Invictus MD to acquire up to 75% of Future Harvest

2015-03-04 08:35 ET - News Release

Invictus MD Strategies Corp. (formerly BioAB Strategies Ltd.) has entered into an agreement to indirectly acquire up to 75 per cent, over a period of eight months, of the shares of Future Harvest Development Ltd., a company located in Kelowna, B.C., for an aggregate purchase price of up to $1,875,000.

About Future Harvest
For over 20 years, Future Harvest has brought innovative products and solutions to the hydroponic and indoor growing industries. Future Harvest's product lines are available through leading distributors and retailers across North America, the United Kingdom and Europe and include SunBlaster Lighting, Nutradip, Plantlife Products and Future Harvest Plastics, as well as the Nano-Dome and Grow Light Garden systems currently sold at major hardware and home garden centres across North America.

The SunBlaster Lighting line has introduced a variety of innovative lighting products to both the hydroponic and indoor growing industries. SunBlaster T5HO lighting fixtures and CFL self-ballasted lamps are industry leaders and a great example of Future Harvest's commitment to providing customers with the best possible lighting for all their growing needs. Future Harvest has been manufacturing metering and monitoring equipment for over 15 years. The most popular and industry standard is the Trimeter, made famous because a single glance tells you if your pH, nutrients and temperatures are on target. All Nutradip and SunBlaster products are developed, designed, tested and assembled in Canada. Plantlife Products consists of 29 proprietary formulas that offer growers the leading edge in sediment-free plant nutrition. Every product has been developed and tested in house by Future Harvest's own plant scientists.

Terms of the transaction
The company will initially acquire 20 per cent of the Future Harvest shares for $500,000, which includes a $40,000 deposit already paid. The company will have the option to acquire up to an additional 55 per cent in four purchases of 13.75 per cent of the Future Harvest shares on each of 60 days, 120 days, 180 days and 240 days after the date of the initial purchase. The purchase price for each additional block of Future Harvest shares is $343,750. The vendors are entitled to elect to receive payment in common shares of the company issued at a deemed per-share price equal to the average closing price for the 10 trading days ending on the fifth business day prior to the applicable payment date less a 10-per-cent discount, subject to any minimum price required under applicable stock exchange rules. Each instalment of the purchase price is subject to a working capital adjustment.
The company will complete the acquisition of Future Harvest shares indirectly through Prestige Worldwide Holdings Inc., a British Columbia company. Management of Prestige will assume a leadership role in Future Harvest. The share purchase agreement provides for 1.71 million Invictus shares to be issued at closing and performance Invictus shares to be issued as follows:

1. 1,822,500 Invictus shares if the company acquires the first additional block of 13.75 per cent of the Future Harvest shares, based on the following release schedule:
   1. 1.05 million shares on the later of (i) Dec. 31, 2015, and (ii) 45 days after Future Harvest achieves a $1-million EBITDA (earnings before interest, taxes, depreciation and amortization) milestone;
   2. 772,500 shares on the later of (i) June 30, 2016, and (ii) 45 days after the EBITDA $1-million date.
2. 1,822,500 Invictus shares if the company acquires the second additional block of 13.75 per cent of the Future Harvest shares, based on the following release schedule:
   1. 607,500 shares on the later of (i) June 30, 2016, and (ii) 45 days after the EBITDA $1-million date;
   2. 180,000 shares on the later of (i) June 30, 2016, and (ii) 45 days after Future Harvest achieves a $2-million EBITDA milestone;
   3. 1,035,000 shares on the later of (i) Dec. 31, 2016, and (ii) 45 days after the EBITDA $2-million date.
3. 1,822,500 Invictus shares if the company acquires the third additional block of 13.75 per cent of the Future Harvest shares, based on the following release schedule:
   1. 525,000 shares on the later of (i) Dec. 31, 2016, and (ii) 45 days after the EBITDA $2-million date;
   2. 690,000 shares on the later of (i) June 30, 2017, and (ii) 45 days after the EBITDA $2-million date;
   3. 607,500 shares on the later of (i) June 30, 2017, and (ii) 45 days after Future Harvest achieves a $3-million EBITDA milestone.
4. 1,822,500 Invictus shares if the company acquires the fourth additional block of 13.75 per cent of the Future Harvest shares, based on the following release schedule:
   1. 262,500 shares on the later of (i) June 30, 2017, and (ii) 45 days after the EBITDA $3-million date;
   2. )1.56 million shares on the later of (i) Dec. 31, 2017, and (ii) 45 days after the EBITDA $3-million date.

On closing, Prestige will be a wholly owned subsidiary of the company and its only asset will be the Future Harvest shares acquired on behalf of the company. The company's obligations to issue the performance shares will expire if the milestones are not achieved by Dec. 31, 2018, or if management of Prestige ceases to have a role with Future Harvest. The transactions are subject to customary closing conditions and, in the case of the Future Harvest transaction, completion of the purchase of Prestige by the company. If all closing conditions are satisfied, closing of the purchase of Prestige and the initial purchase of Future Harvest shares is expected to occur on March 5, 2015. All shares issued in connection of the transactions will be subject to a four-month securities law hold period.
Private placement

The company also announces a non-brokered private placement through the issuance of up to five million common shares at a price of 15 cents for gross proceeds of up to $750,000. Proceeds from the offering will be used to finance the acquisition of the contemplated transaction as described above, to pursue other synergistic business opportunities and for general working capital to continue to develop the company's recent acquisitions. Finder's fees on the offering may be paid, and the securities issued will be subject to a four-month hold from the date of issuance.
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