Molori to acquire hemp cigarette company, delist shares
2020-02-13 12:11 MT - News Release
Mr. Joel Dumaresq reports
MOLORI AND TAAT INTERNATIONAL ENTER INTO A LETTER OF INTENT FOR A PROPOSED ACQUISITION AND APPLIES FOR VOLUNTARY DELISTING FROM TSX VENTURE EXCHANGE
Molori Energy Inc. will apply to voluntarily delist the company's common shares from the TSX Venture Exchange.
Over the past several months, Molori has been evaluating various options and alternatives to allow for the expansion of its business activities. In the course of its review process, the Company's board of directors has determined that in order to allow it to secure these options or alternatives, continued listing on the TSX-V is not currently in the best interest of the Company or its shareholders. The Company believes the best interest of shareholders will be achieved by delisting and temporarily not being subject to the rules and policies of a stock exchange that may hinder or delay a transaction, thus providing the Company with the maximum amount of flexibility to structure a transaction to meet its current and future needs.
Subsequent to delisting, Molori will continue to be a reporting issuer in certain jurisdictions in Canada and it will remain subject to continuous disclosure requirements. Once the Company has completed a transaction that results in the Company expanding upon its business activities, it plans to make an application for relisting its Shares on a recognized stock exchange. The Company is presently well-capitalized and has the resources to pursue its mandate as set out by the board of directors.
Pursuant to the policies of the Exchange, in order to voluntarily delist the Shares from the facilities of the Exchange, a majority of the holders of Shares, excluding those Shares held by officers or directors of the Company must approve the delisting. The Company intends to seek this approval by way of written consent and does not intend to hold a shareholders meeting for this purpose at this time.
Proposed Transaction
Molori and TAAT International LLC ("TAAT") are pleased to announce that they have entered into a letter of intent (the "LOI") to complete an acquisition by Molori of all of the issued and outstanding securities of TAAT (the "acquisition"). Upon completion of the acquisition, Molori will cease to carry on its current business as an oil & gas exploration company, and will change its principle business to the manufacturing and distribution of hemp cigarettes. TAAT is a lifestyle and wellness brand based in Las Vegas, Nevada and focused upon the sale of smokable hemp and hemp cigarettes. Joe Deighan, the controlling shareholder and founder of TAAT, is a pioneer in the smokable hemp space, having developed and launched the "Wild Hemp" brand of hemp cigarettes while the CEO of America Juice Co. Mr. Deighan is renowned for having coined the phrase "hempettes" for hemp cigarettes.
TAAT is focused on in-taking whole hemp plants from strictly organic growers, and processing them into premium, smokable hemp products to compete in the US$100 billion U.S. tobacco market and near US$700 billion worldwide market for traditional tobacco. (www.grandviewresearch.com/industry-analysis/us-tobacco-market) (www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DO9DCKFM)
Smokable hemp flower and branded cigarettes offer a unique opportunity as hemp cigarettes are not subject to the same level of regulation and taxation as tobacco cigarettes, and more importantly hemp is considered less addictive than tobacco, has far fewer additives than vaping and has showed promise in assisting smokers in reducing the tobacco smoking urge.
Through the leadership of Joe Deighan, TAAT provides an attractive alternative to traditional tobacco and cigarettes. TAAT's smokable hemp products contain no nicotine, additives, chemicals or pesticides.
Commented Joe Deighan, founder of TAAT, "Smokable hemp is presently one of the most dynamic new markets worldwide and offers smokers a healthier alternative to tobacco. I am particularly excited to be joining forces with Molori to accelerate the growth of our brand and to provide TAAT with the resources to compete head on with the tobacco industry. I fully intend to establish TAAT as not only the preeminent hemp cigarette brand, but as global player in health and wellness."
The 2018 Farm Bill in the U.S. made it legal Federally and at the State level to sell hemp or its derivatives in all 50 States. A survey of more than 5,000 smokable hemp users found that 24% have used it to quit smoking and replace cigarettes with smoking hemp, according to data from market research firm Brightfield Group. Furthermore, 41% of quitters replaced tobacco entirely with hemp CBD, according to the same report. Commented Joel Dumaresq, CEO of Molori, "We've been working with Joe for several months and could not be more impressed by his work ethic and commitment to his brand. Joe is a true visionary and is building TAAT not just to compete in the dynamic hemp cigarette space, but rather to take on major tobacco. Having previously launched and established Wild Hemp as a leading hemp cigarette brand, through TAAT Joe now has his sights set on providing smokers with an organic and healthier alternative to traditional tobacco."
The LOI was negotiated at arm's length and is effective Jan. 31, 2020.
Description of TAAT
TAAT is a health and wellness brand focused upon the smokable hemp space. Joe Deighan, the founder of TAAT is a pioneer in the smokable hemp space having previously founded Wild Hemp, a leading U.S. hemp cigarette brand. (https://www.wildhemp.com/) TAAT is poised to take on the global tobacco industry through its offerings of CBD-enriched hemp smokable products.
Terms of the acquisition
The acquisition is expected to be completed by way of a share exchange resulting in TAAT becoming a wholly-owned subsidiary of Molori, following which the Company will continue the business of TAAT. The Parties anticipate entering into a definitive share exchange agreement (the "Definitive Agreement") by the end of February 2020, following the completion of satisfactory due diligence. The acquisition constitutes an arm's-length transaction.
As of the date hereof, Molori has 36,203,980 common shares outstanding (the "Molori Shares"), 597,500 outstanding stock options, and 9,283,745 outstanding warrants to acquire Molori Shares.
Upon completion of the acquisition, the holders of TAAT common shares will receive an aggregate of 13.66 million Molori shares at a deemed price of $0.20 per share.
The Company will pay a finder's fee to certain qualified third parties in connection with the acquisition.
Management and Directors of Molori Post-acquisition
When the acquisition is completed, it is anticipated that the board of directors and officers of the Company shall remain the same until the next shareholders' annual general meeting.
Conditions to the acquisition
The acquisition is subject to the satisfaction of customary closing conditions, which include:
- each of Molori and TAAT obtaining any requisite director and shareholder approvals;
- the completion of due diligence investigations to the satisfaction of each of Molori and TAAT; and
- Molori and TAAT entering into the Definitive Agreement.
Additional Information Regarding the acquisition
Molori and TAAT shall use their commercially reasonable efforts to complete the acquisition by April 30, 2020. A comprehensive news release will be issued when all the details associated with the transaction are finalized.
We seek Safe Harbor.
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