Geyser Brands Inc. (formerly Kanzen Capital Corp.) (TSX-V: GYSR) is pleased to announce that it has entered into a non-binding letter of intent with Solace Management Group Inc. a company incorporated under the laws of the Province of British Columbia, setting out certain terms and conditions as to the acquisition of all of the issued and outstanding shares  of Solace by way of a share purchase, share exchange or similar transaction, following a review of all relevant legal, regulatory and tax matters.

Solace’s business consists of leveraging its brands, intellectual property, proprietary formulations in the hemp and cannabis markets by licensing distribution and production arrangements. Solace’s brands and assets include among other assets:

1. Apawthecary Pets – a leading hemp-based pet treat brand with formulations for human grade, all-natural pet treats, salves and oral drops. Apawthecary Pets products are currently sold in pet stores and veterinarian clinics across Canada.
2. Apothecary Naturals – a line of hemp based topical products, pain creams, organic soaps, lip balms and men’s topical grooming products.
3. Apothecary Ink – a line of hemp based all-natural tattoo after care products.
4. WildTail Pets – a line of single ingredient freeze-dried pet products, including hemp-infused pet treats, kibble and freeze-dried pet foods for dogs and cats.
5. Apothecary Labs – a research and development arm of Solace engaged in technology and formulation development for beverages, topicals and other cannabis and hemp infused nutraceutical products.

Solace distributes its products in Canada through over 3,000 stores including Bosleys, PetLand, Pharmasave, Bukerfields, Master-Feeds, Global Pet Foods, Shoppers Drug Mart, Woofies, PetValue, Pet Planet & Bone & Biscuit. International distribution extends to the UK, Caribbean Islands, Austria, Belgium, Netherlands, Italy, Spain and the USA.

Summary of the Proposed Transaction

The Proposed Transaction is subject to, among other things: (1) the Company being satisfied with its due diligence review of Solace; (2) the receipt of all necessary consents, including all necessary third party consents; (3) board approvals of Geyser and Solace, (4) approvals and authorizations including any applicable shareholder approval; (5) TSXV Exchange (the “Exchange“) approval; (6) receipt of an independent valuation report of Solace, if required; (7) satisfaction of any Exchange requirements; and (8) the parties negotiating and entering into a definitive binding agreement in respect of the Proposed Transaction, with such other customary closing conditions.

The Letter of Intent contemplates that in exchange for the Purchased Shares, the Company will pay an aggregate purchase price of $3,900,000, subject to adjustments, to the shareholders of Solace. The Purchase Price payable by the Company shall be paid by way of (1) an aggregate cash payment of $400,000, a portion of which will be payable to each Solace Shareholder in proportion to the number of Purchased Shares such Solace Shareholder owns against the aggregate number of Purchased Shares, and (2) in respect of the balance of $3,500,000, by the issuance of 5,833,333 common shares of the Company at a deemed price of $0.60 per common share, subject to Exchange approval. As with the Cash Payment, the number of the Consideration Shares each Solace Shareholder shall receive upon closing of the Proposed Transaction will be in proportion to the number of Purchased Shares such Solace Shareholder owns against the aggregate number of Purchased Shares. The specific terms of the Cash Payment and Share Payment will be outlined in the definitive binding agreement and the Company will provide an update accordingly. Certain Consideration Shares may be subject to escrow in accordance with Exchange policies. All Consideration Shares will be subject to a statutory hold period expiring on 4 months and 1 days from the date of issuance. On completion of the Proposed Transaction, Solace will become a wholly owned subsidiary of the Company.

Although the parties have entered into the Letter of Intent, there can be no assurance that the Proposed Transaction will be completed as proposed, or at all. No finder’s fees are payable in respect of the Proposed Transaction.

The Letter of Intent may be terminated at any time by either party in certain circumstances.

The Company currently has 20,928,284 common shares issued and outstanding. Upon completion of the Proposed Transaction, the Company will have 26,751,617 common shares issued and outstanding.

The Proposed Transaction is not an “arm’s length transaction” as such term is defined in the Exchange’s Policy 1.1 and constitutes a “related party transaction” as such term is defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“) by reason of Bradley D. Kersch (“Mr. Kersch“), director of the Company, also being director and President of Solace. Furthermore, Mr. Kersch owns 25% of the Purchased Shares, and who, together with other members of Mr. Kersch’s family, own an aggregate of 52.98% of the Purchased Shares. Mr. Kersch currently owns 1,826,434 common shares of the Company representing 8.73% of the issued and outstanding common shares in the capital of the Company on a non-fully diluted basis. The Letter of Intent contemplates that, in the event the Proposed Transaction were to close, Mr. Kersch would hold 3,284,767 common shares of the Company representing 12.2% of the issued and outstanding common shares in the capital of the Company on a non-fully diluted basis, and Mr. Kersch, together with other members of his family, would own 4,917,127 common shares of the Company representing 18.38% of the issued and outstanding common shares in the capital of the Company on a non-fully diluted basis.

Notwithstanding any requirement the Exchange may have with respect to the Proposed Transaction, Mr. Kersch has disclosed to the other directors of the Company (the “Disinterested Directors“) his interest in Solace and the Proposed Transaction and as such, only the Disinterested Directors who are “independent” as such term is defined in MI 61-101 will be entitled to vote on any board resolutions, or make any decisions, to approve the Proposed Transactions. The Letter of Intent has been approved by only the independent Disinterested Directors.

In respect of the requirements of MI 61-101, the Company is relying on the exemptions from the formal valuation and minority approval required under MI 61-101. The Company is exempt from the formal valuation requirement of MI 61-101 in reliance of sections 5.5(b) and 5.5(e) as no securities of the Company are listed on the specified markets outlined therein and the current Control Person, as such term is defined in applicable securities laws, owning 26.29% of the current issued and outstanding common shares in the capital of the Company, supports the Proposed Transaction and (1) is not an interested party, (2) is at arm’s length to the interested party, and (3) supports the transaction. Additionally, the Company is exempt from minority shareholder approval of MI 61-101 in reliance of section 5.7(1)(c). The Proposed Transaction will not create a new Control Person as such term is used applicable securities laws.

ABOUT GEYSER BRANDS

Geyser Brands supports healthy active lifestyles by planning to deliver innovative cannabis, hemp, THC, and CBD infused consumer packaged goods in the nutraceutical, cosmetics, food, beverage and pet sectors. Through ongoing R&D investment in nano-fusion, a proprietary all-natural Nano-technology, Geyser will deliver unique formulations with superior bio-availability and water-solubility properties to its retail and export markets. Geyser Brands is a Licensed Producer under the Cannabis Act, with its facility located in Port Coquitlam, British Columbia and is approved by Health Canada.