Trius Updates Status of Business Combination with Starling Brands Inc.

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
FREDERICTON, New Brunswick, Nov. 26, 2019 (GLOBE NEWSWIRE) — Trius Investments Inc. (“Trius”) (TSXV:TRU.H) is pleased to provide the following updates on its proposed business combination (the “Transaction”) with Starling Brands Inc. (“Starling”).Transaction UpdatesEffective September 30, 2019, the following amendments were made to the business combination agreement dated July 8, 2019 (the “Agreement”) among Trius, Starling, and Trius’ wholly-owned subsidiary 11436465 Canada Inc. (“Subco”).The deadline for the completion of the Transaction was extended from September 30, 2019 to December 31, 2019 (the “Transaction Deadline”).If the Agreement is terminated in certain circumstances, Starling will have to pay Trius a higher termination fee of C$150,000.Starling and Trius are pleased with the progress made to date, notwithstanding delays resulting from challenging capital markets conditions. Both parties continue to work diligently towards satisfying the outstanding conditions to the completion of the Transaction, which include, without limitation, approval of the Transaction by the shareholders of Starling, Starling completing a brokered private placement of subscription receipts for minimum gross proceeds of C$5,000,000, Trius completing a continuance and amendments to its articles as contemplated in the Agreement, TSX Venture Exchange (“TSXV”) acceptance of the delisting of Trius’ common shares from the TSXV, and acceptance of listing of Trius’ re-designated Class A subordinate voting shares by the CSE upon completion of the Transaction. The Transaction will not be completed while Trius is listed on the TSXV.About Starling Brands Inc.Starling is a Toronto-based producer of high quality medical and recreational cannabis products, operating in California. Founded in 2017, Starling leverages its industry leading expertise and relationships to deliver high-quality, consistent cannabis-derived products for itself and its wholesale and white label customers.Starling operates primarily through Kase Manufacturing, Inc. (“Kase Manufacturing”) and other wholly-owned subsidiaries. For more information regarding Kase Manufacturing, please visit www.kasemfg.com.Starling holds exclusive rights to Jayden’s Juice, its flagship brand. For more information regarding Jayden’s Juice, please visit www.thejaydensjuice.com.Starling Sells Hemp-Focused Subsidiary to HTC Extraction SystemsOn November 22, 2019, Starling entered into a share purchase agreement dated November 21, 2019 (the “SPA”) with HTC Purenergy Inc. d/b/a HTC Extraction Systems (“HTC”), pursuant to which HTC will acquire (the “Kase Farma Disposition”) all of the issued and outstanding shares (the “Purchased Shares”) of Kase Farma, Inc. (“Kase Farma”). Kase Farma is authorized to operate in the areas of hemp cultivation, extraction, refining, formulation and distribution in the State of California, and is a wholly-owned subsidiary of Starling. Upon closing, Starling will enter into a management services agreement with Kase Farma and HTC to provide to Kase Farma the management services of Mike Reynolds, Starling’s Chief Executive Officer, and Drew Ford, Starling’s Chief Science Officer, both of whom are highly regarded experts in the cannabinoid extraction, formulation and refining world.The Kase Farma Disposition will not affect Starling’s interest in its primary operating subsidiary, Kase Manufacturing, or the Transaction.Pursuant to the SPA, HTC will acquire the Purchased Shares from Starling in exchange for US$900,000 in cash and the issuance of 8,000,000 units of HTC (“HTC Units”) and 2,000,000 bonus units of HTC (“Bonus Units”). Each HTC Unit will consist of one common share of HTC (a “HTC Share”) and one-half of one HTC Share purchase warrant (each whole warrant, a “HTC Warrant”). Each HTC Warrant shall be exercisable to acquire one HTC Share at a price of C$0.70 for a period of 36 months from the completion of the Kase Farma Disposition. Each Bonus Unit will consist of one HTC Share and one-half of one HTC Share purchase warrant (each whole warrant, a “HTC Bonus Warrant”). Each HTC Bonus Warrant shall be exercisable to acquire one HTC Share at a price of C$1.00 for a period of 36 months from the completion of the Kase Farma Disposition. The HTC Units and HTC Bonus Units shall be subject to certain time-based restrictions on their transfer.With respect to the Kase Farma Disposition, Starling’s Chief Executive Officer Mike Reynolds said, “On behalf of Starling, we are extremely excited to integrate our experience, know-how and pedigree with HTC’s technologies to further the vision and execution as global leaders in the science and production of the highest quality cannabinoid extractions and formulations. The Kase Farma Disposition represents a major cash infusion that strengthens our balance sheet, while also giving Starling meaningful equity exposure to HTC’s hemp extraction business.”The Kase Farma Disposition remains subject to customary closing conditions, including approval of the TSXV, and is expected to be completed in December 2019. Further details regarding the Kase Farma Disposition are available in HTC’s press release dated November 22, 2019.Other Starling Business UpdatesIn recent months, Starling has also advanced or completed a number of other important commercial milestones, including:On June 11, 2019, Starling closed the purchase of its 22,000 square foot licensed Type 7 cannabis manufacturing facility in Ceres, California.
 
Starling is finalizing a 20% equity interest in a cannabis license applicant in Malta, which is advancing through the licensing process to build and operate an extraction facility there.
 
Starling is finalizing a master distribution agreement for its newly-developed Cerius line of topical CBD products, in partnership with a well-known cosmetics industry veteran, for distribution in the United Kingdom and the European Union, and will be distributing their THC topicals through dispensaries in California.Management CommentaryTrius President and CEO Joel Freudman commented, “We are extremely optimistic about the direction Starling is headed in, as evidenced by the significant advances they have made in their operations and partnerships alongside working on the Transaction. The Kase Farma Disposition is only one such example. Although current market conditions in the cannabis sector are challenging, we believe in the Starling business and team and their ability to execute on a commercial level.”Mr. Freudman continued, “In the meantime, our shareholders stand to benefit from an advantageous Transaction structure that has cemented Trius’ valuation, while also giving us increasing exposure to a rapidly-expanding business that has grown significantly since the Transaction was first agreed to. We believe we are well-positioned to ride out the prevailing junior market volatility and emerge in a much better position when the Transaction is completed. We thank our shareholders for their patience during this process, and look forward to advancing and closing the Transaction in the near future.”Added Starling’s CEO, Mike Reynolds, “We remain committed to completing the Transaction with Trius as soon as market conditions permit. Although it is taking longer than we would like, our team continues to work hard every day to deliver a compelling long-term cannabis investment opportunity for investors in both companies.”Further details regarding the Transaction are available in Trius’ press releases dated April 15, 2019; July 9, 2019; and September 9, 2019.For further information please contact:Trius Investments Inc.
Joel Freudman
President and Chief Executive Officer
Telephone: (647) 880-6414
Starling Brands Inc.
Media Relations and Investor Relations:
Tara Murphy
Telephone: (647) 556-0430
IR@StarlingBrands.com         
In accordance with TSXV policy, the common shares of Trius are currently halted from trading and are expected to remain halted until Trius is delisted from the TSXV. Completion of the Transaction is subject to a number of conditions including, but not limited to, CSE acceptance and receipt of applicable corporate approvals. 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 of Trius dated August 8, 2019 or the listing statement of Starling 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.Neither the TSXV nor the CSE has in any way passed on the merits of the Transaction, and neither has approved nor disapproved the contents of this press release.Neither the TSXV nor the Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.All information contained in this press release with respect to Trius and Starling was supplied by the parties respectively for inclusion herein, and each party has relied entirely on the other party for any information concerning the other party. Trius does not assume any responsibility for the accuracy or completeness of the information provided by Starling.This press release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities described herein in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws, and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.Caution Regarding Forward-Looking InformationThis press release includes statements containing forward-looking information that reflect the current views and/or expectations of management of Trius and Starling, respectively, with respect to performance, business, partnerships and future events, and the timing thereof, including but not limited to expressed or implied statements and assumptions regarding Starling’s ongoing business initiatives and the completion of the Transaction and the Kase Farma Disposition as proposed or at all. Forward-looking information is based on the current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which Trius and Starling respectively operate. Statements containing forward-looking information are not guarantees of future performance and involve risks, uncertainties and assumptions, which are difficult to predict, and which are outside of Trius’ control. In particular, there is no guarantee that Starling will be able to achieve its business objectives or to close the Kase Farma Disposition on the terms set out herein and contemplated in the Agreement or at all; that the master distribution agreement for Starling’s Cerius line of CBD products will be entered in as proposed or at all that all conditions to completion of the Transaction will be satisfied; that the parties will be able to consummate the Transaction on the terms in the Agreement (as amended) or at all; or Starling’s business or financial market performance following completion of the Transaction. Actual results may differ, and may differ materially from those projected in the forward-looking information. Accordingly, readers should not place undue reliance on forward-looking statements and information herein, which are qualified in their entirety by this cautionary statement. The forward-looking information contained in this press release is provided as of the date of this press release, and neither Trius nor Starling undertakes any obligation to release publicly any revisions for updating any forward-looking statements made herein, except as required by applicable securities laws.
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