TAAT™ Enters into Agreement to Acquire Ohio-Based Distributor to Enhance its Position in the U.S. Tobacco Industry

Rhea-AI Summary

TAAT Global Alternatives Inc. (OTCQX: TOBAF) announced an agreement to acquire HLND Holdings, Inc. for CAD $6,604,000 (approximately USD $5,200,000). HLND, a profitable tobacco wholesaler in Ohio, has experienced over 10% annual revenue growth, totaling CAD $87.2 million in 2021. This acquisition aims to enhance TAAT’s distribution and product commercialization, leveraging HLND's established network of over 5,000 convenience stores. The transaction is set to close around March 15, 2022, and will involve a mix of cash and common shares for payment.

Positive

• Acquisition of HLND is expected to enhance TAAT's distribution capabilities in the Great Lakes region.
• HLND has shown consistent revenue growth exceeding 10% annually, indicating strong market performance.
• The deal provides access to a network of over 5,000 convenience stores, creating opportunities for market expansion.

Negative

• HLND has a total debt of CAD $2,286,000, which affects the net value of the acquisition.
• Majority of the purchase price (81%) will be in Common Shares, potentially leading to shareholder dilution.

LAS VEGAS and VANCOUVER, British Columbia, Feb. 25, 2022 (GLOBE NEWSWIRE) -- TAAT™ GLOBAL ALTERNATIVES INC. (CSE: TAAT) (OTCQX: TOBAF) (FRANKFURT: 2TP) (the “Company” or “TAAT™”) is pleased to announce that it has entered into an agreement dated Friday, February 25, 2022 to acquire HLND Holdings, Inc. (“HLND”), the parent entity of a convenience and tobacco wholesaler based in Ohio. HLND presently maintains a network of more than 5,000 convenience stores through its direct and indirect relationships with independent and corporate retailers as well as a network of regional sub-distributors. From 2019 to 2021 HLND realized at least 10% growth of its net revenues each year, with net revenues for calendar 2021 amounting to CAD $87,181,400.32 (approximate conversion from USD as at February 23, 2022), and continues to be profitable. The Company anticipates that by acquiring HLND it could fortify its existing revenue sources as well as its portfolio of assets as TAAT™ continues to expand both in the United States and internationally.

With its agreement to acquire HLND, the Company is embarking on a journey in which it plans to convert certain aspects of its supply chain into wholly-owned internal business units, which aligns with the practices of current leaders in the global tobacco industry. With HLND’s seasoned executive team and personnel in sales, logistics, and product development, the Company can leverage these invaluable skill sets as part of commercializing TAAT™ products on a larger scale.

A photo accompanying this announcement is available at:
https://www.globenewswire.com/NewsRoom/AttachmentNg/f5840231-aae7-491d-b6c8-d2864802541b

The Company has entered into an agreement to acquire HLND, which will provide TAAT™ with its own wholesale presence in the Great Lakes region of the United States. HLND operates a long-established convenience distribution network in categories to include tobacco, snacks, candy, and various other convenience products.

Readers using news aggregation services may be unable to view the media above. Please access SEDAR or the Investor Relations section of the Company’s website for a version of this press release containing all published media.

HLND has aggressively expanded its footprint in the Great Lakes region of the United States, which can add to the Company’s overall presence with its first owned facility and distribution network in the northeastern region of the country. Besides TAAT™ and leading brands of tobacco cigarettes (e.g., Marlboro, Newport, Camel), HLND also carries a selection of consumer packaged goods (“CPG”) oriented towards the convenience segment such as candy, snacks, beverages, and paper products. Additionally, HLND already stocks a diverse range of alternatives to tobacco cigarettes such as e-cigarettes and vaping cartridges, which the Company intends to complement with its heat-not-burn offering as detailed in its February 18, 2022 press release. Since 2019, HLND’s net revenues have seen “double-digit” growth (i.e., growth of 10% or more) year-over-year (“YoY”) as shown in the table below.

Year	HLND Net Revenues
2018	$54,134,739.20
2019	$60,181,829.12 (+11.17% YoY)
2020	$78,629,344.00 (+30.65% YoY)
2021	$87,181,400.32 (+10.87% YoY)
All figures in this table are expressed in Canadian dollars (CAD) as approximate conversions from United States dollars (USD) as at February 23, 2022

TAAT™ Chief Executive Officer Setti Coscarella commented, “In competitive industries such as tobacco, long-term success largely depends on how self-sustaining and independent your operations are at a macro level. TAAT™ has proven quite popular in the Midwest, and I believe that by owning a regional fulfillment centre we will be able to distribute our products more efficiently and more profitably as we continue to build market share. Additionally, with direct access to Ohio stores through HLND we can test new offerings and initiatives, and overall gain an improved understanding of a product’s journey to market from a distributor perspective. HLND has proven to be a very reliable, insightful, and beneficial business partner of ours since they began carrying TAAT™. As such, we are excited about making them part of the TAAT™ family, where we anticipate they will be invaluable to us for growing our distribution, developing new products, and formulating strategies for commercializing TAAT™ on an even larger scale.”

HLND Director Barry Adelman stated, “Ever since we started carrying TAAT™ over a year ago, it has proven to be an impressive product among our existing tobacco offerings. Over the past several decades we have seen numerous alternatives to tobacco cigarettes hitting the market, though for a combustible product to be nicotine-free and tobacco-free is rather unique, and that alone does a great job at capturing the attention of our retail accounts, leading to repeat orders when consumers are ultimately compelled to make the switch. Having worked side-by-side with TAAT™ all this time, we have identified countless opportunities for them to potentially generate unparalleled value as our parent company. The combustible Original, Smooth, and Menthol offerings are just the beginning; between the recently announced heat-not-burn offering and the ability to develop and test new variations, our facilities, team, and network are capable of bringing many great things to fruition for TAAT™, which we are very excited to begin exploring.”

The purchase price to acquire HLND will be equal to CAD $6,604,000 or the equivalent of approximately USD $5,200,000 (the "Purchase Price"), representing a valuation of CAD $8,890,000 or the equivalent of approximately USD $7,000,000 (the "Valuation") less CAD $2,286,000 or the equivalent of US $1,800,000 debt outstanding on the HLND line of credit. The final Purchase Price on closing shall be adjusted accordingly as the sum of the Valuation less the Debt Amount on the Closing Date. The Purchase Price shall consist of up to CAD $1,254,760 or 19% of the Purchase Price in cash ("Cash") and the remaining CAD $5,349,240 or 81% of the Purchase Price in Common Shares of TAAT™ (the "Consideration Shares").

All Consideration Shares will be issued upon closing, and will be subject to a lock-up schedule whereby one-third (1/3) of the Consideration Shares will be released from lock-up on the 4^th, 8^th and 12^th month from closing.

The transaction as contemplated in the agreement between the Company and HLND is expected to close on or about March 15, 2022.

In connection with the closing of this transaction, TAAT™ will pay a finder’s fee of 5% of its value (paid as 50% in cash and 50% in shares) to an arm’s length party.

On behalf of the Board of Directors of the Company,

TAAT™ GLOBAL ALTERNATIVES INC.

“Setti Coscarella”

Setti Coscarella, CEO and Director

For further information, please contact:

TAAT™ Investor Relations
1-833-TAAT-USA (1-833-822-8872)
investor@taatglobal.com

THE CANADIAN SECURITIES EXCHANGE (“CSE”) HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ACCURACY OR ADEQUACY OF THIS RELEASE, NOR HAS OR DOES THE CSE’S REGULATION SERVICES PROVIDER.

About TAAT™ Global Alternatives Inc.

The Company has developed TAAT™, which is a tobacco-free and nicotine-free alternative to traditional cigarettes offered in "Original", "Smooth", and "Menthol" varieties. TAAT™'s base material is Beyond Tobacco™, a proprietary blend which undergoes a patent-pending refinement technique causing its scent and taste to resemble tobacco. Under executive leadership with "Big Tobacco" pedigree, TAAT™ was launched first in the United States in Q4 2020 as the Company seeks to position itself in the $814 billion¹ global tobacco industry.

For more information, please visit http://taatglobal.com.

References

¹ British American Tobacco - The Global Market

Forward-Looking Statements

This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Often, but not always, forward-looking information and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur, or be achieved. Forward-looking information in this news release includes statements regarding the anticipated performance of TAAT™ in the tobacco industry, in addition to the following: Completion of the Company’s planned acquisition of HLND under the terms of a February 25, 2022 agreement; the ability of management to integrate HLND's business into its current operations; and the ability to execute on its plan to expand both in the United States and internationally. The forward-looking information reflects management’s current expectations based on information currently available and are subject to a number of risks and uncertainties that may cause outcomes to differ materially from those discussed in the forward-looking information. Although the Company believes that the assumptions and factors used in preparing the forward-looking information are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed timeframes or at all. Factors that could cause actual results or events to differ materially from current expectations include: (i) adverse market conditions; (ii) changes to the growth and size of the tobacco markets; and (iii) other factors beyond the control of the Company. The Company operates in a rapidly evolving environment. New risk factors emerge from time to time, and it is impossible for the Company’s management to predict all risk factors, nor can the Company assess the impact of all factors on Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking information. The forward-looking information included in this news release are made as of the date of this news release and the Company expressly disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable law.

The statements in this news release have not been evaluated by Health Canada or the U.S. Food and Drug Administration. As each individual is different, the benefits, if any, of taking the Company’s products will vary from person to person. No claims or guarantees can be made as to the effects of the Company’s products on an individual’s health and well-being. The Company’s products are not intended to diagnose, treat, cure, or prevent any disease.

This news release may contain trademarked names of third-party entities (or their respective offerings with trademarked names) typically in reference to (i) relationships had by the Company with such third-party entities as referred to in this release and/or (ii) client/vendor/service provider parties whose relationship with the Company is/are referred to in this release. All rights to such trademarks are reserved by their respective owners or licensees.

Statement Regarding Third-Party Investor Relations Firms

Disclosures relating to investor relations firms retained by TAAT™ Global Alternatives Inc. can be found under the Company's profile on http://sedar.com.

FAQ

What is the value of the acquisition deal for HLND Holdings by TAAT?

The acquisition deal for HLND Holdings is valued at CAD $6,604,000 (approximately USD $5,200,000).

When is the TAAT acquisition of HLND expected to close?

The acquisition is expected to close on or about March 15, 2022.

How much revenue did HLND generate in 2021?

HLND generated net revenues of CAD $87,181,400.32 in 2021.

What percentage of the purchase price for HLND is paid in common shares?

81% of the purchase price will be paid in common shares of TAAT.

What strategic advantage does TAAT gain from acquiring HLND?

TAAT gains enhanced distribution capabilities and access to an established network of over 5,000 convenience stores.