Knol Resources Corp. and Pivot Pharmaceuticals Inc. will undergo a reverse takeover, which will see Pivot's non-U.S. cannabis assets transferred and spun out to Knol.
Michael Atkinson, CEO of Vancouver, British Columbia-based Knol, said the spinout is intended to bring Pivot's bio-cannabis products to consumers in Canada, Latin America, Asia-Pacific and the EU. Pivot's CEO Patrick Frankham said the company will continue to focus on its wholly owned U.S. subsidiary, Pivot Naturals LLC, as it prepares to commercialize its bio-cannabis product line in California and Nevada.
In connection with the transaction, Knol will undertake a 7-for-1 reverse split of its common stock and will change its name as agreed upon by the two companies. The new name was not revealed in an Oct. 15 press release announcing the transaction.
Under the terms of the agreement, Knol will issue 35 million common shares at 50 Canadian cents apiece to Pivot shareholders. In addition, Knol will issue 12 million warrants to Pivot, with each warrant enabling the holder to buy one common stock for 75 cents.
Knol will nominate one of the five directors for the new company, and the remaining director positions will be made up of certain members of Pivot's management team involved with its non-U.S. operations.
In addition, Knol will complete a concurrent private placement no later than the closing of the transaction to raise between C$3 million and C$6 million in gross proceeds. Knol said the funds will be used for developing its business following the reverse merger and for general corporate purposes.
The companies expect to sign a definitive agreement by Nov. 30. The transaction is subject to approval from the boards and shareholders of both companies and other regulatory approvals.
Knol, which previously engaged in the exploration and development of oil and natural gas operations, is now focused on acquiring strategic businesses or assets. Pivot is a biopharmaceutical company engaged in developing and commercializing therapeutic pharmaceuticals and nutraceuticals.