Mr. Michael Withrow reports
AREV TO ENTER INTO COLLABORATION PROJECT TO EXTRACT FUNCTIONAL MUSHROOMS
Arev Brands International Ltd. has entered into a letter agreement with Absolem Health Corp.
in connection with the terms and conditions of a proposed business collaboration.
The transaction involves two stages. During the first stage, Absolem will make the cash and share payments to Arev described herein, and Arev will undertake the development work described herein. In the second stage, informed in part by the results of the development work undertaken by Arev in stage 1, Absolem and Arev will form a joint venture to develop, produce and sell mushroom extracts and mushroom-based products. Each of stage 1 and stage 2 of the transaction is subject to receipt of applicable regulatory and stock exchange approvals. The parties intend to replace the letter agreement with a definitive agreement.
Absolem will pay $100,000 to Arev, of which $20,000 will be paid in cash and $80,000 will be paid by the issuance to Arev of common shares of Absolem at a price of 7.5 cents per share. Subject to Arev's satisfaction of due diligence under Subsection 1(a), Arev agrees forthwith to apply the cash payment to the purchase of specific additional extraction equipment, particulars of which have been provided to Absolem prior to the date of this letter agreement. The estimated purchase price of the new equipment is $40,000 (U.S.). Arev will pay the difference between the cash payment and the purchase price of the new equipment. The new equipment will be owned by Arev. In consultation with Absolem, Arev will conduct research and will develop methods for deriving extracts from mushrooms utilizing the new equipment and other extraction equipment that it owns, which research shall not involve any prohibited activities, unless official authorization in writing has been granted to Arev for such prohibited activities under Part J of the Canada Food and Drug Regulations. Arev shall not perform, nor allow on its premises, any illegal activities. Other than the supply of mushrooms, which will be provided by Absolem at Absolem's expense, the cost of the extraction methods research shall be borne by Arev, but shall not exceed $100,000. All intellectual property generated through the extraction methods research that relates to mushroom extraction methods will vest in Absolem, and all other intellectual property shall vest in Arev, which intellectual property shall include any scientific information related to organic chemistry extraction technologies. The parties will make their reasonable best efforts to do all things required from each of them to complete the extraction methods research no later than April 30, 2020.
In stage 2, following completion of the extraction methods research (stage 1), at Absolem's option, Absolem and Arev may form a joint venture for the production, development and sale of mushroom extracts and mushroom products. Subject to the terms and conditions of the letter agreement, each of the parties has agreed to negotiate with the other party in good faith to conclude and execute the definitive agreement as soon as reasonably practical following the execution of this letter agreement.
Michael Withrow, chief executive officer of Arev, commented: "We are honoured to have been selected to be the extraction company of choice by Absolem. The team at Absolem has identified the next big trend in natural medicines, and we are delighted to be part of this innovation. This collaboration will lead to another line of branded ingredients and formulations produced by Arev and build on our revenue stream."
Ken Kuiper, chief executive officer of Absolem, commented: "We are excited about the global growing interest in functional mushrooms and intend to become leaders in commercial extraction. We believe, with Arev's expertise in extractions, we will be successfully in doing so."
details regarding the letter agreement will be provided as soon as all terms of the agreement have been finalized between Arev Brands and Absolem. This transaction is subject to the approval of the Canadian Securities Exchange.
About Arev Brands International Ltd.
Arev Brands International produces and delivers functional compounds and ingredients derived from verified genetics ran through its world-class extraction systems.
We seek Safe Harbor.
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