Seed Innov Regulatory News (SEED)

Seed Innovations Ltd / AIM: SEED / Sector: Closed End Investments

20th August 2021

SEED Innovations Limited ("SEED" or the "Company") 

Investee Company Update: Yooma Wellness

SEED Innovations Ltd, the AIM quoted company investing in fast growing and industry leading businesses with a focus on the medical cannabis, health and wellness space, is pleased to note an announcement by its portfolio company, Yooma Wellness Inc. ('Yooma').

 Yooma has completed its first acquisition since its successful admission to trading on the AQSE Growth Market ("AQSE") on 10 August 2021. The acquisition was made via Yooma's wholly owned subsidiary, Yooma Europe Limited, of UK-based Vitality CBD Limited ("Vitality"), a leading CBD company, for a total consideration of up to £10.2 million (including 7,706,422 shares issued at £0.545 per share) and advances Yooma's stated buy-and-build strategy. Following the acquisition and admission of consideration shares, SEED will hold approximately 4.54% of Yooma.

The announcement by Yooma is set out below without material changes or adjustments:

Yooma Wellness Inc. (CSE:YOOM; AQSE:YOOM), a global vertically integrated wellness platform that develops and markets a portfolio of CBD and wellness brands, is pleased to announce it has completed the acquisition of Birmingham-based Vitality CBD Limited ("Vitality"), a UK-market-leading CBD company, for a total consideration of up to £10.2 million (the "acquisition"), via the Company's wholly owned subsidiary, Yooma Europe Limited. 

The acquisition adds a significant source of recurring revenue to Yooma and its subsidiaries, through Vitality's presence at mainstream retail outlets such as Boots, Tesco, Asda and Lloyds Pharmacy, as well as expanding the Group's target customer base and distribution network for its existing European-focused brands, including the MYO plant nutrition platform.

In the six-month period to 30 June 2021, Vitality had gross turnover of £1.6 million and EBITDA of approximately £300,000. There are significant synergies to be had and by working with the Yooma management team, Vitality will focus on growing revenue and margin in the latter half of 2021 as well as expanding distribution to other European and International markets. 

This is the first acquisition since it completed the dual-listing of its shares on the AQSE Growth Market in London on 10 August 2021 and is part of Yooma's buy-and-build strategy.

Lorne Abony, Chairman of Yooma, commented: "Completing the acquisition of Vitality is the first step of the strategic plan the Company outlined to investors at the time of our UK financing and dual-listing - to buy and build companies globally, focused on materially increasing the Company's top-line revenue, leveraging the Group's integrated supply chain to drive margin growth, and expanding distribution for the existing product portfolio. This acquisition will help accelerate our growth by exporting these branded products to other Yooma jurisdictions and integrating with our MYO Plant Nutrition operations and distribution. Vitality is a market leader in the UK with presence in major retail outlets such as Boots, Tesco, Asda and Lloyds Pharmacy and we look forward to working with the team at Vitality."

Nikhil Nathwani, Co-founder and Managing Director commented on the acquisition: "The whole Vitality CBD team are excited to be joining the Yooma group. CBD is a growing industry not only in the UK but globally, and the acquisition positions us nicely to be able to continue to expand and grow the business."

Details of the Acquisition

Under the terms of a sale and purchase agreement, the Company has acquired 100% of the issued shares of Vitality for total consideration of up to £10.2 million (the "Consideration") comprising:

Ø£4 million cash at closing ("Cash Consideration") subject to agreed working capital adjustments (Vitality being acquired on a cash-free / debt-free basis);

Ø7,706,422 new common shares of the Company ("Consideration Shares") representing £4.2 million issued at an implied price of £0.545 per share; and

Øup to £2 million of cash or share-based consideration, at the Company's option, subject to the achievement of revenue milestones by Vitality for the financial year 2022 as set out below:

Cash consideration for the acquisition will be funded from the Company's existing cash.

100% of the Consideration Shares are subject to a lock-in, with 25% of the Consideration Shares being released from the lock-in on each of the 10-month, 16-month, 22-month and 28-month anniversaries of completion.

The Company has received customary warranties and indemnities in relation to the business and operations, assets, trading and financial affairs of Vitality (with related tax covenant and warranties).

The current senior management team at Vitality have been retained and will continue to operate the business day-to-day as the Company focuses on integration and expansion.

Admission of Consideration Shares and Total Voting Rights

Application will be made for the Consideration Shares, which will rank pari passu with the existing common shares in issue, to be admitted to trading on the AQSE Growth Market ("Admission"). Dealings are expected to commence on or around 23 August 2021.

Following Admission, Nikhil Nathwani, the largest shareholder of Vitality prior to the acquisition by the Company, will hold a total of 4,623,852 common shares of the Company, representing 4.74% of the Company's issued common shares.

The Company's total issued and voting share capital upon Admission of the Consideration Shares will consist of 97,497,707 common shares. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, securities of the Company.

About Vitality CBD Limited

Vitality CBD is the most widely stocked brand of CBD in the UK with products distributed in national retailers such as Boots, Tesco, ASDA and Lloyds Pharmacy. Vitality CBD is also prominent on E-commerce retailers such as Amazon, Very & Ocado. The Vitality CBD product portfolio has over 60 SKUs including oils and sprays in a wide range of flavours and strengths, edibles, and a specially developed and formulated range of CBD skin care cosmetic products.

About Yooma Wellness Inc.

Yooma's mission is to build a vertically-integrated global leader in the manufacturing, marketing, distribution, and sale of wellness products including hemp seed oil and hemp-derived and cannabinoid (CBD) ingredients. The company leverages strategically curated sales channels and ecommerce networks to deliver a diverse mix of wellness products through operating subsidiaries in the United States, United Kingdom, France and Japan. Learn more at www.yooma.ca.

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For further information on the Company please visit  www.seedinnovations.co  or contact:

Notes

SEED Innovations is an AIM quoted investment company focused primarily on disruptive high growth life sciences and technology businesses particularly within the medical cannabis arena. The Company's strategy is to identify early stage opportunities that have an upcoming investment catalyst and grow its portfolio in terms of value whilst limiting the number of investee companies to a level where relevant time can be devoted to each.