Cannabis Co. On The Move: Kiaro Debuts In Ontario Via Acquisition Of Cozy Cannabis, Takes Over Aegis' Subsidiary Through Share Swap Deal

Canadian cannabis retailer Kiaro Holdings Corp. KO announced its debut into the Ontario retail cannabis market through the acquisition of Cozy Cannabis.

Based in Vancouver, the company has purchased all issued and outstanding shares of Sculthorp SEO Inc. for $1.35 million in cash and stock.

The sum includes $850,000 in Kiaro’s common shares, issued at $0.135 per share and $500,000 in cash, subject to a $50,000 holdback for specific performance and transitionary matters and customary adjustments.

The acquisition, which is subject to the approval of the TSX Venture Exchange, enables Kiaro to utilize new revenue segments from the U.S. and Australian jurisdictions with consumption accessory sales. In addition, it strengthens the company’s strategic entry into Ontario.

Sculthorp SEO operates a store located at 1428 Dundas St W in the heart of Trinity Bellwoods neighborhood of Toronto and three eCommerce business platforms, including Vaped.ca, Vaped.com and VaporizersDirect.com.au.

Kiaro also confirmed that Christian Sculthorp, founder and CEO of Cozy Cannabis, agreed to join its management team as director of eCommerce for a minimum period of six months.

"Omni-channel excellence has always been a focus for Kiaro with one of the first private regulated cannabis eCommerce sites in the country," Daniel Petrov, CEO of Kiaro, said. "With this acquisition, Kiaro adds international exposure and operational expertise with a high margin consumption accessory e-Commerce portfolio."

Aegis To Take 25% Stake In Kiaro By Selling Its Subsidiary

On Tuesday, Kiaro agreed to buy Aegis Brands Inc.’s AEG wholly-owned subsidiary Hemisphere Cannabis Co, under a share swap agreement.

In exchange for 100% of Hemisphere's common shares, Kiaro opted to issue 61.3 million common shares worth $7,900,863 to Aegis, plus 6.7 million common share purchase warrants.

Kiaro also plans to issue an additional 6.7 million shares to Aegis once particular commercial milestones are achieved in the 12 months following the transaction's closing.

The transaction boosts Kiaro’s retail footprint to 16 operational cannabis retail locations across Canada and anticipated 18 locations by the end of the first quarter of 2021.

As part of the deal, Jen Juby, vice president of operations at Hemisphere, agreed to join the Kiaro team as vice president of retail.

Kronos Capital Partners agreed to serve as financial counsel to Aegis in collaboration with Haywood Securities as financial advisor to Kiaro.

"The acquisition of Hemisphere is a transformational transaction for Kiaro," Petrov disclosed. "By more than doubling Kiaro's store count and combining two premium cannabis retail brands, we expect to achieve our objective of exponential revenue and EBITDA growth."

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