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VANCOUVER, May 28, 2019 /CNW/ - Geyser Brands Inc.
(formerly Kanzen Capital Corp.) (TSXV:GYSR) ("Geyser
Brands" or the "Company") is pleased to announce that,
further to the Company's news release dated February 11, 2019, the Company has entered into a
definitive agreement (the "Agreement") in respect of the
previously announced acquisition of Solace Management Group Inc.
("Solace"), a private corporation existing under the laws of
British Columbia (the
"Proposed Transaction").
The Company's CEO, Andreas
Thatcher states that "[T]his is a transformational
strategic acquisition for Geyser, which will establish ourselves as
a leading provider of health-focused hemp and CBD wellness
products. With the constant evolution of the national and
international hemp and CBD landscape, by combining the expertise in
innovation and development with Solace's expertise and market
recognition, we will be well placed to capitalize on what is
predicted to be a multibillion-dollar industry."
About Solace
As reported in previously disseminated news releases, Solace
leverages its brands, intellectual property and proprietary
formulations in the hemp and CBD markets by licensing distribution
and production arrangements. Solace's brands and assets include
among other things, the Apawthecary Pets line of products which are
leading all-natural hemp-based pet treats with formulations for
human grade, all-natural pet treats, salves and oral drops.
Apawthecary Pets products are currently being sold in pet stores
and veterinarian clinics across Canada, including Bosley's, PetLand,
Pharmasave, Bukerfields, Shoppers Drug Mart, Global Pet Foods and
Pet Planet to name a few. Solace's product portfolio currently
comprises of 23 products and 57 SKU's of both pet and consumer
healthcare goods. All products are currently utilizing organic,
unrefined, cold-pressed hemp seed oil extracts. As part of the
Solace's continued growth, it has recently moved to a new 7,500 sq.
ft. facility built to Good Manufacturing Practices. The new
facility is anticipated to increase Solace's production capacity
significantly in order to meet the growing demand and will allow
the development of new products and formulations.
As part of the Proposed Transaction, Solace will be terminating
its licensing arrangement with its Canadian manufacturer so as to
bring manufacturing and distribution within Solace in order to
maximize revenues. Solace's licensing arrangement with its
United States manufacturer is
currently on hold with no operations or revenue generated until
such time as the manufacturer has obtained all necessary
governmental and regulatory approvals in compliance with all
applicable laws. Solace generated unaudited licensing revenues of
$428,196 for the fiscal year ended
September 30, 2018, compared to
$591,167 for the fiscal year ended
September 30, 2017. Gross margin was
100% and 21% respectively. Net income for Solace was $266,187 and $1,448
respectively. Retained earning were $213,626 and $(261)
respectively. Solace's Canadian manufacturer generated unaudited
revenues of $1,478,862 for the fiscal
year ended September 30, 2018,
compared to $304,109 for the fiscal
year ended September 30, 2017. Gross
margin was 39% and 21% respectively. Net income was $293,023 and $(6,386) respectively. Retained earnings were
$286,637 and $(6,286) respectively.
Transaction Summary
The Agreement provides that the Company will acquire all of the
issued and outstanding shares of Solace (the "Purchased
Shares") from the shareholder of Solace (the "Solace
Shareholders") for an aggregate purchase price of
$3,900,000 (the "Purchase
Price"), subject to adjustments as outlined in the
Agreement.
The Purchase Price will be payable by way of (1) an aggregate
cash payment of $400,000 (the
"Cash Payment"), payable by way of a promissory note
(the "Promissory Notes") delivered to each of the
Solace Shareholders upon closing in proportion to the number of
Purchased Shares owned by such Solace Shareholder against the
aggregate number of the Purchased Shares (the "Principal
Amount"), and (2) in respect of the balance of $3,500,000, by the issuance of 5,833,333 common
shares (the "Consideration Shares") of the Company at
a deemed price of $0.60 per common
share, subject to Exchange approval (the "Share
Payment"). As with the Cash Payment, the number of
Consideration Shares each Solace Shareholder shall receive upon
closing will be in proportion to the number of Purchased Shares
such Solace Shareholder owns against the aggregate number of
Purchased Shares.
The terms of the Promissory Notes provide that the Principal
Amount will be paid in full, without interest, on or before the
first anniversary of the closing of the Proposed Transaction. The
Company shall have the right to prepay all or any part of the
Principal Amount at any time without notice, bonus or penalty.
Furthermore, in the event the Company raises capital after the
closing of the Proposed Transaction in the aggregate amount of
$5,000,000 by way of one or more
private placement financings, or other form of investment from
arm's length third parties, the unpaid balance of the Principal
Amount will be immediately due and payable.
Certain Consideration Shares may be subject to escrow in
accordance with Exchange policies and all Consideration Shares will
be subject to a statutory hold period expiring 4 months and 1 date
from the date of issuance. No finder's fees are payable in
connection with the Proposed Transaction. On completion of the
Proposed Transaction, Solace will become a wholly owned subsidiary
of the Company.
Although the parties have entered into the Agreement, there can
be no assurance that the Proposed Transaction will be completed as
proposed, or at all. The Agreement may be terminated by the parties
in certain circumstances.
The closing of the Proposed Transaction remains subject to,
among other things: (1) the Company being satisfied with its due
diligence review of Solace; (2) the receipt of all necessary
consents, including all necessary third party consents; (3) board
approvals of Geyser and Solace, (4) approvals and authorizations
including any applicable shareholder approval; (5) TSXV Exchange
(the "Exchange") approval; (6) satisfaction of any Exchange
requirements; and (7) the satisfaction or waiver of conditions
precedent and other customary closing conditions outlined in the
Agreement. Closing of the Proposed Transaction is anticipated to
take place within 5 business days after receipt of final acceptance
from the Exchange.
The Company currently has 21,184,950 common shares issued and
outstanding. Upon completion of the Proposed Transaction, and
subject to any warrant or option exercise, the Company anticipates
that it will have 27,018,283 common shares issued and
outstanding.
Board Recommendations
The Agreement has been approved by the Disinterested Directors
of the Company and recommends to the Company's shareholders to
approve the Proposed Transaction.
Shareholder Approval
As previously announced, the Proposed Transaction is not an
"arm's length transaction" as such term is defined in the
Exchange's Policy 1.1 and therefore constitutes a "related party
transaction" as such term is defined in Multilateral Instrument
61-101 – Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). Bradley D. Kersch ("Mr. Kersch")
is a director of the Company and is also a director and President
of Solace. Mr. Kersch owns 23.48% of the Purchased Shares. Mr.
Kersch along with other members of his family that are deemed to be
"associates" of Mr. Kersch as such term is defined in the
Exchange's Policy 1.1, own 53.01% of the Purchased Shares. Mr.
Kersch currently owns 1,826,434 common shares of the Company on a
non-fully diluted basis, representing 8.62% of the issued and
outstanding common shares in the capital of the Company on a
non-fully diluted basis. On closing of the Proposed Transaction,
Mr. Kersch will own 3,092,152 common shares of the Company on a
non-fully diluted basis, representing 11.83% of the issued and
outstanding shares in the capital of the Company. Mr. Kersch along
with other members of his family that are deemed to be "associates"
of Mr. Kersch as such term is defined in the Exchange's Policy 1.1,
will own 4,918,586 common shares of the Company on a non-fully
diluted basis, representing 18.20% of the issued and outstanding
shares in the capital of the Company. The Proposed Transaction
would not result in a "Change of Control" or new "Control Person"
as such terms are defined in the Exchange's Policy 1.1.
In respect of the requirements of MI 61-101, the Company is
relying on the exemptions from the formal valuation and minority
approval required under MI 61-101. The Company is exempt from the
formal valuation requirement of MI 61-101 in reliance of sections
5.5(b) and 5.5(e) as no securities of the Company are listed on the
specified markets outlined therein and the current Control Person,
as such term is defined in applicable securities laws, who own
25.96% of the current issued and outstanding common shares in the
capital of the Company, supports the Proposed Transaction and (1)
is not an interested party, (2) is at arm's length to the
interested party, and (3) supports the transaction. Additionally,
the Company is exempt from minority shareholder approval of MI
61-101 in reliance of section 5.7(1)(c).
Although the Company is exempt under MI 61-101 in respect of
minority shareholder approval and formal valuations, in accordance
with the Exchange's Policy 5.3, the Proposed Transaction
constitutes a "reviewable transaction", and, as the number of
Consideration Shares issuable to "Non-Arm's Length" parties exceeds
10% of the number of common shares issued and outstanding in the
capital of the Company, the Exchange may require the Company to
seek approval of a simple majority of the Company's shareholders,
excluding certain insiders. The Company will communicate the timing
and conduct of such meeting in due course if required, or in the
alternative, will seek written consent from the Company's
shareholders approving the Proposed Transaction as may be permitted
by the Exchange.
As indicated in previously disseminated news releases, Mr.
Kersch has disclosed to the other directors of the Company (the
"Disinterested Directors") his interest in Solace and
the Proposed Transaction and as such, only the Disinterested
Directors who are "independent" as such term is defined in MI
61-101 will be entitled to vote on any board resolutions, or make
any decisions, to approve the Proposed Transaction.
ABOUT GEYSER BRANDS
Geyser Brands Inc. builds health-based hemp CBD consumer
products in the Nutraceutical, Cosmetics, Food & Beverage and
Pet sectors world-wide. R&D investment in NanoFusion, a
proprietary all-natural nanotechnology, delivers topical, cream,
beverages and baked goods, oil, and tincture formulations with
superior bio-availability and water-solubility.
Geyser Brands is a Health Canada approved Licensed Producer
("LP") in Port Coquitlam, B.C.
that holds a cultivation license and is anticipating its processing
and sales licenses. Geyser Brands is exclusively focusing on
leveraging these assets to provide the regulatory infrastructure
for its global brands and distribution strategy, acquiring hemp-
and plant-based brands and infusing them with new CBD product lines
in jurisdictions where the therapeutic ingredient is legal. Geyser
Brands' proprietary NanoFusion technology surrounds oils and solves
for the insolubility of CBD. Geyser Brands will utilize its 7,000
sq. ft. licensed facility in British
Columbia for the manufacturing and distribution of its hemp
and CBD-based products internationally.
For more information, visit Geyser Brands' website
at www.geyserbrands.com
On Behalf of the Board of Directors
Andreas
Thatcher
Director and CEO
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.
CAUTIONARY AND FORWARD-LOOKING STATEMENTS
This news release contains forward‐looking statements and
forward‐looking information within the meaning of applicable
securities laws. These statements relate to future events or future
performance. All statements other than statements of historical
fact may be forward‐looking statements or information.
Forward‐looking statements and information are often, but not
always, identified by the use of words such as "appear", "seek",
"anticipate", "plan", "continue", "estimate", "approximate",
"expect", "may", "will", "project", "predict", "potential",
"targeting", "intend", "could", "might", "should", "believe",
"would" and similar expressions.
Forward-looking statements and information are provided for the
purpose of providing information about the current expectations and
plans of management of the Company relating to the future. Readers
are cautioned that reliance on such statements and information may
not be appropriate for other purposes, such as making investment
decisions. Since forward‐looking statements and information address
future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks. These include, but are not limited to, the risks
associated with the marijuana industry in general such as
operational risks in growing; competition; incorrect assessment of
the value and potential benefits of various transactions; ability
to access sufficient capital from internal and external sources;
failure to obtain required regulatory and other approvals and
changes in legislation, including but not limited to tax laws and
government regulations. Accordingly, readers should not place undue
reliance on the forward‐looking statements, timelines and
information contained in this news release. Readers are cautioned
that the foregoing list of factors is not exhaustive. Additional
information relating to Geyser is available
at www.sedar.com.
SOURCE Geyser Brands Inc.