OAKLAND, Calif. and TORONTO , May 28, 2019 /PRNewswire/ -- FLRish Inc. d/b/a/ Harborside, a California corporation which manages the iconic Harborside dispensaries ("Harborside" or the "Company"), today announced that Harborside has closed an approximately C$19.65 million private placement (the "Financing") of subscription receipts (the "Subscription Receipts"). AltaCorp Capital Inc. ("AltaCorp") and Foundation Markets Inc. ("FMI") served as co-lead agents on behalf of a syndicate of agents which included Cormark Securities Inc., Beacon Securities Limited and Haywood Securities Inc. (collectively with AltaCorp and FMI, the "Agents"). The net proceeds from the financing, following release from escrow, are expected to be used to provide the Company with general working capital and to support the Company's initiatives throughout California .
Each Subscription Receipt shall be automatically exchanged, without any further act or formality on the part of the holder of such Subscription Receipt, and for no additional consideration, for (i) one share of Class D common stock in the capital of Harborside (a "Common Share") and (ii) one Common Share purchase warrant of Harborside (a "Warrant") which will entitle the holder to acquire one Common Share at a price of C$8.75 for a period of two years, subject to adjustment and/or acceleration in certain circumstances, immediately prior to the completion of the reverse takeover transaction (the "Reverse Takeover") with Lineage Grow Company Ltd. ("Lineage") and upon the satisfaction or waiver (to the extent such waiver is permitted) of certain other conditions (the "Escrow Release Conditions"). Pursuant to the Reverse Takeover, if and when completed, holders of the Common Shares will receive one subordinate voting share (a "Subordinate Voting Share") in the capital of the issuer resulting from the Reverse Takeover (the "Resulting Issuer") in exchange for each Common Share held, and the Warrants will, following the completion of the Reverse Takeover, be exercisable for Subordinate Voting Shares. The gross proceeds of the Financing, less the Agents' expenses and 50% of the Agents' commission are being held in escrow pending the satisfaction or waiver of the Escrow Release Conditions.
Andrew Berman , Chief Executive Officer of Harborside, said, "This financing is an important source of funding to allow Harborside to continue pursuing its growth in Northern California and strengthens our strong working capital in advance of our planned listing on the Canadian Securities Exchange. We are pleased to see returning investors in this round, like Cresco Capital Partners, Quinsam Capital, and UJI Capital. Ongoing support from entities like these provides a strong vote of confidence in our operations and future of the Company."
Steve DeAngelo , Chairman Emeritus of Harborside, said, "Harborside is different from our competitors. We've overcome challenges they can barely imagine; know how to adapt to the ever-changing conditions of the cannabis industry— and know how to continue to thrive. Our pioneering example lit a beacon of hope for patients and helped pave the way for legalization; and our community-centric, social justice model set the tone for a whole new industry. Today, we look forward to writing the next chapter of our story, continuing our success, and always being a standard bearer for justice."
"We are excited to continue supporting Harborside," said Matt Hawkins , from Cresco Capital Partners of Dallas, Texas . "We made our first investment in Harborside in 2015, and continue to be impressed with the experience it has in cannabis over the past 12 years. Harborside is well positioned to grow in this vibrant market in Northern California ."
The Financing represents Harborside's third successful fundraising round. The three funding rounds have allowed the company to continue its mission of creating a premier, vertically integrated California cannabis company.
In connection with the Reverse Takeover, Harborside entered into a definitive merger agreement with Lineage and Lineage Merger Sub Inc., a wholly-owned subsidiary of Lineage on February 8, 2019 , as amended on April 17, 2019 ("Merger Agreement"). Upon the completion of the Reverse Takeover, which has been conditionally approved by the CSE, it is proposed that the Resulting Issuer will be renamed "Harborside Inc." and will trade under the ticker symbol "HBOR." A listing statement in respect of the Reverse Takeover will be prepared and posted on the CSE website and under the profile of Lineage on SEDAR at www.sedar.com in accordance with Policy 2 of the CSE after the closing of the Reverse Takeover. A press release will be issued once the listing statement has been filed.
Harborside Shareholder Approval
At a special meeting of shareholders of Harborside held on May 20, 2019 , shareholders approved the principal terms of the Merger Agreement and the transactions contemplated thereby, including the Reverse Takeover. In addition, holders of Harborside's outstanding preferred stock voted to waive certain of their rights in conjunction with the Reverse Takeover.
Lineage Shareholder Approval
At a special meeting of shareholders of Lineage held on May 16, 2019 , shareholders approved various matters relating to the Reverse Takeover, including (i) an amendment to the articles of Lineage creating certain special shares, (ii) an amendment to the articles of Lineage consolidating the Lineage common shares and re-designating the post-consolidated common shares as Subordinate Voting Shares, creating a new class of multiple voting shares and changing its name, (iii) a new equity incentive plan for the Resulting Issuer, (iv) an updated set of by-laws which will include advance notice provisions, and (v) a shareholder rights plan for the Resulting Issuer. With respect to the approval of Lineage shareholders of the Reverse Takeover, in addition to the shareholder approval required under corporate law, Lineage obtained a majority of minority approval for the Reverse Takeover where Lineage common shares held by Lineage insiders were excluded from voting, to satisfy the requirements under Ontario Securities Commission Rule 56-501 – Restricted Shares, which requires that a restricted security reorganization receive prior majority of minority approval of the shareholders of Lineage.
No Offer or Solicitation
None of the securities of Harborside or the securities issued in connection with Financing or the Reverse Takeover have been or will be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or applicable state securities laws, and may not be offered or sold to, or for the account or benefit of, persons in the United States or "U.S. Persons", as such term is defined in Regulation S under the U.S. Securities Act, absent registration or an applicable exemption from such registration requirements. This news release shall neither constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
Harborside was co-founded by Steve DeAngelo and dress wedding in 2006, after being awarded one of the first six medical cannabis licenses granted in the United States . As one of the oldest, largest and most respected cannabis retailers in the world, Harborside has played an instrumental role in making cannabis safe and accessible to a broad and diverse community of California consumers. Today, the Harborside brand is well known throughout California and all around the world. Harborside owns and operates a cultivation campus in Salinas, California that was established in 2016 and produces high-quality, low-cost cannabis at scale for sale through the Harborside dispensaries, third-party dispensaries, distributors, and manufacturing partners. Harborside is currently structured as a private California corporation.
Lineage is a reporting issuer that is listed on the CSE. Lineage is currently focused on operating two retail licensed stores located in two prominent cities in Oregon ( Portland and Eugene ), and on assembling licensed operators with good growth potential and superior management, either through direct acquisition or through joint ventures, with an aim towards building a dominant vertically-integrated cannabis business that leverages best-in-class cultivation, brands, distribution, and retail assets. Lineage has entered into a purchase agreement with respect to the Agris Farms Acquisition and a binding letter of intent with respect to the Lux Acquisition. In addition, Lineage and Harborside have entered into a binding merger agreement pursuant to which Lineage will acquiring all the issued and outstanding securities of Harborside in a reverse takeover transaction. For updates on Lineage's activities and highlights of Lineage's press releases, investor deck and other media coverage, please visit Lineage's web site (under construction) at www.lineagegrow.com.
Certain statements contained in this press release constitute "forward-looking statements", including statements regarding the Reverse Takeover and the Company's proposed listing on the Canadian Securities Exchange. All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's future outlook, use of proceeds, strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.
The CSE has in no way passed upon the merits of the Reverse Takeover and has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.
Pursuant to National Instrument 33-105 – Underwriting Conflicts ("NI 33-105"), Lineage is a "related issuer" of FMI in connection with the Financing. In addition, Lineage may be considered a "connected issuer" of FMI under NI 33-105 due to Adam Szweras being the corporate secretary of Lineage and the Chairman of FMI and Peter Bilodeau being President, Chief Executive Officer and director of Lineage and the President of FMI. FMI is acting as the financial advisor to Harborside. FMI Capital Advisory Inc., a party related to FMI, also provides advisory services to Harborside. As these relationships give rise to the potential for conflicts of interests between the interests of FMI and investors in relation to Harborside and in respect of a prospective investment in Harborside by FMI clients, the proceeds of the Financing will not be applied for the benefit of Foundation Group Companies, except that the Foundation Group Companies will receive from Harborside commissions and fees for services rendered to Harborside in the ordinary course of business.
Andrew Berman , CEO
Greg Sutton , Interim CFO
North 6th Agency
SOURCE FLRish, Inc.