FOR IMMEDIATE RELEASE
Toronto, Ontario – March 10, 2020 – Good2Go Corp. (“G2G” or the “Company”) (TSX-V: GOTO.P) is pleased to announce that on March 4, 2020, it entered into a letter of intent with Magical Brands Inc. (“Magical Brands”), pursuant to which G2G agreed to indirectly or directly acquire all of the issued and outstanding securities of Magical Brands (the “Transaction”). The Company intends that the Transaction will constitute G2G’s qualifying transaction in accordance with the policies of the TSX Venture Exchange (the “Exchange”). The Transaction is to be structured as a three-cornered amalgamation, share exchange, plan of arrangement or other similarly structured transaction as may be agreed upon by the parties. For the purposes of the Transaction it is intended that the shareholders of Magical Brands will receive, to be established subordinate voting shares of G2G (the “Subordinate Voting Shares”) in exchange for their common shares of Magical Brands (the “Magical Brands Shares”) on the basis of one (1) Subordinate Voting Share for each one (1) Magical Brands Share. In connection with the Transaction, the Company intends to seek the listing of the Subordinate Voting Shares on the Exchange. Upon completion of the Transaction, it is intended that G2G will change its name to “Magical Brands Corp.”, or such other name as may be determined by the board of directors of Magical Brands. For convenience, the Company, after the completion of the Transaction, is referred to herein as the “Resulting Issuer”. Unless otherwise indicated, all dollar amounts referred to herein are expressed in Canadian Dollars.
Upon successful completion of the Transaction, it is anticipated that the Resulting Issuer will be listed on the Exchange as a Tier 2 Technology Issuer, operating as a product innovation and consumer branding company. The Transaction is subject to the receipt of all necessary regulatory and shareholder approvals as well as the satisfaction of conditions to closing which will be set out in a definitive agreement between the parties (the “Definitive Agreement”).
G2G was incorporated under the Business Corporations Act (Ontario) on February 28, 2018, and is a capital pool company listed on the Exchange. G2G has no commercial operations and has no assets other than cash. G2G’s only business has been to identify and evaluate assets or businesses with a view to completing a qualifying transaction.
About Magical Brands
Magical Brands was incorporated under the laws of Florida on May 13, 2015. Magical Brands is a product innovation and consumer branding company focused on research and development, product innovation and licensing, and global sales and distribution. Magical Brands creates consumer-focused hardware and consumable products, including the Magical Butter Machine, a “do-it-yourself” botanical extraction machine, and a line of cannabidiol (“CBD”) based products.
The Magical Butter Machine and its related products developed by Magical Brands are focused on removing inconsistencies from the botanical extraction process and increasing production capabilities for consumers to develop nutrient-rich extracts from roots, fruits and herbs, infusing the lipid extracted nutrients into butter, oils, tinctures, salves, and lotions. Magical Brands’ CBD products are available under the “Magical” brand name and comprise various formats, including
- edibles: soft gels, fruit chews, and hard candies; (ii) tinctures: liquid form available in multiple flavours; and (iii) topicals: presently available as a cream.
Magical Brands’ sales and distribution footprint spans North America, the European Union, the United Kingdom, Australia, and New Zealand using both direct-to-consumer and retail distribution channels, including Walmart, Bed Bath & Beyond and Hawthorne.
Summary of Financial Information for Magical Brands
The following table sets forth selected audited financial information for Magical Brands for the year ended December 31, 2018. The financial information has been prepared in accordance with International Financial Reporting Standards.
December 31, 2018 ($USD)
Net loss before income taxes
Net loss and comprehensive loss
Basic and diluted loss per share
Magical Brands Financing
Magical Brands intends to complete a concurrent financing consisting of a minimum of
$3,000,000 up to $5,000,000 (the “Offering”) consisting of a combination of (a) a non-brokered private placement (the “Non-Brokered Offering”) of Magical Brands Shares on substantially similar terms to the Brokered Offering (as defined below), and (b) a brokered private placement (the “Brokered Offering”) of subscription receipts (the “Subscription Receipts”) of a special purpose company to be established as a wholly-owned subsidiary of Magical Brands (“Finco”), at a price of $0.35 per Subscription Receipt (the “Issue Price”). Each Subscription Receipt is exchangeable for one (1) unit of Finco (each, a “Finco Unit”). Each Finco Unit is comprised of one common share of Finco and one half common share purchase warrant of Finco (each whole common share purchase warrant, a “Warrant”). Upon confirmation that all conditions precedent to the Transaction, other than the release of the Escrowed Proceeds (as defined below) (the “Escrow Release Conditions”), have been satisfied or waived, each Finco Unit underlying the Subscription Receipts will automatically convert into and be exchanged for one (1) unit of G2G (each, a “G2G Unit”). Each G2G Unit shall consist of one Subordinate Voting Share and one- half of one share purchase warrant of G2G (each whole share purchase warrant a “G2G Warrant”). Each G2G Warrant shall entitle the holder thereof to acquire one additional
Subordinate Voting Share at a price of $0.50 for a period of twenty-four (24) months following the closing of the Offering. Expiry of the G2G Warrants will occur at the option of the Resulting Issuer upon 30 days’ notice to G2G Warrantholders should the volume-weighted average trading price (“VWAP”) of the Subordinate Voting Shares exceed $0.85 per Share for twenty (20) consecutive trading days.
Haywood Securities Inc. and PI Financial Corp. are acting as co-lead agents in connection with the Brokered Offering (the “Lead Agents”), on behalf of a syndicate of agents (together with the Lead Agents, the “Agents”) to offer the Subscription Receipts for sale on a commercially reasonable efforts agency basis. Magical Brands has granted the Agents an option (the “Agents’ Option”), exercisable in whole or in part, at any time and from time to time up to forty-eight (48) hours prior to the closing of the Brokered Offering, to arrange for the purchase of an additional fifteen percent (15%) of the number of Subscription Receipts sold under the Brokered Offering at the Issue Price. In connection with the Brokered Offering, Magical Brands has agreed to pay the Agents a cash fee (the “Agents’ Commission”) equal to 7% of the gross proceeds of the Subscription Receipts sold in the Brokered Offering (reduced to 3% in respect of sales to the president’s list) and to issue compensation options (the “Compensation Options”) to the Agents equal to 7% of the number of Subscription Receipts sold in the Brokered Offering (reduced to 3% in respect of sales to the president’s list). Each Compensation Option shall be exercisable for such a number of Finco Units or G2G Units, as the case may be, at an exercise price equal to the Issue Price and having a term of twelve (12) months from the closing of the Brokered Offering. No finders’ fees will be paid in connection with the Non-Brokered Offering.
The proceeds from the Brokered Offering (less an amount equal to 50% of the Agents’ Commission and the reasonable expenses of the Agents in connection with the Brokered Offering) (the “Escrowed Proceeds”) will be held in escrow until the satisfaction of the Escrow Release Conditions.
Principal Purposes of Funds
The funds to be available to the Resulting Issuer upon the closing of the Transaction are expected to be between a minimum of $3,000,000 up to a maximum of $5,000,000, which includes the net proceeds of the Offering and existing cash on hand of Magical Brands and G2G. These funds are anticipated to be used, principally, as follows:
Joint ventures and M&A Marketing and advertising
Product development, manufacturing, and R&D
General working capital
The Resulting Issuer intends to spend the funds available to it as stated above. There may be circumstances, however, where for sound business reasons, a reallocation of funds may be necessary.
The proposed Transaction is subject to the sponsorship requirements of the Exchange, unless a waiver or exemption from the sponsorship requirement is available. If required, a sponsor will be identified at a later date and will be announced in a subsequent press release of G2G. An agreement to sponsor should not be construed as an assurance with respect to the merits of the transaction or the likelihood of completion of the proposed Transaction.
About the Transaction
G2G will duly call and hold a special meeting of its shareholders (the “G2G Meeting”), to approve, among other things and subject to the completion of the Transaction, (i) the composition of the board of directors of the Resulting Issuer following the completion of the Transaction; (ii) the Resulting Issuer’s stock option plan to take effect following completion of the Transaction; (iii) the consolidation (the “Consolidation”) of the issued and outstanding common shares of G2G (the “G2G Shares”) prior to the Transaction on the basis of one (1) post-Consolidation G2G Share for every 2.4195 pre-Consolidation G2G Shares (the “Consolidation Ratio”); (iv) the change of the name of G2G to “Magical Brands Corp.”, or such other name as may be determined by the board of directors of Magical Brands; (v) amend its articles of incorporation to delete the common shares of G2G and amend the authorized share capital to consist of Subordinate Voting Shares and multiple voting shares (the “Multiple Voting Shares”) and to exchange each issued and outstanding G2G Share for one (1) Subordinate Voting Share (the “Share Amendments”); and (vi) the continuance of the Resulting Issuer from the Business Corporations Act (Ontario) to the Business Corporations Act (British Columbia).
G2G will seek the majority of the minority shareholder approval for the creation of the Subordinate Voting Shares and the Multiple Voting Shares. The Multiple Voting Shares will not be listed for trading on any exchange. The Subordinate Voting Shares will carry one (1) vote per share at meetings of the shareholders of the Resulting Issuer, and the Multiple Voting Shares will carry a number of voting rights to be determined by Magical Brands and G2G. It is anticipated that Multiple Voting Shares, rather than Subordinate Voting Shares, may be issued to certain U.S. resident shareholders of Magical Brands in order to ensure that the Resulting Issuer is a “foreign private issuer” (as determined in accordance with the United States Securities Exchange Act of 1934). Accordingly, the number of Multiple Voting Shares to be issued in connection with the completion of the Transaction will be determined at a later date based on the residency of the participants of the Offering. The number of votes per Multiple Voting Share will reflect the number of Subordinate Voting Shares into which each Multiple Voting Share may be exchanged.
Upon completion of the Consolidation and the Share Amendments, it is anticipated that the 5,203,570 currently issued and outstanding G2G Shares will be consolidated into 2,150,679 post-Consolidation Subordinate Voting Shares.
Details regarding the G2G Meeting will be made available in a management information circular that will be mailed to shareholders of G2G.
For greater certainty, the shareholders of G2G will not be required to approve the completion of the Transaction. However, the Transaction is subject to the approval of the shareholders of Magical Brands.
It is anticipated that, at the effective time of closing of the Transaction, among other things:
- each issued and outstanding Magical Brands Share, will be cancelled and its holder will receive in exchange therefor one fully paid and non-assessable Subordinate Voting Share;
- each holder of Finco Units underlying the Subscription Receipts issued in connection with the Offering will receive one G2G Unit in exchange therefor, following which all Finco Units will be cancelled;
- each outstanding option to purchase G2G Shares (of which 405,000 are outstanding as at the date hereof) (a “G2G Option”) will be cancelled and its holder will receive in exchange therefor one option to purchase a Subordinate Voting Share (a “Resulting Issuer Option”), which Resulting Issuer Option shall have all of the terms and conditions, including the exercise price, term to expiry, vesting conditions and manner of exercising, as the G2G Option for which it was exchanged, as adjusted by the Consolidation Ratio;
- each outstanding broker warrant to purchase G2G Shares (of which 216,430 are outstanding as at the date hereof) (a “G2G Broker Warrant”) will receive in exchange therefor one option to purchase a Subordinate Voting Share (a “Resulting Issuer Broker Warrant”), which Resulting Issuer Broker Warrant shall have all of the terms and conditions, including the exercise price, term to expiry, vesting conditions and manner of exercising, as the G2G Broker Warrant for which it was exchanged, as adjusted by the Consolidation Ratio.
In connection with the Transaction, approximately 72,254,133 Subordinate Voting Shares will be issued to holders of Magical Brands Shares (including the holders of unsecured convertible promissory notes, which will be converted into Magical Brands Shares prior to closing of the Transaction) and the holders of Finco Units (assuming the minimum Offering is completed) in exchange for their Magical Brands Shares and common shares of Finco, underlying the Finco Units.
Immediately after the completion of the Transaction, on a non-diluted basis and after giving effect to the Consolidation, the shareholders of G2G will own approximately 2.9% of the Subordinate Voting Shares and the shareholders of Magical Brands (including the holders of Finco Units issued in connection with the Offering) will own approximately 97.1% of the Subordinate Voting Shares. The completion of the Transaction is conditional on obtaining all necessary regulatory and shareholder approvals in connection with the matters described above and other conditions customary for a transaction of this type.
The current principal shareholder of Magical Brands is Garyn Angel, the Chief Executive Officer of Magical Brands. Garyn Angel is resident in the United States and indirectly and directly owns
and controls approximately 70% of the issued and outstanding Magical Brands Shares on a non- diluted basis. It is expected that following completion of the Transaction, Mr. Angel will continue in his role as Chief Executive Officer and will be an insider of the Resulting Issuer. The only other insiders of the Resulting Issuer will be its directors and senior officers.
Arm’s Length Transaction
The Transaction is not a non-arm’s length transaction in accordance with the policies of the Exchange.
Proposed Management and Board of Directors of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the board of directors of the Resulting issuer will consist of up to five (5) directors, each of whom will be nominated by Magical Brands and elected at the G2G Meeting. It is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer, with additional appointments to be confirmed in due course.
Garyn Angel, Chief Executive Officer and Director
Garyn Angel is the founder, Chief Executive Officer and Chairman of the board of Magical Brands. He conceptualized the core product of Magical Brands and had led designers and developers through the evolution of its product line. He is also the President of ThinkMB, a global think tank that combines modern science, traditional Chinese medicine, and cannabinoids. In 2014, he was selected to the exclusive CNBC NEXT List of global business visionaries for his work in the legal cannabis industry. He has also been recognized as High Times Top Hundred influencer. Prior to founding Magical Brands’ business in 2012, Mr. Angel enjoyed a successful career in multiple industries. He was the recipient of Reuter’s Top Advisor award to recognize his financial acumen. He is an inspirational leader who lives with passion and specializes in curating depth to relationships with brands, customers and teammates.
Craig Snyder – Chief Operating Officer and Director
Mr. Snyder is a senior leader with over 20 years of success in driving growth and development of high tech and emerging technology organizations. He has significant experience leading disruptive strategies in new markets and building corporate reputation on a national scale. He has held senior leadership positions at two Fortune 100 companies (Pepsi Cola & Citibank) combined with executive leadership experience in two Nasdaq startup to IPO success stories (Go2Net & Marchex). He has deep experience in M&A and P&L Management with experience in over 20 acquisitions and most recently had direct responsibility for two successful company sales as Chief Executive Officer (SnapNames & Moniker). He is a graduate of the United States Naval Academy and a former Naval Officer.
Filing Statement or Information Circular
In connection with the Transaction and pursuant to Exchange requirements, G2G will file a filing statement on SEDAR (www.sedar.com), which will contain details regarding the Transaction, the Offering, G2G, Magical Brands and the Resulting Issuer.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
ANY SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “1933 ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements and majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.
The information contained or referred to in this press release relating to Magical Brands has been furnished by Magical Brands. Although G2G has no knowledge that would indicate that any statement contained herein concerning Magical Brands is untrue or incomplete, neither G2G nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.
Notice regarding forward-looking statements:
This release includes forward-looking statements regarding Magical Brands, G2G, and their respective businesses, which may include, but is not limited to, statements with respect to the completion of the Transaction, the terms on which the Transaction is intended to be completed, the use of the net proceeds from the Offering, the ability to obtain regulatory and shareholder approvals, the proposed business plan of Magical Brands, the effect of the novel Coronavirus (COVID-19) on the equity markets and economy as a whole, and other factors. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”, “anticipates”, “believes”, “proposes” or variations (including negative variations) of such words and phrases, or state
that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Such statements are based on the current expectations of the management of each entity. The forward-looking events and circumstances discussed in this release, including the completion of the Transaction, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding Magical Brands’ industry, failure to obtain regulatory or shareholder approvals, changing regulatory landscape, economic factors, the equity markets generally and risks associated with regulations, growth and competition. Although G2G and Magical Brands have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and G2G and Magical Brands undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
For further information please contact:
Magical Brands Inc.
Garyn Angel, Chief Executive Officer
James Cassina, President