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CE BRANDS INC. AND EBUYNOW ECOMMERCE LTD. ANNOUNCE EXECUTION OF AMALGAMATION AGREEMENT

CALGARY, Alberta and VICTORIA, British Columbia, March 13, 2020 (GLOBE NEWSWIRE) -- CE Brands Inc. (TSXV:CEBI.P, “CEBI”), 1233336 B.C. Ltd. (“CEBI Subsidiary”), a wholly-owned subsidiary of CEBI, and eBuyNow eCommerce Ltd. (“EBN”) are pleased to announce that they have entered into an amalgamation agreement dated March 12, 2020 (the “Amalgamation Agreement”), pursuant to which CEBI will acquire all of the issued and outstanding securities of EBN (the “Proposed Transaction”).

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.

EBN

EBN carries on the business of developing, manufacturing, and distributing consumer electronics in partnership with globally-recognized brands. Using proprietary market data, it identifies gaps in global markets, creates products to fill those gaps, and leverages brands to accelerate product sales. EBN has been the research and development and online-sales team behind more than 30 products delivered in partnership with brands such as Kodak, LG, Motorola, Panasonic, Samsung, Sharp, and Skype.

EBN is currently developing, manufacturing, and distributing Kodak Smart Home products, including Cherish Home Security Cameras and Cherish Video Baby Monitors. EBN recently launched the Motorola Moto 360 SmartWatch, as well as a range of patented Air Purifiers.

EBN was incorporated under the laws of the Province of British Columbia in April 2012. Immediately before the Qualifying Transaction, EBN expects its outstanding capital to consist of (a) 92,461,446 class “A” common voting shares (the “EBN Shares”) assuming the Minimum Private Placement (as defined below) and 99,161,446 EBN Shares assuming the Maximum Private Placement (as defined below); (b) 6,673,320 options to purchase an aggregate of EBN Shares (the “EBN Options”); and (c) 19,390,967 warrants to purchase EBN Shares (the “EBN Warrants”) assuming the Minimum Private Placement and 26,090,967 EBN Warrants assuming the Maximum Private Placement, plus EBN Warrants that entitle the holders to purchase the number of EBN Shares as is calculated by applying a 33% discount to the EBN Share Price (as defined below), and dividing the sum of $2,052,286.38 by that discounted deemed price. No individual has beneficial ownership of or control or direction over, directly or indirectly, 20% of more of the outstanding EBN Shares on a non-diluted or fully-diluted basis. The directors of EBN are Craig Smith of Guanacaste Province, Costa Rica, and W.K. Wong of the Republic of Singapore.

The following tables summarize certain financial information about EBN for the nine months ended December 31, 2019:

Item As at December 31, 2019
Total assets C$22,441,136
Total liabilities C$13,278,107
Total shareholders’ equity C$9,163,029
Revenue C$5,077,788
Expenses C$9,953,830
Net income (loss) and comprehensive income (loss) C$(4,876,042)
Basic and diluted income (loss) per share C$(0.05)

The foregoing financial information was derived from the unaudited financial statements of EBN for the nine months ended December 31, 2019. Readers are cautioned that, because the financial statements of EBN were internally prepared, there can be no assurance that the financial information is accurate prior to the completion of an independent audit.

CEBI

CEBI was incorporated under the laws of the Province of Alberta in October 2018, and is a CPC, as that term is defined in the policies of the Exchange. It does not carry on any business other than the identification and evaluation of assets and businesses with a view to completing a Proposed Transaction.

Immediately before the Proposed Transaction, CEBI expects its outstanding capital to consist of 8,600,000 common shares (the “CEBI Shares”) and 1,360,000 options to purchase CEBI Shares. Historical financial information about CEBI is available on its SEDAR profile at www.sedar.com.

Proposed Transaction

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

  (a) CEBI will consolidate all of the issued and outstanding CEBI Shares on a five-for-one basis (the “Consolidation”).
     
  (b) 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 post-Consolidation CEBI Shares (the “Post-Consolidation Shares”) on a one-for-one basis.
     
  (c) All of the issued and outstanding EBN Options will be exchanged for options to purchase Post-Consolidation Shares (the “Post-Consolidation Options”) on a one-for-one basis.
     
  (d) All of the issued and outstanding EBN Warrants will be exchanged for warrants to purchase Post-Consolidation Shares (the “Post-Consolidation Warrants”), on a one-for-one basis.

On June 17, 2019, the day before the Exchange halted trading of the CEBI Shares pending public disclosure of the Proposed Transaction, the closing price of the CEBI Shares was $0.245. The parties will determine the deemed price of the EBN Shares for the purposes of the Proposed Transaction (the “EBN Share Price”) at the time CEBI files its Prospectus (as defined below).

Private Placement

EBN has engaged Integral Wealth Securities Limited to act as the exclusive agent in connection with the private placement (the “Private Placement”) of a minimum of 6,700,000 and a maximum of 13,400,000 units of EBN (the “EBN Units”), at a purchase price of C$0.75 per EBN Unit, for minimum gross proceeds of C$5,025,000 (the “Minimum Private Placement”) and maximum gross proceeds of C$10,050,000 (the “Maximum Private Placement”). Each EBN Unit will consist of one EBN Share and one EBN Warrant. Each EBN Warrant will entitle the holder of the EBN Warrant to purchase one EBN Share, at a purchase price of C$0.75 per EBN Share, at any time up until 24 months after the EBN Units have been issued. The Private Placement is scheduled to close before the completion of the Proposed Transaction.

Conditions Precedent to Closing of Proposed Transaction

The Proposed Transaction is subject to a number of significant conditions, including that: (a) the Exchange has conditionally accepted the Proposed Transaction; (b) EBN has completed the Minimum Private Placement; (c) holders of the CEBI Shares have approved the Consolidation and Name Change in accordance with corporate law; (d) holders of the EBN Shares have approved the Amalgamation and Share Exchange in accordance with corporate law; (e) holders of the EBN Options have approved the Option Exchange; and (f) holders of the EBN Warrants have approved the Warrant Exchange.

Business of the Resulting Issuer

CEBI, after the completion of the Proposed Transaction (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: (a) 92,461,446 Post-Consolidation Shares assuming the Minimum Private Placement and 99,161,446 Post-Consolidation Shares assuming the Maximum Private Placement; (b) 6,673,320 Post-Consolidation Options; and (c) 19,390,967 Post-Consolidation Warrants assuming the Minimum Private Placement and 26,090,967 Post-Consolidation Warrants assuming the Maximum Private Placement, plus Post- Consolidation Warrants that entitle the holders to purchase the number of Post-Consolidation Shares as is calculated by applying a 33% discount to the EBN Share Price, and dividing the sum of $2,052,286.38 by that discounted deemed price.

Immediately after the Proposed Transaction, CEBI and EBN expect the outstanding capital of the Resulting Issuer to consist of: (a) 94,181,446 Post-Consolidation Shares assuming the Minimum Private Placement and 100,881,446 Post-Consolidation Shares assuming the Maximum Private Placement; (b) 6,945,320 Post-Consolidation Options; and (c) 19,390,967 Post-Consolidation Warrants assuming the Minimum Private Placement and 26,090,967 Post-Consolidation Warrants assuming the Maximum Private Placement, plus Post-Consolidation Warrants that entitle the holders to purchase the number of Post-Consolidation Shares as is calculated by applying a 33% discount to the EBN Share Price, and dividing the sum of $2,052,286.38 by that discounted deemed price.

Resulting Issuer Insiders

The composition of the board of directors of the Resulting Issuer has not yet been determined. CEBI and EBN intend to announce the composition of the board of directors in a subsequent press release.

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

Craig Smith – President and Chief Executive Officer. Mr. Smith is Chairman and President and Chief Executive Officer of EBN. He has been actively involved in the electronics and consumer goods industries for over 25 years. Mr. Smith previously served for eleven years as Chief Executive Officer of Freetalk LLC, a Delaware-based manufacturing and distribution company producing consumer goods under license from Panasonic, Samsung, Sharp, Toshiba, and many others. Prior thereto, he acted as Chief Executive Officer of Hubble Connected Ltd., a company involved in the design and development of application software for electronics manufacturers. He holds a Master of Engineering (Aeronautical Mechanical Engineering) from Kingston University.

Wong Wing Kiong – Chief Product Officer. Mr. Wong has over 25 years of international experience in consumer electronics development and manufacturing, serving as Chief Operating Officer of Cinatic Technology Limited, a Hong Kong-based manufacturing and wholesale company. After Cinatic Technology Limited was acquired by EBN, Mr. Wong was appointed a director and Chief Product Officer of EBN.

Kalvie Legat – Chief Financial Officer. Mr. Legat is the Chief Financial Officer of EBN. He has over 15 years of experience at investment dealers and other financial-services firms. He began his career at a predecessor to Canaccord Genuity Group Inc. in 2004 and later transitioned to executive roles for Jennings Capital Inc. and Rundle Capital Advisors Inc., before serving as Institutional Sales and Branch Manager of Integral Wealth Securities Limited.

Graem Millala – Chief Commercial Officer. Mr. Millala is the Chief Commercial Officer of EBN. He has over 15 years of experience in the creative industry, including numerous regional, national, and international campaigns. He currently acts as Chief Marketing Officer of Media One Multimedia Inc., a multimedia production agency he helped co-found.

Katica Viskovic – Chief Operating Officer. Ms. Viskovic is the Chief Operating Officer of EBN. In that role, she has over a decade of experience with international supply chain management and client onboarding.

Adam Rock – Corporate Secretary. Mr. Rock is a partner of Nerland Lindsey LLP, a Canadian law firm, where he practices corporate law with a focus on securities and mergers and acquisitions. His clients include private corporations, public companies, and investments funds. Mr. Rock holds a law degree from the University of Toronto and is called to the bar in the Province of Alberta.

Upon completion of the Proposed Transaction, it is anticipated that Craig Smith of Guanacaste Province, Costa Rica, the proposed President and Chief Executive Officer of the Resulting Issuer, will beneficially own or control, directly or indirectly, 12,956,250 Post-Consolidation Shares, representing 13.76% of the issued and outstanding Post-Consolidation Shares assuming the Minimum Private Placement and 12.84% of the issued and outstanding Post-Consolidation Shares assuming the Maximum Private Placement.

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 (the “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 Private Placement. 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 Private Placement. 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
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.