INVICTUS MD STRATEGIES CORP. (OTC: IVITF) (TSX-V: IMH) is pleased to announce that the Company has entered into a Letter of Intent ("LOI") to make a further strategic investment in the licensed production facility under the Access to Cannabis for Medical Purposes Regulations ("ACMPR"), AB Laboratories Inc. ("AB Labs") located near Hamilton, Ontario, from its current 33.3% ownership interest to 50%. Additionally, the Company is pleased to announce that AB Labs has received the amendment to sell dried marijuana under the ACMPR ("Sales License").
AB Labs has now received its Sales License to sell dried marijuana under the ACMPR. AB Labs has 130 kilograms of dried marijuana in its vault and intends to sell 100% of this inventory in January 2018 to Canopy Growth Corporation (TSX:WEED) initiating its first revenue stream since inception.
Dan Kriznic, Chairman and CEO commented, "This is a significant milestone for Invictus MD. We started this company in 2014 with the intention of becoming Canada's Cannabis Company. AB Labs produces high quality strains, which will meet the increasing demand in the Canadian marketplace. We also expect to receive a sales license for Acreage Pharms Ltd. ("Acreage Pharms") within the first quarter of 2018."
The terms of the LOI include a direct cash investment in AB Labs for $10 million to be used for the expansion of AB Labs' existing facility, acquisition of the land and building at the existing facility from the landlord and for the acquisition of an adjacent land and building including retrofitting costs towards the existing building on the adjacent property (the "Secondary Facility"), for a combined production space of approximately 56,000 square feet. Invictus MD will make available to AB Labs a $2 million line of credit in the event costs exceed budget during the construction period. The LOI is subject to various conditions including approval of Invictus MD's board as well as satisfactory completion of due diligence. There can be no assurance that the transaction contemplated by the LOI will complete.
Total annual kilogram capacity after various phases of expansion in 2018, complete and in progress, is expected to be approximately 26,000 kilograms, with the expected net production capacity to Invictus MD of approximately 22,150 kilograms after giving effect to the additional investment contemplated in the LOI that will bring Invictus MD's ownership of AB Labs to 50%. AB Ventures Ltd. ("AB Ventures") has submitted its license application to Health Canada as well as its development permit for the initial Phase 1 construction. Currently Acreage Pharms and AB Labs have a total of 280 kilograms of dried marijuana in their vault. AB Labs plans to sell 100% of its inventory in the month of January 2018. A detailed summary of expected production at Acreage Pharms, AB Labs and AB Ventures and the net capacity to Invictus MD assuming completion of the transaction contemplated by the LOI is as follows:
| Square Feet ||Status||% Funded||KG's Produced to Date|| KG Capacity ||Forecast Invictus MD Ownership|| Invictus MD KG Capacity |
|Total Acreage Pharms||119,600||150||19,000||100%||19,000|
|Total AB Laboratories||55,600||130||4,900||50%||2,450|
|Total AB Ventures||21,000||-||2,100||33%||700|
"The increase in our ownership of AB Labs and the renovations of the Secondary Facility will dramatically advance our timeline for increasing our annual run-rate production capacity at our facilities to 26,000 kg in 2018 in time for the adult-use market." said Dan Kriznic, Chairman and CEO, of Invictus MD. "Increasing our canopy footprint has been a sharp focus of the Company. Our production will satisfy the significant demand in Canada for high quality, standardized, pesticide free product for the current medical cannabis market and recreational market that is expected to begin mid 2018. The receipt of AB Labs' Sales License was another significant milestone and the final and crucial missing piece for AB Labs on the regulatory pathway to becoming a fully licensed producer. The issuance of the sales and distribution amendment to AB Labs' cultivation license is a significant value catalyst for our shareholders."
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