Newstrike to Make Strategic Investment in Retail Distribution

Newstrike to Make Strategic Investment in Retail Distribution

Newstrike Resources Ltd. (TSXV:HIP) is pleased to announce that it has entered into an investment agreement with Inner Spirit Holdings Ltd.. Dated May 18, 2018, pursuant to which both Newstrike and Inner Spirit will acquire equity interests in each other and  enter into a company strategic alliance agreement for the retail distribution of Up Cannabis products and the creation and operation of Up Cannabis-branded customer lounges or “Experiential Hubs” in each of Inner Spirit’s shops.

“We believe this investment and strategic alliance have the capability to effectively elevate the profile of the Up Cannabis brand and increase customer access to Up’s complete line of cannabis and associated merchandise”, commented Jay Wilgar, Newstrike’s CEO. “We look forward to working with Spiritleaf to improve Up’s distribution reach and successfully building our businesses in a complementary and strategically aligned manner. ”

Inner Spirit has extensive franchise, marketing, real-estate and retail experience that it intends to capitalize on by establishing a chain of branded adult-use cannabis dispensaries across Canada under the “Spiritleaf” banner. To date, Spirit Leaf is the only Canadian retail cannabis company to be granted membership into the Canadian Franchise Association and has over 100 franchises in various stages of development.  

“Partnering with Newstrike & Up Cannabis is a unique opportunity for the two organizations to showcase the amazing initiatives they’ve undertaken.   It will allow our mutual customers to visit Spiritleaf stores and, through every Up Cannabis Experiential Hub, experience how cannabis, music, education and community can come together and have a positive effect”, said Darren Bondar, President & CEO of Inner Spirit.

Under the proposed strategic alliance, Newstrike and Spirit Leaf will produce and operate Up Cannabis Experiential Hubs within Spiritleaf’s shops where customers can enjoy the Company’s quality lifestyle brands. The store-in-store experiences will match the existing Spiritleaf design elements and provide education about cannabis, showcase both companies’ love of music and their respective community and charitable endeavours.

Mutual Investment

On closing, Newstrike will make an aggregate investment in Inner Spirit valued at $2.25 million comprised of:

  • $1,125,000 in money; and
  • Newstrike common shares with an aggregate worth $1,125,000.

The Newstrike common shares to be issued on closing will be issued at a cost of $.90 which is equivalent to the five-day volume weighted average price (VWAP) calculated as at May 18, 2018, being the date that the investment agreement was executed.   Newstrike will also issue up to 1,125,000 warrants to purchase Newstrike common shares (the “Newstrike Warrants”).   The Newstrike Warrants will have an exercise price of .99, which represents a premium of 10 percent to the issue price of the Newstrike common shares.   The Newstrike Warrants will have a term of 24 months and will vest on a performance-based schedule triggered by the launch of a pre-determined variety of future Spirit Leaf places, all of which is subject to the approval of the TSX Venture Exchange (“TSX-V”) and in accordance with applicable securities laws

In consideration for Newstrike’s investment in Inner Spirit, Inner Spirit will issue to Newstrike, subject to approval of the Canadian Securities Exchange (“CSE”-RRB- and in compliance with the applicable securities laws, 15,000,000 units of Inner Spirit (“Units”-RRB- on the very same terms as such securities must be offered under Inner Spirit’s proposed initial public offering at a cost of $0.15 per Unit.  

Distribution

The strategic alliance agreement includes terms providing for, subject to applicable regulations governing retail distribution of cannabis, including without limitation, the approval and Royal Assent of Bill C-45, the Cannabis Act, and requisite retail licensing of Spiritleaf outlets, the preferential distribution of Up Cannabis products and merchandising opportunities, as well as a commitment by Inner Spirit into the Gord Downie and Chanie Wenjack Fund.  

Closing

The closing of this transaction is subject to certain customary conditions, including but not limited to: the completion of satisfactory due diligence, the receipt of all necessary approvals, the approval of the TSX-V and the CSE, the approval of applicable securities regulatory authorities and the execution of a mutually agreeable strategic alliance arrangement.   The closing date is expected to be immediately prior to the closing of the proposed initial public offering of Inner Spirit’s common shares on the CSE.

For further information, please contact:  
Jay Wilgar, Chairman and CEO
Telephone: -LRB-905-RRB- 844-8866 ext. 12
Email: ir@newstrike.ca        

About Newstrike and Up Cannabis 

Newstrike is the parent company of Up Cannabis Inc., a licensed producer of cannabis that is licensed to both promote and sell cannabis in all acceptable forms. To learn more visit www.up.ca or www.newstrike.ca.

Dedicated to producing cultural hubs in every community where it operates, Inner Spirit is establishing a chain of recreational cannabis dispensaries under its Spiritleaf brand. Supporting local entrepreneurs by using its award-winning franchise and retail versions, Inner Spirit has more than 100 partnerships set up for Spiritleaf places across BC, Alberta and Saskatchewan. Inner Spirit will also operate multiple corporate dispensaries. With a diverse portfolio of quality and curated lifestyle cannabis products – like Spiritleaf’s very own locally and sustainably sourced lines — Spiritleaf is set to be an iconic Canadian brand and the most trusted source for recreational cannabis. More information can be found on Inner Spirit’s site at www.innerspiritholdings.com.

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Published at Wed, 23 May 2018 16:32:21 +0000

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