EVC.P Everfront Ventures Corp

TORONTO, Jan. 27, 2014 /CNW/ - Everfront Ventures Corp. ("Everfront") (TSXV: "EVC.P"), a capital pool company ("CPC"), is pleased to announce that, further to its press release dated December 4, 2013, it has entered into an amalgamation agreement dated January 23, 2014 (the "Amalgamation Agreement") with Global Gardens Group Inc. ("Global Gardens"), to acquire all of the outstanding common shares of Global Gardens by way of a three-cornered amalgamation (the "Transaction") among Everfront, Global Gardens and a wholly-owned subsidiary ("Subco") of Everfront.

The Transaction is subject to TSX Venture Exchange ("TSXV") approval and is intended to constitute Everfront's "Qualifying Transaction" in accordance with TSXV Policy 2.4 - Capital Pool Companies. On closing of the Transaction, the resulting issuer anticipates being classified as a "Tier 2" issuer that will meet the TSXV's initial listing requirements for a manufacturing company. The Transaction will not be a Non-Arm's Length Qualifying Transaction (as that term is defined under the TSXV policies), and as such, it is not expected that the approval of Everfront's shareholders will be required.

Terms of the Agreement

Subject to the terms and conditions and in the manner as set out in the Amalgamation Agreement, Global Gardens and Subco will amalgamate, pursuant to the provisions of the Canada Business Corporations Act ("CBCA"), effective as of the date set forth in a certificate of amalgamation to be issued pursuant to the CBCA in respect of the Transaction (the "Effective Time"). Each common share of Global Gardens issued and outstanding before the Effective Time shall be cancelled and its holder shall receive therefor one fully paid and non-assessable common share of Everfront. The common shares of Subco issued and outstanding immediately before the Effective Time shall be replaced by common shares of the amalgamated company issued in favour of Everfront.  Upon amalgamation, Global Gardens will effectively be a wholly-owned subsidiary of Everfront. All of the options and warrants of Global Gardens immediately before the Effective Time shall be exchanged for options and warrants of Everfront on a one-for-one basis, respectively, on the same terms and conditions.

Conditions for Closing of the Transaction

The Amalgamation Agreement provides that closing of the Transaction is subject to a number of conditions including, among other things: (i) receipt of all regulatory approvals, including that of the TSXV; (ii) Everfront being able to satisfy the applicable initial listing requirements of the TSXV as of the completion of the Transaction; (iii) Everfront having complied with the sponsorship requirements set out in TSXV Policy 2.2 - Sponsorship and Sponsorship Requirements and either having engaged a sponsor in accordance therewith or having obtained an exemption from the TSXV in respect of compliance with such obligations; (iv) corporate approval of the various transactions contemplated by the Transaction from the directors of Everfront and the directors and shareholders of Global Gardens; (v) the completion of the Private Placement (as defined below); and (vi) the consolidation of the common shares, options and warrants of Everfront on the basis of one post-consolidation common share, option or warrant of Everfront, as applicable, for every two pre-consolidation common shares, options or warrants of Everfront, respectively (the "Consolidation").

Private Placement

Prior to or concurrently with the closing of the Transaction, Global Gardens will complete a private placement (the "Private Placement") of convertible notes ("Note") for gross proceeds of a minimum of $2,000,000 and a maximum of $2,500,000 or, in any event, not less than the amount necessary to ensure that there are sufficient funds to satisfy any working capital requirements of the TSXV to obtain the final approval of the Transaction by the TSXV. The Notes will mature two years following closing of the Private Placement and every $0.20 of the principal amount will be convertible to one unit of Global Gardens ("Unit").  Each Unit will comprise of one Global Garden common share and ½ of a common share warrant. Each whole warrant is expected to be exercisable for $0.30 and expire 24 months following the closing of the Private Placement.

Capitalization

As of the date hereof, Everfront has issued and outstanding 6,240,550 common shares and 384,054 management options exercisable at $0.20 per share.  Following completion of the Consolidation and immediately prior to the Transaction, Everfront is expected to have the following securities issued and outstanding: 3,120,275 common shares and 192,027 management options exercisable at $0.40 per share.

Prior to the completion of the Transaction, Global Gardens is expected to have the following securities issued and outstanding assuming the completion of a minimum private placement of $2,000,000: up to 25,832,591 common shares, warrants to purchase 5,980,358 common shares and 1,260,000 management options.

The capitalization of the resulting issuer upon completion of the Transaction, which has been updated since Everfront's press release dated December 4, 2013, is set forth in the table below:

Notes:

1. Post-Consolidation figures.
2. Each option entitles its holder to purchase one Everfront common share for $0.25.
3. Each option entitles its holder to purchase one Everfront common share for $0.40.
4. Each warrant will entitle its holder to purchase one Everfront common share for $0.30.
5. Each Agent's Warrant will entitle its holder purchase one Everfront common share and ½ common share warrant for $0.20.
6. 400,000 warrants will be exercisable to purchase 400,000 Everfront common shares at $0.45 each, 142,858 warrants will be exercisable to purchase 142,858 Everfront common shares at $0.65 each, and 437,500 warrants will be exercisable to purchase 437,500 Everfront common shares and warrants to purchase 218,750 Everfront common shares at $0.30 each.
7. The Notes will be converted to Units upon certain events including completion of the Qualifying Transaction.

Global Gardens and Management of the Resulting Issuer

Please refer to Everfront's press release dated December 4, 2013 for a description of the business of Global Gardens and management of the resulting issuer.

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless an exemption from the sponsorship requirement is available.  Everfront intends to apply for an exemption from the sponsorship requirement.  There is no assurance that Everfront will be able to obtain such an exemption.

Trading Halt

Everfront's common shares are currently halted and Everfront anticipates they will remain halted until the documentation required by the TSXV for the proposed Transaction can be provided to the TSXV.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance.  There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Everfront should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

This press release contains forward-looking information within the meaning of Canadian securities laws.  Such information includes, without limitation, information regarding the completion of the proposed Transaction and the proposed Private Placement. Although Everfront believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct.

Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. Everfront cautions investors that any forward-looking information provided by Everfront are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to: Everfront's ability to complete the proposed Transaction; the completion of the Private Placement; the state of the financial markets for Everfront's securities; the state of the market for products to be developed by the Resulting Issuer in the event the Transaction is completed; recent market volatility; Everfront's ability to raise the necessary capital or to be fully able to implement its business strategies; and other risks and factors that Everfront is unaware of at this time.  The reader is referred to Everfront's most recent annual and interim Management's Discussion and Analysis for a more complete discussion of all applicable risk factors and their potential effects, copies of which may be accessed through Everfront's page on SEDAR at www.sedar.com.

SOURCE Everfront Ventures Corp.