Lifeist Wellness Inc.(TSXV: LFST) (FRANKFURT: M5B0) (OTCMKTS:
LFSWF)
My Fellow Shareholders,
In response to inquiries from many of you, we
wish to set forth the reasoning behind the strategic decision to
divest Lifeist of CannMart Inc. (“CannMart”) via a sale to Simply
Solventless Concentrates Ltd. (“SSC”) under the terms of the
agreement set forth in our press release of June 25, 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, rising nearly 50% 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 distractions in other sectors and ventures and
substantially reduced costs as a result of that renewed singular
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
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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