Digicann, 3Win poised for reverse takeover arrangement for listing on CSE

Digicann Ventures Ltd. (CSE: DCNN) (OTCPK: AGFAF) signed a definitive agreement for a reverse takeover by 3Win Corp., finalizing a deal first proposed in early August.

3Win would emerge as the controlling entity, with its shareholders holding about 97.3% of the resulting issuer’s common shares, according to the agreement. The deal structure involves a three-cornered merger, with 3Win becoming a wholly owned subsidiary of Digicann.

3Win distributes CCELL vape products to the cannabis and hemp industries. Its Canadian subsidiary also holds licenses for cannabis cultivation and export, as well as for handling psilocybin and psilocin.

Before closing the RTO deal, Digicann plans to consolidate its shares on a 98-to-1 basis, valuing pre-consolidation shares at 5 Canadian cents each. As of early August, Digicann had 22.1 million common shares outstanding.

Nicholas Kuzyk, who currently serves as CEO of Digicann and chief strategy officer of 3Win, is set to become CEO of the combined entity, which is expected to be renamed Serewin Corp. The new entity plans to trade on the Canadian Securities Exchange under the symbol SRWN, if available. Rodney Hu, 3Win’s executive chairman, is set to serve as independent chairperson.

Digicann has scheduled a special shareholder meeting for Nov. 7 to seek approval. The CSE still needs to review the deal, as well.

“There can be no assurance that the Proposed Transaction will be completed as proposed or at all,” Digicann stated. However, the agreement includes a provision for a variable cash exit fee payable to Digicann if 3Win doesn’t complete the transaction.

The deal is expected to provide new opportunities for Digicann, which has been facing strong headwinds. According to filings ending June 30, the company reported total assets of $420,000 against total liabilities of $1.08 million, resulting in a working capital deficit of $661,000. Digicann also disclosed an accumulated deficit of $216 million.

For the first half of 2024, the company reported a net loss of $125,000 and no revenue from continuing operations.