Safe Supply Streaming Co Ltd. Announces Closing of Acquisition of Drug Lab 118 Ltd

Rhea-AI Summary

Safe Supply Streaming Co (SSPLF) has completed the acquisition of Drug Lab 118 in an all-share transaction, issuing 10 million common shares at $0.05 per share. The acquisition includes Drug Lab US's proprietary harm reduction test strips, strengthening Safe Supply's position in North American markets. The shares are subject to resale restrictions over 12 months, with one-third becoming tradeable at 4, 8, and 12-month intervals. Additionally, 1 million shares were issued as a finder's fee. Seymour Paul Ferreira joins Safe Supply's board, bringing health-tech expertise. The global drug testing and harm reduction market is projected to reach $11.83 billion by 2028 with a 5.0% CAGR.

Positive

• Strategic acquisition strengthens product portfolio with proprietary harm reduction test strips
• Enters fast-growing market projected to reach $11.83B by 2028
• Acquisition completed using shares as currency, preserving cash
• Addition of experienced health-tech executive to board of directors

Negative

• 11.13% shareholder dilution from share issuance
• Significant share lock-up period could impact stock liquidity

Toronto, Ontario--(Newsfile Corp. - November 20, 2024) - Safe Supply Streaming Co Ltd. (CSE: SPLY) (FSE: QM4) (OTCQB: SSPLF) ("Safe Supply" or the "Company") is pleased to announce the closing of its previously announced acquisition of 100% of the issued and outstanding shares of Drug Lab 118 Ltd. ("Drug Lab US") the subsidiary of DrugLab118 Ltd. ("Drug Lab Parent") in an all-share transaction. The acquisition demonstrates Safe Supply's growth strategy and commitment, underscoring the Company's ability to execute strategic M&A transactions using its shares as currency.

The addition of Drug Lab US's proprietary harm reduction test strips strengthens Safe Supply's portfolio of innovative technologies to reach fast growing North American markets. This advances Safe Supply's goal to become a leader in the rapidly expanding harm reduction market.

Under the terms of a share purchase agreement dated November 1, 2024, between Safe Supply, Drug Lab US and Drug Lab Parent, Safe Supply issued 10,000,000 common shares at a deemed price of $0.05 per share to Drug Lab Parent as consideration. These shares are subject to resale restrictions, with one-third of the shares becoming tradeable at each of the four, eight, and twelve month anniversaries of the closing date. Additionally, Safe Supply issued 1,000,000 common shares at $0.05 per share as a finder's fee to an arm's-length third-party facilitator.

As part of this acquisition Safe Supply is pleased to add Seymour Paul Ferreira, executive director of Drug Lab Parent to its board of directors. Seymour brings a wealth of experience in the health-tech space, making him an invaluable addition to the board.

Bill Panagiotakopoulos, CEO of Safe Supply, commented:

"This acquisition demonstrates our team's ability to execute strategic M&A transactions efficiently, leveraging our shares to close deals that significantly enhance our portfolio."

Colin Lyon, CEO of Drug Lab Parent, added:

"We are pleased to reach the close of the transaction and continue to advance our growth strategy in North America with Safe Supply."

The global market for drug testing and harm reduction solutions continues to grow, with market research forecasting it to reach $11.83 billion by 2028 at a CAGR of 5.0%. This acquisition solidifies Safe Supply's position as a key player in this burgeoning industry.

Early Warning Disclosure

In connection with the Acquisition, Drug Lab Parent, a company located in Darlington, United Kingdom, has acquired 10,000,000 Common Shares. Immediately before the closing of the Acquisition, Drug Lab Parent, beneficially owned, or exercised control or direction over, 0 Common Shares, representing approximately 0% of the issued and outstanding Common Shares on a non-diluted and partially-diluted basis.

Immediately following the closing of the Acquisition, Drug Lab Parent beneficially owns, or exercises control or direction over, 10,000,000 Common Shares, representing approximately 11.13% of the issued and outstanding Common Shares on a non-diluted and partially diluted basis. Drug Lab Parent acquired these securities for investment purposes and may, from time to time, acquire additional securities of the Company or dispose of such securities as Drug Lab Parent may deem appropriate.

For the purpose of National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, a copy of Drug Lab Parent's early warning report may be obtained on the Company's SEDAR+ profile at www.sedarplus.ca or by contacting Colin Lyon at colin.lyon@druglab118.com. Drug Lab Parent's address is 43 Coniscliffe Road, Darlington, Co Durham, DL3 7EH.

About Drug Lab 118 Ltd.

Drug Lab US is a Delaware-incorporated subsidiary of Drug Lab Parent, a UK-based leader in forensic drug detection technologies. Drug Lab US's proprietary test kits are designed to detect a wide range of substances, including narcotics, and are exclusively distributed in North America.

About Safe Supply Streaming Co Ltd.

Safe Supply, listed on the Canadian Securities Exchange, focuses on acquiring, investing in, and developing businesses within the medical, wellness, and technology sectors. The Company is committed to driving shareholder value by leveraging innovative, technology-driven solutions to address critical healthcare and wellness needs.

For more information, please contact:

Bill Panagiotakopoulos
Chief Executive Officer
Email: info@safesupply.com
Telephone: (416) 566-3872
Website: www.safesupply.com

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements:

This press release contains certain "forward-looking statements" that reflect the Company's current expectations and projections about its future results. Wherever possible, words such as "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict" or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. Forward-looking statements in this press release include, but are not limited to, statements relating to the stated plans of the Company, including the addition of a new director to the Company's board of directors; the impact of adding Drug Lab US's proprietary harm reduction strip to Safe Supply's portfolio; Safe Supply's plans of becoming a leader in the harm reduction market; resale restrictions on securities; and expected timelines of issued shares becoming freely tradeable. The forward-looking statements, while considered reasonable by the Company, are inherently based upon assumptions that are subject to significant risks and uncertainties, including, but not limited to, the Company being able to carry out its business plan as contemplated; the Company's ability to maintain and retain the intellectual property rights to Drug Lab US's harm reduction strips; and the Company's plans to scale and develop its product offerings. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, they can give no assurances that the expectations of any forward-looking statements will prove to be correct. Such statements and information reflect the current view of the Company. Risks and uncertainties exist that may cause actual results to differ materially from those indicated or implied in the forward-looking statements and information. Such factors include, among others: the Company's reliance on key management; risks related to the Company's growth strategy, including that previous and future acquisitions do not meet expectations or potential acquisitions cannot be completed; the business of the Company being subject to broader economic and political factors; disruptions or changes in the credit or security markets; financial results of the Company's operations; unanticipated costs and expenses; general market and industry conditions; the Company's inability to retain 100% of the rights to develop products for pharmaceutical or medical uses; and the Company's inability to enhance its product development capabilities and/or maintain a portfolio of strategic investments; the forward-looking information contained in this press release represents the expectations of the Company as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable laws.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/230707

FAQ

How many shares did Safe Supply Streaming (SSPLF) issue for the Drug Lab 118 acquisition?

Safe Supply issued 10 million common shares at $0.05 per share for the acquisition, plus an additional 1 million shares as a finder's fee.

What is the lock-up period for shares issued in the SSPLF Drug Lab 118 acquisition?

The shares have a 12-month lock-up period, with one-third becoming tradeable at each of the four, eight, and twelve month anniversaries of the closing date.

What percentage ownership does Drug Lab Parent hold in SSPLF after the acquisition?

Drug Lab Parent now owns approximately 11.13% of Safe Supply's issued and outstanding Common Shares on a non-diluted and partially diluted basis.

What is the projected market size for drug testing and harm reduction by 2028?

The global market for drug testing and harm reduction solutions is forecasted to reach $11.83 billion by 2028, growing at a CAGR of 5.0%.