LFST Lifeist Wellness Inc

Lifeist Wellness Inc. (“Lifeist” or the “Company”) (TSXV: LFST) (FRANKFURT: M5B) (OTCMKTS: LFSWF), a health-tech company that leverages advancements in science and technology to build breakthrough ventures that transform human wellness, today announced it has entered into a definitive share purchase agreement (the “SPA”) with 1463663 B.C. Ltd. (the “Buyer”), a newly-incorporated affiliate of Tierra Corp., and the Company’s Canadian cannabis subsidiaries, collectively referred to as the “CannMart Group”, to divest and sell all of the shares of the CannMart Group to the Buyer for total aggregate consideration of CAD $5 million (“the Transaction”), subject to certain adjustments, plus the adjusted value of inventory at the time of closing.

The projected final sale price for CannMart may thus exceed Lifeist’s total present market capitalization, resulting in extraordinarily attractive price-to-book and price-to-cash ratios for Lifeist post-closing. This will allow the company to aggressively drive growth in its Mikra Cellular Sciences (“Mikra”) and Aussie Vapes subsidiaries and to take advantage of additional emerging opportunities as they arise to increase shareholder value in the near- and long-term.

"The decision to undertake this transaction is a pivotal step in our broader strategy to fortify the financial position of both Lifeist and CannMart by improving cash flow, streamlining operational costs, and strategically shifting the focus of both entities beyond the constraints of the current cannabis regulatory framework,” said Meni Morim, CEO of Lifeist. “The shareholders from both companies benefit from the laser like focus of each management team on their respective lines of business. Lifeist will focus on continuing the growth of its nutraceutical business Mikra and Aussie Vapes, while CannMart will benefit from operating away from the onerous demands imposed by the multilayered regulatory regime that governs Canadian public cannabis companies. Lifeist will also be positioned to greatly enhance available free cash without dilution or debt, allowing it to not only sustain but aggressively grow existing ventures while actively exploring additional strategic opportunities.”

Tierra Corp. is a private Canadian corporation led by its principal shareholder, Colin Samples. Mr. Samples is a respected entrepreneur and seasoned executive who brings a wealth of experience from his multiple roles in the cannabis industry in Canada and abroad. He has demonstrated a deep understanding of cannabis business operations and is positioned to continue steering CannMart forward in a less heavily regulated environment.

The Transaction allows Lifeist to complete the strategic pivot launched in 2021 with the formation of its wholly owned subsidiary Mikra Cellular Sciences (“Mikra”). The Company can now focus its attention more fully on opportunities in the large and growing nutraceutical space. In Q4 2023 Mikra launched two new natural science-based products and is well positioned to pursue opportunities in the wellness market, taking advantage of the substantially higher margins, lower effective taxation rate, much lower regulatory compliance overhead costs, and far greater freedom to creatively market and advertise innovative products therein as compared to the regulated cannabis space. The nutraceutical market in North America alone was worth US$88.3 billion in 2022, and is forecast to grow to US$118.7 billion by 2028.1

In addition, Lifeist retains upside exposure to new developments in the regulated cannabis space through purchase warrants in Tierra Corp., and is free to reenter the industry domestically or internationally if and when management so sees fit.

Under the terms of the SPA, the Company has agreed to sell all of the issued and outstanding shares of each of the corporations in the CannMart Group for aggregate consideration of $5 million plus the adjusted value of inventory at the time of closing. The purchase price payable to the Company on closing is structured as follows:

1. $500,000 payable in cash upon closing of the Transaction, subject to a working capital adjustment;

2. a $4.5 million senior secured vendor takeback loan with set monthly repayments; and
3. common share purchase warrants to acquire up to 9.9% of the equity of Tierra Corp., parent company of the Buyer.

For the purposes of section 301 of the Business Corporations Act (British Columbia) (“BCBCA”) the Transaction constitutes the sale of the majority of the Company’s undertaking and accordingly requires the approval of 2/3 of the shareholders of the Company entitled to vote thereon in order to complete the Transaction. In addition to obtaining Shareholder approval, the closing of the Transaction (the “Closing”) is subject to, among other things, the satisfaction of all regulatory requirements and the fulfilment of certain other conditions, including the granting of final approval of the Transaction by the TSXV. The Company’s intention is to complete the Transaction as soon as practicable after the annual and special meeting of the Company’s shareholders being held on March 14, 2024 (the “Meeting”).

In accordance with the requirements of “Notice-and-Access” which the Company is using to deliver its Meeting proxy materials, the Company will be filing and posting its management information circular (the “Circular”) for the Meeting on SEDAR+ and its website shortly which further describes the Transaction, among other matters to be voted on at the Meeting, This news release describes some of the principal terms of the Transaction and the SPA. It does not purport to be complete and it is subject to, and qualified in its entirety by reference to, the provisions of the SPA, a copy of which will be available on the Company’s profile on SEDAR+ at www.sedarplus.ca. Shareholders are urged to review the Circular, once available, for additional details of the SPA and the Transaction.

The Transaction and the provisions of the Share Purchase Agreement are the result of arm’s length negotiations conducted between the Company and the Buyer. Kronos Capital Partners Inc. is acting as financial advisor to Lifeist in connection with the transaction.

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: 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; Australian Vapes, one of Australia’s largest online retailers of vaporizers and accessories; and Mikra, a biosciences and consumer wellness company developing and selling innovative therapies for cellular health.  

Information on Lifeist and its businesses can be accessed through the links below:  www.lifeist.com  https://cannmart.com  https://wearemikra.com/  www.australianvaporizers.com.au    Contact:  Meni Morim CEO Lifeist 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 news release 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 anticipated closing of the Transaction is made as of the date of this news release and is 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 in a timely manner and to fulfill all conditions required under the SPA to consummate the closing, 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 press release. Such factors include, without limitation: the inability of the Company to obtain all required shareholder and/or regulatory approvals to complete the Transaction and to fulfill all closing conditions set out in the SPA.

Additional risk factors can also be found in the Company’s current MD&A which has been 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 news release are expressly qualified by this cautionary statement.

Source: Lifeist Wellness Inc.  

1 https://www.marketdataforecast.com/market-reports/north-america-nutraceuticals-market