Lifeist Wellness Inc.(TSXV: LFST) (FRANKFURT:
M5B0) (OTCMKTS: LFSWF)
My Fellow Shareholders,
Further to my previous letter of August 15,
2024, we wish to remind you of the reasoning behind the strategic
decision to divest Lifeist of CannMart Inc. (“CannMart”) via a sale
to Simply Solventless Concentrates Ltd. (“SSC”) per our press
release of June 25, 2024, and why shareholders should vote in favor
of the transaction at the Annual and Special Meeting on September
5, 2024.
The decision to sell CannMart is the result of
careful consideration by the Lifeist Board with input from its
advisors and is aimed at securing the near- and long-term viability
and success of Lifeist for the benefit of all shareholders.
As you all know, the regulatory framework under
which Canadian public cannabis companies operate has proven to be
prohibitively expensive for all public companies in the space in
terms of ever being able to turn a profit. This experience has not
been unique to Lifeist or CannMart: the vast majority of Canadian
public cannabis companies, from the largest to the smallest, from
generalists growing stadium-sized crops to specialists focused on
extracts, distillates, beverages, and exotics, have been unable to
turn a consistent profit. As a result, share prices across the
entire sector have been in a long and grinding bear market for
several years. The previously high-flying TSX Cannabis Index
(https://www.theglobeandmail.com/investing/markets/indices/XCAN/),
after peaking in early 2021, was delisted in April 2023 after
losing over 90% of its value.
Success stories in the cannabis space have been
few and far between, but SSC is clearly one of them. SSC have
proven themselves capable of succeeding in an extremely challenging
sector, returning profitable quarters repeatedly while growing
their market. It is the considered position of the Board that the
best chance of success for CannMart is as a part of SSC, and the
best hope for Lifeist shareholders to enjoy capital appreciation on
the value of the CannMart assets is similarly through their sale to
SSC.
Lifeist shareholders stand to benefit from this
in four key ways:
First and foremost, through the realization of
direct value through the sale of CannMart to SSC:
- $500,000
payable upon the closing date.
- $1,500,000 plus
applicable interest in a VTB loan, subject to adjustments as set
forth in the share purchase agreement.
- $500,000
satisfied by the issuance of units, comprised of one common share
and one-half purchase warrant to purchase one common share of
SSC.
- SSC shall pay
Lifeist 100% of the net revenue generated by the sale of 50% of
existing inventory (presently estimated at $1,000,000 value),
separate and in addition to any other fees.
- An earnout
bonus of 20% of any revenue above $3,000,000 per quarter over the
first 12 months.
Second, through the divestiture of the
consistent loss leader that CannMart has been and would otherwise
continue to be for Lifeist under the presently applicable Canadian
public cannabis company regulatory framework. This will remove the
continued negative cash flow that the cannabis business has cost
shareholders and give Lifeist its best chance at demonstrating
positive cash flow.
Third, through the opportunity for capital
appreciation via the common shares and warrants that Lifeist will
hold in SSC after the sale has been completed. It is worth noting
that SSC shares have dramatically outperformed the sector as well
as the broader market, approximately doubling in value just since
the proposed CannMart transaction was announced on June 25th.
Fourth, through the concentration of all
resources on driving forward the success of Mikra Cellular
Sciences, with no operational distractions in other sectors and
ventures and substantially reduced costs as a result of that
renewed focus.
We are more confident than ever in Lifeist's
roadmap to future cash flow positivity and profitability. The
combination of this divestiture and several critical initiatives
already underway at Mikra hold great promise for the realization of
shareholder value in the near- and intermediate-term, and this
proposed sale of CannMart is the key to opening the door to that
future.
We sincerely hope that shareholders will vote
(or change their vote) in favor of the proposed sale, and thus be
positioned to benefit from its completion, and the survival and
growth of your company. Shareholders are encouraged to vote
their shares NOW by one of the methods described in the
Circular, available under Lifeist’s profile on SEDAR+
(www.sedarplus.ca) and on the Company’s website at:
https://lifeist.com/investors/events-and-presentations/events/event-details/2024/AGSM_Sept2024/default.aspx
Shareholders who have any questions or require
assistance with voting, including the option to register or change
their vote over the phone, may contact Laurel Hill at:
Laurel Hill Advisory GroupToll
Free: 1-877-452-7184 (for shareholders in North
America)International: +1 416-304-0211 (for shareholders outside
Canada and the US)By Email: assistance@laurelhill.com
On behalf of the Board of Directors,
/s/ “Branden Spikes”
Branden Spikes, Chairman of the Board
About Lifeist Wellness Inc.
Sitting at the forefront of the post-pandemic
wellness revolution, Lifeist leverages advancements in science and
technology to build breakthrough companies that transform human
wellness. Portfolio business units include: Mikra, a biosciences
and consumer wellness company developing and selling innovative
products for cellular health; and CannMart, which operates a B2B
wholesale distribution business facilitating recreational cannabis
sales to Canadian provincial government control boards including
for CannMart Labs, a BHO extraction facility producing high margin
cannabis 2.0 products.
Information on Lifeist and its businesses can be
accessed through the links below:
www.lifeist.com https://wearemikra.com/
https://cannmart.com
Contact: Meni MorimCEOLifeist
Wellness Inc.Ph: 647-362-0390 Email: ir@lifeist.com
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 or has in any way approved
or disapproved of the contents of this press release.
Forward Looking Information
This letter to shareholders contains
“forward-looking information” within the meaning of applicable
securities laws. All statements contained herein that are not
historical in nature contain forward-looking information.
Forward-looking information can be identified by words or phrases
such as “may”, “expect”, “likely”, “should”, “would”, “plan”,
“anticipate”, “intend”, “potential”, “proposed”, “estimate”,
“believe” or the negative of these terms, or other similar words,
expressions and grammatical variations thereof, or statements that
certain events or conditions “may” or “will” happen.
The forward-looking information contained
herein, including, without limitation, statements related to the
expected benefits from the CannMart divestiture, including future
cash flow positivity and profitability are made as of the date of
this letter to shareholders and are based on assumptions management
believed to be reasonable at the time such statements were made,
including without limitation, Lifeist’s ability to obtain all
required approvals and fulfill all conditions required under the
share purchase agreement with SCC and to close the sale of CannMart
to SSC in a timely manner, its expectation that the nutraceutical
market will continue to develop, expand and grow as currently
anticipated, the nutraceutical market will continue to be a
multi-billion dollar high-margin market, Mikra’s introduction of
new products and brands will generate additional revenue,
expectations that Mikra’s existing products as well as other new
nutraceutical products to be developed by Mikra will gain market
acceptance and generate meaningful revenue, as well as other
considerations that are believed to be appropriate in the
circumstances. While we consider these assumptions to be reasonable
based on information currently available to management, there is no
assurance that such expectations will prove to be correct. By its
nature, forward-looking information is subject to inherent risks
and uncertainties that may be general or specific and which give
rise to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct, and that objectives, strategic
goals and priorities will not be achieved. A variety of factors,
including known and unknown risks, many of which are beyond our
control, could cause actual results to differ materially from the
forward-looking information in this news release. Such factors
include, without limitation: the inability of the Company to obtain
all required shareholder and/or regulatory approvals to complete
the transaction with SSC and to fulfill all closing conditions set
out in the share purchase agreement with SSC. the Company’s
inability to develop successful marketing campaigns for Mikra’s
products, the risk that the expected demand for nutraceutical
products in general and those of Mikra in particular does not
develop as anticipated and risks relating to the Company’s ability
to execute its business strategy and the benefits realizable
therefrom. Additional risk factors can also be found in the
Company’s current MD&A filed under the Company’s SEDAR profile
at www.sedarplus.ca. Readers are cautioned not to put undue
reliance on forward-looking information. The Company undertakes no
obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise,
except as required by applicable law. Forward-looking statements
contained in this letter to shareholders are expressly qualified by
this cautionary statement.
Source: Lifeist Wellness Inc.
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