Material Change Report
Item 1 Name and Address of Company
Red White & Bloom Brands Inc. (formerly, Tidal Royalty Corp.) (the “Company” or “RWB”)
810-789 West Pender Street
Vancouver, B.C. V6C 1H2
Item 2 Date of Material Change
August 11, 2020, July 24, 2020, July 21, 2020 and July 16, 2020.
Item 3 News Release
The new releases were filed on SEDAR, disseminated through the facilities of GlobeNewswire and
posted to the Issuer’s disclosure hall with the CSE.
Item 4 Summary of Material Change
On August 11, 2020, the Company entered into a distribution agreement for the exclusive distribution of Avicanna Inc.’s (“Avicann”) advanced and clinically backed CBD-based cosmetic and topical products Pura H&W™ by RWB in the US and certain other markets. RWB will pay Avicanna an upfront licensing fee in the amount of two hundred fifty thousand Canadian dollars (CAD$250,000) in cash, along with minimum purchase requirements for the rights to be the exclusive distributor of Avicanna’s Pura H&W branded cosmetics products in the US. Under the agreement, RWB also has the right to purchase Avicanna’s cosmetics products for distribution into the US and certain other territories under brands of RWB’s choosing. The initial product offerings under the agreement will include body and face lotions, cosmetic creams, gels and serums, as well as soaps and bath bombs
On July 24, 2020, the Company’s wholly owned subsidiary, Mid American Growers Inc. entered into a growing and sales agreement with 39 Industries, LLC (“39 Hemp”) to grow genetics provided by 39 Hemp for ultra-premium hemp at the Company’s facility located in Granville, IL.
On July 24, 2020, the Company provided notice to PharmCo Inc. (“PharmCo”) of its intent to exercise the Company’s right to acquire 100% of PharmCo. The all-share remuneration under the call option allows the Company to acquire PharmaCo in exchange for 37,000,000 units of the Company, subject to certain adjustments and regulatory approvals.
On July 21, 2020, the Company entered into a binding letter of intent (“LOI”) to acquire 100% of the issued and outstanding shares of Platinum Vape. Under the terms of the LOI, RWB and the securityholders of Platinum Vape will enter into a definitive agreement (the “Definitive Agreement”) pursuant to which RWB will acquire all of the ownership interests in Platinum Vape and Platinum Vape will become a wholly owned subsidiary of RWB in exchange for a total cash payment of US$35 million, consisting of US$7 million in cash payable at closing, a further US$13 million in cash payable within 120 days of closing and a US$15 million convertible note, only convertible after 12 months, payable on the third anniversary of closing. Additionally, the selling securityholders of Platinum Vape will be entitled to receive up to a further US$25 million
on the first anniversary of closing, contingent on Platinum Vape achieving certain financial milestones.
On July 16, 2020, the Company announced that it appointed Steven Grasso as a business advisor to the Company.
Item 5 Full Description of Material Change
5.1 Full Description of Material Change
The material change with respect to the distribution agreement with Avicanna is fully described in the news release attached hereto as Schedule “A”.
The material change with respect to the growing and sales agreement with 39 Hemp is fully
described in the news release attached hereto as Schedule “B”.
The material change with respect to the notice given to PharmCo is fully described in the news
release attached hereto as Schedule “C”.
The material change with respect to the letter of intent to acquire 100% of the issuend and outstanding shares of Platinum Vape is fully described in the news release attached hereto as Schedule “D”.
The material change with respect to the appointment of Steven Grasso as a business advisor is
fully described in the news release attached hereto as Schedule “E”.
5.2 Disclosure for Restructuring Transactions
Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102
Item 7 Omitted Information
Item 8 Executive Officer
Theo van der Linde, Chief Financial Officer
Item 9 Date of Report
August 24, 2020