LEADING BRANDS, INC.: Amends Definitive Arrangement Agreement with Liquid Media Group, Inc., and Announces Q3 Results
January 15 2018 - 8:30AM
LIQUID MEDIA GROUP,
INC.: Acquires 51% of Majesco Entertainment
Company, and Announces $4,000,000 US
Preferred Share Subscription
Leading Brands, Inc. (NASDAQ:LBIX), announces that
it has amended its Definitive Arrangement Agreement with Liquid
Media Group, Inc. and the results for its third quarter of fiscal
2017, which ended November 30, 2017. Unless otherwise stated,
all financial amounts are denominated in Canadian dollars, with all
financial figures rounded to the nearest $000.
On September 18, 2017 the Company announced that it had entered
into a Definitive Arrangement Agreement with Liquid of Vancouver,
Canada whereby LBIX would acquire 100% of Liquid pursuant to a plan
of arrangement. Existing LBIX shareholders were anticipated to hold
22.637% and Liquid Shareholders were anticipated to hold 77.363% of
the post-transaction entity. For those purposes, existing LBIX
shares were valued at $1.50 US. As matters progressed and the
transaction evolved, it became apparent that LBIX would have more
cash available and that an adjustment of the exchange ratio to
account for various transactions was appropriate. Consequently
existing LBIX shares will now be valued at $1.78 US and the
percentages of the combined entity held by each group of
shareholders will be adjusted accordingly.
With the concurrent completion of the Liquid developments
described below, it is anticipated that this transaction will now
be completed by April 30, 2018.
Non-GAAP Net Income (Loss) before Stock
Based Compensation (“SBC”) is determined as
follows:
|
|
Q3
2017 |
|
Q3
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(352,000 |
) |
$ |
(144,000 |
) |
$ |
(553,000 |
) |
$ |
(530,000 |
) |
Add Back SBC |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Net income (loss)
before SBC |
$ |
(352,000 |
) |
$ |
(144,000 |
) |
$ |
(553,000 |
) |
$ |
(530,000 |
) |
Non-GAAP Net Income (Loss) per share before
Stock Based Compensation
(“SBC”) is
determined as follows:
|
|
Q3
2017 |
|
Q3
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(0.13 |
) |
$ |
(0.05 |
) |
$ |
(0.20 |
) |
$ |
(0.19 |
) |
Add Back SBC |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Net income (loss)
before SBC |
$ |
(0.13 |
) |
$ |
(0.05 |
) |
$ |
(0.20 |
) |
$ |
(0.19 |
) |
Pro-forma results for EBITDAS, as defined below, are
determined as follows:
|
|
Q3
2017 |
|
Q3
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(352,000 |
) |
$ |
(144,000 |
) |
$ |
(553,000 |
) |
$ |
(530,000 |
) |
Add Back: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net |
|
(1,000 |
) |
|
- |
|
|
(17,000 |
) |
|
- |
|
Depreciation and
amortization |
|
- |
|
|
- |
|
|
1,000 |
|
|
1,000 |
|
Non-cash stock based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Non-cash income tax
expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Total Add Backs |
|
(1,000 |
) |
|
- |
|
|
(16,000 |
) |
|
1,000 |
|
EBITDAS |
$ |
(353,000 |
) |
$ |
(144,000 |
) |
$ |
(569,000 |
) |
$ |
(529,000 |
) |
EBITDAS per share reconciles to earnings per share as
follows:
|
|
Q3
2017 |
|
Q3
2016 |
|
YTD 2017 |
|
YTD
2016 |
Net Income (Loss) from
continuing operations |
$ |
(0.13 |
) |
$ |
(0.05 |
) |
$ |
(0.20 |
) |
$ |
(0.19 |
) |
Add Back: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net |
|
- |
|
|
- |
|
|
(0.01 |
) |
|
- |
|
Depreciation and
amortization |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Non-cash stock based
compensation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Non-cash income tax
expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Total Add Backs |
|
- |
|
|
- |
|
|
(0.01 |
) |
|
- |
|
EBITDAS |
$ |
(0.13 |
) |
$ |
(0.05 |
) |
$ |
(0.21 |
) |
$ |
(0.19 |
) |
As at November 30, 2017 the Company had 2,802,412 outstanding
common shares.
LIQUID:
Today, Liquid issued a News Release that, as it relates to LBIX
and the transactions between the parties, the pertinent excerpt is
as follows:
“LIQUID MEDIA GROUP ACQUIRES PROVEN
GAMING PUBLISHER MAJESCO ENTERTAINMENT, ANNOUNCES $4M PREFERRED
SHARE FINANCING ANDAMENDS ARRANGEMENT AGREEMENT
“VANCOUVER, BC – January 15,
2017 – Liquid Media Group Ltd. (“LMG” or the “Company”) is
pleased to announce that that it has acquired 51 percent of Majesco
Entertainment Company, a proven gaming publisher that has had such
hits as Zumba and A Boy and His Blob.
“The Board of Directors of LMG is excited to add
the Majesco assets to its portfolio of synergistic operations.
Majesco is led by its current CEO Jesse Sutton who will now serve
as LMG’s Gaming Advisor. LMG will use its production service
capabilities to re-release Majesco’s library of gaming assets for
all platforms including consoles, PC and mobile and extend
Majesco’s assets into film and television verticals. The
acquisition of Majesco fulfills LMG’s obligation to acquire a
studio under the arrangement agreement with Leading Brands, Inc.
(the “Arrangement Agreement”), announced on September 19, 2017.
“LMG is also pleased to announce that it intends
to complete a non-brokered private placement of newly created Class
B Series I preferred shares (the “Preferred Shares”) for gross
proceeds of up to U.S.$4,000,000. LMG has received and
accepted a subscription agreement for the entire offering…”
The full text of the Liquid News Release may be found at
www.LiquidMediaGroup.co
Leading Brands, Inc.Per:
Ralph McRae
Ralph D. McRaeChairman & CEO
Non-GAAP MeasuresAny non-GAAP financial measures referenced in
this release do not have any standardized meaning prescribed by
GAAP and are therefore unlikely to be comparable to similar
measures presented by other issuers.
EBITDAS is a non-GAAP financial measure. EBITDAS is
defined as net income (loss) before income taxes, interest expense,
depreciation and amortization and stock-based compensation.
EBITDAS should not be construed as a substitute for net income (as
determined in accordance with GAAP) for the purpose of analyzing
operating performance, as EBITDAS is not defined by GAAP.
However, the Company regards EBITDAS as a complement to net income
and income before taxes.
Forward Looking Statements
Certain information contained in this press release includes
forward-looking statements. Words such as “believe”,
“expect,” “will,” or comparable terms, are intended to identify
forward-looking statements concerning the Company’s expectations,
beliefs, intentions, plans, objectives, future events or
performance and other developments. All forward-looking
statements included in this press release are based on information
available to the Company on the date hereof. Such statements
speak only as of the date hereof. Important factors that
could cause actual results to differ materially from the Company’s
estimations and projections are disclosed in the Company’s
securities filings and include, but are not limited to, the
following: general economic conditions, weather conditions,
changing beverage consumption trends, pricing, availability of raw
materials, economic uncertainties (including currency exchange
rates), government regulation, managing and maintaining growth, the
effect of adverse publicity, litigation, competition and other risk
factors described from time to time in securities reports filed by
Leading Brands, Inc. For all such forward-looking statements, we
claim the safe harbor for forward looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995.
©2018 Leading Brands, Inc.
(table follows)
|
|
LEADING BRANDS, INC. |
|
CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME
(LOSS) |
|
(UNAUDITED) |
|
(EXPRESSED
IN CANADIAN DOLLARS) |
|
|
|
|
|
Three months ended |
|
Nine months
ended |
|
|
|
November 30,
2017 |
|
November 30 2016 |
|
November 30,
2017 |
|
November 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Gross Revenue |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
Less: Discount, rebates
and slotting fees |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Net
Revenue |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Operations, selling,
general & administration expenses |
|
325,926 |
|
|
174,325 |
|
|
570,437 |
|
|
547,550 |
|
|
Depreciation of
property, plant and equipment |
|
263 |
|
|
263 |
|
|
789 |
|
|
789 |
|
|
Interest, net |
|
(873 |
) |
|
- |
|
|
(17,240 |
) |
|
- |
|
|
Change in fair value of
derivative liability |
|
26,991 |
|
|
(30,597 |
) |
|
(877 |
) |
|
(17,924 |
) |
|
|
|
(352,307 |
) |
|
(143,991 |
) |
|
(553,109 |
) |
|
(530,416 |
) |
|
Net income (loss)
before taxes from continuing operations |
|
(352,307 |
) |
|
(143,991 |
) |
|
(553,109 |
) |
|
(530,416 |
) |
|
Income tax expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
Net income
(loss) from continuing operations |
|
(352,307 |
) |
|
(143,991 |
) |
|
(553,109 |
) |
|
(530,416 |
) |
|
Net income
(loss) from discontinued operations |
$ |
(1,193,334 |
) |
$ |
(4,829,063 |
) |
$ |
(2,557,036 |
) |
$ |
(4,295,687 |
) |
|
Net income
(loss) |
$ |
(1,545,641 |
) |
$ |
(4,973,054 |
) |
$ |
(3,110,145 |
) |
$ |
(4,826,103 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per common share |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations |
$ |
(0.13 |
) |
$ |
(0.05 |
) |
$ |
(0.20 |
) |
|
$ |
(0.19 |
) |
|
Discontinued
operations |
|
(0.42 |
) |
|
(1.72 |
) |
|
(0.91 |
) |
|
|
(1.52 |
) |
|
Net basic earnings
(loss) per common share |
$ |
(0.55 |
) |
$ |
(1.77 |
) |
$ |
(1.11 |
) |
|
$ |
(1.71 |
) |
|
Diluted
earnings (loss) per
common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations |
$ |
(0.13 |
) |
$ |
(0.05 |
) |
$ |
(0.20 |
) |
|
$ |
|
(0.19 |
) |
|
Discontinued
operations |
|
(0.42 |
) |
|
(1.72 |
) |
|
(0.91 |
) |
|
|
|
(1.52 |
) |
|
Net
diluted earnings (loss) per common share |
$ |
(0.55 |
) |
$ |
(1.77 |
) |
$ |
(1.11 |
) |
|
$ |
|
(1.71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
2,802,412 |
|
|
2,802,412 |
|
|
2,802,412 |
|
|
|
|
2,826,614 |
|
|
Diluted |
|
2,802,412 |
|
|
2,802,412 |
|
|
2,802,412 |
|
|
|
|
2,826,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT:Leading Brands, Inc.Tel: (604) 685-5200Email:
info@LBIX.com
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