TORONTO, Nov. 28, 2018 /CNW/ - Newstrike Brands Ltd. (TSX-V:HIP) ("Newstrike" or the "Company") is pleased to announce that it has entered into an agreement, as of today's date, with Peter Neal and Chris Neal and their company, Neal Brothers Inc. ("Neal Brothers") to create a co-branded specialty food products company (the "Joint Venture Agreement") to develop, market and sell cannabis edibles.
"We are bringing together two established brands and combining our respective strengths in a venture focused on the cannabis edibles sector. The Neal Brothers are innovators with a proven track record of creating a premium brand of products. Through their distribution business, they have also discovered and built several premium brands in the Canadian retail marketplace. We will apply our combined expertise to deliver leading-edge edible cannabis products that will both delight consumers and create shareholder value," said Jay Wilgar, CEO of Newstrike. "Our goal is to become the most trusted consumer focused brand in the Cannabis sector. Through our joint venture with Neal Brothers, we will engage in vast consumer insights, as well as in-house R&D to create real products that will stand the test of time in the consumer packaged goods (CPG) space."
"We are thrilled to partner with Newstrike," said Peter Neal. "Bringing together our combined brand and product development capabilities under one roof, coupled with our respective experience in the cannabis and food sectors, creates a powerful combination. Our goal is to continue to develop high quality products based on consumer desires and we see tremendous opportunity to come up with innovative and exciting products. We are approaching this product segment with an open mind and can't wait to start developing premium edible cannabis products and to share our creations with customers in the very near future."
The joint venture partners will conceive and develop innovative edible cannabis products at Newstrike's fully-licensed Niagara operations, where an in-house research and development facility is being constructed. Product development and future product brand names will be based on consumer data and insights.
Terms of Agreement
Pursuant to the Joint Venture Agreement, Newstrike and Neal Brothers have incorporated a joint venture entity and have agreed on terms relating to the management and control of the specialty food products company (the "Joint Venture"). The Company and Neal Brothers will contribute proportional capital in the Joint Venture in exchange for a 60% and a 40% interest in the Joint Venture, respectively. The Joint Venture will be involved in the procuring, manufacturing, distributing, marketing and selling of certain co-branded specialty food products which will be infused, derived or otherwise include cannabis.
The Company has also entered into an agreement to acquire a minority interest in Neal Brothers, pursuant to a share purchase agreement (the "SPA" and, together with the Joint Venture Agreement, the "Agreements"). As part of the agreement, Peter and Chris Neal will also provide advisory services to Newstrike with respect to the business of Newstrike.
"The culture, style and ethos of the Neal Brothers company is something we genuinely want to be part of," said Wilgar. "We felt an investment into their business was an important step that signifies the start of a long-lasting partnership between our two companies."
The Agreements are subject to customary conditions precedent, including receipt of all applicable regulatory and third-party approvals.
In connection with new executive appointments, the Company has granted incentive stock options to purchase up to an aggregate of 1,500,000 common shares of the Company (the "Options"). The Options are exercisable for a period of 3 years at a price of $0.52 per share, based on the 15-day volume weighted average price plus 10% of Newstrike's common shares on the TSX Venture Exchange as of November 25, 2018. All Options were granted in accordance of the Company's stock option plan.
About Newstrike and Up Cannabis
Newstrike is the parent company of Up Cannabis Inc., a licensed producer of cannabis that is licensed to both cultivate and sell cannabis in all acceptable forms. Newstrike, through Up Cannabis and together with select strategic partners, including Canada's iconic musicians The Tragically Hip, is developing a diverse network of high-quality cannabis brands. For more information, visit http://www.up.ca or http://www.newstrike.ca
About Neal Brothers Inc.
Neal Brothers is a highly respected leader and innovator in the natural, organic and specialty foods sector in Canada. Started by brothers Chris and Peter Neal in their Mom's kitchen in Aurora, Ontario in 1988, Neal Brothers branded products have been available across Canada for over 30 years. For more information, visit www.nealbrothersfoods.com
This news release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Newstrike to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or 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. These forward-looking statements include, but are not limited to, statements relating to the entering into of the Agreements and the completion of the proposed transactions thereunder by and between the Company and Neal Brothers. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a number of factors and risks. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements contained in this news release are made as of the date of this release and, accordingly, are subject to change after such date.
Newstrike does not assume any obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, except as required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Newstrike Brands Ltd.
For further information: Investor Relations, Telephone: (416) 283-9930, Email: firstname.lastname@example.org; Jay Wilgar, Chief Executive Officer, (905) 844-8866