLC (“S8
Management”), entered into management agreements with each of Rosebud Organics, Inc.
(“Rosebud”), which is authorized to purchase, process and sell medical cannabis products in
Maryland, and Budding Rose, Inc. (“Budding Rose”), which is authorized to operate a dispensary
and sell medical cannabis products in Maryland. Pursuant to the management agreements, S8
Management is providing all management services typically required by a production facility, in
the case of Rosebud, and a dispensary facility, in the case of Budding Rose. Management services
include, but are not limited to, all staffing, materials, equipment, logistical support, accounting and
other administrative functions, contractor selection, advisory services and any other requirements
essential to the successful operation of Rosebud and Budding Rose.
In addition to managing the facilities, the Issuer, through its wholly-owned subsidiary, CGX Life
Sciences, Inc. (“CGX”), concurrently acquired options to purchase 100% of the issued and
outstanding common stock of Rosebud for aggregate consideration of US$3,018,181.82 and
Budding Rose for aggregate consideration of US$2,481,818.18. The options are each exercisable
for a period of two (2) years. The Rosebud exercise price is comprised of a cash payment of
US$2,200,000 with the remainder of the purchase price satisfied by the issuance of 1,329,811
common shares in the capital of the Issuer (the “MPX Shares”) at a price of $0.77 per MPX Share.
The Budding Rose exercise price will be comprised of a cash payment of US$1,800,000 with the
remainder of the purchase price satisfied by the issuance of 1,108,184 MPX Shares at a price of
$0.77 per MPX Share.
Concurrently with entering into the management agreements and the option agreements to acquire
the Rosebud and Budding Rose options, CGX provided secured loans to the sellers in the aggregate
principal amount of US$4,000,000 bearing interest at a rate of 3% per annum. The secured loans
are repayable on the earliest of: (a) the termination of the option agreements; (b) the option has not
been exercised within 180 days following the expiry of the option periods; and (c) following an
event of default.
Future Acquisitions
Further Arizona Acquisition
The Issuer entered into a non-binding letters of intent to acquire a profitable and cash flow positive
management company that provides extensive services to an operational licensee with a cultivation,
production and dispensary license located in the Phoenix area. This will be the Issuer’s third
acquisition in the Arizona market. Upon completion, transaction will bring total number of Arizona
dispensaries under the Health for Life umbrella – current and under development - to four in a state
with less than 100 dispensaries in total.
Panaxia Definitive Agreement
The Issuer entered into a definitive agreement with Panaxia Pharmaceutical Industries Ltd.
(“Panaxia”) through its wholly-owned subsidiary Salus BioPharma Corporation (“Salus
BioPharma”), a company engaged in the business of development and production of pharma grade
cannabidiol medicinal products, medicinal preparations and medicinal accessories (the “CBD
Products”).
Panaxia will provide the capital and equipment to build out and equip the manufacturing facility
and will supply the non-active ingredients and compounds for formulation and packaging. The
CBD Products will be produced at MPX-operated locations under licenses owned or managed by
the Issuer or a subsidiary thereof. Salus BioPharma will provide Panaxia with the raw cannabidiol
materials for final product assembly, as well as be responsible for marketing of the CBD Products
which will be sold through the Health for Life (“HFL”) dispensaries managed by MPX and through
HFL’s wholesale channels to other licensed dispensaries in Arizona.
The agreement also provides Salus BioPharma with exclusivity for the production and marketing
of pharma-grade cannabinoid products through MPX-operated dispensaries in Arizona, Maryland,
Massachusetts and Nevada with a right of first refusal in any other U.S. State, other than California,
Colorado and New Mexico.
The construction of the first production facility at Health for Life’s Mesa North Arizona location
is still in the permitting phase. Once approved, the installation can progress rapidly and production
of additional CBD Products are expected to commence in Arizona in the Second Quarter of 2018
with the launch of seven pharma-grade CBD Products. The CBD Products are all proprietary,
having been developed for specific medical indications and conditions in accordance with Good
Manufacturing Procedure approval from the Israeli Department of Health, part of the Ministry of
Health.
MPX Closed Second and Final Tranche of Private Placement Offering
On January 15, 2018, the Issuer closed the second and final tranche of its previously announced
private placement offering (the “Offering”) of units (the “Units”) of the Issuer. Echelon Wealth
Partners Inc., together with Canaccord Genuity Corp. as co-lead agents and special selling agent,
Chrystal Capital Partner LLP (together, the “Agents”). The Issuer received aggregate gross
proceeds of $28,705,779.69, exercised in part the over-allotment option for additional Units, for a
total aggregate subscription of 61,076,127 Units at a price of $0.47 per Unit. On closing the second
tranche, the Issuer issued 4,749,169 Units for total gross proceeds of $2,322,109.43.
Each Unit issued in the Offering consisted of one common share (“Common Share”) in the capital
of the Issuer and one-half of one Common Share purchase warrant (each whole Common Share
purchase warrant, a “Warrant”). Each Warrant entitles the holder thereof, pursuant to and in
accordance with the warrant indenture, to acquire one Common Share at a price of C$0.64 for a
period of 24 months from the date hereof, subject to adjustment and acceleration in certain
circumstances.
In connection with their services under the Offering, the Issuer paid to the Agents an aggregate
cash commission of $2,046,860.47 and issued an aggregate of 4,280,829 broker warrants (the
“Broker Warrants”). Each Broker Warrant entitles the holder to acquire one Unit at an exercise
price of $0.47 per Unit for a period of 24 months from the date hereof. On closing the second
tranche, the Issuer paid to the Agents a cash commission of $191,118.55 and issued an aggregate
of 4,280,829 Broker Warrants.
The Issuer intends to use the net proceeds from the Offering to fund future acquisitions and for
working capital and general corporate purposes.
Appointment of CFO
The Issuer appointed David McLaren as MPX’s new Chief Financial Officer, effective January 15,
2018.
Stock Option Grant
The Issuer granted 8,485,762 stock options to purchase common shares of MPX to officers,
directors, employees and consultants of the Issuer and its subsidiaries at an exercise price of $0.86
per share and expiring on January 15, 2023.