Organigram Acquires Soft Chew Manufacturer

Edibles & Infusions Corporation, a Cannabis Processor Backed by Decades of Confectionary Experience - Seite 3

Premium purpose-built facility provides R&D capabilities for future product development. EIC’s facility is equipped with over 30,000 square feet of dedicated production space as well as a research and development laboratory. The facility’s custom developed depositor line allows cannabis-infused edible products to be produced from raw materials and cannabis inputs with little human intervention. The facility will be able to utilize state-of-the-art equipment designed to precisely, and consistently, dose a range of formats with cannabinoids, ensuring regulatory compliance and consumer confidence within a scalable and automated environment. The R&D laboratory, coupled with EIC’s Research License, will allow Organigram to position itself at the forefront of the Cannabis 2.0 product categories, continuously innovating new products and formulations.

Accelerates and strengthens Organigram’s presence in cannabis 2.0 product categories and provides manufacturing and R&D diversification. EIC’s confectionary focus complements Organigram’s industry-leading cannabis infused chocolate production capabilities and allows Organigram to manufacture future confectionary product lines and undertake additional R&D at a facility dedicated for this purpose. EIC has the capability to produce a wide range of cannabis-infused products in various formats and dosages including pectin, gelatin, and sugar-free soft chews (gummies), toffee and caramel with novel capabilities such as infusions, striping and possibility of using fruit purees.

Key Transaction Terms

The purchase price payable on closing of $22.0 million was satisfied in full by the issuance of 5,045,873 shares (the “Common Shares”) based on the closing price of Organigram of $4.36 per share on April 5, 2021. Upon satisfaction of the Milestones, Organigram will issue up to an aggregate of $13.0 million of Common Shares, for which the number of Common Shares will be determined upon achievement of the Milestone. The Milestones include:

1. $3.5 million to be paid in shares on first listing prior to December 31, 2021 in either the Ontario or Alberta recreational market of EIC or Organigram branded product (which was manufactured at the EIC facility);
2. $7.0 million to be paid in shares on the generation of $15 million in net revenue during the 12 months ended December 31, 2022; and
3. $2.5 million to be paid in shares on the generation of $7 million in Adjusted EBITDA for the 12 months ended December 31, 2022.

Milestone payments paid in Common Shares shall be priced at the closing price on the five-day VWAP for the shares on the TSX as of the day prior to settlement.