RMMI Announces Strategic Alliance with Synergenetics Biosciences and Purchase of up to 1,000,000 kgs of Premium High-CBD Hemp Flower and Biomass
Calgary, Alberta--(Newsfile Corp. - October 15, 2020) - RMMI Corp. (CSE: RMMI) ("RMMI" or the "Company") a licensed producer and processor under the Cannabis Act (Canada), is pleased to announce that it has entered into a strategic partnership and contribution of premium high-CBD hemp with SynerGenetics Bioscience Inc. ("SG") (the "SG Transaction"), a leading plant genetics technology company focused on the development of novel hemp strains with high-CBD content and other hemp-derived cannabinoid cultivars. In connection with the SG Transaction, RMMI has entered into a definitive purchase agreement dated October 14, 2020 for the purchase of up to 1,000,000 kilograms of premium high-CBD hemp flower and biomass (the "Hemp Biomass") from SG (the "Hemp Contribution Agreement") and entered into a definitive strategic alliance agreement dated October 14, 2020 which provides RMMI with exclusivity over SG's high-CBD genetics in Canada and assumption of its hemp CBD flower, biomass and concentrate business globally (the "Strategic Alliance").
"Completion of the SG Transaction is a significant step forward in executing on RMMI's strategic shift into hemp processing and CBD extractions" said Peter Cheung, Interim CEO and CFO. "This partnership with SG provides us with the expertise, relationships, premium high-CBD flower and biomass and exclusive genetics to create a vertically integrated platform from CBD seed to concentrates at scale" he added.
SG Transaction Highlights:
- SG Transaction provides the basis for creating a platform focused on becoming the lowest cost producer of CBD concentrates and CBD flower for a rapidly expanding global market that is demonstrating an increasing demand for extracts and premium flower
- 1,000,000 kilograms of premium high-CBD hemp flower and biomass cultivated in 2020 contributed by SG on favourable terms to RMMI which is expected to yield between 60,000 - 70,000 kg of CBD concentrates
- SG brings established relationships with farming partners in Ontario, Manitoba and BC, which collectively have cultivated 1,325 acres of SG's proprietary genetics for the 2020 season
- Exclusivity on current and future pipeline of proven high-CBD hemp genetics from SG enables an additional revenue stream for RMMI via seed sales in Canada
- SG's management brings decades of combined experience in the breeding, cultivation, extraction of hemp biomass and concentrates
- Fully-integrated seed-to-sale business model in high-CBD hemp seeds, flower and concentrate production provides a diversified revenue stream for RMMI
- Significant alignment of interests with SG as SG will be receiving the majority of its total consideration for the Hemp Contribution Agreement and Strategic Alliance in common shares of RMMI and cash consideration tied to the sale of products
Hemp Contribution Agreement
To commence processing and extraction operations at RMMI's Health Canada licensed processing facility, the Company has entered into the definitive Hemp Contribution Agreement for up to 1,000,000 kg of premium hemp flower biomass with an expected average of over 10% CBD and a minimum guarantee of 8% CBD from SG. In consideration for the Hemp Contribution Agreement, RMMI has agreed to issue up to 22,000,000 common shares of RMMI (the "Common Shares") plus a contingent payment of up to $13,600,000 in cash. The Common Shares shall be issued to SG as the Hemp Biomass is delivered to RMMI. This process is expected to occur over the next 60-90 days. The $13,600,000 contingent payment is paid out of a portion of RMMI's revenue as the processed and unprocessed hemp biomass is sold. The first delivery of the Hemp Biomass is expected within the next 30 business days as the Hemp Biomass is cultivated and prepared in the fall of 2020.
The Hemp Biomass may produce up to approximately 60,000 kg - 70,000 kg of high-quality CBD concentrates. RMMI is currently in the process of configuring and equipping its facility into large-scale extraction and processing operations.
RMMI and the SG have entered into the Strategic Alliance pursuant to which SG has provided a perpetual exclusive license for its current and future CBD hemp genetics to RMMI in Canada and RMMI is to assume SG's global hemp CBD biomass and concentrates business. In consideration for the Strategic Alliance, RMMI has agreed to issue 3,000,000 Common Shares upon completion of certain milestones, as well as pay SG a cash royalty on the sale of hemp seed sales in Canada.
No finder's fees are payable under the SG Transaction.
Management and Board Changes
In conjunction with the SG Transaction, SG will be entitled to nominate up to two directors of the Company.
SG and the Company will collectively be responsible to manage the final renovations of the licenced areas of the Newell facility, the purchase and installation of the hemp processing equipment, the ongoing processing operations and the sale of high-CBD hemp seeds, flower and concentrate production.
Breton Gaunt has been appointed Corporate Secretary of the Company. Mr. Gaunt is a Barrister and Solicitor with the law firm of McLeod Law LLP.
Novus Merchant Partners Inc. acted as financial advisor to RMMI.
About SynerGenetics Bioscience Inc.
SynerGenetics Bioscience Inc. is a leading plant genetics technology company focused on the development of novel hemp strains with high-CBD content and other focused cannabinoid cultivars. SG utilizes genomic research and cutting-edge technology to produce hemp cultivars with the proven ability to provide 15%+ CBD content and <0.3% THC hemp flower in outdoor cultivation. SG was founded by principals with extensive experience in the hemp and genomic research industries. SG has a genetic library with 20+ novel strains of hemp under development with various cannabinoid and other characteristic outcomes.
About RMMI Corp.
RMMI is an Alberta based company whose wholly owned subsidiary, Rocky Mountain Marijuana Inc., is licensed under the Cannabis Act (Canada) to cultivate, produce and sell marijuana in various forms. RMMI's vision is to build a low cost, highly efficient, hemp processing and CBD extraction business focused on serving a premier set of customers in Canada and abroad.
Peter Cheung, Interim Chief Executive Officer and Chief Financial Officer
All information in this Press Release relating to SynerGenetics Bioscience Inc. is the sole responsibility of SG. Management of RMMI has not independently reviewed this disclosure nor has RMMI management hired any third-party consultants or contractors to verify such information.
Certain information set forth in this news release contains forward-looking statements or information ("forward-looking statements"), including details about the Hemp Contribution Agreement and the Strategic Alliance. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, operational risks, competition from other industry participants, stock market volatility, the risks that the parties will complete the Hemp Contribution Agreement. Although the Company believes that the expectations in its forward-looking statements are reasonable, its forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. Risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our public disclosure documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
Completion of the Hemp Contribution Agreement is subject to a number of conditions.
There can be no assurance that the Hemp Contribution Agreement and Strategic Alliance will be completed as proposed or at all.
Trading in the securities of RMMI should be considered highly speculative.
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