TICKERS: APH, LHS

Canadian Medical Cannabis Provider Expanding into US Market Through RTO
Reverse Takeover

Source:

A company with Canadian medical cannabis provider Aphria's backing is doing a reverse takeover on the Canadian Securities Exchange and expects to begin trading on July 26.

Liberty Health Sciences Inc. (LHS:CSE), an operator in the medical cannabis market, expects to begin trading on the Canadian Securities Exchange on Wednesday, July 26, under the symbol LHS. The company is being formed through a reverse takeover with privately held DFMMJ Investment Ltd. and SecureCom Mobile Inc., whose shareholders approved the arrangement on July 20, and renamed Liberty Health Sciences.

In April, Aphria Inc. (APH:TSX) announced a $25 million investment in DFMMJ Investment Ltd. Aphria is licensing its Aphria medical brand as well as its greenhouse growing intellectual property system to Liberty.

According to the company, Aphria is one of Canada's lowest cost producers, and "produces, supplies and sells medical cannabis," and is "the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters."

Liberty stated that it was "launched to acquire and operate U.S.-based companies in the medical cannabis market." In its first transaction, it entered into an agreement with Chestnut Hill Tree Farm LLC, which "grants the company all economic risk and rewards associated with the Florida-based operation." Chestnut holds one of seven licenses in Florida and is a "nursery authorized by the Florida Department of Health, Office of Compassionate Use, as a dispensing organization of medical cannabis to patients in need in the State of Florida."

Liberty's investment strategy, according to its website, is to invest in states in the U.S. that have an established medical cannabis market, grant a limited number of cultivation licenses, do not impose canopy restrictions and have a large population of users, at least 2%. The company stated that this strategy "reduces investor risk and aims to maximize shareholder value."

Liberty is helmed by George Scorsis, who has an "extensive background in managing growth within highly regulated environments." He served as president of Mettrum Health Corp., a producer of medical cannabis in Canada that was acquired by Canopy Growth Health Corp. for $430 million. He also was president of Red Bull Canada, and in that capacity "worked closely with Health Canada on guidelines regulating the energy drink category."

The board of directors includes Vic Neufeld and John Cervini, cofounders of Aphria Inc. Cervini is the founding chair of the Ontario Greenhouse Marketing Association and brings extensive experience in greenhouse growing technology. Aaron Serruya, CEO of Yogen Fruz, also serves on the board and has extensive retail expertise as president of International Franchise Inc., which is the home of the Yogen Fruz, Pinkberry and Swensen's Ice Cream brands, with 4,500 franchises globally.

Liberty Health Sciences has 287 million shares outstanding at an issue price of $0.624 per share. After the reverse takeover, Aphria will hold 37.6% of Liberty Health Sciences, management and the board 9% and SecureCom shareholders 14%, leaving approximately 39% for new shareholders.

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