Aegis Brands Inc. Closes Sale of Hemisphere to Kiaro, Holds 25 Per Cent of Kiaro's Common Shares

Published: September 28, 2021

Aegis Brands Inc. Closes Sale of Hemisphere to Kiaro, Holds 25 Per Cent of Kiaro's Common Shares

Aegis Brands Inc. completed transaction with Kiaro Holdings Corp., a national cannabis retailer and wholesale distributor, acquiring all the issued and outstanding shares of Aegis’ subsidiary, 2734524 Ontario Inc. (dba Hemisphere Cannabis Co. or “Hemisphere”), which comprises a portfolio of seven retail locations in Ontario and two more locations subject to potential future development.

In consideration for 100% of Hemisphere’s common shares, Kiaro issued to Aegis 61,300,000 common shares of Kiaro (the “Kiaro Shares”), having an aggregate value of $6.13 million based on the closing price of the Kiaro Shares on September 24, 2021, and 6,700,000 common share purchase warrants, with each warrant exercisable for one additional Kiaro Share at an exercise price of $0.16, subject to customary adjustments. Aegis is also entitled to receive a further 6,700,000 Kiaro Shares on achievement of certain commercial milestones concerning the existing seven locations within the first year following the closing of the transaction.

AEGIS HOLDS 25 PER CENT OF KIARO’S COMMON SHARES
The 61,300,000 Kiaro Shares issued to Aegis at closing represent approximately 25% of the Kiaro Shares, and Aegis is now Kiaro’s largest shareholder. Prior to the closing of the sale transaction, Aegis held no Kiaro Shares. Further, Aegis’ CEO Steven Pelton has joined the Kiaro board of directors. A copy of the early warning report with additional information in respect of the foregoing will be available on SEDAR at www.sedar.com and from Melinda Lee at investors@aegisbrands.ca.

THE FUTURE OF AEGIS
With the completed Hemisphere transaction and the sale of Second Cup in April, the next chapter of Aegis’ transformation is underway. As North America starts to return to pre-pandemic activities, Aegis is eager to expand its presence in the food and beverage sector through acquisitions and partnerships with great brands across North America.

“The completed transaction of Hemisphere means that Aegis can remain focused on acquisition and growth in the food and beverage space. We will partner with incredible brands and management teams to innovate, reposition and expand in this industry,” said Steven Pelton, President and CEO of Aegis Brands Inc. “We know that the team at Kiaro will use their cannabis industry expertise to successfully grow the business in a highly competitive market.”

Consumers are enthusiastically returning to food service locations following a period of household savings and fewer food service options from which to choose. This return of consumers to food service locations has the potential to create a profitable environment for the operators in the space and highlights Aegis’ opportunity to consolidate great restaurant companies and the entrepreneurs behind them.

Additionally, the sale of Hemisphere to Kiaro enables Aegis to increase its focus on the growth of its Bridgehead Coffee brand and execute its wholesale, e-commerce, and new Coffeehouse strategies. The sale transaction also enables Aegis to retain an investment in retail cannabis, and is a positive step toward optimizing value in its cannabis business.

“The closing of the transaction is a significant moment for Kiaro. Kiaro’s past operational successes combined with our objective of exponential revenue and EBITDA growth demonstrate our performance advantage within the Cannabis Industry,” stated Daniel Petrov, Chief Executive Officer of Kiaro. “We would like to thank Aegis for its partnership and are eager to see its transformation within the food and beverage space.”

Aegis Brands Inc.
Aegis Brands Inc. currently owns and operates Bridgehead Coffee. The company’s vision is to build a portfolio of amazing brands that can grow and flourish with access to our resources and expertise. The company is committed to letting each brand operate independently while providing shared expertise to help them thrive. For more information, please visit aegisbrands.ca. Aegis’ head office is located at 210 Shields Court, Markham, Ontario, L3R 8V2.

Kiaro Holdings Corp.
Based in Vancouver, British Columbia, Kiaro is an independent, omni-channel cannabis retailer and distributor. Through existing storefronts across British ColumbiaSaskatchewanOntario and with the completion of the recent acquisition of Hemisphere Cannabis from Aegis Brands, Kiaro has 16 stores in operation and another two expected by Q1 of 2022. This is in addition to a wholesale distribution division servicing Saskatchewan; ecommerce sites in Canada, the US and Australia; and plans for continued national expansion. Kiaro is driven to introduce new and experienced consumers to a lifelong exploration of cannabis.

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