Psychedelics Company, Delic, Completes Acquisition of Complex Biotech Discovery Ventures

“Delic Labs will be an integral pillar of the Delic ecosystem and will produce evidence-based psilocybin and cannabis treatments in innovative product forms, providing great benefits for those suffering from treatable illnesses,” said Matt Stang, Delic Co-Founder and CEO. “CBDV has a consistently profitable history, more than 50 blue chip clients, and an opportunity for tremendous growth as we commercialize the science.  As further legalization of psychedelic treatments progresses, we are well positioned to capitalize on new markets with significant opportunities. We officially welcome the CBDV family into Delic and look forward to their continued success and sharing their discoveries with millions in the near term.”

Dr. Markus Roggen, CEO of CBDV, stated “The Delic platform now allows us to reach much broader psychedelic and medical communities and help ensure cutting-edge treatments become accessible for all. We believe our IP and innovative findings will enable Delic to become the leader in psychedelic wellness discovery and treatment.”

Founded by award-winning chemist, Dr. Markus Roggen, and UBC Professor, Glenn Sammis, CBDV supports the psychedelic industry with high precision chemical analytics and metabolomic identification. CBDV is one of a handful of licensed research psilocybin labs in Canada and has an aggressive plan to build out a suite of novel compounds and delivery methods for the industry. The company is also a leading cannabis analytical and research company boasting clients that include some of the largest brands in the world. CBDV has applied for its dealer’s license, and intends to eventually commercialize its psilocybin research and associated intellectual property (IP).

Acquisition Highlights

• The acquisition of CBDV further establishes DELIC as a diversified psychedelics organization: The addition of CBDV allows DELIC to add scientific-based research and analytics to its product offerings. CBDV recently received its Section 56 Exemption granted by Health Canada, enabling CBDV to focus on research and intellectual property development with psilocybin.
• Building an IP portfolio: CBDV plans to use its analytical tools for psychedelic mushroom compounds that advance clinical ‎and end-user testing. Development of psilocybin analogs that could be used in future medical ‎treatments.
• Enhanced exposure of CBDV to drive growth: DELIC expects to drive customers to CBDV for its cannabis related laboratory services through its media platform, allowing CBDV to expand its current customer base and potential product offerings.
• History of profitability: CBDV has a history of profitability, with a focus on extraction optimization, analytical testing, and chemical process development to advance the cannabis and psilocybin industry. Current and past customers are well-established global enterprises who require the cutting-edge cannabis and soon, psilocybin research, which CBDV provides services to.
• Management expertise. Dr. Roggen, who will remain an employee of CBDV, brings a wealth of knowledge and industry experience to DELIC, in a critically important and evolving space.

Transaction Terms

Delic acquired all of the issued and outstanding shares of CBDV from its shareholders for a purchase price of $7,000,000 (the “Closing Date Payment”) plus certain amounts, if any, to be earned by Dr. Roggen pursuant to an Earn-Out Agreement (as defined below) (together with the Closing Date Payment, the “Purchase Price”). The Closing Date Payment was  satisfied by Delic’s issuance to the CBDV shareholders of the number of consideration shares equal in value to the Closing Date Payment amount, issued at a price per share equal to the hire of (a) the ten (10) trading day volume weighted average price (“VWAP”) of such consideration shares on the Canadian Securities Exchange (the “Exchange”) on the trading day immediately prior to the closing date.

Dr. Roggen has also entered into an earn out agreement (the “Earn Out Agreement”) whereby he may receive additional consideration shares in an amount equal to up to $3,000,000 as follows: (a) $500,000 to be issued on the earlier of (i) the date CBDV’s Section 56 Exemption is renewed or a new authorization is issued by Health Canada or (ii) the date CBDV’s application for a dealer’s license from Health Canada is received; (b) $1,250,000 to be issued if CBDV achieves gross revenue equal to at least $1,200,000 in the first 12 months following closing of the transaction; and (c) $1,250,000 to be issued if CBDV achieves gross revenue equal to at least $3,600,000 in the first 24 months following closing of the transaction (each such event, a “Milestone”). Such additional consideration to satisfied by Delic’s issuance of additional consideration shares at a price per share equal to the ten (10) trading day VWAP of the consideration shares on the Exchange on the trading day prior to the date the Milestone is reached.

In addition, Dr. Roggen has entered into an employment agreement with CBDV whereby he will serve as President and Chief Scientific Officer of CBDV.

Release of Proceeds From Subscription Receipt Financing

Prior to closing of the Transaction, CBDV completed a non-brokered private placement (the “Offering“) of 11,441,189 subscription receipts of CBDV (the “Subscription Receipts“) at a price of $0.30 per Subscription Receipt for gross proceeds of approximately $3,432,356. The proceeds from the Offering were placed into escrow on completion of the Offering.

CBDV has now satisfied the escrow release conditions, and immediately prior to closing of the Transaction: (i) each Subscription Receipt was converted into one common share of CBDV and one common share purchase warrant of CBDV (each, a “Warrant“), which, concurrent with the closing of the Transaction, were immediately exchanged for one subordinate voting share of DELIC and one subordinate voting share purchase warrant of DELIC having the same terms as the Warrants, respectively; and (ii) the gross proceeds of the Offering were released to CBDV.

In connection with the Offering, CBDV paid aggregate finders’ fees of $92,085.62 cash and issued finders an aggregate of 306,951 share purchase warrants of CBDV. In addition, DELIC paid a corporate finance fee of $63,000 cash and issued 200,000 subordinate voting share purchase warrants of DELIC.

The net proceeds from the Offering shall be used to increase DELIC’s cash position, to execute on DELIC’s business plan, for working capital and for general corporate expenses.

Forward-Looking Information and Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of DELIC’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but are not limited to: the business, plans, operations and growth of Delic Labs; potential benefits of the Transaction; use of proceeds of the Offering; and expectations for other economic, business, and/or competitive factors.

By identifying such information and statements in this manner, DELIC is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of DELIC to be materially different from those expressed or implied by such information and statements. Such risks and other factors may include, but are not limited to: incorrect assessment of the value and potential benefits of the Transaction; direct and indirect material adverse effects from the COVID-19 pandemic; inability of Delic Labs to adequately protect and enforce its intellectual property; inability to obtain future financing on suitable terms; failure to obtain required regulatory and other approvals; risks inherent in the psychedelic treatment sector; changes in applicable laws and regulations; and failure to comply with applicable laws and regulations.

In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, DELIC has made certain assumptions. These assumptions include, but are not limited to: the ability of the Company to successfully execute on its plans and integrate Delic Labs; the ability to commercialize Delic Lab’s psilocybin research and associated intellectual property; the Company’s continued response and ability to navigate the COVID-19 pandemic; the ability to maintain compliance with applicable contractual and regulatory obligations and requirements; and there will be adequate liquidity available to the Company to carry out its obligations.

Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

Although DELIC believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and DELIC does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward- looking information and statements attributable to DELIC or persons acting on its behalf is expressly qualified in its entirety by this notice.