Mr. Harrison Ross reports

HEALTH LOGIC INTERACTIVE ANNOUNCES SIGNING OF LETTER OF INTENT TO COMPLETE A REVERSE TAKEOVER TRANSACTION WITH HYDRO GIANT

Health Logic Interactive Inc. has signed a non-binding letter of intent, dated Sept. 27, 2023, to complete a reverse takeover (RTO) transaction with Hydro Giant, a U.S. established and revenue-generating premier hydroponic indoor gardening supply store serving the multibillion-dollar controlled-environment agriculture (CEA) market. The anticipated acquisition price for Hydro Giant is set at $5-million (U.S.), with Health Logic planning to issue shares at a price of five cents.

Hydro Giant -- mission, history and opportunity

Founded in 2009, Hydro Giant, headquartered and incorporated in Detroit, Mich., United States, outlets specialize in products and services for the growing industry of home and commercial gardens. The company desires to take its profitable business model and expand into additional states offering favourable demographics.

Hydro Giant specializes in lighting, grow media, nutrients, and pest and disease control for the indoor gardening space. The company believes there are significant organic growth opportunities, along with accretive acquisitions already identified. With the funds from acquisition, the company can increase buying power, providing better terms to customers, and increasing the addition of offshore product supply and acquisitions of popular products/brands to increase EBITDA (earnings before interest, taxes, depreciation and amortization) and net income margins.

Despite the large size of the market, it is very fragmented and underserved for new consumer demand, which will serve well in continuing organic growth and looking for potential acquisition targets. The industry is estimated to grow at a compound annual growth rate of 18.1 per cent, attributed to the increasing awareness among consumers regarding supply chain issues for food and the effects of pesticides and artificial ripening agents on their health as well as increasing use of cannabis due to legalization around the world. Health Logic believes Hydro Giant is in the right space to take advantage of changing market conditions.

Health Logic and Hydro Giant -- transaction details

In terms of financing, Health Logic intends to conduct a financing round of up to $500,000 prior to the closing of the transaction. Subsequently, there will be a raise of between $2-million and $4-million concurrent with the closing of the Hydro Giant RTO. According to the LOI, the company will undertake a capital raise at a to-be-determined size and valuation concurrently with that definitive agreement. The capital will be used to finance growth initiatives, including sales and marketing, acquisitions, optimization of the supply chain, and for general corporate purposes. There will be a finder's fee associated with the transaction, details of which have not been finalized but will fall under the Toronto Stock Exchange's guidelines and policies surrounding such fees. The likely industry sector of the resulting issuer would be under diversified industries, specifically in consumer products and services.

The company will be seeking a waiver of exemption from TSX Venture Exchange's sponsorship requirements and should a waiver/exemption not be granted, the company will be required to obtain a sponsor. The company does not intend to seek shareholder approval for the RTO as the company is currently listed on NEX, the RTO is an arm's-length transaction, the company is not and will not be subject to a cease trade order and will not otherwise be suspended from trading upon completion of the RTO, and shareholder approval of the RTO is not required under applicable corporate and securities laws.

The acquisition of Hydro Giant is an arm's-length transaction, ensuring that no related parties are involved, maintaining the integrity and transparency of the transaction. At this juncture, no loan will be issued by Health Logic to Hydro Giant.

Upon completion of the transaction, Martin Yono will assume the role of chief executive officer and director, with Patrick Murphy stepping in as chief financial officer and director. Hydro Giant will be appointing one additional board member yet to be identified. George Kovalyov and Harrison Ross will continue to serve on the board as directors, strengthening the leadership team with their extensive experience and industry knowledge. Mr. Yono, CEO and founder, has been running the company since its inception, while Mr. Murphy has been with the company for over five years and has previous public market experience.

Next steps and continued disclosure

The signing of the LOI initiates a period of detailed due diligence by both companies to evaluate the merits and risks of the transaction. Upon satisfactory review, a definitive agreement is drafted detailing the specifics of the anticipated transaction, including terms, share exchange ratios, closing conditions, plans for financing and other important details regarding the transaction. Subsequently, necessary disclosure documents are prepared and submitted to the TSX Venture Exchange. If required, existing shareholders may be asked to vote on the transaction. The TSX-V then conducts a regulatory review, and, once approved, the transaction is finalized, leading to the new entity being listed for trading.

Throughout this process, transparency is paramount. The company will issue press releases at significant milestones, ensuring investors are continually informed. After the transaction, the resulting entity is obligated to maintain continuing disclosures as mandated by the TSX-V and securities regulators, ensuring consistent updates on financial and operational disclosure.

About ChipBrain Inc. LOI

The company has decided to no longer pursue the potential ChipBrain acquisition. Health Logic wishes ChipBrain the best in its future endeavours and the company will now solely be focused on the matters relating to the potential reverse takeover of Hydro Giant.

About Health Logic Interactive Inc.

Health Logic Interactive is a public entity on the NEX board of the TSX-V and intends to pursue its search for new assets to develop and make an application to the TSX-V for a reactivation to Tier 2 of the TSX-V from the NEX. The reactivation will be subject to meeting all continued listing requirements of Tier 2 of the TSX-V.

We seek Safe Harbor.