Harvest One Acquires Delivra to Strengthen its Medical and Wellness Division - March 4, 2019

TORONTO, March 4, 2019 /PRNewswire/ - Harvest One Cannabis Inc. (TSXV: HVT, OTCQX: HRVOF – “Harvest One”) and Delivra Corp. (TSXV: DVA – “Delivra”) are pleased to announce today that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) pursuant to which Harvest One will acquire all of the issued and outstanding common shares of Delivra (the “Delivra Shares”) (the “Transaction”). Under the terms of the Arrangement Agreement, shareholders of Delivra (“Delivra Shareholders”) will receive 0.595 common shares of Harvest One (the “Harvest One Shares”) for each Delivra Share (the “Exchange Ratio”).

Harvest One, an international cannabis house of brands in the self-care and health and wellness space, has acquired Delivra as a means to further its strategy of providing trusted, effective products to help people in their daily lives. The acquisition of Delivra and its LivRelief™ brand, which produces a variety of topicals and creams with existing distribution channels across Canada, will position Harvest One well when cannabis-infused products are legalized in Canada, which is expected in the fall of 2019.

“The acquisition of Delivra by Harvest One puts further emphasis on the Harvest One goal of being a leading house of brands in the global health, wellness, and self-care sector. The addition of LivRelief™, which is already on retail shelves across Canada, will give Harvest One a head start for cannabis-infused products in Canada and beyond and is a great addition to our existing brands in this space with Satipharm CBD GelPell capsules already on sale in Europe, and our Dream Water all natural sleep aid available across North America” said Grant Froese, CEO of Harvest One. Mr. Froese added, “We are very excited to welcome Dr. Joseph Gabriele and the Delivra team into the Harvest One family and expanding our brand portfolio, as well as moving forward aggressively with our cannabis-infused products strategy when and where legal.”

Dr. Joseph Gabriele, Director, Chief Executive Officer, and Chief Scientific Officer of Delivra, added, “The transaction with Harvest One is an exciting and important step for our shareholders and is the result of an extensive strategic review process. Harvest One is a global leader in the cannabis space, focusing on innovative lifestyle and wellness products. Combined with our proprietary transdermal delivery system platform and extensive research, development and commercialization capabilities, the combined company is extremely well-positioned to take advantage of the growing market for topicals, sprays, beverages, and other cannabis/CBD-infused products. In addition, Harvest One’s global reach can provide greater distribution capabilities for our existing product portfolio. This is a value-maximizing transaction that provides our shareholders with a significant premium and an exciting opportunity to participate in the upside of Harvest One. We believe that Harvest One is the ideal partner to take Delivra to the next level.”

TRANSACTION RATIONALE

• Harvest One’s acquisition of Delivra furthers the company’s health, wellness, and self-care strategy by adding LivRelief™ to its brand portfolio
• Delivra has already begun formulation work for the infusion of CBD and THC with the goal of integrating cannabinoid formulations into their existing line of products
• Harvest One will benefit from the formulation expertise of Delivra as it works to create a suite of brands and infused versions of existing brands in the Harvest One portfolio, such as Dream Water
• Delivra will immediately add to the revenue of Harvest One with its existing distribution into Shoppers Drug Mart, Walmart, Loblaw, Rexall, Pharmasave, London Drugs, and other major retailers in conjunction with Harvest One’s existing distribution of Dream Water in 30,000 stores across North America
• The addition of Dr. Gabriele’s expertise in pain relief R&D will be a major boost for Harvest One’s in-house formulation and product development team for future brands and products
• Based on the closing trading price of the Harvest One Shares on the TSX Venture Exchange (“TSX-V”) on March 1, 2019, the Transaction represents a premium of 27% to Delivra’s closing trading price on the TSX-V on September 28, 2018, the last trading day prior to Delivra’s announcement that it had hired Canaccord Genuity Corp. (“Canaccord Genuity”) to act as exclusive advisor to Delivra to, among other things, explore strategic alternatives available to Delivra
• The Transaction will result in additional liquidity for Delivra Shareholders in terms of both volume and value of shares traded
• Delivra Shareholders will represent approximately 13.4% of the issued and outstanding Harvest One Shares (on a non-diluted basis), giving Delivra Shareholders the opportunity to participate in the future potential increase in the value of Harvest One, a leading global cannabis house of brands company

TERMS OF THE TRANSACTION

The Transaction will be effected by way of a plan of arrangement under the Business Corporations Act (Ontario). Under the terms of the Arrangement Agreement, Harvest One will acquire all of the issued and outstanding Delivra Shares, with each Delivra Shareholder receiving 0.595 Harvest One Shares for each Delivra Share. All outstanding options and warrants of Delivra will similarly be exchanged for corresponding securities of Harvest One based on the same Exchange Ratio. After giving effect to the Transaction, Delivra Shareholders will hold approximately 28.3 million Harvest One Shares (representing approximately 13.4% of the issued and outstanding Harvest One Shares (on a non-diluted basis)). Upon closing, Delivra will become a wholly-owned subsidiary of Harvest One. Based on the closing trading price of the Harvest One Shares on the TSX-V on March 1, 2019, the implied value equates to approximately $0.39 per Delivra Share, and represents a total equity consideration of approximately $19 million.

The Transaction has been unanimously approved by the Board of Directors of each of Harvest One and Delivra. In addition, Delivra Shareholders holding approximately 28.7% of the issued and outstanding Delivra Shares have entered into voting and support agreements to vote in favour of the Transaction.

The Arrangement Agreement provides that Delivra is subject to non-solicitation provisions, but also provides that Delivra may consider an unsolicited superior proposal in certain circumstances and a right, in favor of Harvest One, to match any such superior proposal. The Arrangement Agreement also provides for the payment by Delivra of a termination fee of $500,000 to Harvest One in certain circumstances. Concurrently with the execution of the Arrangement Agreement, (i) Harvest One has provided Delivra with a loan in the amount of $250,000, bearing interest at a rate of 6% per annum and having a 1-year term (the “Loan”), and (ii) Harvest One and Delivra have entered into a services agreement in the amount of $250,000, whereby Delivra will provide Harvest One with certain product formulations (the “Services Agreement”).

The Transaction is subject to, among other things, the approval of the Ontario Superior Court of Justice and requires the approval of two-thirds of the votes cast by Delivra Shareholders at a special meeting expected to be convened by Delivra in May, receipt of required regulatory approvals and other customary conditions of closing. Approval of shareholders of Harvest One is not required. Additional details of the Transaction will be provided to Delivra Shareholders in an information circular expected to be mailed in April. It is currently anticipated that, subject to receipt of all regulatory, court, shareholder and other approvals, the Transaction will be completed in the second quarter of 2019.

Upon the completion of the Transaction, all current directors of Delivra shall resign. In addition, Dr. Joseph Gabriele, the current CEO of Delivra, will join the Board of Directors of Harvest One.

The Board of Directors of Delivra unanimously recommends that Delivra Shareholders vote in favor of the resolution to approve the Transaction. The Board of Directors of Delivra has obtained a fairness opinion from Canaccord Genuity that states, based upon and subject to the assumptions, limitations, qualifications and such other matters as Canaccord Genuity considered relevant, Canaccord Genuity is of the opinion that, as of March 3, 2019, the consideration to be received under the Arrangement Agreement by the Delivra Shareholders is fair, from a financial point of view, to the Delivra Shareholders.

FINANCIAL AND LEGAL ADVISORS

Aird & Berlis LLP acted as legal counsel and PricewaterhouseCoopers LLP provided financial advisory services to Harvest One.

Canaccord Genuity Corp. acted as financial advisor and Goodmans LLP acted as legal counsel to Delivra. Canaccord Genuity Corp. provided a fairness opinion to the Board of Directors of Delivra.

ABOUT HARVEST ONE CANNABIS INC.

Harvest One is a global cannabis company that develops and provides innovative lifestyle and wellness products to consumers and patients in regulated markets around the world. The Company’s range of lifestyle solutions is designed to enhance quality of life. Shareholders have significant exposure to the entire cannabis value chain through three wholly-owned subsidiaries: United Greeneries, a Licensed Producer; Satipharm (medical and nutraceutical); and Dream Water Global (consumer), and a minority interest in Burb Cannabis (retail operations). For more information, please visit www.harvestone.com.

ABOUT DELIVRA CORP.

Delivra Corp. is a specialty biotechnology company having a proprietary transdermal delivery system platform that can shuttle pharmaceutical and natural molecules through the skin, in a targeted manner. Delivra manufactures and sells a growing line of natural topical creams with the proprietary transdermal delivery system platform under the LivRelief™ brand, for conditions such as joint and muscle pain, nerve pain, varicose veins, wound healing, and sports performance. LivRelief™ products are available in over 6,000 retail locations, including pharmacies, grocery chains, and independent health food stores across Canada, including, but not limited to, Shoppers Drug Mart, Walmart, Loblaw, Rexall, Pharmasave, London Drugs, and on-line at www.livrelief.com. In parallel with its consumer products business, Delivra also has a mandate to license its patent-pending, proprietary transdermal delivery technology platform to pharmaceutical companies globally, for the repurposing of pharmaceutical molecules transdermally to treat a broad range of conditions, along with licensing its over-the-counter products globally. Delivra is headquartered in Hamilton, Ontario and has a research and development laboratory in Charlottetown, PEI.

Further information on Delivra can be found at www.delivracorp.com and www.livrelief.com.

Cautionary Note Regarding Forward-Looking Statements

This news release includes statements containing certain “forward-looking information” within the meaning of applicable securities law (“forward-looking statements”). Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements in this news release include, but are not limited to statements with respect to accretive earnings, future financial position and results of operations, anticipated benefits and costs synergies associated with the Transaction, internal expectations, estimated margins, expectations for future growing capacity, costs and opportunities, liquidity of Harvest One Shares, effect of the Transaction on the combined company and its future strategy, plans, objectives, goals, targets and future developments, expectations for receipt of licenses to process or distribute cannabis in legal markets, the completion of any capital projects or expansions, the terms of the Loan and the Services Agreement, the anticipated timing for the special meeting of Delivra Shareholders and the closing of the Transaction, the anticipated consideration to be received by Delivra Shareholders, the satisfaction of closing conditions including: (i) required Delivra Shareholder approval; (ii) necessary court approval in connection with the Transaction; (iii) certain termination rights available to the parties under the Arrangement Agreement; (iv) Delivra obtaining the necessary approvals from the TSX-V; (v) Harvest One obtaining necessary approvals from the TSX-V for the listing of the Harvest One Shares issuable under the Transaction; and (vi) other closing conditions, including, without limitation, the operation and performance of the Delivra business in the ordinary course until the closing of the Transaction and compliance by Delivra with various covenants contained in the Arrangement Agreement.

These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release, including assumptions regarding the expected growth, results of operations, performance, industry trends and growth opportunities for Harvest One and Delivra.

Forward-looking statements are based on the opinions and estimates of management of Harvest One and Delivra at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; market or other events limiting the liquidity of the Harvest One Shares; inability to realize anticipated synergies; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in Canada and elsewhere generally; income tax and regulatory matters; the ability of Harvest One and Delivra to implement their business strategies; competition; crop failure; currency and interest rate fluctuations and other risks. Readers are cautioned that the foregoing list is not exhaustive.

Management provides forward-looking statements because it believes they provide useful information to readers when considering their investment objectives and cautions readers that the information may not be appropriate for other purposes. Consequently, all of the forward-looking statements made in this news 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, Harvest One or Delivra. In particular, there can be no assurance that the Transaction will be completed. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.

These forward-looking statements are made as of the date of this news release and neither Harvest One nor Delivra assumes any obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as expressly required by applicable law.

Neither TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accept responsibility for the adequacy or accuracy of this release.

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SOURCE Harvest One Cannabis Inc.

Company Codes: OTC-QX:HRVOF, TorontoVE:HVT, OTC-PINK:DLRVF, TorontoVE:DVA