Le Lézard
Classified in: Health, Business
Subjects: TNM, MAT

Origin House Acquires Major Online and Retail Canadian Vape Operator, 180 Smoke - Paving the Way for Brand and Product Expansion into Canadian Market


All financial figures in Canadian Dollars ($) unless otherwise noted.

OTTAWA, Feb. 20, 2019 /CNW/ - CannaRoyalty Corp. d/b/a Origin House (CSE: OH) (OTCQX: ORHOF) ("Origin House" or the "Company"), a leading North American cannabis products and brands company, announced today that it has completed the previously announced acquisition (the "Acquisition") of 180 Smoke and its affiliates ("180 Smoke").

Transaction Highlights

_____________________________

1

Unaudited figures based on internal financial statements of 180 Smoke for the years ended December 31, 2018 and
December 31, 2017

2

180 Smoke Customer Survey

 

Commenting on the announcement, Afzal Hasan, President of Origin House, said, "The close of this Acquisition marks a major milestone in the Origin House story, and sets the foundation for a strategic, accretive expansion into the Canadian market, with plans to leverage 180 Smoke's expertise in other global markets in the future. Given the lack of compelling products and brands on-offer for consumers in Canada, including those expected to come to market one year post-legalization, the market is ripe for disruption. We are confident that the combination of 180 Smoke's proven ability to build a high-margin, branded consumables product portfolio in an extremely fragmented market, along with Origin House's portfolio of consumer-led brands emanating from the most dynamic legal cannabis market in the world today, will translate into rapid growth as the Canadian market continues to evolve."

"We are very pleased to become part of Origin House," said Ashutosh Jha, President of 180 Smoke. "Collectively, we bring a constructive, innovative and prudent approach that makes us a valuable and loved partner to our customers, colleagues and the wider populus. Through additional capital, industry expertise and an established California distribution and brand blueprint, Origin House will accelerate 180 Smoke's mission of harm reduction from combustibles, and 360 Cannabis' focus of highlighting the harm reduction properties of cannabis. We look forward to utilizing this support to drive significant growth and profitability over the next two years, both on the Vape and cannabis sides of our business."

Transaction Summary:

Purchase Price

The consideration for the Acquisition is comprised of:

(i) gross proceeds of $2.8 million paid in cash on closing and 3,294,453 Origin House common shares representing approximately $22.2 million as of the date that the Company and 180 Smoke entered into a term sheet in connection with the Acquisition using the 15-day volume weighted average price ("VWAP") of the Origin House common shares on that date (the "Term Sheet Date"), such 3,294,453 Origin House common shares representing approximately $30.5 million as of closing share price on February 19, 2019;

(ii) up to an additional $15 million in common shares upon the successful achievement of certain milestones for the three calendar years from 2019 to 2021; and

(iii) a contingent purchase price adjustment providing for an additional 1,483,680 common shares of Origin House, payable if Origin House's VWAP during the 3-month period from October 1, 2020 to December 31, 2020 is not at least $7.75 (being the price that is 15% above the 15-day VWAP of the Origin House common shares on the Term Sheet Date),  and 180 Smoke has achieved at least $25 million in exit rate revenues in 2019.

Milestone Payments

180 Smoke will be required to meet certain annual revenue targets for 2019 to 2021, in order for its vendors to receive a milestone payment for each of those years of up to $4.17 million.

Furthermore, an additional $2.5 million in Origin House common shares is payable to the vendors of 180 Smoke if it obtains an Indoor Standard Processing License in Canada to process cannabis by December 2020.

About 180 Smoke

180 Smoke is a leading Canadian Vape product retailer that is considered the gold standard for Vape store operations and customer service. 180 Smoke sells Vape and nicotine-related products, herbal vaporizer products and parts. With the corporate mission of "significantly reducing harm done to human health from addictive substances," 180 Smoke's vision is to become a multi-region, omni-channel, vertically integrated market leader servicing the end-to-end needs of Canadian nicotine and cannabis consumers. For more details, visit www.180smoke.com.

About Origin House

Origin House is a growing cannabis products and brands company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands. The Company's foundation is in California, the world's largest regulated cannabis market, where it delivers over 130 branded cannabis products to the majority of licensed dispensaries. Origin House's brand development platform is operated out of five licensed facilities located across California, and provides distribution, manufacturing, cultivation and marketing services for its brand partners. The Company is actively developing infrastructure to support the proliferation of its brands internationally, initially through this acquisition of Canadian retailer 180 Smoke. Origin House's shares trade on the Canadian Securities Exchange (CSE) under the symbol "OH" and on the OTCQX under the symbol "ORHOF". Origin House is the registered business name of CannaRoyalty Corp. For more information, visit www.originhouse.com.

Forward Looking Statements

Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in Origin House's periodic filings with Canadian securities regulators. When used in this news release, words such as "will, could, plan, estimate, expect, intend, may, potential, believe, should," and similar expressions, are forward- looking statements.

Forward-looking statements may include, without limitation, statements relating to the execution of the Company and 180 Smoke's strategies, including but not limited to the timing and completion of 180 Smoke's store openings, the Company and 180 Smoke's timing and processes for expansion in Canada and globally, new opportunities, potential cannabis consumers, increases in revenues, new opportunities, future growth, and other statements. 

Although the Company has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals; investing in target companies or projects that are engaged in activities currently considered illegal under US federal law; changes in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry and; regulatory or political change.

There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. The Company disclaims any intention or obligation to update or revise such information, except as required by applicable law, and the Company does not assume any liability for disclosure relating to any other company mentioned herein.

SOURCE Origin House


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