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TSXV: FIRE

TORONTO, Oct. 17, 2017 /CNW/ – Supreme Pharmaceuticals Inc. (the “Company”) (TSXV:FIRE) announced today that it has entered into an agreement with Canaccord Genuity Corp., as lead underwriter on behalf of a syndicate of underwriters (the “Underwriters”), pursuant to which the Underwriters have agreed to purchase, on a bought deal, private placement basis, $30,000,000 aggregate principal amount of convertible debenture units (the “Convertible Debenture Units”) at a price of $1,000 per Convertible Debenture Unit. Each Convertible Debenture Unit will consist of $1,000 principal amount of 8.0% senior unsecured convertible debentures (the “Convertible Debentures”) and 313 common share purchase warrants (the “Warrants”) of the Company (the “Offering”).

The Convertible Debentures will bear interest from the date of closing at 8.0% per annum, payable annually in arrears on December 30, 2018and thereafter semi-annually on the last day of June and December in each year and will mature two years following the closing of the Offering (the “Maturity Date”).

The Convertible Debentures will be senior unsecured obligations of the Company and rank pari passuin right of payment of principal and interest with all other Convertible Debentures issued under the Offering and all previously existing senior unsecured indebtedness of the Company.

The underwriters will have an option to acquire up to 4,500 additional Convertible Debenture Units, each having the same terms as the Convertible Debenture Units above.

It will be a condition to the completion of the sale of Convertible Debenture Units to holders (“Participating 2016 Investors”) of 10% senior unsecured convertible debentures of the Company due 2019 (the “Outstanding Debentures”) that such Participating 2016 Investors convert all Outstanding Debentures held by them on or before the Offering Closing Date in accordance with their terms.

The Convertible Debentures will be convertible at the option of the holder into Common Shares at any time prior to the close of business on the Maturity Date at a conversion price of $1.60 per Common Share (the “Conversion Price”). Beginning on the date that is four months and one day following the Closing Date (as hereinafter defined) of the Offering, the Company may force the conversion of all of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on 30 days prior written notice should the daily volume weighted average trading price of the Common Shares be greater than $2.10 for any 10 consecutive trading days.

Each Warrant will be exercisable to acquire one common share of the Company (a “Warrant Share”) at an exercise price of $1.80 per Warrant Share for a period of three years following the Closing Date (as hereinafter defined) of the Offering, subject to customary adjustments in certain events and, provided that if, at any time following the date that is four months and one day from the Closing Date, and prior to the expiry date of the Warrants, daily volume weighted average trading price of the Company’s common shares equals or exceeds $2.90 for any 10 consecutive trading days, the Company may, on prior written notice, accelerate the expiry date of the Warrants to the date that is 30 days following the date of such notice. Any unexercised Warrants shall thereafter automatically expire.

The Convertible Debentures and the Warrants comprising the Convertible Debenture Units and any Common Shares issuable upon conversion or exercise thereof, as applicable, will be subject to a statutory hold period lasting four months and one day following the Closing Date. The Company intends to use the net proceeds of the Offering to partially fund the development of its facilities in Kincardine, Ontario and for general corporate purposes. Closing of the Offering is expected to occur on or about November 9, 2017 (the “Closing Date”). The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX Venture Exchange.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About Supreme

Supreme is a Canadian publicly traded company committed to becoming a leading cultivator and distributor of sun grown cannabis through its wholly-owned subsidiary 7ACRES. 7ACRES is a federally licensed producer of medical cannabis pursuant to the ACMPR operating inside a 342,000 sq. ft. Hybrid Greenhouse facility. The Hybrid Greenhouse combines the best technology of indoor production with the efficiencies and sustainability of a greenhouse, in a single large-format production footprint. Please visit www.supreme.ca and www.7acres.com for more information.

Forward Looking Statements

Certain statements made in this press release may constitute forward-looking information under applicable securities laws. These statements may relate to anticipated events or results and include, but are not limited to, expectations regarding the terms the Offering and receipt of related regulatory approvals, the Closing Date and other statements that are not historical facts. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities is forward-looking information. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as “may” “will”, “expect”, “believe”, “estimate”, “plan”, “could”, “should”, “would”, “outlook”, “forecast”, “anticipate”, “foresee”, “continue” or the negative of these terms or variations of them or similar terminology. Forward-looking statements are current as of the date they are made and are based on applicable estimates and assumptions made by us at the relevant time in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances. However, we do not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. There can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors discussed in the “Risks and Uncertainties” section of the Company’s Management’s Discussion & Analysis dated May 30, 2017 (“MD&A”). A copy of the MD&A and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. The Company cautions that the list of risk factors and uncertainties described in the MD&A is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Supreme Pharmaceuticals Inc