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Health Logic Interactive Inc (2)
Symbol	CHIP
Shares Issued	6,724,205
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Health Logic signs LOI for RTO with Hydro Giant

2023-11-15 16:35 ET - News Release

Subject: Health Logic - Q3 FS Word Document File: '\\swfile\EmailIn\20231115 132506 Attachment Health Logic NR - LOI with Hydro Giant - Updated v.3 CLEAN.docx' HEALTH LOGIC INTERACTIVE ANNOUNCES SIGNING OF LETTER OF INTENT TO COMPLETE A REVERSE TAKEOVER TRANSACTION WITH HYDRO GIANT CALGARY, AB, November 15, 2023 - Health Logic Interactive Inc. ("Health Logic" or the "Company") (TSXV: CHIP.H) (OTCPK: CHYPF), a Company in the search of licensing and acquisition opportunities, is pleased to announce it has signed a non-binding letter of intent, dated September 27, 2023, to complete a reverse takeover transaction with Hydro Giant, a US established and revenue generating premier hydroponic indoor gardening supply store serving the multi-billion-dollar Controlled Environment Agriculture ("CEA") market.(1) The anticipated acquisition price for Hydro Giant is set at $5M USD, with Health Logic planning to issue shares at a price of $0.05 CAD. Hydro Giant - Mission, History, and Opportunity Founded in 2009, Hydro Giant, headquartered and incorporated in Detroit, Michigan, USA, 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 favorable 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 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 CAGR of 18.1%(2), 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. We believe 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 $500k CAD prior to the closing of the transaction. Subsequently, there will be a raise of between $2M - $4M CAD 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 TSX'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 TSXV's sponsorship requirements and that 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 arms-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 CEO and Director, with Patrick Murphy stepping in as CFO 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. Martin Yono, CEO and Founder has been running the company since its inception, while Patrick Murphy has been with the company for over 5 years and has previous public market experience. Hydro Giant - Financial Information US$ FY 2022 Revenue 15,052,659 Net income (loss) - 126,269 Total Assets Total Liabilities 7,903,200 7,751,714 The above financial information is unaudited and references the Hydro Giant group of companies which currently exist of 7 total companies, without a common parent company. 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, Inc. acquisition. We wish 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 Hydro Giant Founded in 2009, Hydro Giant specializes in providing products and services for the growing controlled environment agriculture market ("CEA") for home and commercial gardens. The company is taking its profitable business model and expanding across the United States on a mission to become the nation's largest independent retailer of hydroponic services and quality garden supplies. 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. Further information regarding Health Logic Interactive Inc. and its disclosure documents are available on SEDAR at www.sedar.com. Disclaimer and Cautionary Notes Completion of the transaction is subject to a number of conditions, including but not limited to, exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of [insert name of Issuer] should be considered highly speculative. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release. Neither the 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. Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, are forward-looking statements. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law. SOURCE Health Logic Interactive Inc. Harrison Ross, CEO, (1-877)-456-4424, harrison@healthlogicinteractive.com (1) https://www.prnewswire.com/news-releases/global-controlled-environment-agriculture-market-cea-expected-to-reach-172-billion-in-2025-301409455.html (2) https://market.us/report/controlled-environment-agriculture-market/#:~:text=Market%20Growth%3A%20In%202022%2C%20global,18.13%25%20from%202023%2D2032.