CGOC Announces Closing of Core One Labs Debenture Facility and Share-Swap

TORONTO, March 17, 2020 /CNW/ - Cannabis Growth Opportunity Corporation ("CGOC", or the "Company") (CSE: CGOC), a cannabis focused investment corporation with both public and private cannabis holdings, is pleased to announce that the Company and Core One Labs Inc. (CSE: COOL) ("Core One") have closed their previously-announced convertible debenture facility and share-swap. Core One is a technology company that licenses its technology to a state-of-the-art production and packaging facility located in Southern California. Core One's technology produces infused strips that provide a new way to accurately meter the dosage and assure the purity of the selected cannabinoid constitutes.

Pursuant to the terms of a subscription agreement, the Company has committed to advance up to the principal amount of $1,500,000 (the "Principal") through a non-brokered convertible debenture (the "Convertible Debenture") offering (the "Offering"). The Principal amount of the Convertible Debenture is to be advanced in three equal tranches of $500,000, with part of the first tranche released today (and the balance expected to be advanced this week), and each subsequent tranche to be released upon completion of mutually agreed operational milestones. The Convertible Debenture shall mature on December 31, 2022 and shall bear interest at 12% per annum, calculated and accrued monthly in arrears and due on maturity. The Convertible Debenture is to be secured by a general security agreement covering all of Core One's personal property upon the Company advancing the total Principal amount of the Convertible Debenture. Furthermore, the Principal amount of the Convertible Debenture and any accrued but unpaid interest shall be convertible at the option of the Company into common shares of Core One ("Core One Shares") at anytime prior to maturity at a price of $0.40 per share.

In connection with the Offering, the Company also received 1,500,000 common share purchase warrants of Core One (the "Core One Warrants") that shall vest in three equal tranches upon closing of each advance under the Convertible Debenture. The Core One Warrants shall be exercisable until December 31, 2022 at a price of $0.60 per share. Furthermore, Core One may accelerate the expiration date of the Core One Warrants to a period of 30 days following written notice to the Company in the event that the Core One Shares close at or above $1.50 per share for a period of 10 consecutive trading days on the Canadian Securities Exchange.

In addition, the Company and Core One also entered into subscription agreements to exchange approximately $2,000,000 of each companies' common shares (the "Share-Swap") whereby Core One received a total of 3,149,606 common shares of CGOC, at a deemed price of $0.635 per share, and the Company received a total of 5,333,333 Core One Shares, at a deemed price of $0.375 per share. Pursuant to the Share-Swap, both CGOC and Core One have also signed a voting and resale agreement providing that each party will be required to vote such common shares acquired under the Share-Swap as recommended by the other party and will be restricted from trading such common shares for a period of 18 months. A copy of the voting and resale agreement shall be made available under the Company's issuer profile on SEDAR at www.sedar.com. Furthermore, Core One has also agreed to nominate one board member of Core One as recommended by the Company at future shareholder meetings and the ability, if the Company does not have its nominee on Core One's board of directors, to appoint a board observer.

Brad Eckenweiler, Chief Executive Officer of Core One, commented, "We are excited with the prospect of developing a relationship that will benefit both parties in the United States, Canada and Europe. While CGOC has expertise that can expedite our Canadian goals, I also believe our experience will assist CGOC's interests throughout California."

Sean Conacher, Chief Executive Officer of CGOC, commented, "Core One operates out of a state-of-the-art facility in California and we believe this investment will assist in advancing our interests in the California market. CGOC also believes there is significant opportunities with Core One's infused strip technology and we work to advance this technology globally."

All securities issued pursuant to the Offering and Share-Swap are subject to a mandatory hold period of four months and a day under applicable Canadian securities laws.

Early Warning Disclosure Pursuant to National Instrument 62-103

Prior to the Offering and Share-Swap, CGOC held nil securities of Core One. As of the date hereof, after giving effect to Offering and Share-Swap, the Company beneficially owns or controls 5,333,333 Core One Shares, the Convertible Debenture and 1,500,000 Core One Warrants, representing approximately 16.63% of the issued and outstanding Core One Shares on a non-diluted basis and approximately 28.35% of the issued and outstanding Core One Shares on a partially diluted basis, assuming the conversion of the Convertible Debenture (excluding conversion of any accrued and unpaid interest into Core One Shares) and exercise of all Core One Warrants held by the Company.

Pursuant to the terms of the subscription agreement in respect to the Offering, the Company has agreed to advance an additional $1,000,000 under the Convertible Debenture, to be released upon completion of mutually agreed operational milestones.

The Core One Shares, Convertible Debenture and Core One Warrants were acquired for investment purposes. While Company currently has no plans or intentions with respect to the Core One securities, other than the Company's agreement to advance an additional $1,000,000 under the Convertible Debenture as set out above, the Company may from time to time acquire additional securities of Core One, may sell all or a portion of its securities of Core One or may continue to hold the Core One Shares, Convertible Debenture and Core One Warrants, or other securities of Core One, depending on market conditions, the Company's view of Core One's prospects, other investment opportunities and other factors considered relevant the Company.

A copy of the early warning report to be filed by the Company will be available under Core One's issuer profile on SEDAR at www.sedar.com or by contacting Sean Conacher, CEO at (647) 660-0566. The Company's head office is located at 240 Richmond Street West, Suite 4163, Toronto, Ontario, M5V 1V6.

About Core One

Core One (CSE: COOL) is a technology company that licenses its technology to a state-of-the-art production and packaging facility located in Southern California. Core One's technology produces infused strips (like breath strips) that are not only a safer, healthier option to other forms of delivery but also superior bioavailability of cannabis constituents. Some strips will also include supplemental co-active ingredients such as nutraceuticals, vitamins and peptides. The technology provides a new way to accurately meter the dosage and assure the purity of selected product. From start to finish, the production process, based on Core One's technology, tests for quality and composition of all the ingredients used in every strip which results in a delivery system that is safe, consistent and effective. In addition, through its efforts to develop a better CannaStripsTM product, Core One has developed considerable expertise in cannabis extraction and nursery activities. The operational expertise developed by Core One as a result of these efforts has created new market opportunities for the company in white label sales.

About CGOC

CGOC is an investment corporation that offers unique global exposure to the emerging global cannabis sector. CGOC's main objective is to provide shareholders long-term total return through its actively managed portfolio of securities, both public and private, operating in, or that derive a portion of their revenue or earnings from products or services related to the cannabis industry.

Forward-looking Statements

This press release contains certain forward-looking statements with respect to the Company. These forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated in those forward-looking statements and information. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: risks associated with the Company's business plan and matters relating thereto, and risks associated with the Company's investments and financial objectives, as well as other risks and uncertainties, including but not limited to those detailed from time to time in the Company's public filings on SEDAR. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.

Neither the Canadian Securities Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

SOURCE Cannabis Growth Opportunity Corporation