CE Brands Inc. and eBuyNow eCommerce Ltd. Announce Execution of Amended and Restated Amalgamation Agreement

CALGARY, Alberta and VICTORIA, British Columbia, Feb. 09, 2021 (GLOBE NEWSWIRE) — CE Brands Inc. (TSXV:CEBI.P, “CEBI”) and eBuyNow eCommerce Ltd. (“EBN”) are pleased to announce that they have entered into an amended and restated amalgamation agreement dated January 28, 2021 (the “Amended Agreement”), which contemplates amendments to their proposed business combination (the “Proposed Transaction”), which was originally announced on March 13, 2020.

The Proposed Transaction is subject to certain conditions and applicable shareholder and TSX Venture Exchange (the “Exchange”) approvals and is intended to constitute the Qualifying Transaction of CEBI within the meaning of the policies of the Exchange. Following the completion of the Proposed Transaction, CEBI intends to carry on the current business of EBN.

Proposed Transaction

The Amended Agreement provides that CEBI will acquire all of the issued and outstanding securities of EBN by way of a three-cornered amalgamation. In particular:

1. CEBI will consolidate the outstanding CEBI shares on a 20.75-for-one basis (the “CEBI
   Consolidation”).
2. EBN will consolidate the EBN shares on a five-for-one basis (the “EBN Consolidation”).
3. EBN and CEBI Subsidiary will amalgamate and continue as one corporation (the “Amalgamation”). Pursuant to the Amalgamation, all of the issued and outstanding EBN shares will be exchanged for CEBI shares on a one-for-one basis.
4. All of the issued and outstanding options to purchase EBN shares will be exchanged for options to purchase CEBI shares on a one-for-one basis (the “Option Exchange”).
5. All of the issued and outstanding warrants to purchase EBN shares will be exchanged for warrants to purchase CEBI shares on a one-for-one basis (the “Warrant Exchange”).
6. C$1,174,784.99 aggregate principal amount of notes that are convertible into up to 1,566,376 EBN shares, will be exchanged for C$1,174,784.99 aggregate principal amount of notes that are convertible into up to 313,277 EBN shares, and US$1,388,888 aggregate principal amount of notes that are convertible into up to 3,123,604 EBN shares, will be exchanged for US$1,388,888 aggregate principal amount of notes that are convertible into up to 624,721 EBN shares (the “Note Exchange”).

For purposes of the Proposed Transaction, the deemed price per CEBI share (prior to giving effect to the CEBI Consolidation) is $0.20 and the deemed price per EBN share (prior to giving effect to the EBN Consolidation) is $0.83.

Public Offering

The Amended Agreement contemplates a public offering (the “Offering”) of a maximum of 3,614,457 CEBI subscription receipts, at a price of $4.15 per CEBI subscription receipt, for maximum gross proceeds of $15,000,000 (excluding any over-allotment option granted to the agents of the Offering). Each CEBI subscription receipt will entitle the holder to receive, without payment of additional consideration and without any further action, one CEBI unit upon the satisfaction of the conditions precedent to closing the Proposed Transaction. Each CEBI unit will consist of one CEBI post-consolidation share and one-half of one warrant to purchase a CEBI post-consolidation share. Each CEBI warrant will entitle the holder to purchase one additional CEBI post-consolidation share, for a purchase of price of $7.50, for a period of 24 months following the date on which the CEBI warrant was issued. CEBI has agreed to pay the agents of the Offering a cash commission equal to 8% of the gross proceeds of the Offering, plus grant them options entitling them to purchase that number of CEBI post-consolidation shares equal to 8% of the aggregate number of CEBI subscription receipts sold pursuant to the Offering. The options will be exercisable at a price of $4.15 per CEBI post-consolidation share, for a period of 12 months following the satisfaction of the conditions precedent to closing the Proposed Transaction.

Conditions Precedent to Closing of Proposed Transaction

The Proposed Transaction is subject to a number of significant conditions, including but not limited to the following: (a) the Exchange has conditionally accepted the Proposed Transaction; (b) CEBI has completed a minimum of $5,000,000 of the Offering; (c) holders of the CEBI shares have approved the CEBI Consolidation; (d) holders of the EBN shares have approved the EBN Consolidation and Amalgamation; (e) holders of options to purchase EBN shares have approved the Option Exchange; (f) holders of warrants to purchase EBN shares have approved the Warrant Exchange; and (g) holders of notes that are convertible into EBN shares have approved the Note Exchange.

Business of the Resulting Issuer

After the completion of the Proposed Transaction, CEBI (the “Resulting Issuer”) will be classified in the “Technology” industry segment of the Exchange, and will carry on the current business of EBN, namely the business of developing, manufacturing, and distributing consumer electronics in partnership with globally-recognized brands.

Capitalization of the Resulting Issuer

Pursuant to the Proposed Transaction, CEBI expects to issue the former security holders of EBN: (a) 17,931,497 CEBI post-consolidation shares; (b) options to purchase up to 1,395,000 CEBI post-consolidation shares; (c) warrants to purchase up to 3,352,155 CEBI post-consolidation shares; and (d) C$1,174,784.99 aggregate principal amount of notes that are convertible into up to 313,277 CEBI post-consolidation shares; and US$1,388,888 aggregate principal amount of notes that are convertible into up to 624,721 CEBI post-consolidation shares.

Immediately after the Proposed Transaction and assuming the maximum Offering (but without giving effect to any over-allotment option granted, or equity compensation paid, to the agents of the Offering), CEBI and EBN expect the outstanding capital of the Resulting Issuer to consist of: (a) 21,960,413 Resulting Issuer shares; (b) options to purchase up to 1,460,542 Resulting Issuer shares; (c) warrants to purchase up to 5,200,716 Resulting Issuer shares; (d) C$1,174,784.99 aggregate principal amount of notes that are convertible into up to 313,277 Resulting Issuer shares; and (e) US$1,388,888 aggregate principal amount of notes that are convertible into up to 624,721 Resulting Issuer shares.

Resulting Issuer Insiders

Upon completion of the Proposed Transaction, it is anticipated that the following individuals will serve as directors and officers of the Resulting Issuer:

• Craig Smith, Chair and Chief Executive Officer – Mr. Smith has been the Chair and Chief Executive Officer of EBN since its incorporation. He has 25 years of direct experience in the areas of consumer electronics, licensing, and distribution. Mr. Smith has cultivated an extensive global network of relationships in brand licensing and contract manufacturing, securing brand-licensing agreements with companies such as Microsoft, Skype, Samsung, Sony, Motorola, and Kodak. With hands-on experience of living in China, Europe, and North America, Mr. Smith is well-versed in international trade and regulations. Prior to EBN, Mr. Smith previously launched successful direct to consumer electronics brands in the gaming and video industry and is a key driving force behind the product and brand strategy of EBN. He holds a MSc in Aeronautical Engineering from Kingston University.
• David Henderson, Director – Mr. Henderson is a director and the President and Chief Executive Officer of CEBI. He is also Director of Geoscience at Enersoft Inc., a geosciences company. Prior thereto, he was the Founder of Henderson and Associates Petroleum & Consultants Ltd., an energy-services company, which he sold in 2013 to Maxxam Analytics Inc., a leading North American provider of analytical services and solutions to the energy and environmental industries. He remained with Maxxam and its affiliates until 2015. Mr. Henderson holds a BSc (Earth Science) from Dalhousie University and an MBA from Queen’s University.
• Kalvie Legat, Chief Financial Officer, Executive Vice President, Head of Corporate Development, and Corporate Secretary – Mr. Legat has held various executive roles since joining EBN on November 1, 2018. He has over 15 years of experience in finance and capital markets. He began his career in 2004 with the investment dealer Canaccord Capital Inc., and thereafter, the investment dealers MGI Securities Inc., Jennings Capital Inc., and Integral Wealth Securities Limited, with a focus on institutional sales for small- to mid-cap issuers. Mr. Legat holds a Bcrim from Mount Royal University.
• Ernest Levenson, President – Mr. Levenson has been the President of EBN since April 1, 2020. He has 15 years of executive experience at Vtech Communications Inc., a wholly-owned subsidiary of Vtech Holdings Limited, a global supplier of electronic learning products, as its President and VP of Operations. His work at Vtech led it to become the number one market-share leader in the global Baby Monitor category, generating over 260% e-commerce revenue growth across major retailer websites in less than three years. Prior to Vtech, he was the Chief Operating Officer of HomeRelay Communications, Inc., a telecommunications company, overseeing budget planning, contract management, engineering, day-to-day network operations, billing, customer support, quality assurance, and production. He also possesses significant experience in information technology as the Director of IT and Business Development for Verizon Communications Inc., a global telecommunications company, where he created and managed the strategic direction and IT team for Verizon’s web presence and managed the programming and operations staff to support the R&D centres. Mr. Levenson holds an M.B.A from Babson College and a B.A. from Connecticut College.
• Adam Rock, Director – Mr. Rock is a partner of Nerland Lindsey LLP, a Canadian law firm, and has practiced corporate law, with a focus on corporate finance and mergers and acquisitions, since 2006. Mr. Rock holds an LLB from the University of Toronto and is called to the bar in the Province of Alberta.
• Stephen Smith, Director
  – Mr. Smith currently serves on the Board of Directors of MAV Beauty Brands Inc., a consumer discretionary company, as Audit Committee Chair, Freshii Inc., a consumer discretionary company, and Organigram Holdings Inc., a consumer staples company. He has also served on the Board of Directors, Audit Committee and the Executive Committee for CST Brands, Inc., a consumer staples company (recently acquired by Alimentation Couche-Tard), was recently an Advisory Board member of Jackman Reinvention Inc., a brand strategy consultancy in Toronto. He was also the Lead Director and Chair of the Audit Committee for Newstrike Brands Ltd., a consumer staples company, which went on to sell to HEXO Corp. His executive experience includes serving as an Executive Vice President with Loblaw Companies Ltd., a consumer staples company, and CFO, later Co-CEO, of Cara Operations Ltd., a consumer discretionary company.
• Katica Viskovic, Chief Operating Officer – Ms. Viskovic has been the Chief Operating Officer of EBN since 2017. She has significant experience building and managing global teams remotely. Prior to her current position, she served as the Supply Chain Manager for EBN. She began her career as a supply chain officer and has ten years of experience in international supply chain management and client onboarding, overseeing and managing the overall supply chain and logistics strategy of EBN. Ms. Viskovic holds a bachelor degree from the Faculty of Political Science in Zagreb University in Croatia.
• Jared Wolk, Director – Mr. Wolk is the portfolio manager of Vesta Wealth Partners Ltd. (formerly Genn Family Office), a leading investment firm in western Canada. In 2018, his team received the Multi-Family Office Team of the Year award from the Society of Trust and Estate Practitioners, an international organization of 20,000 members representing 95 jurisdictions. He also sits on the board of Kleos Microfinance Group, a non-profit organization, and is a director of the General Partner of Cerulean Private Equity Access Funds, a private equity fund of funds. Mr. Wolk holds a BA from the University of Calgary and an MSc (Finance) from Simon Fraser University. He also holds the CAIA designation and is a CFA charterholder.
• Wong Wing Kiong, Director, Chief Product Officer – Mr. Wong has been a director of EBN since November 21, 2019, and Chief Product Officer of EBN since February 1, 2019. He has been in the electronics industry for the last 25 years. He started his career as a software engineer, programming micro-controllers for Panasonic audio devices. He then went on to hold various positions at Philips Semiconductors, Inc., a technology company, including senior marketing manager in the Zurich office. During his stint in Zurich, his team created the world’s first one-chip DECT IC. In 2008, he created a start-up company developing state-of-the-art baby monitors for various original design manufacturers such as Summer Infant, Levana, and Motorola. In 2017, Mr. Wong started Cinatic, which was acquired by EBN in 2019. He graduated from the National University of Singapore with an EEE.

Arm’s Length Negotiations

The Non Arm’s Length Parties, as that term is defined in the policies of the Exchange, to CEBI (a) do not own any direct or indirect beneficial interest in EBN; (b) are not Insiders, as that term is defined in the policies of the Exchange, of EBN; and (c) do not have any relationship with the Non Arm’s Length Parties to EBN. Furthermore, the Proposed Transaction does not constitute a Non Arm’s Length Proposed Transaction, as that term is defined in the policies of the Exchange. Consequently, CEBI is not required to obtain shareholder approval of the Proposed Transaction under the policies of the Exchange.

Trading Halt

The Exchange halted trading in the CEBI shares on June 18, 2019. Trading in the CEBI Shares will remain halted until further notice.

Sponsorship

In connection with the Proposed Transaction, CEBI intends to apply for an exemption from the sponsorship requirements of the Exchange. There can be no assurance that the Exchange will grant the exemption. If the Exchange does not grant the exemption, then CEBI must retain a sponsor of the Proposed Transaction in accordance with the policies of the Exchange. 

Disclosure Document

As the Proposed Transaction involves the acquisition of significant assets not located in Canada or the United States, the policies of the Exchange require the Proposed Transaction to be undertaken using a long-form prospectus as its disclosure document. CEBI will post the long-form prospectus on its SEDAR profile at www.sedar.com.

Exchange Advisory

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to the requirements of the Exchange, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the prospectus to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

Trading in the securities of a CPC should be considered highly speculative.

The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Neither the Exchange nor its regulation services provider (as defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Forward-Looking Information Disclaimer

This press release contains forward-looking information within the meaning of applicable securities legislation. In general, forward-looking information refers to disclosure about future conditions, courses of action, and events. The use of any of the words “anticipates”, “expects”, “intends”, “will”, “would”, and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this press release contains forward looking information concerning the proposed terms, and the anticipated results, of the Proposed Transaction and the Offering. The forward-looking information is based on certain key expectations and assumptions made by CEBI and EBN, including expectations and assumptions concerning the ability of CEBI and EBN to complete the Proposed Transaction and the Offering. Although CEBI and EBN believe that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because neither CEBI nor EBN can give any assurance that they will prove to be accurate. By its nature, forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed in this press release. These risks and uncertainties include, but are not limited to, the inability of CEBI and EBN to satisfy the conditions precedent to the Proposed Transaction. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date of this press release, and to not use such forward-looking information for anything other than its intended purpose. Neither CEBI nor EBN undertakes any obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities legislation.

Further Information

For further information about CEBI, please contact:

Dave Henderson
President and Chief Executive Officer
403-978-5201
dhhendersonceb@gmail.com

Brian Prokop
Chief Financial Officer
587-899-4807
brianprokop@yahoo.ca

For further information about EBN, please contact:

Kalvie Legat
Chief Financial Officer, Executive Vice President, Head of Corporate Development, and Corporate Secretary
778-771-0901
ir@ebuynow.com

THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF THAT JURISDICTION.