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Private Equity
quantumcapital.com

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Portfolio Exits

1

About Quantum Capital

Quantum Capital is a Toronto headquartered private equity investment firm which invests on behalf of Jack Cowin, the founder and Executive Chairman of Competitive Foods Australia Ltd. Quantum makes control investments in emerging and middle market companies, and is industry agnostic.

Quantum Capital Headquarter Location

161 Bay Street 27th FLoor

Toronto, Ontario, M5J 2S1,

Canada

416-572-2070

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Latest Quantum Capital News

Quantum Capital, Inc. Signs LOI to Acquire Hemp Kings, Corp.

Apr 10, 2019

Upon completing the transaction, Quantum will assist Hemp Kings, Corp. in creating a network of branded cannabis products. YAU MA TEI, Hong Kong, April 10, 2019 (GLOBE NEWSWIRE) -- via OTC PR WIRE -- PRESS RELEASE -- Quantum Capital, Inc. has announced that it has entered into a Letter of Intent (LOI) to form a Joint Venture with Hemp Kings, Corp., a company with significant cannabis assets in Canada, with retail operations currently generating over $1 billion in cannabis sales. Upon completing the transaction, Quantum will assist Hemp Kings, corp. in creating a network of branded cannabis products. Quantum’s digital business platform will also help Hemp Kings, corp. better interact with their customers, our business plan will boost Hemp Kings, Corp. sales. In the coming weeks Quantum will keep its shareholders and investment community completely informed of the entire process, watch for regular press releases about the company’s progress. Harvest Health & Recreation Announces Private Placement of US$500 Million of Convertible Debentures The funding will fuel the company's vision to become one of the most valuable cannabis companies in the world. April 4, 2019—VANCOUVER—PRESS RELEASE— Harvest Health & Recreation, Inc. , a vertically integrated cannabis company with one of the largest and deepest footprints in the U.S., has announced that it has entered into an engagement agreement for a brokered private sale of up to 500,000 convertible debentures of Harvest, at a price of US$1,000 per Debenture, for gross proceeds of US$500 million. The Offering is intended to be closed in five tranches of 100,000 Debentures per tranche, over a period of not more than 18 months. The net proceeds of the Offering will be used by Harvest for working capital and general corporate purposes. The first tranche of the Offering is expected to close on May 1, 2019 and subsequent tranches are issuable at the option of Harvest, subject to certain conditions. Concurrently with the engagement agreement, Harvest also entered into an agreement with a lead investor to subscribe for the full amount of the Offering. Pursuant to the Agreement with the Lead Investor, Harvest is entitled, in its discretion, to issue the additional tranches of Convertible Debentures not less than 60 days following the issuance of the immediately preceding tranche. The Debentures will bear interest at a rate of 7.0 percent per annum from the closing date of each tranche, payable semi-annually in arrears on June 30 and December 30 of each year. The initial tranche of Debentures will be convertible at the option of the holder to Subordinate Voting Shares of Harvest at a price of $15.38 per Subordinate Voting Share, and each subsequent tranche will be convertible at the option of the holder at a 15 percent premium to the volume weighted average price of the Subordinate Voting Shares on the Canadian Securities Exchange for the five trading day period immediately preceding the closing of the relevant tranche. Each tranche will mature 36 months from the date of issuance of such tranche. In addition, Harvest may require that any tranche of Debentures be converted if, at any time after the date that is four months and one day following the issuance of the applicable tranche of Debentures, the daily VWAP of the Subordinate Voting Shares is greater than a 40 percent premium to the applicable conversion price of a tranche for any 10 consecutive trading day period. Commenting on the transaction, Harvest CEO Steve White said, “This transaction is fuel for growth to realize our vision of becoming one of the most valuable cannabis companies in the world. With the recent announcement of our acquisition of Verano Holdings, not only will we have the largest and deepest footprint of licenses in the U.S., we are equally well capitalized to ensure our growth ambitions as a company.” Jason Vedadi, executive chairman of Harvest, addedm “We realize our position as one of the leaders in the fast-growing U.S. cannabis market and this agreement continues our march towards creating unparalleled shareholder value and building the first truly national cannabis company.” Upon completion of each of Tranches 1, 2 and 3 warrants in an amount equal to 40 percent, 40 percent and 20 percent of the number of Subordinate Voting Shares issuable upon conversion of the first, second and third Tranche of Debentures, respectively, will be issued to the purchasers of such Debentures. Each Warrant will entitle the holder thereof to purchase one Subordinate Voting Share for a period of 36 months from the date of issue. Warrants issued pursuant to Tranche 1 will, subject to the policies of the CSE, have an exercise price equal to $18.17. Warrants issued pursuant to Tranche 2 and 3 will, subject to the policies of the CSE, have an exercise price equal to a 30 percent premium to the VWAP for the five trading day period immediately preceding the closing date of the relevant Tranche. Eight Capital brokered the private placement for Harvest as the lead agent and sole bookrunner. Closing is subject to conditions that are customary for a transaction of this nature and the engagement letter may be terminated by Eight Capital in certain circumstances. There can be no assurances that the private placement will be completed as proposed or at all. U.S. Sen. Mitch McConnell Wants to Fix Farm Bill’s Hemp Legalization ‘Glitches’ Confronting law enforcement in the U.S., McConnell wants to address problems in the bill he helped pass. In late January, Idaho State Police inspected a truck driven by Denis Palamarchuk on I-84 outside Boise. He’d been stopped at a state port of entry, and law enforcement discovered 6,700 lbs. of cannabis plant material in his rig. Palamarchuk claimed he was transporting hemp from one licensed company to another; police officers asserted that he was carrying illegal marijuana through the state. Either way, Idaho prohibits any biomass that contains even trace amounts of THC. Palamarchuk was arrested and charged with felony drug trafficking. The tension in Palamarchuck’s case is a question with which law enforcement authorities and agricultural regulators have been wrestling in early 2019: Now that hemp production is legal in the U.S., what does that really mean for interstate commerce? Palamarchuk was hired to deliver hemp product from a licensed Oregon farm to Aurora, Colo., where he would deliver the plants to Big Sky Scientific. The truck driver and the Colorado CBD product manufacturer insist that the hemp was legal to transport across state lines, thanks to the passage of the 2018 Farm Bill and its hemp legalization provision. Idaho State Police don’t see it that way. It’s not clear how the law will ultimately be interpreted in this case and others, as the Farm Bill’s administrative follow-through hasn’t materialized just yet. Hemp is legal, but hemp-derived CBD products are stuck in an FDA-oversight gray area, for example. And hemp production is legal, but truck delivers like Palamarchuk are still facing jail time for handling the plant. (In Oklahoma, also in January, four men were stopped and arrested for transporting more than 17,000 lbs. of hemp plant material from Kentucky to a Colorado manufacturer.)   McConnell U.S. Sen. Mitch McConnell says there’s still work to do on the bill he helped pass late last year. What’s needed, he hinted at this week, is federal legislative guidance on interstate hemp transportation. This is what the senator from Kentucky was referring to when he told farmers and business owners gathered at the Kentucky Exposition Center this week that “We’re in the red zone, but there are some glitches. Some of it may require legislation. If it does, I’ll be there to do it.” The Louisville Courier Journal first reported on McConnell’s remarks. One of the more nuanced aspects of hemp legalization has been that law enforcement angle: When addressing the matter of probable cause, it’s often difficult to accurately assess whether a plant is Farm Bill-compliant hemp or THC-containing marijuana. The legal distinction is murky enough; the physical distinction, which must occur quickly in the event of a traffic stop, is even more complicated. Hemp, legally speaking, according to the 2018 Farm Bill and other sources, does not contain more than 0.3-percent THC. Anything above that threshold legally constitutes marijuana and falls under a state’s marijuana statutes—and under the federal Controlled Substances Act. How law enforcement agencies integrate that legal definition is another task that’s been forced into police departments across the U.S. following the Farm Bill passage. In fact, as the Courier Journal points out, hemp is caught in all sorts of snares that have otherwise bogged down the federally illegal marijuana businesses, like a lack of access to banking and difficulty in obtaining crop insurance. U.S. states, including Florida, Ohio, Texas and Kentucky, have been working out their own laws on hemp production—regulations that will allow farmers to tap into the industry. The U.S. Department of Agriculture, however, must approve those laws first; furthermore, the USDA has not yet written an overarching set of rules to govern a domestic hemp industry and tie those state laws together. A truck driver passing across state lines does not yet have a clear picture of what laws are in place. How the USDA—or Congress—addresses the interstate commerce question remains to be seen. Palamarchuk, meanwhile, is stuck in the middle of this debate. He’s set to be arraigned in Idaho’s Fourth District Court on April 16. The Idaho State Police filed paperwork to seize his truck and sell it. Idaho state lawmakers are in the process of working out an interstate hemp transportation bill, which would allow the Idaho Department of Agriculture to issue permits for such shipments and allow law enforcement to inspect them. That won’t happen in time to impact Palamarchuk’s criminal case. At the same time, Big Sky Scientific has filed a civil lawsuit against Idaho State Police over the seizure of the hemp shipment that it had been awaiting. “The 2018 Farm Bill prohibits states from blocking the transportation of industrial hemp in interstate commerce as Defendants have done,” according to the lawsuit. “Notwithstanding the 2018 Farm Bill, states cannot prohibit the shipment of a legal good through interstate commerce under the Commerce Clause.” For an industry intimately familiar with uncertainty, the beacon of good news that business owners received in late 2018—the legalization of the hemp in the U.S.—has, for the moment, only made things more complicated. U.S. Department of Agriculture Undersecretary Greg Ibach was in attendance at the Kentucky hemp forum earlier this week, and he echoed McConnell’s call for some sort of fix. “That might be an area where USDA can work together with other federal agencies to not only help them understand hemp, [but] look for testing protocols that might be able to be used on the road to be able to differentiate between hemp and other products that aren’t legal,” he told the Associated Press. Wildflower Brands to Buy Vancouver Dispensary for $45 Million in Stock The final structure of the Acquisition will be determined by the parties following receipt of tax, corporate and securities law advice. Vancouver, British Columbia–(Newsfile Corp. – April 9, 2019) –  Wildflower Brands Inc.  is pleased to announce that it has entered into a non-binding letter of intent dated April 3, 2019, to acquire City Cannabis Corp., a premier licenced cannabis retailer in British Columbia, in exchange for common shares of Wildflower. The final structure of the Acquisition will be determined by the parties following receipt of tax, corporate and securities law advice. City Cannabis is a cannabis retailer holding two of the three City of Vancouver licences to sell cannabis and the only company with multiple licences in the Province of British Columbia. City Cannabis has been profitably operating various dispensaries in Vancouver since Vancouver commenced licencing cannabis retailers. City Cannabis will be the only B.C.-based cannabis retailer to go public. British Columbia is the heart of cannabis country in Canada with a long history of cannabis production and consumption. As part of City Cannabis’ strategy, it is looking for premier locations to operate in, and, its Robson and Granville location is the premier location in Western Canada located at the junction of the Entertainment District and Shopping District of downtown Vancouver. The other City Cannabis licence is located at Fraser Street and East 57th Avenue. City Cannabis has multiple cannabis retail licence applications submitted in the provinces of British Columbia and Alberta. "City Cannabis and Wildflower are the perfect combination of premier products and a premier consumer retail experience," said William MacLean, Chief Executive Officer of Wildflower. "City Cannabis’ retail consumer data and insight will help shape development of Wildflower’s product line-up while the retail expertise of City Cannabis will aid Wildflower in its retail expansion. The combination of Wildflower and City Cannabis will form a truly global cannabis company." Pursuant to the terms of the LOI, the Company will acquire 100% of the issued and outstanding common shares in the capital of City Cannabis in exchange for the issuance of 60,000,000 common shares of the Company (“Consideration Shares”) at a deemed price per Consideration Share of $0.75 for aggregate consideration of $45,000,000. The LOI also contemplates that, upon the closing of the Acquisition, Krystian Wetulani, City Cannabis’ founder and chief executive officer, will join Wildflower as a director and as the chief development officer. During the year ended Dec. 31, 2018, City Cannabis had revenues of $7.7M, cost of goods of $4.3M for a gross profit of $3.4M. Administrative expenses were $2.4M with additional losses for a share repurchase and lease buyout for income before taxes of $0.7M for the year ending Dec. 31, 2018. These financial results are management prepared. An audit is being performed now. City Cannabis has granted Wildflower a 60-day exclusivity period to complete its due diligence and execute a definitive agreement. The completion of the Acquisition is subject to numerous conditions, including but not limited to the following: the negotiation and execution of a definitive agreement; completion of satisfactory due diligence by each of Wildflower and City Cannabis; and receipt of all required regulatory, corporate, shareholder and third-party approvals, including approvals by the Canadian Securities Exchange (the “CSE”), applicable governmental authorities, and the fulfillment of all applicable regulatory requirements and conditions necessary to complete the Acquisition. Further Information Further details about the Acquisition will be provided in a comprehensive news release when the parties enter into the definitive agreement. Investors are cautioned that any information released or received with respect to the Acquisition in this press release may not be complete and should not be relied upon. Trading in the common shares of the Company should be considered highly speculative. The securities to be issued in connection with the Acquisition have not been and will not be registered under the United States Securities Act of 1933, as amended (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 Regulation S promulgated under 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. 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 jurisdiction in which such offer, solicitation or sale would be unlawful. Completion of the Acquisition is subject to a number of conditions, including but not limited to, CSE acceptance, requisite shareholder approvals, and if applicable, disinterested shareholder approval. Where applicable, the Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular of the Company to be prepared in connection with the Acquisition, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of Wildflower should be considered highly speculative. Wildflower is being advised by Borden Ladner Gervais LLP and GMP Securities L.P. GMP Securities L.P. has been engaged to provide a fairness opinion to Wildflower. LOS ANGELES--(BUSINESS WIRE)--Apr 10, 2019--MJIC, Inc., doing business as ManifestSeven, a fully integrated omnichannel platform for legal cannabis, announced that it received shareholder approval to consummate a merger with a wholly owned subsidiary of P&P Ventures, Inc. during its Annual Shareholders Meeting held on April 8, 2019. P&P Ventures will be filing a listing application moving from the Toronto Venture Exchange to the Canadian Stock Exchange and changing its name to ManifestSeven Holdings, Inc. with the requested trading symbol of MSVN. Upon completion of the Merger, all MJIC shareholders will become shareholders of M7 and the present business operations of MJIC will be wholly owned and continued by M7. “We are pleased to embark on this important new stage in M7’s growth,” said Sturges Karban, Chief Executive Officer. “As M7 continues to build out a fully-compliant cannabis infrastructure across California, this transaction will enable the company to aggressively execute our long-term growth strategy and create value for all of our shareholders. We were overwhelmed by the shareholder turnout and support for the next phase of M7’s evolution.” Haywood Securities, Inc., a leading Canadian independent investment bank, assisted in MJIC’s recent $15 million private placement announced in March 2019 and will continue as a financial advisor in connection with the merger and M7’s capital raising activities after its initial listing. Prior to the execution of the agreement, M7 completed a private placement of 6,666,666 shares of common stock for aggregate gross proceeds of $15-million (U.S.) at an adjusted price of $2.25 (U.S.) (which is equivalent to 19,999,998 Class A shares upon exchange of such M7 securities for resulting issuer securities at an adjusted price of 75 U.S. cents per Class A shares). The common shares of P&P Ventures were halted effective March 28, 2019 and are not expected to recommence trading on the TSX-V prior to delisting in connection with the completion of the proposed transaction. The proposed transaction is anticipated to close on or before June 30, 2019. The proposed transaction is an arm’s-length transaction. On completion of the aforementioned shareholder meeting, M7 has elected a new board of directors and officers that will take the Company into completion of the transaction and listing on the CSE. • Sturges Karban — President and Chief Executive Officer; • Urban Smedeby — Executive Vice President; • Jordan Gerber — Chief Financial Officer; • Dmitry Gordeychev — Chief Investment Officer; • Pierre Rouleau — Chief Operating Officer; • Larry Horwitz — Corporate Secretary; • Daniel Sekers — Non-Executive Director and Chairman; • Kristin Fox — Non-Executive Director;

Quantum Capital Portfolio Exits

1 Portfolio Exit

Quantum Capital has 1 portfolio exit. Their latest portfolio exit was Skyway Canada on February 03, 2017.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

2/3/2017

Merger

2

Date

2/3/2017

Exit

Merger

Companies

Valuation

Acquirer

Sources

2

Quantum Capital Acquisitions

2 Acquisitions

Quantum Capital acquired 2 companies. Their latest acquisition was Apache Industrial Services on February 03, 2017.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

2/3/2017

Acq - Fin - II

$124.7M

Acq - Fin - II

3

3/9/2007

Acq - Fin

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$991

$99M

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10

Date

2/3/2017

3/9/2007

Investment Stage

Acq - Fin - II

Acq - Fin

Companies

Subscribe to see more

Valuation

$991

Total Funding

$124.7M

$99M

Note

Acq - Fin - II

Subscribe to see more

Sources

3

10

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