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Umbral Enters Into a Letter Of Intent to Acquire 1005477 BC Ltd. and Clarifies Disclosure Following BCSC Review

Vancouver, B.C. / TNW-ACCESSSWIRE / October 30, 2014 / UMBRAL ENERGY CORP. (CSE: UMB) (the “Company” or “Umbral”) is pleased to announce that it has entered into a letter of intent for the Company to acquire 100% of the outstanding shares of 1005477 BC Ltd. (“1005477 BC”) for a combination of cash and shares.

On May 21, 2014, the Company filed a news release announcing it signed a non-disclosure agreement with a private company and received a business plan to produce and market medical marijuana. The private company is 105477 BC Ltd. (“1005477 BC”).

On June 19, 2014, the Company filed another news release announcing it entered into an exclusivity and standstill agreement effective June 18, 2014 with 1005477 BC. 1005477 has the rights to acquire 50% of the common shares of a certain BC corporation incorporated as PhyeinMed Inc. (“PhyeinMed”).

1005477 BC has acquired 50% equity in PhyeinMed, a company which intends to become a grower and distributor of medical marijuana in Canada. PhyeinMed is now equally owned by 1005477 BC and Estek Ventures Corp.

Subject to the signing of a definitive agreement (the “Umbral Definitive Agreement”), the Company has agreed to the following proposed terms and conditions with 1005477 BC:

  • — The Company will pay the outstanding shareholder loan of approximately $100,000 for debts incurred to-date on business expenditures.– The Company will issue to 1005477 BC 3,000,000 shares at a value of $0.10 per share (the “Shares”).

    — All common shares issued are subject to a four-month hold period from date of issuance.

    — The Company will assume 1005477 BC’s commitment to provide up to $2,000,000 in loans on a best efforts basis to fund PhyeinMed’s efforts in the medical marijuana business (the “Loan”). The Loan is interest-bearing with a term of 36 months.

    — Clint Sharples, the Chairman of Umbral, will be appointed to the board of directors of PhyeinMed.

As recommended by the British Columbia Securities Commission, the Company would like to clarify certain aspects of its business plan to pursue commercial ventures in the medical marijuana business (see News Releases dated April 1, 2014, May 21, 2014, and June 19, 2014). Furthermore, the Company would like to take this opportunity to announce certain progresses with its new business plan.

Completion of the Acquisition is subject to a number of conditions, including but not limited to: (a) entering into the Umbral Definitive Agreement; (b) completion of due diligence; (c) regulatory acceptance; and (d) if necessary, Umbral shareholder approval. The Acquisition cannot close until these conditions are satisfied. There can be no assurance that the Acquisition will be completed as proposed or at all. In addition, the Company wishes to highlight the following with respect to its stage of entry into the medical marijuana business and the associated risks:

  • — Production of medical marijuana in Canada is regulated pursuant to the MMPR. Any applicant seeking to become such a producer is subject to the stringent licensing requirements of Health Canada, which would be applicable in the event that either the Company, 1005477, PhyeinMed, or any other entity the Company may invest in applies for or acquires a licence. These requirements include the significant infrastructural requirements of attaining and maintaining a licence such as an indoor facility equipped with physical barriers, visual monitoring, recording devices, intrusion detection, air filtration systems, as well as other important controls around distribution and access, among others. In addition, and as specified in the MMPR, once a licence is issued, a holder of a producer licence must comply with a number of ongoing requirements, including (i) physical security and storage measures, (ii) good productions practices, and (iii) a licencee must ensure that it complies with the terms of its other permits and ancillary licences as well as ensuring that all of its management and designated personnel have passed the security clearance provided under MMPR.
  • — In compliance with the security requirements of Health Canada, amended in the fall of 2014, PhyeinMed has undertaken an overhaul of its security systems and storage and therefore has not yet submitted an application to Health Canada for a licence under Marihuana for Medical Purposes Regulations (“MMPR”). PhyeinMed is currently completing its application, including upgrading the security and facility requirements to meet the very recent changes by Health Canada. It is anticipated that the application will be submitted to Health Canada prior to the Company completing the Acquisition.
  • — The timeframes and costs required for PhyeinMed or any MMPR applicant to build the infrastructure required to apply for, and to receive, and MMPR licence can be significant. Estimates of the timeframe and costs cannot be reliably determined at this time given that PhyeinMed is at the preliminary stage in the licence application process and has not yet submitted its application. However, in preparing its licence application under MMPR, PhyeinMed has assembled and hired the following teams: (1) the growing team; (2) quality assurance team; and (3) security team. Each team is made up of medical marijuana experts. Furthermore, PhyeinMed has received an accepted offer from the owners of the targeted facility (the “Facility”), subject to PhyeinMed receiving the initial “Licence to Build” approval from Health Canada. The Facility will be the primary location for the production, storage and sale of medical marijuana. The Facility is zoned for medical marijuana growing purposes. It is approximately 10,500 square feet with 13 acres of yard located in Falkland, BC. It is comprised of two buildings, 7,400 square feet and 3,364 square feet, respectively, and a 3,431 square foot dwelling/office. The Facility has a reliable water source and an existing electrical system to meet the requirements of PhyeinMed.
  • — Any MMPR applicant, including PhyeinMed, will not be able to legally grow or sell medical marijuana without a licence from Health Canada.
  • — A facility meeting the rigorous licensing requirements of Health Canada must be available for inspection by Health Canada before any licence can be granted.

The Company’s Board of Directors has approved the Company’s plan to enter the medical marijuana business and its general plan to diversify its business into other industry sectors outside of the mining resource sector with a view of creating value for shareholders. The Company confirms that the Acquisition is not a Fundamental Change, as defined in Policy 8 of the Canadian Securities Exchange. However, if the Acquisition results in a Fundamental Change, the approval of the Company’s shareholders is required.

There can be no assurance that the Acquisition or any other transactions for the Company’s prospective projects in the medical marijuana industry will be successfully completed.


“Jag Bal”

Jagdip Bal

President and CEO

Copyright (c) 2014 TheNewswire – All rights reserved.



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