News Releases

Movarie Capital Ltd. and Canada Yoga Inc. Enter into Definitive Amalgamation Agreement

Vancouver, B.C. – Movarie Capital Ltd. (TSX.V: MOV) (“Movarie”) and Canada Yoga Inc. (“CYI”) are pleased to announce that they have entered into an Amalgamation Agreement dated March 8, 2017 (the “Agreement”) with each other and 1109983 BC Ltd. (“Newco”), a wholly-owned subsidiary of Movarie, in respect of a proposed transaction whereby Movarie will acquire all of the issued and outstanding securities of CYI and the business of CYI (the “Transaction”).  The Transaction is expected to constitute a fundamental acquisition in accordance with Policy 5.3 of the TSX Venture Exchange (“TSXV”). 

In connection with the Transaction, Movarie also seeks to complete a bridge financing prior to closing of the Transaction to raise up to $150,000 (the “Bridge Financing”) and to complete a private placement concurrently with closing of the Transaction to raise between $500,000 and $1,200,000 (the “Private Placement”).

Terms of the Transaction

The Transaction will be completed on the terms and conditions of the Agreement, which replaces and supersedes the letter of intent dated December 6, 2016 previously entered into by Movarie and CYI with respect to the Transaction. 

Pursuant to the Agreement, it is anticipated that Newco and CYI will amalgamate to form a single subsidiary of Movarie (“Amalco”) and that in consideration for the cancellation of all outstanding securities of CYI, the holders of the CYI securities will be issued an aggregate of 18,650,000 common shares in the capital of Movarie (each, a “Movarie Share”) at a deemed price of $0.15 per share and an aggregate of 233,355 warrants of Movarie (each, an “Exchange Warrant”), with each Exchange Warrant being exercisable into one Movarie Share at an exercise price of $0.43 until September 1, 2017.  In addition, 1,000,000 Movarie Shares will be issued to L.R. Yoga Studio Inc. (“LR”) pursuant to the terms of an agreement between LR and CYI with respect to the purchase by CYI of its yoga studio located in North Vancouver, B.C. (as such obligations have been assumed by Movarie under the Agreement), and a total of 600,000 Movarie Shares will be issued as finder’s fees, as permitted by TSXV policy.

In addition to customary conditions associated with such a transaction, the Agreement provides that the closing is subject to the following conditions: (i) Movarie and CYI shall obtain shareholder approval of the Transaction, and, in the case of CYI, of adoption of new articles of incorporation, in accordance with corporate law and the requirements of applicable regulatory authorities; (ii) each of the board of directors of CYI and Movarie having approved the Transaction; (iii) CYI shall have terminated any shareholders’ agreements; (iv) CYI shall have obtained consent to the Transaction from the landlord of its North Vancouver yoga studio; (v) CYI shall have converted certain outstanding shareholder loans into shares; and (vi) the TSXV shall have accepted notice for filing of and approved all transactions of Movarie necessary to complete the Transaction.

Upon completion of the Transaction, Movarie intends to change its name to “Wellness Lifestyles Inc.” and to be classified as a Tier 2 industrial issuer under the policies of the TSXV.  The directors and officers of Movarie are expected to retain their positions with Movarie upon completion of the Transaction (the “Resulting Issuer”).

The Transaction is a Non-Arm’s Length Transaction under the policies of the TSXV, as Hamed Shahbazi is a director of both Movarie and CYI.  On closing, it is expected that Mr. Shahbazi will hold more than 10% of the issued and outstanding shares of the Resulting Issuer.  Accordingly, in accordance with TSXV Policy 5.3, approval of the Transaction will be sought from the shareholders of Movarie at the upcoming annual general meeting to be held on April 7, 2017. 

At the time of Movarie’s news release dated December 6, 2016 announcing the Transaction (the “December News Release”), it was expected that the Transaction would constitute a reverse takeover transaction; however, Movarie has determined, in conjunction with consultations with the TSXV, that the Transaction will be classified as a fundamental acquisition pursuant to TSXV Policy 5.3.

Certain securities issued in connection with the Transaction may be subject to mutually agreed upon escrow conditions, and hold periods as required by the TSXV and applicable securities laws.

Business of the Resulting Issuer

Following closing of the Transaction, the Resulting Issuer intends to carry on the business of Movarie and CYI, and to conduct additional non-yoga related acquisitions in the health and wellness space with a view to developing a synergistic portfolio of brands and products that drive maximum shareholder value.  The proposed directors of the Resulting Issuer have extensive and highly successful track records on M&A transactions.

CYI is a British Columbia company which aims to be a leading company in franchised yoga studios across Canada.  CYI holds the sole license to use the “Chopra” brand in Canada for purposes of licensing and/or franchising Chopra Yoga Centers.

CYI currently operates a yoga studio in North Vancouver under the name “Chopra Yoga Center”. The website for the North Vancouver yoga studio operated by CYI is www.choprayoga.com.

CYI plans to offer franchised yoga studios under the Chopra Yoga Center brand in Canada, and to combine this with retail and online sales for health and wellness related products and, following completion of the Transaction with Movarie, products from other brands held by Movarie (i.e. Shakti Apparel) and CYI.

Bridge Financing

Prior to the closing of the Transaction, Movarie seeks to complete a non-brokered Bridge Financing to raise gross proceeds of up to $150,000.  The proceeds of the Bridge Financing are intended to be used to finance the costs associated with the Transaction, including filing fees, legal fees, audit fees and other professional fees, and if necessary, to finance loans to CYI to fund the working capital requirements of CYI until closing.  Movarie intends to offer up to 1,000,000 units (each, a “Bridge Unit”) at a price of $0.15 per Bridge Unit, with each Bridge Unit being comprised of one Movarie Share and one-half of one warrant.  Each whole warrant (each, a “Bridge Warrant”) will be exercisable into one additional Movarie Share at a price of $0.25 per share for two years from the closing date of the Bridge Financing (the “Bridge Closing”), subject to acceleration.  In the event that the Movarie Shares have a closing price on the TSXV (or such other exchange on which the Movarie Shares may be traded at such time) of greater than $0.50 per Movarie Share for a period of 30 consecutive trading days at any time after four months and one day from the Bridge Closing, Movarie may accelerate the expiry date of the Bridge Warrants by giving notice to the holders thereof and, in such case, the Bridge Warrants will expire on the 30th day after the date on which such notice is given to the holder by Movarie.

The Movarie Shares and Bridge Warrants issued pursuant to the Bridge Financing will be subject to a hold period expiring four months and one day after the date of their issuance.  Insiders of Movarie and CYI may participate in the Bridge Financing, and finder’s fees may be paid in connection with the Bridge Financing, as permitted by TSXV policy.

Private Placement

Concurrent with the closing of the Transaction, Movarie intends to complete a non-brokered financing to raise between $500,000 and $1,200,000.  The proceeds of the Private Placement are intended to be used to fund the business and working capital requirements of the Resulting Issuer following closing of the Transaction.  Movarie intends to offer a minimum of 3,333,333 units (each, a “Concurrent Unit”) and a maximum of 8,000,000 Concurrent Units at a price of $0.15 per Concurrent Unit, with each Concurrent Unit being comprised of one Movarie Share and one-half of one warrant.  Each whole warrant (each, a “Concurrent Warrant”) will be exercisable into one additional Movarie Share at a price of $0.25 per share for 2 years from the Closing, subject to accelerated expiry on the same terms as described for the Bridge Warrants. 

The Movarie Shares and Concurrent Warrants issued pursuant to the Private Placement will be subject to a hold period expiring four months and one day after the date of their issuance.  Insiders of Movarie and CYI may participate in the Private Placement, and finder’s fees may be paid in connection with the Private Placement, as permitted by TSXV policy.

Selected Financial Information of CYI

The audited financial statements of Movarie for the fiscal years ended October 31, 2016, October 31, 2015, and October 31, 2014 are available under Movarie’s profile on SEDAR.  Selected financial information of CYI from its most recent audited annual financial statements is provided below:

  Year Ended
December 31, 2015
(audited)
Year Ended
December 31, 2014
(audited)
Year Ended
December 31,
2013
(audited)
Total Assets $1,109,477 $886,981 $1,725,373
Total Liabilities $2,874,134 $2,549,105 $3,093,107
Gross Revenue $410,616 $834,310 $999,314
Cost of Goods Sold $10,163 $45,169 $42,713
Gross Profit $400,453 $789,141 $956,601
Total Expenses $833,227 $1,369,198 $1,666,745
Net Loss $102,533 $294,390 $733,132
 

Directors and Officers

The proposed directors and officers of the Resulting Issuer, Wellness Lifestyles Inc., upon the completion of the Transaction are expected to be the same as the current directors and officers of Movarie and will be as follows:

Name Title
Alex Read CEO and Director
Paul Condon COO and Director
Peter Maclean Director
Hamed Shahbazi Director
Kenneth Cawkell Director
Brian Levinkind CFO
 

The members of audit committee of the Resulting Issuer will be Peter Maclean (Chair), Hamed Shahbazi, and Kenneth Cawkell.  Additional biographical information on the directors and officers is as follows:

Alex Read: Chief Executive Officer and Director:  Alex Read is a seasoned entrepreneur who was the recipient of the Business In Vancouver “40 Under 40” award.  Alex has worked with a number of businesses across North America including a number of franchises with 1-800-GOT-JUNK?, You Move Me in the New Jersey area, the entrepreneurial success toolkit “Make My Marketing Work” and WOW 1 DAY! Painting in the Seattle area.  Alex brings a wealth of international business and leadership experience having worked in several countries around the world.  These include such places as the UK, Australia, New Zealand, Bahrain and Canada.  Previously in his career, he has worked in a variety of senior leadership roles for companies such as American Express and 1-800-GOT-JUNK? Alex holds an honors degree in Marketing.  He is also a past Regional Director for the Canadian region of Entrepreneurs Organization (EO), a global organization.

Paul Condon: Chief Operating Officer and Director:  Paul Condon earned a Bachelor of Arts Degree from the University of British Columbia in 2002 and Degree in Business Administration from the British Columbia Institute of Technology.  Mr. Condon has served as the CEO of Shakti Yoga Apparel LLC since June 2012.  In addition, Mr. Condon has been a director of Breathe Yoga Wear and responsible for sales, marketing, design and product development.

Peter Maclean: Director:  Peter Maclean is an economist by training.  After a stint working for the New Brunswick Provincial government, Mr. Maclean has spent most of the last 30 years working for junior Canadian resource companies and been a director of several public companies.  Working primarily in Europe, Mr. Maclean has extensive contacts and played a significant role in the raising equity capital over the last 10 years.  Mr. Maclean anticipates utilizing his European and Canadian network to raise capital for the Company.  Mr. Maclean has a BA (Economics) from Acadia University and a MA (Economics) from the University of New Brunswick.

Hamed Shahbazi: Director:  Hamed Shahbazi earned his Bachelor of Applied Science Degree in Civil Engineering from the University of British Columbia in 1997.  He founded TIO Networks Corp. in 1997 and is currently the President and Chief Executive Officer of TIO Networks, one of the largest issuers listed on the TSXV.  TIO Networks began as a solution provider in the self-service automated kiosk marketplace.  Since then he has transitioned TIO Networks into a payment solution provider that specializes in delivering bill payment and other financial services through a variety of automated self-service, retail point-of-sale, mobile and web-based methodologies. 

Kenneth Cawkell: Director:  Kenneth Cawkell is a member of the British Columbia Bar Association, and, in 1987, he co-founded the law firm Cawkell Brodie LLP, where he remains as Managing Partner.  For over 25 years, he has been involved in various industries within public, private and venture capital markets; successfully fulfilling the roles as a professional advisor and as a principal / investor.  He is a founder of Neurodyn Life Sciences Inc., a private biotech company focused on developing natural based products to treat Alzheimer’s and other neurodegenerative diseases.  In his professional capacity, he has focused on intellectual property, technology transfer, financial and transaction structuring, and securities law.  He is a past member of the National Research Council of Canada IMB/INH Advisory Board and the British Columbia Securities Commission’s Securities Law Advisory Committee.

Brian Levinkind: Chief Financial Officer:  Brian Levinkind holds his Bachelor of Commerce, and has over twenty years of experience as a Chartered Accountant (now CPA) in both Canada and South Africa.  Brian’s most recent experience includes CFO appointments in the healthcare and clean energy sectors.  Specializing in tax and mergers and acquisitions, his experience also includes seven years as a partner and equity partner at Grant Thornton LLP in Canada. Brian has held managerial positions at HSBC Canada and KPMG LLP (Canada).  He has been involved in the planning, structuring and implementation of numerous financings, mergers, acquisitions and corporate reorganizations.

Trading in Movarie Shares

Trading in Movarie Shares on the TSXV was halted in connection with the December News Release.  Trading in the Movarie Shares will remain halted pending the review of the Transaction by the TSXV and satisfaction of any conditions of the TSXV for resumption of trading.  It is likely that trading in the Movarie Shares will not resume prior to the completion of the Transaction.

MOVARIE CAPITAL LTD.

Per:         “Alex Read”                                                                                                  
                  Alex Read
                  Chief Executive Officer

For further information:

Movarie Capital Ltd.
Alex Read, Chief Executive Officer
Phone: (778) 883-2621
alex@movariecapital.com
www.movariecapital.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Disclaimer for Forward-Looking Information

Certain statements in this news release related to the Transaction, Bridge Financing, Private Placement and related transactions and the securities issuable thereunder are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. These statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements in this news release include statements regarding completion of the Transaction, the proceeds to be raised pursuant to the Bridge Financing and Private Placement, resale restrictions relating to the securities to be issued, the use of proceeds of the Bridge Financing and Private Placement, the business of the Resulting Issuer, the listing of the Resulting Issuer on the TSXV, the corporate name of the Resulting Issuer, the insiders of the Resulting Issuer and their respective shareholdings and receipt of the approval of the TSX Venture Exchange. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding Movarie’s ability to complete the Transaction and related financings, including the risk that the Transaction and/or the financings may not be completed as expected or at all, that the proceeds of the financings may be used other than as set out in this news release, that the TSXV may not approve the Transaction and financings, the shareholders of either Movarie or CYI may not approve the Transaction and such other factors beyond the control of Movarie. Such forward-looking statements should therefore be construed in light of such factors, and Movarie is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Reference in this news release to third party websites are for information purposes only, and Movarie takes no responsibility for the content of such sites, and such sites do not form part of Movarie’s disclosure record.