IONIC Brands Corp. Acquires Zoots Premium Edibles for $11 Million to Expand Consumer-Focused Cannabis Portfolio

2019Year7Month26Sun.,VCBeat（WeChat ID:vcbeat）It has been learned that,IONIC BRANDS CORP（hereinafter referred to as“IONIC”）（OTC Market Code：IONKF）announced that the company has completed the acquisition of the Washington, D.C.-basedEdibleCannabis ProductsCompanyd/b/a Zoots Premium bles（(hereinafter referred to as“Zoots”）the acquisition.

The total consideration for the acquisition of Zoots was approximately US$11 million, comprising US$855,000 in cash, the issuance of 9,635,150 common shares (“Consideration Shares”) to Zoots’ shareholders (the “Vendors”) at a deemed value of CAD $1.30 per share, and the assumption of outstanding debt amounting to US$606,420. The Vendors also agreed to enter into a lock-up agreement, pursuant to which up to 70% of the Consideration Shares will be locked up and released over a nine-month period. The issuance of the shares is subject to approval by the Board of Directors and the Canadian Securities Exchange (CSE). In addition, IONIC will issue to Zoots’ shareholders warrants to acquire up to 4.8 million common shares at an exercise price of CAD $1.33 per share, exercisable within three years. Through this acquisition, IONIC has added Zoots’ edible and infused products to its consumer-focused cannabis concentrate portfolio. The Zoots product line expands IONIC’s current offerings and is expected to increase its market share in the cannabis retail and wholesale sectors.

In February 2019, Zion Market Research released the report “Edible Cannabis Market by Type (Solid Edibles, Topicals, Inhalables, and Liquids), Formulation (Cannabidiol and Tetrahydrocannabinol), Application (Cancer, Epilepsy, Arthritis, Multiple Sclerosis, Alzheimer’s Disease, etc.): Global Industry Perspective, Comprehensive Analysis, and Forecast, 2018–2025.” The report stated that the global edible cannabis market was valued at approximately USD 2.376 billion in 2018 and is projected to reach USD 11.564 billion by 2025, representing a compound annual growth rate (CAGR) of approximately 25.4% from 2019 to 2025. The legalization of cannabis in Canada has attracted numerous market participants. Increasing social acceptance of cannabis across various regions will create further opportunities for the edible cannabis products market.

Patrick Devlin, co-founder of Zoots, stated, “Both IONIC and Zoots are trusted family-owned businesses and leaders in the cannabis industry. Our target consumers are seeking a simple and intuitive way to consume cannabis. With cannabis edibles gaining increasing popularity worldwide, we offer an ideal option for cannabis consumption.”

John Gorst, Chairman and CEO of IONIC, stated that IONIC has been working closely with the Zoots leadership team to integrate Zoots’ portfolio of handcrafted and trusted products into its transition. Its premium ion vaporizers are targeted at consumers interested in high-end cannabis products that can be consumed with confidence, while Zoots’ edible products align well with IONIC’s brand strategy. The acquisition of Zoots expands IONIC’s market segments into the popular edibles category and broadens IONIC’s distribution network across the United States. IONIC is also pleased to announce that Mr. Dan Devlin will continue to serve as the Company’s Chief Operating Officer.

Zoots is a cannabis edibles company based in Washington State and the first to enter the cannabis beverage market. Founded by brothers Dan, Michael, and Patrick Devlin, Zoots utilizes its proprietary Cypress Extraction™ system, blending it with other premium ingredients to deliver a safe, reliable, and enjoyable experience. The company’s product line includes tinctures, gummies, energy chews, and hard candies, all manufactured to ensure consistent and reliable dosing. In 2019, Zoots reported total revenue of approximately $3 million and an EBITDA of $360,000. Following the acquisition, Zoots’ formulations will be retained by IONIC. Zoots’ premium cannabis beverages are available through licensed cannabis retailers in Illinois, Washington, Colorado, and Massachusetts. Emphasizing product quality, safety, and consistency, Zoots offers products with THC (tetrahydrocannabinol, the primary psychoactive component in cannabis) levels as low as 5 mg, enabling consumers to easily manage dosage and control the intensity and effects of consumption.

IONIC BRANDS is a Washington-headquartered national cannabis holding company dedicated to building a consumer-centric, multi-state portfolio of cannabis concentrate brands, with a focus on the premium and luxury segments. The company’s cornerstone brand, Ionic, is an established vaporizer brand that, following aggressive expansion across the U.S. West Coast, currently operates in Washington, Oregon, and California. IONIC Brands aims to become a leader in the highest-value segment of the cannabis market and achieve nationwide expansion.

(Compiled by Tian Shuhang)