Trusted Brand 2016 Inc. Announces Business Combination Agreement with Theracann International Benchmark Corporation for Qualifying Transaction

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CALGARY, June 4, 2019 /CNW/ - Trusted Brand 2016 Inc. ("Trusted Brand") (TSX VENTURE:HAH), a capital pool company as defined under Policy 2.4 – Capital Pool Companies ("CPC") of the TSX Venture Exchange (the "Exchange"), is pleased to announce that it has entered into a definitive agreement dated May 31, 2019 (the "Business Combination Agreement") with Theracann International Benchmark Corporation ("Theracann"), a Panama based company providing advanced technology and service solutions for global clients in the emerging cannabis industry. Pursuant to the Business Combination Agreement, Theracann's wholly-owned subsidiary, 2172014 Alberta Ltd. ("Theracann Subco"), will amalgamate with Trusted Brand (the "Amalgamation") to complete Trusted Brand's qualifying transaction (the "Transaction") in accordance with the policies of the Exchange. Upon completion of the Amalgamation, the resulting issuer will be known as "Theracann International Benchmark Corporation" (the "Resulting Issuer") and the Resulting Issuer will continue the business of Theracann. The Transaction is subject to the receipt of all necessary regulatory approvals and shareholder approvals required by applicable corporate law, including the approval of the shareholders of Trusted Brand, as well as the satisfaction of conditions to closing as set out in the Business Combination Agreement.

About Theracann

Theracann was incorporated under the laws of Panama on April 28, 2017. Headquartered in Panama Pacifico, Panama, a special economic zone for multi-national high technology companies, Theracann maintains offices and/or operations through joint ventures in North America, Central and South America, and Australia, and is actively expanding into new jurisdictions. Through Theracann's Technology, Operations and Analytics divisions, Theracann offers a full suite of unique solutions for use across the cannabis value chain. Technology: TheraCann owns and provides unique technology designed specifically for the cannabis industry, from ensuring supply chain integrity, to machine learning production systems and multi-regulatory enterprise relationship management at scale. TheraCann has already launched three disruptive technologies for the cannabis industry, ETCH biotrace™, DNA tracking system, SproutAI, machine learning aeroponic systems and OS2, blockchain backed regulatory and cultivation management. Operations: The BenchmarkSOLUTION, a division specializing in the planning, design, implementation, training and/or support of vertically integrated industrial cannabis cultivation, processing, packaging, quality assurance, and secure facilities worldwide, brings the rigor of agribusiness, biotechnology, finance, property management, construction and infrastructure to the cannabis industry while adapting to its unique challenges of risk mitigation, distribution, and asymmetric regulatory environments. Analytics: TheraCann is uniquely positioned to leverage 'big data' gleaned from the cannabis verticals, with blockchain and artificial intelligence to empower businesses with clear and deep insights to act, turning it into profitable results. ETCH biotrace™, SproutAI and OS2 technologies collect, centralize and monetize big data related to the all segments of the cannabis industry.

The current principal shareholders of Theracann are Chris and Julie-Anne Bolton, who are both residents of Panama and the beneficial owners of 10,000,000 common shares of Theracann, equal to 100% of the current issued and outstanding common shares on an undiluted basis.

Summary of Financial Information for Theracann

The following table sets forth selected unaudited financial information for Theracann for the financial years ended December 31, 2017 and December 31, 2018. The financial information has been prepared in accordance with International Financial Reporting Standards.

		Twelve months ended (Unaudited)		Twelve months ended (Audited)
Income Statement Data^(1)		December 31, 2018		December 31, 2017
Total Revenues		927,941		208,153
Net Income		(1,132,133)		127,643
Cash Dividends Declared		-		-
		As at		As at
Balance Sheet Data^(1)		December 31, 2018		December 31, 2017
Total Current Assets		1,826,409		665,926
Total Non-Current Assets		1,469,208		210,434
Total Assets		3,295,617		876,360
Total Current Liabilities^(2)		1,864,145		458,755
Total Non-Current Liabilities^(2)		2,410,601		289,952
Total Shareholders' Equity		(979,129)		127,653
Total Working Capital		(37,736)		207,171

Note:
(1)	Amounts are provided in US dollars which is the functional and reporting currency of Theracann.
(2)	$3,071,693 of the aggregate Current and Non-Current Liabilities are associated with the outstanding convertible debentures of Theracann, which will automatically convert into common shares of the Resulting Issuer on completion of the Transaction.

Theracann Financing

In connection with the Transaction, Theracann intends to complete a brokered private placement (the "Subscription Receipt Financing") of subscription receipts (the "Subscription Receipts") for gross proceeds of up to $15,000,000, with the price to be determined in the context of the market (the "Issue Price"). It is expected that approximately 2,000,000 Subscription Receipts will be issued, with an anticipated Issue Price of approximately $7.50 per Subscription Receipt (the "Liquidity Event Price"). The financing is expected to close in July 2019. Each Subscription Receipt will entitle the holder thereof to receive, upon satisfaction of certain escrow release conditions (the "Escrow Release Conditions") on or before the escrow release deadline, and without payment of additional consideration, one unit in the capital of Theracann (a "Unit"). Each Unit consists of one Resulting Issuer common share ("Resulting Issuer Share") and one half (1/2) of a common share purchase warrant (a "Resulting Issuer Warrant"). Each whole Resulting Issuer Warrant shall entitle the holder thereof to acquire one Resulting Issuer Share at a price equal to a 25% premium to the Issue Price for a period of 24 months following the, closing date of the Transaction, subject to adjustment and acceleration.

Laurentian Bank Securities Inc. ("Laurentian") has been engaged by Theracann as lead agent in connection with the Subscription Receipt Financing (the "Agent"). The Agent will receive a cash commission equal to 7.0% of the aggregate gross proceeds of the Subscription Receipt Financing (the "Commission"), together with an option to purchase up to an additional 7.0% of the number of the Resulting Issuer Shares issued upon conversion of the Subscription Receipts sold under the Subscription Receipt Financing (the "Compensation Options"). Each Compensation Option will entitle the Agent to purchase one Resulting Issuer Share at an exercise price equal to a 25% premium to the Issue Price for a period of 24 months following the closing of the Transaction. 

The gross proceeds from the Subscription Receipt Financing (the "Escrowed Proceeds") will be held in escrow until the satisfaction of the Escrow Release Conditions, including the confirmation that all conditions precedent to the Transaction, other than the release of the Escrowed Proceeds, have been satisfied. In the event that the Escrow Release Conditions are not met by the date which is three months from the closing date of the Subscription Receipt Financing, the Escrowed Proceeds, together with accrued interest thereon, shall be returned to the purchasers pro rata and the Subscription Receipts shall be automatically cancelled.

Principal Purposes of Funds

The funds to be available to the Resulting Issuer upon the closing of the Transaction are expected to be approximately USD$11,000,000 which includes the anticipated net proceeds of the Subscription Receipt Financing, the Bridge Financing (as defined herein) and existing cash on hand of Theracann and Trusted Brand estimated to equal CAD$1,100,000 immediately following the Amalgamation.  These funds are anticipated to be used, principally, as follows:

Proposed Use of Funds^(1)		Budgeted Amount assuming completion of Transaction (USD)
ETCH biotrace/Applied DNA development		$4,000,000
G&A Expenses for 12 months		$3,500,000
Manufacturing facility upgrades		$1,000,000
Brand awareness and policy		$1,000,000
Expansion of global operations		$750,000
Contingency		$450,000
OS2 System upgrades		$300,000
TOTAL		$11,000,000^2
Notes:
(1)  The principal use of funds is in USD and has been prepared based upon anticipated needs of the Resulting Issuer over a 12 month period. (2)  Assumes completion of Subscription Receipt Financing for the maximum offering amount.

The Resulting Issuer intends to spend the funds available to it as stated above. There may be circumstances, however, where for sound business reasons, a reallocation of funds may be necessary. Further details on the use of proceeds will be provided in the Information Circular.

ETCH biotrace/Applied DNA Development

On March 29, 2019, Theracann and Applied DNA Sciences Inc. ("Applied DNA"), a leader in polymerase chain reaction ("PCR") based DNA manufacturing for product authenticity and traceability solutions, entered into an enhanced exclusive cannabis licensing and cooperation agreement (the "Applied DNA Agreement") wherein Theracann obtained an exclusive right to Applied DNA's patented DNA tagging technology and authentication technologies marketed under the SigNature^® and/or CertainT^® for exclusive use in the cannabis markets for a period of 20 years. As per the terms of the Applied DNA Agreement, Theracann will make a series of payments over a four month period totalling USD$5,000,000, which began on April 15, 2019 with a payment of USD$1,000,000. Pursuant to the Applied DNA Agreement, Applied DNA will be the exclusive supplier of molecular tags (provided as SigNature®), molecular tag application systems and molecular tag authentication systems for TheraCann's ETCH biotrace seed-to-sale-tracking system.

Bridge Financing

Theracann is in the process of issuing additional securities of Theracann as part of a maximum $3,000,000 private placement bridge financing (the "Bridge Financing"). The Bridge Financing consists of convertible debentures units (the "Bridge Units") with each Bridge Unit consisting of one unsecured convertible debenture (the "Bridge Debentures") in the principal amount of $1,000 and 45 common share purchase warrants (the "Bridge Warrants"). Each one (1) Bridge Warrant is exercisable for a period of eighteen (18) months following the Liquidity Event into one (1) common share of the Resulting Issuer, at an exercise price equal to a 50% premium to the Liquidity Conversion Price.  The Bridge Debentures are convertible at any time until two years from the closing date (the "Maturity Date") at the holder's option into Common Shares at $7.00 per Common Share. The Bridge Debentures will automatically convert into Common shares at either: (i) a 20% discount to the Liquidity Event Price (defined below) per Common Share, or (ii) the value that would be attributed to each outstanding Common Share if the Enterprise Value (as defined below) of the Corporation at the time of the Liquidity Event was calculated as $60,000,000 (in either case, the "Liquidity Conversion Price"). In connection with the Bridge Financing, Theracann intends to pay a commission to the Agent of 6.0% of the gross proceeds raised.

The proceeds of the Bridge Financing will be used towards the payments required to Applied DNA under the Applied DNA Agreement and various transaction costs required to complete the Transaction. Further details related to the Bridge Financing will be provided in the Information Circular.

Details of the Proposed Transaction

Pursuant to the terms of the Amalgamation, Trusted Brand will amalgamate with Theracann Subco to form an amalgamated entity ("Amalco") which will continue as a wholly owned subsidiary of Theracann. In addition to the Trusted Brand common shares, stock options and agent's warrants currently outstanding, the Transaction will involve the issuance of approximately 2,000,000 Resulting Issuer Shares at the Liquidity Event Price per Resulting Issuer Share.

In connection with the completion of the Transaction, the common shares of Trusted Brand ("Trusted Brand Shares") will be consolidated on a basis of one (1) new common share of Trusted Brand for each existing 18.75 Trusted Brand Shares. It is expected that following the completion of the Transaction, and assuming the Subscription Receipt Financing and the Bridge Financing are fully subscribed, the current holders of Trusted Brand Shares will hold approximately 1.32% of the outstanding Resulting Issuer Shares, the subscribers in the Subscription Receipt Financing and Bridge Financing will hold approximately 15.75% of the outstanding Resulting Issuer Shares, and the current holders of Theracann common shares will hold approximately 62.57% of the outstanding Resulting Issuer Shares, all as calculated on a fully diluted basis, immediately following the closing of the Transaction.

It is anticipated that immediately following the Transaction, Chris Bolton, the Chief Operating Officer of Theracann and an anticipated director of the Resulting Issuer, and his spouse Julie Ann Bolton will be the only shareholders who hold greater than 10% of the issued and outstanding Resulting Issuer Shares. Together, Chris Bolton and Julie Ann Bolton will own an aggregate of 10,000,000 shares of Theracann or 62.57% of the Resulting Issuer on a fully diluted basis.

Sponsorship

Under the policies of the Exchange, the parties to the Transaction will be required to engage a sponsor for the Transaction unless an exemption or waiver from this requirement can be obtained. Theracann and Trusted Brand intend to apply for a waiver of the sponsorship requirement in connection with the Transaction. There is no assurance that an exemption or waiver from this requirement can or will be obtained.

The Resulting Issuer

Immediately following the completion of the Transaction, the Resulting Issuer is expected to change its name to "Theracann International Benchmark Corporation", and the Resulting Issuer will be an Industrial/Technology/Life Sciences issuer under the policies of the Exchange.

Concurrent with the completion of the Transaction, all directors and officers of Trusted Brand will resign and the directors and officers of Amalco will be Jason Warnock, Chris Bolton and David Hyman.

Proposed Management and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.

Jason Warnock, Chief Executive Officer and Director

Jason Warnock is the Chief Executive Officer of Theracann International Benchmark Corporation. In this role, he chairs the investment and venture capital commitment committees and actively manages Theracann's corporate capital raising activities. Mr. Warnock has extensive experience in public and private financing, as well as M&A and other strategic transactions. Mr. Warnock has worked with high profile brands for over 20 years to articulate sustainable, resonant campaigns. Prior to leading the capital markets effort, Mr. Warnock had spent his career as a marketing and business consulting lead, building companies and brands while working on M&As through an advisory practice. In 2007, he opened DMD Green in Calgary, Alberta and was instrumental in expanding the sustainable business markets in New York, Atlanta, Seattle, Los Angeles and San Francisco.

Chris Bolton, Chief Operating Officer and Director

Chris Bolton has 30 years of global experience in agricultural science and laboratory operations, manufacturing, quality control, software development, cannabis regulatory compliance, business development and consulting. Mr. Bolton is a senior executive with a proven reputation for creating a corporate vision to maximize multi-stakeholder input and the knowledge and passion to implement on that vision, and with proven experience in conducting international business. Mr. Bolton holds a LLB from the University of Calgary.

David Hyman, Chief Financial Officer

David Hyman has 20 years of experience in financial and economic analysis for public and private enterprises, with experience in financial governance and public accounting. Prior to joining Theracann, David was the Chief Financial Officer of Merrco Payments Inc. Mr. Hyman is also a director and Chief Financial Officer of Haw Capital Inc. (TSXV: HAW). Mr. Hyman holds a B.Comm from the University of Calgary.

Oswaldo Bello, Chief Information Officer

Oswaldo Bello is a Systems Engineer with a Masters in IT Management and domestic and international experience in corporate technological environments. Prior to joining Theracann, Oswaldo acted as Information Technology Operations Manager for Cobalt Technology Services. Mr. Bello holds a Systems Engineering degree from the Instituto Universario Politecnico.

Margo Micaleff, Director

Margot Micaleff is the President of Oliver Capital and a partner and co-founder of Gabriella's Kitchen (CSE: GABY). Ms. Micaleff has served as an Adjunct Professor in governance and ethics for the MBA program at the University of Alberta, and is on the Faculty of the Directors College. Prior thereto, Ms. Micalef was senior vice president of Shaw Communications Inc. and a Partner with Russell and DuMoulin (now Fasken Martineau DuMoulin) in Vancouver, BC. Ms. Micaleff was appointed a Queen's Counsel in 2002 and has been named as one Canada's Top 100 Most Powerful Women.

Shawn Ripley, Director

Shawn Ripley is an entrepreneur focused on bringing dosage predictable enhanced medicinal nutraceutical delivery systems to patients in a non-smokable format. Mr. Ripley was Chief Executive Officer of EFX Laboratories Inc. from October 2015 to January 2018.

Lisa Troe, Director

Lisa Troe has 35 years of business experience in public and private companies, as a public accounting international business advisory and as regional chief enforcement accountant at the U.S. Securities and Exchange Commission. Among other professional organizations she is a member of the National Association of Corporate Directors, Women Corporate Directors, and is a credentialed NACD Governance Fellow. Ms. Troe holds a CERT Certificate in Cybersecurity Oversight by Software Engineering Institute of Carnegie Mellon University, and is a Certified Public Accountant.

Leanne Likness, Corporate Secretary

Leanne Likness has 20 years of experience in overseeing corporate governance, privacy, strategy, enterprise risk management, and compliance programs for companies both in the public and private sectors, including Sun Life Financial (TSX: SLF), Shell Canada, Superior Plus Corp. (TSX: SPB), and ENMAX. 

Arm's Length Transaction

The Transaction is not a Non-Arm's Length Qualifying Transaction in accordance with the policies of the Exchange.

Advisory Fees

Upon completion of the Transaction, an advisory fee will be payable to Phase Merchant Capital Inc., an arm's length third party, comprising of: (i) 100,000 Resulting Issuer Shares; and (ii) 165,000 common share purchase warrants of the Resulting Issuer exercisable into Resulting Issuer Shares on a one-for-one basis for a period of one year from closing of the Transaction, at a price equal to a 25% discount to the Liquidity Event Price. The approval of the advisory fee is subject to the approval of the Exchange.

Information Circular

In connection with the Transaction and pursuant to Exchange requirements, Trusted Brand will file the Information Circular on SEDAR (www.sedar.com), which will contain details regarding the Transaction, the Amalgamation, the Subscription Receipts Financing, Trusted Brand, Theracann and the Resulting Issuer.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

ANY SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. The Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the content of this press release.

The information contained or referred to in this press release relating to Theracann has been furnished by Theracann. Although Trusted Brand has no knowledge that would indicate that any statement contained herein concerning Theracann is untrue or incomplete, neither Trusted Brand nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

This forward-looking information in respect of Trusted Brand and Theracann reflects Theracann's or Trusted Brand's, as the case may be, current beliefs and is based on information currently available to Trusted Brand and Theracann, respectively, and on assumptions Trusted Brand and Theracann, as the case may be, believes are reasonable. These assumptions include, but are not limited to, management's assumptions about the Exchange approval for the Transaction, closing of the Subscription Receipt Financing, closing of the Amalgamation announced above and Theracann's assumptions regarding its business objectives.

Notice regarding forward-looking statements:

This release includes forward-looking statements regarding Trusted Brand, Theracann, and their respective businesses, which may include, but is not limited to, statements with respect to the completion of the Transaction, the terms and timing on which the Transaction and Subscription Receipt Financing are intended to be completed, the use of the net proceeds from the Subscription Receipt Financing, the ability to obtain regulatory and shareholder approvals, the proposed business plan of the Resulting Issuer and other factors. Forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes", "estimates" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of each entity. The forward-looking events and circumstances discussed in this release, including completion of the Transaction, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, , including regulatory risks regarding the cannabis industry in the jurisdictions in which Theracann's clientele operate, the risk that Theracann and Trusted Brand may not obtain all requisite approvals for the Transaction, including the approval of the Exchange for the Transaction (which may be conditional upon amendments to the terms of the Transaction), failure to obtain regulatory or shareholder approvals, economic factors, any estimated amounts, timing of the Bridge Financing and Theracann Financing, the Principal Purposes of Funds, the equity markets generally and risks associated with growth and competition. Although Trusted Brand and Theracann have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Trusted Brand and Theracann undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Trusted Brand is a capital pool company governed by the policies of the Exchange. The principal business of Trusted Brand is the identification and evaluation of assets or businesses with a view to completing a qualifying transaction.

SOURCE Trusted Brand 2016 Inc.

Trusted Brand 2016 Inc., Ted Geier, Chief Executive Officer, [phone]; Theracann International Benchmark Corporation, Jason Warnock, Chief Executive Officer, [phone]