Icanic Brands Signs Non-Binding LOI To Acquire DNA Organics, Here Are The Terms

Icanic Brands Company, Inc. ICNAF ICAN has signed a non-binding letter of interest to acquire DNA Organics, Inc. (“Lifted”).

Lifted is a vertically integrated California cannabis company specializing in cultivation and solventless manufacturing using sustainable, organic practices with a focus on achieving economies of scale through adoption and adaptation of existing commercial agriculture and manufacturing solutions. It currently has 20.25 acres of licensed outdoor canopy. The company currently has 100% of its cultivation under contract with three of the largest companies in California including Buddies, Jetty and LEEF brands.

Key Highlights

• Currently producing 240k lbs fresh frozen per year

• Under contract with Buddies, Jetty Extracts, and LEEF

• Specialty in fresh frozen material

• Experienced management team

• Proprietary list of high yielding genetics

• Accretive transaction

Acquisition Strategy

• Utilize Lifted Organics’ raw inputs to power Icanic’s existing extraction lines

• Integrate raw inputs from Lifted Organics into Icanic’s higher margin branded portfolio

• Strengthen business-to-business relationships through the ability to offer Icanic’s partners additional supply chain

• Consolidate operating expenses onto Icanic’s existing team to improve efficiencies

• All stock transaction

“We are very excited to welcome the Lifted Organics team to our family. With the addition of the 20 acres to our supply chain, it will allow Icanic to expedite our dedication to providing industry best gross margins on our internal brand portfolio while being able to offer a more robust solution to our brand manufacturing partners who are some of the largest companies in the state,” stated Brandon Kou, CEO of Icanic Brands. “This accretive acquisition should significantly reduce COGS with the addition of an industry leader within the cultivation supply chain and provide a platform to continue to grow our robust and dynamic genetics portfolio. Lifted Organics is the latest example of how we are able to grow through our merger & acquisition process and provide significant value to our shareholders.”

Terms of the LOI

Under the terms of the LOI, the purchase price will be comprised of the closing purchase price, and the earn-out payments.

The initial payment forming part of the purchase price will be 1.0x multiple of revenue for the period beginning September 30^th, 2022 till September 30^th, 2023, less the estimated revenue value of the current inventory on hand calculated at the time of close and less any estimated revenue value of produced between the time of close until September 30^th, 2022. The closing purchase price will be satisfied in full through the issuance of common shares of the company.

The earn-out payment forming part of the purchase price will be paid as follows:

• performance milestone of 10% of the difference in the closing purchase price and a 1.0x multiple of the subsequent 12 months of revenue following the closing date of the proposed acquisition; and

• milestone based consideration derived from achieving revenue targets.

Each of the foregoing earn-out payments will be satisfied in full through the issuance of Icanic shares.

In the event the purchase price does not exceed $5 million, Ionic agrees to pay the difference such that the total consideration shall equal to $5 million. Such payment will be satisfied in full through the issuance of Icanic shares.

THC Engineering Share Issuance

The company will issue an aggregate of 3.76 million common shares pursuant to the terms of its acquisition of THC Engineering, LLC. On May 7, 2021, the company announced that it had completed the acquisition of THC Engineering, LLC and THC Engineering Holdings, LLC and pursuant to the terms of a share exchange agreement dated April 7, 2021 among the company, THC and the unit-holders of THC.

Pursuant to the terms of the share exchange agreement, the company will issue 1.75 million common shares which equates to 50% of the shares paid for consideration; and 2 million common shares for the portion currently owed for meeting one of the milestones as defined in the share exchange agreement. The consideration shares and milestone shares have been issued at a deemed price of CA$0.239 per share and are subject to a four-month hold period and resale conditions as required by applicable securities laws and the policies of the Canadian Securities Exchange. The price per share was determined by calculating the volume-weighted average trading price of the company’s common shares for the ten days ending on the day prior to the achievement of the certain milestones pursuant to the share exchange agreement.

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