LEQ.H Leo Acquisitions Corp

Leo Acquisitions Corp. (NEX: LEQ.H) (“Leo” or the “Company”) and CBx Brands Inc. (“CBx”) are pleased to announce that they have entered into a letter of intent (the “LOI”), dated July 10, 2019, pursuant to which the Company and CBx have agreed to complete a transaction (the “Transaction”) that will result in a reverse take-over of the Company by the shareholders of CBx. It is intended that the Transaction will constitute the "Qualifying Transaction" of the Company as such term is defined in Policy 2.4 of the Corporate Finance Manual (the “Policy”) of the TSX Venture Exchange (the “TSXV”). Following the completion of the Transaction, it is intended that the resulting issuer (the “Resulting Issuer”) will carry on the current business of CBx.

CBx is a vertically-integrated retail technology company providing online and offline services including curated cannabinoid products, product development, manufacturing, payment, endless-aisle, fulfillment and attribution. Capitalizing on challenges that retailers face in provisioning online CBD storefronts, CBx is developing its own marketplace by enabling trusted resellers to instantly become premium cannabinoid destinations. CBx’s initial attack vertical is vape with a secondary distribution into lifestyle verticals such as gyms and spas. CBx was incorporated under the laws of the Province of Ontario under the name "Gilla Canada Inc,".

CBx’s primary geographic focus is Europe with manufacturing and fulfillment based out of Edinburgh, Scotland. CBx has secured an agreement for exclusive CBD distribution and manufacturing with CCHG Ltd. d/b/a VPZ (“VPZ”), a large vape retailer in the United Kingdom covering over 125 stores with plans to add an additional 300 physical stores over the next 18 months and thousands of online resellers. Under the terms of the agreement, VPZ has agreed to manufacture certain CBx products at cost plus a 25% fee. CBx is not required to provide any capital or minimum order requirements under the agreement. In addition, for any products manufactured by VPZ and subsequently sold to its retail vape stores, CBx will be entitled to a fixed dollar royalty payment per unit sold and the amount of the royalty payment will vary across CBx's product line. CBx plans to launch into the United States in the first quarter of 2020.  

Mr. Gerald Goldberg, CEO of Leo, commented, “This is a very exciting transaction opportunity for Leo as CBx has positioned itself with significant capabilities for manufacturing and distribution of CBD and other cannabinoid products throughout the UK and Europe and is accelerating a USA distribution strategy as well.” He added, “We are very impressed with the CBx approach of combining a strong marketplace strategy with effective distribution and leading product development, formulation and verification.”

Under the terms of the LOI, it is intended that the Company and CBx will enter into a definitive business combination agreement (the “Definitive Agreement”), pursuant to which the Transaction will be completed by way of merger, amalgamation, arrangement or other similar form of transaction; the final structure of which will be subject to the receipt by the parties of all relevant tax, corporate and securities law advice. The Definitive Agreement will incorporate the principal terms of the Transaction set forth in the LOI, together with other representations, warranties, and indemnities customary for transactions of similar nature.

The Proposed Transaction

It is contemplated that the Company will acquire all the issued and outstanding common shares of CBx (the “CBx Shares”) by way of a share exchange, plan of arrangement, amalgamation or other form of business combination. In exchange for all of the outstanding CBx Shares, the Company will issue common shares of the Resulting Issuer to the shareholders of CBx at an exchange ratio to be determined by the parties based on the relative valuations of the Company and CBx provided for in the Definitive Agreement. Furthermore, all securities exchangeable or convertible into, or other rights to acquire CBx Shares (the “CBx Convertible Securities”), including all issued and outstanding options and warrants, will be exchanged, on the same economic terms, for equivalent securities of the Resulting Issuer.

The Company’s common shares (the “Company Shares”) are currently listed on the NEX board of the TSXV under the symbol "LEQ.H". The Company Shares are currently halted from trading and are expected to remain halted pending the completion of the Transaction.

Terms and Conditions of the Transaction

The completion of the Transaction is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to: (i) the negotiation of the Definitive Agreement; (ii) receipt of all requisite regulatory, stock exchange, court or governmental approvals, authorizations and consents; (iii) satisfactory results of due diligence and absence of any material change or a change in a material fact or a new material fact affecting the Company or CBx; (iv) completion of the Concurrent Financing (defined below); and (v) if applicable, each party having received appropriate approvals from their shareholders.

Prior to or concurrently with the completion of the Transaction, CBx intends to complete an equity financing by way of private placement of subscription receipts for gross proceeds of $1,000,000 or such other amount that is adequate to meet the applicable listing requirements of the TSXV (the “Concurrent Financing”). The terms and conditions of the proposed Concurrent Financing have not been finalized as of the date hereof and the parties have not yet engaged a lead agent to assist with the completion of the Concurrent Financing.

It is anticipated that the Company will be valued at $1,903,211 (based on 4,229,357 issued and outstanding Company Shares at a value of $0.45 per share) and CBx will be valued at $9,835,260 on a pre-Concurrent Financing basis. Based on the relative valuations of the Company and CBx at closing of the Transaction, the Company will issue the applicable number of common shares of the Resulting Issuer to the shareholders of CBx and holders of CBx Convertible Securities will receive convertible securities of the Resulting Issuer on the same economic terms as the CBx Convertible Securities which they replace.

Resulting Issuer

It is expected that the Resulting Issuer will continue the business of CBx and will be renamed to Shop CBx Group Inc. or such other name as may be reasonably determined by CBx. In addition, it is intended that upon closing of the Transaction that the common shares of the Resulting Issuer will be listed and posted for trading on the TSXV.

Following the completion of the Transaction, it is expected that the board of directors of the Resulting Issuer will consist of a minimum of 6 directors, including 2 directors to be nominated by the Company and 4 directors to be nominated by CBx. In addition, it is also anticipated that the current management of CBx will become the management of the Resulting Issuer upon completion of the Transaction.

The following sets out the names and backgrounds of the persons that are currently proposed to be the directors and officers of the Resulting Issuer. The remaining proposed directors and officers of the Resulting Issuer will be determined at a later date.

Gary Schwartz – Proposed Director and Chief Executive Officer

Mr. Schwartz is a six-time recipient of the Deloitte Fast 50 Award and was recognized as the “2013 Mobile Commerce Evangelist of the Year” and “2014 US Retail Innovator of the Year”. For the past 25 years, Mr. Schwartz has played a role as investor, owner-operator in a number of companies in the healthtech, fintech and adtech space. He was the founder of Impact Mobile Inc., a leading provider of mobile communication services which he sold to IMI Mobile in 2018. Mr. Schwartz is an award-winning Simon & Schuster Business Author, and Chairman of the Toronto Chapter of the Silicon Valley Blockchain Society, and President of the Canadian Lenders Association.

Cameron Wickham – Proposed Chief Financial Officer

Mr. Wickham has over 7 years of experience in public company financial management and has been involved in a number of going public transactions in Canada and the United States. He specializes in navigating early stage financing structures, going public transactions, ongoing management and continuous disclosure requirements of public companies both in Canada and the United States. Mr. Wickham began his career in investment banking after obtaining his Bachelor of Commerce from Queen’s University. He is currently the CFO of Baymount Incorporated, a diversified investment and venture capital firm.

Gerald Goldberg, CPA, CA – Proposed Director

Mr. Goldberg is a Chartered Professional Accountant and a former senior partner at two major accounting firms. Mr. Goldberg has over 30 years of audit experience and was the head of the public company audit division of a major firm. He has industry expertise in cannabis cultivation and aggregation, distribution, retail, mining natural resource and oil & gas, real estate, "not-for-profit" entities and manufacturing industries, with a strong emphasis on taxation and business advisory services. Mr. Goldberg was active in corporate finance and development and was involved in the structure and design of numerous innovative financing instruments, tax shelters and syndications, both in Canada and the US. He was actively involved with the audit of various public Canadian, US, Chinese and other foreign companies listed in the US and Canada. Mr. Goldberg holds the designation of C.T.A. from the University of South Africa and is a member of the Institute of Chartered Professional Accountants of Ontario and the Public Accountants Council of Ontario. Mr. Goldberg was and is a director and audit committee chairman of numerous Canadian and U.S. public companies. Mr. Goldberg currently serves as Chairman and CEO of Osoyoos Cannabis Inc. (CSE:OSO) and Director at FSD Pharma Inc. (CSE: HUGE), Capricorn Business Acquisitions Inc. (NEX: CAK.H)  and Baymount Incorporated (NEX:BYM.H) and is Chief Executive Officer and a Director of  the Company. Mr. Goldberg previously served as Interim Chief Executive Officer of Canada House Wellness Group Inc. (CSE:CHV).

Graham Simmonds – Proposed Director

Mr. Simmonds has over 20 years of experience in public company management and business development projects within both the gaming and technology sectors. Mr. Simmonds is licensed and/or has previously been licensed/registered with a number of horse racing and gaming commissions in the United States and Canada. Mr. Simmonds developed and launched the first in-home digital video horse racing service in North America and is a former director and partner in eBet Technologies Inc., a licensed ADW operator and software developer for the online horse racing industry in the United States. eBet Technologies Inc. was successfully sold to Sportech PLC in December of 2012. Mr. Simmonds is the Chairman and CEO of Gilla Inc., a global manufacturer and distributor of e-liquid and vape products, and Baymount Incorporated, a diversified investment and venture capital firm. Mr. Simmonds was also the former Chairman and CEO of CordovaCann Corp., a Canadian-domiciled diversified cannabis investment company, and DealNet Capital Corp., a consumer finance company.

Callum Henderson – Proposed Director

Mr. Henderson is the Managing Director and Co-owner of VPZ, the United Kingdom’s leading vape retailer, as well as its related entities, which include its manufacturing and distribution businesses. VPZ was founded by Mr. Henderson and his brother Connor in 2012 and have since grown the business to over £25 million in annualized revenues. VPZ currently has over 125 retail stores and Mr. Henderson is currently leading an aggressive expansion with a plan to have over 300 stores by 2021.

Ashish Kapoor – Proposed Director

Mr. Kapoor has over 18 years of experience in providing capital markets advisory and assurance services as a finance professional. After obtaining his Chartered Accountant designation at Ernst & Young, Mr. Kapoor has gained over 10 years of experience in investment banking; advising clients across various industries. As a senior vice president at Macquarie Capital Markets Canada Ltd., Mr. Kapoor was responsible for the Canadian telecom, media, entertainment and technology investment banking and principal investing group. During his 10 years at Macquarie, Mr. Kapoor completed in excess of $3 billion in successful principal investments and advised on a further $4 billion of mergers and acquisitions for third party clients. Mr. Kapoor was formerly the CFO of DealNet Capital Corp., a consumer finance company, Transeastern Power Trust (prior to its current name, Blockchain Power Trust), an independent power producer focused on renewable energy sources, and Gilla Inc., a global manufacturer and distributor of e-liquid and vape products. Mr. Kapoor is currently a Director and CFO of CordovaCann Corp., a Canadian-domiciled diversified cannabis investment company.

About CBx Brands Inc.

CBx Brands Inc. is a vertically-integrated retail technology company providing online and offline services including curated cannabinoid products, product development, manufacturing, payment, endless-aisle, fulfillment and attribution. CBx has secured exclusive distribution with VPZ to over 125 vape stores in the United Kingdom and has also secured an exclusive contract manufacturing and fulfillment services agreement with a leading manufacturer in Scotland. CBx was founded by leaders in the vape industry to develop a dedicated strategy to launch CBD and other cannabinoid products throughout Europe and the United States. Its shareholders include publicly listed Gilla Inc. (OTCQB: GLLA), an international manufacturer and distributor of vape products, and the founders of VPZ in the United Kingdom.

The controlling shareholders of CBx are Gilla Inc., a Nevada corporation (50.7%), and The Woodham Group Inc. (16.6%) and SimKap Advisory Corp. (3.3%), which, in each case, are Ontario corporations, controlled by Graham Simmonds, a resident of Toronto, Ontario.

About Leo Acquisitions Corp.

Leo Acquisitions Corp. is a capital pool company as defined in the policies of the TSXV. The Company was incorporated on October 28, 2009 and has not commenced commercial operations and has no significant assets other than cash. Leo’s common shares are currently halted from trading and are expected to remain halted pending the completion of the Transaction and until after the TSXV has reviewed the materials in support of the Transaction.

Sponsorship

The Qualifying Transaction will be subject to TSXV Policy 2.2 on sponsorship and sponsorship requirements, unless exempt in accordance with TSXV policies. Although no sponsor has been engaged at this time, if necessary, the Company intends to apply for an exemption from the sponsorship requirements of the TSXV, however there is no assurance that the TSXV will exempt the Company from all or part of applicable sponsorship requirements.

Forward-looking Statements

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward-looking statements. Forward-looking statements in this news release include, but are not limited to, the ability of the Company to complete the Transaction on the terms and conditions contained in this news release and CBx's proposed business objectives. Any number of factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although the Company believes that the expectations reflected in forward looking statements are reasonable, it can give no assurance that the expectations of any forward-looking statements will prove to be correct, or that the Transaction will be completed as proposed or at all. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise. As of the date of this release, the Company has not entered into a definitive agreement with CBx with respect to the Transaction and there can be no assurances that such an agreement will be executed or that the Transaction will be completed.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV Requirements, 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.

For further information please contact:

Leo Acquisitions Corp.Gerald GoldbergChief Executive Officergerrygoldbergcpa@gmail.com(416) 460-3000

CBx Brands Inc.Graham SimmondsCo-Chairgraham.simmonds@cbxbrands.com(416) 843-8221

Neither the 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 news release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.