Safe Supply Streaming Co. Ltd. Announces Signing of Definitive Agreement to Acquire Drug Lab 118 Ltd

Rhea-AI Summary

Safe Supply Streaming (SSPLF) has signed a definitive agreement to acquire 100% of Drug Lab 118 through a share purchase valued at $0.05 per share, totaling 10,000,000 common shares. The acquisition enhances Safe Supply's portfolio of proprietary products in the medical testing and harm reduction sector. The deal includes contractual resale restrictions over 12 months and the issuance of 1,000,000 finder fee shares. Drug Lab US brings expertise in harm reduction test strips development, strengthening Safe Supply's position in the North American market. The integration aims to address growing regulatory requirements and consumer safety needs in the rapidly expanding harm reduction market.

Positive

• All-stock acquisition preserves cash resources
• Expands product portfolio with proprietary harm reduction test strips
• Enters growing market projected to reach $11.83 billion by 2028
• Strategic expansion into North American market

Negative

• Share dilution through issuance of 11 million new common shares
• Phased share release restrictions may impact stock liquidity

Toronto, Ontario--(Newsfile Corp. - November 4, 2024) - Safe Supply Streaming Co. Ltd. (CSE: SPLY) (FSE: QM4) (OTCQB: SSPLF) ("Safe Supply" or the "Company") is pleased to announce that, further to its press release of September 26, 2024, it has signed a definitive share purchase agreement dated November 1, 2024 (the "Definitive Agreement"), to acquire 100% of the issued and outstanding shares of Drug Lab 118 Ltd. ("Drug Lab US") from DrugLab118 Ltd. ("Drug Lab Parent"). The acquisition of Drug Lab US (the "Acquisition") enhances the Company's portfolio of proprietary products, developed through extensive R&D, and further strengthens its position in the medical testing and harm reduction sector.

Terms of the Transaction

Pursuant to the terms of the Definitive Agreement, Safe Supply will acquire all of the issued and outstanding shares of Drug Lab US from Drug Lab Parent and in consideration, Safe Supply will issue an aggregate of 10,000,000 common shares (each, a "Consideration Share") to Drug Lab Parent at a deemed issue price of $0.05 per Consideration Share. The Consideration Shares are subject to contractual resale restrictions, allowing 1/3 of the Consideration Shares to be traded after four, eight and twelve months following the closing of the Acquisition. It is anticipated that Drug Lab Parent will appoint one nominee to the Company's board of directors upon closing of the Acquisition. The closing of the Acquisition is expected to take place as soon as reasonably practicable, upon satisfaction of all requisite closing conditions.

In connection with the Acquisition, the Company has agreed to issue 1,000,000 common shares (the "Finder Fee Shares") at a deemed issue price of $0.05 per Finder Fee Share to a certain arm's length third party as compensation for facilitation the introduction of the Company to Drug Lab Parent and Drug Lab US. The Finder Fee Shares will be subject to a statutory hold period of four months and one day from the date of issuance in accordance with applicable securities laws.

Drug Lab US and Drug Lab Parent are arm's length parties to the Company. It is not expected that the Acquisition will result in a change of control or the creation of a new control person.

Strategic Acquisition and Strong Future Outlook

Management of Safe Supply believes the Acquisition enhances the Company's portfolio of proprietary product offerings and potential revenue opportunities, particularly with the addition of harm reduction test strips developed by Drug Lab US. These test kits, covering a wide range of narcotics and other substances, are a key element of Safe Supply's strategic growth initiative, expanding its product portfolio and increasing its presence in the North American market. The rising presence of toxic substances in schools, universities, and public venues continues to pose significant health risks, particularly from contaminated opioids and other potentially fatal substances. By leveraging Drug Lab Parent's extensive R&D experience and advanced technology, the integration of Drug Lab US will further broaden Safe Supply's product offerings and enhance its ability to address growing regulatory requirements and consumer safety needs.

Bill Panagiotakopoulos, CEO of Safe Supply, commented:

"The Acquisition of Drug Lab US demonstrates Safe Supply's strength in sourcing strategic deals and closing them efficiently. With Drug Lab Parent's extensive R&D investment, this Acquisition significantly enhances our portfolio and positions us to lead in the rapidly expanding harm reduction market. We are confident this Acquisition will contribute meaningfully to our revenue growth and long-term market share."

Colin Lyon, CEO of Drug Lab Parent, added:

"We are excited to partner with Safe Supply to expand our reach into the North American market. With Safe Supply's resources and strategic vision, we are well-positioned to execute our goals and grow our market presence. We look forward to this collaboration as we continue to innovate in harm reduction technologies."

The Acquisition comes at a time of rapid growth in the global market for narcotic testing and harm reduction solutions, with Drug Lab US's proprietary technology offering strong market potential, particularly in North America. According to Polaris Market Research, the global market for drug testing kits is expected to reach $11.83 billion by 2028, growing at a CAGR of 5.0% from 2021 to 2028^[1].

About Drug Lab 118 Ltd.

Drug Lab US, incorporated in Delaware, is a subsidiary of Drug Lab Parent, a United Kingdom-based company specializing in forensic drug detection technologies. With a focus on innovative solutions for the detection of illicit substances, Drug Lab US has developed a portfolio of proprietary, cutting-edge test kits for narcotics and harm reduction. Drug Lab US has an exclusive agreement with Drug Lab Parent to distribute these products in North America.

About Safe Supply Streaming Co. Ltd.

Safe Supply, a publicly traded company that is listed on the Canadian Securities Exchange, is focused on the acquisition, investment, and development of businesses within the medical, wellness, and technology sectors. The Company aims to drive sustainable growth and shareholder value by leveraging innovative, technology-driven solutions that address critical needs in healthcare and wellness.

For further information, regarding Safe Supply or the contents of this press release, please contact Bill Panagiotakopoulos, Chief Executive Officer and Director of Safe Supply, at bill@safesupply.com.

On behalf of the Board of Directors of Safe Supply Streaming Co. Ltd.

Bill Panagiotakopoulos
Chief Executive Officer and Director

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 "forward-looking information" within the meaning of applicable Canadian securities legislation. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events.

The forward-looking information and forward-looking statements contained herein include, but are not limited to, statements regarding: the Company's performance, business objectives and milestones and the anticipated timing thereof, and costs in connection with; the execution or achievement of such objectives and milestones; statements with respect to the growing market for narcotic testing and harm reduction solutions; statements with respect to the market for narcotic testing and harm reduction solutions experiencing rapid growth on a global scale; statements with respect to the ability for the Company to be a leader in the medical testing space due to the proposed acquisition of Drug Lab US; the Company's ability to complete the acquisition of Drug Lab US on the proposed terms, or at all; the ability of the Company to receive all required approvals for the completion of the Drug Lab US acquisition; the integration of the Drug Lab US products into the Company's portfolio; and statements with respect to the expansion of the Company's market presence due to continued growth, strategic acquisitions, and innovative partnerships.

Forward-looking information in this press release are based on certain assumptions and expected future events, namely: the Company's ability to maintain or exceed its current performance, and carry out its business objectives and milestones and under the anticipated timing and costs in connection with; the execution or achievement of such objectives and milestones; the Company's ability to capitalize on the potential benefits resulting from the potential distribution expansion in the North American market; the Company and Drug Lab US's respective abilities to maintain its stated licenses and obtain all necessary additional licenses and regulatory approval required for it to carry out its plans as described; statements with respect to the growing market for narcotic testing and harm reduction solutions; statements with respect to the market for narcotic testing and harm reduction solutions experiencing rapid growth on a global scale; the ability for the Company to be a leader in the medical testing space; statements with respect to Drug Lab US's ability to generate revenue from the sale of its products; the ability of the Company and Drug Lab US to successfully integrate their businesses; and that there will be continued growth, strategic acquisitions, and innovative partnerships that would expand the Company's market presence.

These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements, including but not limited to: the Company's inability to maintain or exceed its current performance, and carry out its business objectives and milestones and under the anticipated timing and costs in connection with, the execution or achievement of such objectives and milestones; the Company's inability to capitalize on the potential benefits resulting from the potential distribution expansion in the North American market; either the Company's or Drug Lab US's inability to maintain its stated licenses and obtain all necessary additional licenses and regulatory approval required for the Company or Drug Lab US to carry out its plans as described; the Company's inability to significantly enhance its portfolio after any strategic acquisitions it may complete, including the proposed acquisition of Drug Lab US; statements with respect to the growing market for narcotic testing and harm reduction solutions; statements with respect to the market for narcotic testing and harm reduction solutions experiencing rapid growth on a global scale; the inability of the Company and Drug Lab US to successfully integrate their businesses; the ability for the Company to be a leader in the medical testing space due to the proposed acquisition of Drug Lab US; and that there will be continued growth, strategic acquisitions, and innovative partnerships that would expand the Company's market presence.

Readers are further cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.

Forward-looking statements contained in this press release are expressly qualified by this cautionary statement and reflect the Company's expectations as of the date hereof and are subject to change thereafter. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking information, except as required by applicable law.

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^[1] https://www.polarismarketresearch.com/press-releases/drug-testing-market

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/228769

FAQ

What is the acquisition price for Drug Lab 118 by Safe Supply Streaming (SSPLF)?

Safe Supply Streaming will issue 10 million common shares at $0.05 per share, plus 1 million finder fee shares at the same price.

What are the share resale restrictions for SSPLF's Drug Lab 118 acquisition?

The consideration shares have a phased release: 1/3 can be traded after 4, 8, and 12 months following the closing of the acquisition.

How will the Drug Lab 118 acquisition benefit Safe Supply Streaming (SSPLF)?

The acquisition enhances Safe Supply's proprietary product portfolio, particularly in harm reduction test strips, and strengthens its position in the North American medical testing market.

What is the market growth projection for drug testing kits mentioned in SSPLF's announcement?

According to Polaris Market Research, the global drug testing kits market is expected to reach $11.83 billion by 2028, with a CAGR of 5.0% from 2021 to 2028.