The Company has been informed by the Canadian Securities Exchange (“CSE”) that the symbol “SOU”, of the predecessor company Southbridge Resources Corp. (“Southbridge”), has been delisted and that trading will commence as the Company has posted its Form 2A Listing Statement on the CSE Web Site at www.thecse.com The Form 2A describes the Company’s fundamental change.
The Company is pleased to announce that it has completed its purchase of Vodis Innovative Pharmaceuticals Inc. (“VODIS”) with the principals of Vodis, Pencho Batanov, Ivan Miliovski and Derek Good (together, the “Individual Vendors”), all of BC, Canada, and 0934145 B.C. Ltd. (the “Corporate Vendor”) to acquire (the “Acquisition”) the business of VODIS and the assets (the “Assets”) of 934145 BC Ltd. which was in production under the previous Health Canada regulations. VODIS has made an application to Health Canada to become a Licensed Producer (the “License”) under the new Marihuana for Medical Purposes Regulation.
As consideration for the acquisition of the License and the Assets, Southbridge issued 36 million of its common shares to the Individual Vendors and will pay, subject to the issuance of the License, $500,000 to the Corporate Vendor. The 36 million shares will be subject to the provisions of an escrow agreement and will be released over a period of 36 months. Upon completion of the Acquisition the Individual Vendors will hold 74.69% of the then outstanding issued shares of Southbridge. Southbridge has paid a finder’s fee to Hani El Rayess and Brian Gusko of 1,440,000 shares.
In connection with the Acquisition, Southbridge has changed its name to Vodis Pharmaceuticals Inc. (“VP”) and VODIS becomes a wholly owned subsidiary. Otto Folprecht, Brian Gusko and Ivan Miliovski will be appointed to the Board of Directors. Mr. Miliovski will be appointed as President and COO, Mr. Folprecht will be appointed as CEO and Mr. Gusko will be appointed as CFO.
The VP executive team will continue to work towards the successful completion of the commercial production license process. Vodis Innovative Pharmaceuticals has thus far passed the submission phase by providing to Health Canada the required documentation to meet Health Canada’s requirements under the Medical Marihuana Purpose Regulation (MMPR) for successfully producing medical grade marihuana for human consumption, and has demonstrated that Vodis Innovative Pharmaceuticals incorporates into its procedures the recommendations of Good Manufacturing Practices (GMP) and Good Agricultural Practices (GAP). Health Canada has issued to Vodis Innovative Pharmaceuticals the “Ready to Build” comfort letter confirming that the documentation supplied meets the Medical Marihuana Purpose Regulation.
However, approval is subject completion of the build out of the facility and the successful completion of the final inspection and review by Health Canada before becoming fully approved for commercial production. There is no assurance that final approval will be granted.
VP will during its first year of operations in its new industry need to achieve certain critical milestones in order to obtain the License and produce an acceptable level of operating income from the sale of marihuana to patients as follows:
- Integration of the production and commercial software application into a single software platform and patient database conversion in order for VP to provide world class patient care;
- The extension of the production facility lease;
- Further upgrading the security system of the production facility to the new Health Canada standards;
- Completion of production facility upgrades;
- The issuance of License;
- Website conversion to allow for the marketing and sales of its current product line on its website upon the issuance of the License; and
- Product marketing.
Upon the issuance of the License, VP will begin the marketing and sales of its current product line through its website. The product line consists of a number of types of marijuana and a number of packaging options. Upon approval of the License, VP will begin immediate marketing to its client base. VP expects that it will take approximately four months to reach acceptable levels of production, sales and marketing after the issuance of the License.
Grant of License
There is no assurance that the Company’s application to become a Licensed Producer under the Marihuana for Medical Purposes Regulation (“MMPR”) will be approved by Health Canada and local governments and the License granted as submitted. This would materially adversely affect the Company’s operations and the Company would need to significantly revise its business plan accordingly.
The Company has no operating history and an evolving business model.
The Company has no operating history under MMPR and its business model is still evolving. The Company’s ability to continue as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operations but the Company has no proven history of performance, earnings or success under MMPR. There can be no assurance that the Company will achieve profitability or obtain future financing.
Demand for the Company’s marijuana products is dependent on a number of social, political and economic factors that are beyond its control. While the Company believes that demand will continue to grow, there is no assurance that such increase in demand will happen and that the Company will reach profitability.
The Company operates in a highly competitive marketplace with various competitors. Increased competition may result in reduced gross margins and/or loss of market share, either of which would seriously harm its business and results of operations. Management cannot be certain that the Company will be able to compete successfully against current or future competitors or that competitive pressure will not seriously harm its business. Some of the Company’s competitors are much larger and have greater access to capital, sales, marketing, and other resources. These competitors may be able to respond more rapidly to changing markets or devote greater resources to the development and promotion of their business model than the Company can. Furthermore, some of these competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties in the industry to increase their ability to rapidly gain market share.
Reliance on Key Personnel
To date, the Company has been dependent on a relatively small number of key officers and employees. The Company has assembled a team that have experience in the industry. The loss of knowledge of the Company’s operations, management expertise and technical proficiency as a result of the loss of one or more members of the Company’s core team, could result in a diversion of management resources or a temporary executive gap, or negatively affect the Company’s ability to develop and pursue other business strategies, which could materially adversely affect the Company’s business and/or financial results.
Share Price and Volume Volatility
The Company’s common shares may be affected by limited or sporadic trading volumes, which may affect its shareholders' ability to sell the Company’s common shares. The Company’s share price may be volatile and could be subject to wide fluctuations due to a number of factors including the risk factors noted above. In addition, broad fluctuations in the financial markets as well as economic conditions may adversely affect the market price of the Company’s common shares.
On Behalf of the Board of Directors,
Completion of the transaction is subject to a number of conditions, including Canadian Securities Exchange (`CSE`) acceptance. There can be no assurance that the transaction will be completed as proposed or at all.
Trading in the securities of Southbridge Resources Corp. should be considered highly speculative.
The CSE has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Cautionary Statement: Certain information contained in this press release constitutes “forward-looking information", within the meaning of Canadian legislation. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", “forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur", "be achieved" or “has the potential to”. Forward looking statements contained in this press release may include statements regarding the potential spin-out and acquisition which involve known and unknown risks and uncertainties which may not prove to be accurate. Actual results and outcomes may differ materially from what is expressed or forecasted in these forward-looking statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States of America. The securities have not been and will not be registered under the United States Securities Act of 1933 (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons (as defined in the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration is available.
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