Canadian CANNAINVESTOR Magazine February 2018 | Page 295

Beleave Inc. (BE) is licensed for cultivation at its 14,500 sq. ft. GMP compliant, purpose built, indoor facility outside of Hamilton, Ontario. The company has taken a scientific approach to cannabis through research partnerships and is prepared to enter the growth phase of its business.

Beleave’s management team has been very mindful of the effects of dilution and how it

should be minimized for optimal shareholder returns over the long term. To date, the company has issued

just over 32 million shares, and seed investors/insiders hold nearly half of those. This is significant because it demonstrates managements alignment with shareholders and commitment to the company’s success. With only 16 million shares floating, the basic principles of supply and demand can be clearly seen with the stocks trading patterns. With such a short supply of shares, as positive catalysts are announced, increasing demand causes investors to bid the stock higher, often quickly, as we have seen several times since the company went public in 2016.

The company demonstrated their ability to acquire non-dilutive capital when they signed a debt deal with Wheaton Income (CBW) for up to $10 million. As reported on October 5, 2017, the company announced the DOPE note, or debt obligation repayable in product equivalents, with CBW. As per the terms of the deal, BE will repay the loan with the proceeds from 85% of all grams sold until the principal is repaid. This deal allows Beleave to maintain their attractive share structure, while forging a strong relationship with Wheaton which may lead to further synergies between the two companies in the future.

In addition to their financing deal with CBW, the company announced on November 30, 2017 an up-sized private placement for proceeds of $10 million. As per the terms of the placement,

each unit, priced at $1.50, is comprised of one common share and one warrant with an exercise price of $2.00. If the closing price of

the stock exceeds $3.00 per share for 10 consecutive days over the next 24 months, the company is able to accelerate the expiration of the warrants, further strengthening their balance sheet. Upon the closing of this placement, expected in early December 2017, the company will have a war chest in excess of $15 million. It has yet to be disclosed what the proceeds will be allocated towards, but this placement positions Beleave extremely well complete all scheduled expansion plans, as well as explore potential opportunities for other partnerships or strategic acquisitions.

The company is currently constructing an 80,000 sq. ft. state-of-the-art hybrid greenhouse adjacent to its current operations near Hamilton. This new greenhouse will be of dutch design, making it very cost effective and operationally efficient. Although output yields have yet to be disclosed by the company, if comparable to peers, this facility could yield as much as 10,000kg per year.

Since late 2016, the company has had ongoing research and development initiatives with Ryerson University. On December 4, 2016, the company announced that research had concluded on optimizing methods of cannabinoid and terpene extraction in a unique and more efficient manner. On March 6, 2017, further R&D commenced with Ryerson University when the company announced that they were working in collaboration to develop methods in which medicinal compounds can be highly purified. In both instances, the projects were funded through grants with the Natural Sciences and Engineering Research Council of Canada (NSERC), and that the intellectual property stemming from these projects will belong to Beleave.

Beleave Inc

CSE:BE

As At 11/25/2107

Shares Outstanding: 532,416,754

Share Price: $1.73 Market Cap: $32,416,754

VIEW CASE STUDY LINKS HERE

As the industry matures, an increasingly growing segment of the market is going to be in oral dosed delivery systems. This Health Canada approved technology allows for increased bioavailability and absorption, as well as manipulation of the release of cannabinoids over time. This will prove to be extremely valuable in fast onset or delayed onset of cannabis capsules, and moreso as the market matures into edibles, functional beverages and topicals.

Many producers have began to reveal their recreational branding strategies in advance of upcoming adult use. Maricann has aligned themselves with two distinct global brands to date in this area. On October 6, 2017, the company announced that they had entered into an exclusive licensing agreement with International Cannabrands Ltd. (JuJu Royal™) to bring Julian Marley’s JuJu Royal™ brand to Canada and Western Europe. Additionally, the company announced on January 2, 2018 an exclusive agreement (Rare Dankness) to license High Times Cannabis Cup award winning strains from Rare Dankess LLC into the Canadian market. These distinct brands should cater to a diverse demographic and position Maricann very well to gain market share of the adult use market.

Maricann recently added $70mm in cash to its balance sheet with a bought deal financing which was announced on January 29, 2018 (January Financing). The company took advantage of a temporarily inflated stock price to sell units at $4.00 with 36 month warrants at $4.15 to increase its already strong cash position to a total in excess of $120mm. With such a significant sum of cash on hand, one could expect that the company will seek further to make additional acquisitions both in Canada and globally over the coming months.

In conclusion, it appears that Maricann Group has the pieces in place to become a global powerhouse in the cannabis sector. Despite making several savvy acquisitions and aligning themselves with large global corporations, the company has been overlooked by many investors, and it is evident when comparing their valuation to some peers. Priced very attractively with a market cap under $300mm, some of their direct competitors are being valued at two to three times higher, without consideration that over 30% of their current market cap is in cash. The company has many upcoming catalysts in the first half of 2018 including GMP certification, TSX uplisting, export licenses, and phase 1 completion to name a few. A combination of these catalysts could be the driving force to make Maricann a top performing stock in 2018.

Highlights:

l Automation partnerships with global companies

l Canadian expansion potential to 95,000kg

l Global delivery system patents in Vesisorb

l Finalist in German cultivation bid - 1,150,000 sq. ft. facility in Ebersbach

l Licensing agreements with international recreational cannabis brands

l Future uplisting to TSX

l Canadian Pharmacy partnerships

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