May 13th, 2014, Vancouver, BC – Supreme Pharmaceuticals Inc. (“Supreme” or the “Company”) (SPRWD – OTC) (“SL” – CSE)is pleased to report that the Company has signed a letter of intent (“LOI”) to acquire a green house facility and 100% of a Southern Ontario based company (the “Target Company”) that has been approved for a pre-build Marijuana for Medical Purposes Regulations license (“MMPR Licence”). Under the terms of the MMPR License, the Target Company can build out and operate a 342,000 square foot facility that can produce up to 24,000,000 grams (24,000 kilograms) of medicinal marijuana per year. Supreme has made an initial $250,000 payment under the terms of the LOI,and must, by May 22nd, 2014 advance to the Target Company an additional $750,000, at which time Supreme will own the Facility, as described below. The transaction terms contained in the LOI are binding on the parties, subject to final documentation. Supreme currently has the necessary funds on hand to close this portion of the transaction..
The Target Company has the option to purchase an Ontario facility that is a state of the art 342,000 square foot facility covering approximately 7 acres that was originally built by Agriculture Canada (“the Facility”). The Target Company has placed in trust with the vendor of the Facility the initial down payment of $250,000 to buy the Facility, and upon Supreme provindg the balance of the closing payment of $750,000, the Facility will be fully owned by Supreme. who will have a two-year period to pay to the vendor another $4,500,000. Upon closing of the acquisition of the Facility, year one will be an interest free period, and year two will bear interest of 7%.
To complete the licensing requirement and move from pre-build status to MMPR, the Target Company must complete the installation of the required security measures. Once Health Canada completes its final inspection of the Facility, the Target Company will be granted an MMPR licence. It is anticipated that initial production could commence by the fourth quarter of 2014. The Target Company anticipates it will take 90 days after taking over the Facility to construct and implement the required security measures.
Health Canada has stated that as of 2013 there were 40,000 users of medical marijuana and that by 2024 there could be over 450,000. The industry is evolving rapidly as Supreme looks to become a commercial producer in Canada.
Terms of the Target Company Acquisition
Following the closing of the purchase of the Facility, Supreme has agreed to buy all of the issued and outstanding shares of the Target Company in exchange for that number of shares representing 45% of the current issued and outstanding common shares of Supreme, subject to regulatory approval. Neither control or the board of Supreme shall not change.
Management stated: “This new acquisition is in line with Supreme’s goal of becoming a national company with its potential acquisitions in both British Columbia and Southern Ontario. We believe this transaction could provide significant upside potential for our shareholders. We have made this strategic acquisition to build long-term value for our shareholders.”
FORWARD LOOKING INFORMATION
>This news release contains forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. This news release includes forward-looking statements with respect to the up grading of the facility, the timing on completetion of the MMPR License conditions and the start of production. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. These statements speak only as of the date of this news release. Actual results could differ materially from those currently anticipated due to a number of factors and risks including various risk factors discussed in the Company’s disclosure documents which can be found under the Company’s profile on www.sedar.com and such factors as the Company failing to finish the upgrading of the facility and put the same into production in accordance within the terms of the MMPR license. This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995.