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Avihu Tamir of Kanabo & Nick Pateras of Materia discuss the positive progress on the Acquisition

09:27, 5th November 2021

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Avihu Tamir CEO of Kanabo #KNB FOLLOW & Nick Pateras, Managing Director of Materia Europe, discuss the positive progress on the Acquisition, which "has progressed the potential for the combined company to establish itself as a market leader".

· Agreement reached on majority of commercial terms of the proposed acquisition;
· Due diligence on Materia substantively complete;
· All share acquisition agreed, valuing Materia at CAN$20MM initially (c.£12million*), with up to an additional CAN$40MM (c.£24million*) payable in new Kanabo shares, upon attainment of post completion performance milestones;
· Both the Initial Consideration and the Earn-Out Consideration to be satisfied through the issue of new ordinary shares in the Company;

Update of the Proposed Acquisition
Kanabo has completed the majority of the due diligence on Materia and commenced the work on the regulatory documents required to complete the Proposed Transaction. The Parties have also begun planning the integration of the companies once the transaction is completed.

Whilst this announcement contains details of the Term Sheet, the Proposed Transaction is still subject inter alia to the agreement of formal documentation and conditional on, among other things, the receipt of all necessary regulatory consents.

The Consideration
The Head of Terms states that the consideration for the Proposed Transaction, which will be subject to the execution of the Share Purchase Agreement and completion, will be satisfied via an initial payment of CAN$20m (c.£12million*) (the "Initial Consideration"). In addition to the Initial Consideration, Materia will be paid an additional consideration of up to CAN$40m (c.£24million*), subject to achieving certain operational and financial milestones (the "Earn-Out Consideration") including, but not limited to:

· Commercial production of two total products in Materia Malta;

· Sales in a new market beyond Germany and Malta;

· Malta production facility reaching a breakeven point.

· Sales of CANS$30million (c. £17.73million*) for the 12-month period to December 31, 2022;

· Sales of CAN$50miliion (c. £29.55million*) for the 12-month period to December 31, 2023; and

Both the Initial Consideration and the Earn-Out Consideration are to be satisfied through the issue of ordinary shares in the Company.

About Materia
Materia's medicinal cannabis assets include its Maltese, German, and UK subsidiaries ("Materia Malta", "Materia Germany", and "Materia UK" respectively). Materia Malta operates a European Union Good Manufacturing Practices ("EU GMP") certified facility, through which Materia Malta is able to import cannabis flower from its global supply network of cultivators and process it into EU GMP certified medical cannabis products. The Company anticipates that Materia Malta will be particularly well placed to process any new extracts developed by Kanabo. Materia Germany is a fully operational pharmaceutical wholesaler, with EU GDP and EU GMP certificates, enabling it to import and sell medical cannabis products directly to thousands of German pharmacies. Materia UK sells several leading CBD and wellness brands through Handpicked CBD, which aims to be one of the UK's largest CBD e-commerce marketplaces, and which now features Kanabo's own CBD line, as announced on 22 September 2021.

About Kanabo Group Plc
Kanabo Group Plc is an R&D company currently selling a range of wellness CBD Products in the Primary Markets and Medical Cannabis Products. The company's core strategy is to increase revenues from the sale of its Retail CBD Products in the wellness sector and to grow the Kanabo brand through its marketing initiatives.


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