NEWS RELEASE TRANSMITTED BY Marketwired FOR: GEA Technologies Ltd. TSX VENTURE SYMBOL: GEA.H NEX BOARD SYMBOL: GEA.H and DropLeaf LLC JULY 6, 2017 GEA Technologies and DropLeaf Jointly Announce Entering Into Definitive Agreement for Proposed Merger CALGARY, ALBERTA--(Marketwired - July 6, 2017) - GEA Technologies Ltd. (NEX:GEA.H) ("GEA" or the "Company"), an Alberta corporation listed on the NEX exchange, and DropLeaf LLC ("DropLeaf"), a limited liability company governed by the laws of Nevada, are pleased to announce (further to the press release dated June 9, 2017), that the parties have entered into a share exchange and merger agreement (the "Merger Agreement") dated June 21, 2017, with the DropLeaf holders, pursuant to which a subsidiary of GEA will amalgamate (the "Amalgamation") with DropLeaf. The Amalgamation is structured as a three-cornered amalgamation and, as a result, the amalgamated corporation ("Amalco") will become a wholly-owned subsidiary of GEA on closing and the former holders of DropLeaf will become shareholders of GEA and receive common shares and preferred shares of GEA. The Amalgamation will constitute a reverse take-over under applicable securities laws. It is a condition of the transaction that GEA apply to the Canadian Stock Exchange ("CSE") for approval to have the common shares of the Resulting Issuer (as defined below) listed for trading on the CSE following the Amalgamation ("GEA Common Shares"). The transaction has been structured so that the Resulting Issuer qualifies as a Foreign Private Issuer in the United States, until such time as the Company is ready to become a U.S. domestic issuer for U.S. securities laws purposes. This would involve the Resulting Issuer complying with securities reporting requirements in the United States, including registering the Resulting Issuer Common Shares by filing a Form S-1 registration statement under the United States Securities Act of 1933, as amended (the "US Securities Act"). In order to qualify as a Foreign Private Issuer, the Resulting Issuer needs to maintain a threshold whereby less than 50% of the voting shares of the Resulting Issuer are held directly or indirectly by residents of the United States. Accordingly, the holders of DropLeaf will receive a combination of GEA Common Shares and preferred voting shares of GEA ("GEA Preferred Shares"). DropLeaf holders will receive one (1) GEA Common Share and 0.11048 GEA preferred shares for each DropLeaf Share held. As consideration for the acquisition of DropLeaf, GEA will issue approximately 16,623,790 GEA Common Shares and 1,836,630 GEA Preferred Shares. Each GEA Preferred Share carries the right to vote on an as-converted basis (100 votes per GEA Preferred Share), as well as the right to receive dividends at the same time as the GEA Common Shares on an as-converted basis, and the right to receive the remaining property of GEA on the same footing as the GEA Common Shares in the event of a winding-up or dissolution on an as- converted basis. The GEA Preferred Shares each have a restricted right to convert into one hundred (100) GEA Common Shares. In addition, the GEA Preferred Shares will be automatically converted into GEA Common Shares in certain circumstances, including upon the registration of the GEA Common Shares under the US Securities Act. A full description of the GEA Preferred Shares will be included in the Listing Statement to be prepared by GEA and DropLeaf in connection with the transaction. Immediately after the completion of the Amalgamation, on a non-diluted basis, the former holders of DropLeaf will own approximately 16,623,788 GEA Common Shares and 1,836,628 GEA Preferred Shares (representing 200,286,600 GEA Common Shares on an as-converted basis, or 95% of the shares of the Resulting Issuer). The existing holders of GEA will own 10,541,400 GEA Common Shares (5%) of the Resulting Issuer. A deemed value of $0.06 per share has been placed on the GEA Common Shares issued in connection with the Amalgamation, resulting in total consideration paid to the holders of DropLeaf Shares of approximately US$10 million. Depending upon the timing for receipt of consent from the CSE to the proposed listing, the parties anticipate closing the Amalgamation prior to the end of August 2017, and in any event prior to September 30, 2017. GEA's common shares were halted on June 6, 2017, at GEA's request, in connection with the announcement of the proposed transaction and will remain halted until the transaction is completed. About DropLeaf DropLeaf, a private limited liability Nevada company, was founded in 2014, for the purpose of licensing Julian Marley's JuJu Royal Ultra Premium Cannabis brand to producers and processors to develop branded strains of cannabis, infused and edible cannabis consumables, as well as ancillary products such as clothing, paraphernalia, posters, and other products. DropLeaf maintains its head office and operations in Denver, CO and derives its revenue from licensing and other fees and royalties generated from the various licensees who ultimately distribute and sell the products. For additional information concerning DropLeaf please refer to the press release dated June 9, 2017, filed under the SEDAR profile for GEA at www.sedar.com. DropLeaf Selected Financial Information: Selected financial information for DropLeaf for the years ended December 31, 2016 and 2015 (audited) and for the three months ended March 31, 2017 (unaudited), is as follows. For the three months For the years ended ended March 31, 2017 December 31 2016 2015 Sales(1) 27,908 387,116 33,212 Operating (loss) (147,973) (353,226) (556,849) Net (loss)(2) (492,045) (387,547) (576,861) Total assets 332,513 290,897 333,900 Total liabilities 1,165,772 1,090,278 745,734 Stockholder's equity (deficit) (883,259) (799,381) (411,834) Notes: (1) Sales consist of license fees and royalties and the sale of merchandise. (2) The net loss for March 31, 2017, includes a loss of $345,207 due to the recognition of a loss on the acquisition of DropLeaf membership units from a holder. /T/ Proposed Board of Directors and Management Following is a description of the proposed Board of Directors and management of the Resulting Issuer. Subject to shareholder and CSE approval, the proposed Board of Directors for the Resulting Issuer will consist of the below five members, two of whom are currently considered as independent. A majority of the proposed directors have significant experience with publicly listed companies. Jeffrey Britz - Chairman & CEO and a Director Mr. Britz is currently President of DropLeaf. In 2014, through DropLeaf, Mr. Britz obtained the license for the Julian Marley JuJu Royal brand and has been securing sub-licensees including growers, edible manufacturers and manufacturers of related products. Mr. Britz has a consistent track record of success building and operating large, successful, public and private companies in various industries during his 40-year career. Mr. Britz's accomplishments include the following: /T/ -- From 1963 to 1987, Mr. Britz turned a small fabric company into Pacesetter Industries, one of the 50 largest publicly held garment companies in the United States with almost $50,000,000 in sales and over 2000 employees prior to Mr. Britz's divestiture. -- From 2007 to 2010, Mr. Britz founded and operated First Realty Reserve, a real estate syndication firm, which owned over $200,000,000 of commercial real estate through limited partnerships. -- From 1987 to 1998, Mr. Britz founded and operated Allison Baer Securities, a company that managed initial public offerings of small high technology companies. -- From 1992 to 2001, Mr. Britz built Hudson Physical Therapy and its affiliated management company, Professional Management Bureau, from one physical therapy center in Jersey to over 65 physical therapy centers in New Jersey and Florida. -- From 2007 - 2014, Mr. Britz was involved in various ventures focused on the purchase and rehabilitation of residential real estate, including developing a lease to own program of over 50 homes in Atlanta, Georgia, founding WRI Capital II in 2010, a company that purchased and sold approximately 200 single family homes, and working with a large private equity firm in acquiring, leasing and managing over 5,000 single family homes in Atlanta and Florida. /T/ Travis Belcher - President and a Director Mr. Travis Belcher has been a Managing Member, Founder and Chief Executive Officer of DropLeaf since its inception in 2014. Mr. Belcher oversees the day-to-day operations, nationally and internationally. His daily tasks include but aren't limited to, Product/ Brand Development, Packaging, Fulfilment, Quality Control, and Celebrity Endorsements Management. Between 1999 and 2014, Mr. Belcher owned and operated Madison Avenue Cafe, a family business established in 1992 with fifteen retail locations and direct wholesale customers throughout the Midwest states. At Madison he was directly responsible for the procurement of raw coffee beans from various regions around the world, as well as securing state and government contracts, and management of all retail locations. Mr. Belcher sold this business in 2014. In addition to his experience in the Cannabis and Coffee industry, Mr. Belcher has extensive experience in the entertainment and nightlife industry. The relationships that were built and maintained throughout the entertainment business have enabled DropLeaf to create the Julian Marley Brand. Mark Scott, CPA - Chief Financial Officer Mark E. Scott - Mr. Mark Scott was appointed Consulting Chief Financial Officer and Secretary of DropLeaf on June 1, 2017, and has been a consultant since December 1, 2016. Mr. Scott is the proposed Chief Financial Officer for the Resulting Issuer. He has significant financial, capital market and relations experience in public and private microcap companies. Mr. Scott is a certified public accountant and received a Bachelor of Arts in Accounting from the University of Washington. Antonio Ruggieri, P.Eng., MBA - Director Mr. Ruggieri is currently the President, CEO and a Director of GEA and is a proposed Director for the Resulting Issuer. Mr. Ruggieri is a professional engineer, executive and financier based in Calgary, Alberta. He was founder, CEO and Director of two engineering firms, President and Director of a home building company as well as a real estate manager before moving into his current role. Mr. Ruggieri is a member of the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and the Institute of Corporate Directors (ICD). Furthermore, he has served on Technical, Investigative and Audit Committees. He graduated with a Bachelor of Engineering from Concordia University in Montreal and an MBA from the University of Calgary. Scott Reeves, Director and Secretary Mr. Reeves is currently a director of GEA and is a proposed director and secretary for the Resulting Issuer. Mr. Reeves is a partner with TingleMerrett LLP, a Calgary-based law firm with a focus on securities, corporate finance and commercial transactions for emerging and growth companies, joint ventures and partnerships. He has advised numerous private and public corporations (including registered dealers) in a wide range of business matters including access to capital markets, corporate governance and operational issues both nationally and internationally. Shares issued under the Amalgamation The table below illustrates the number of Resulting Issuer Shares outstanding and reserved for issuance following the Amalgamation. /T/ Percentage of total number of Resulting Issuer Shares outstanding following the Number of Securities Amalgamation ------------------------------ (undiluted) (fully-diluted) ---------------------------------------------------------------------------- GEA outstanding 10,541,400 5% 4.7% ---------------------------------------------------------------------------- Resulting Issuer Shares to be issued as consideration for the 200,286,600 95% 89.1% DropLeaf Shares(1) ---------------------------------------------------------------------------- Total Resulting Issuer 221,369,400 100% 98.5% Shares(2)(undiluted) ---------------------------------------------------------------------------- Resulting Issuer Shares issuable upon exercise 894,000 -- 0.4% of the GEA Options(2) ---------------------------------------------------------------------------- Resulting Issuer Shares issuable upon exercise of the DropLeaf 2,553,486 -- 1.14% Options(3) ---------------------------------------------------------------------------- Total Resulting Issuer Shares(1) (fully 224,816,846 -- 100% diluted) ---------------------------------------------------------------------------- Notes: (1) Includes GEA Common Shares issuable upon the conversion of GEA Preferred Shares, which are only expected to be converted once the Resulting Issuer has registered the GEA Common Shares on a Form S-1 registration statement under the United States Securities Act of 1933, as amended). As consideration for the acquisition of DropLeaf, GEA will issue approximately 16,623,790 GEA Common Shares and 1,836,630 GEA Preferred Shares issued and outstanding. (2) Includes 10,541,400 GEA Common Shares, issuable at a deemed price of $0.06 per share, on Closing to Dosdall Properties Inc., or its nominees, a party at arm's length to GEA and DropLeaf, as a finder's fee in connection with the Transaction, which represents 5% undiluted (4.7% diluted). (3) GEA options have an exercise price ranging from $0.06 to $0.50 and expire at dates ranging from October 2017 (14,000 options) to 2022 (880,000). (4) DropLeaf options include the right to purchase 120,000 DropLeaf Shares at a price of US$1.00 per share expiring 2022. The holders of DropLeaf Options will enter into option exchange agreements and receive options to purchase GEA Shares on an equivalent basis, receiving options to purchase 21.2791 GEA Common Shares at a price of $0.06 for each DropLeaf Option held. Principal Holders of DropLeaf The principal holders of DropLeaf are Jeffrey Britz and Travis Belcher, both U.S. residents. Mr. Britz currently holds 3,832,504 DropLeaf Shares (40.72% of the DropLeaf Shares). Travis Belcher currently holds 1,170,454 DropLeaf Shares (12.44% of the DropLeaf Shares). Mr. Britz will receive an aggregate of 6,768,821 GEA Common Shares and 747,832 GEA Preferred Shares (convertible into 74,783,236 GEA Common Shares) (36.8% of the Resulting Issuer - non-diluted). Mr. Belcher will receive an aggregate of 2,067,211 GEA Common Shares and 228,389 GEA Preferred Shares (convertible into 22,838,942 GEA Common Shares) (11.3% of the Resulting Issuer - non-diluted). In addition to any escrow required under applicable securities legislation, Mr. Britz and Mr. Belcher agreed to enter into a private escrow agreement whereby the GEA Preferred Shares and the GEA Common Shares held by them will be deposited into escrow and released as to 10% upon closing, and 15% thereafter on each 6 months anniversary of the closing for a period of 36 months. Conditions to Completion of the Amalgamation The closing of the Amalgamation is subject to satisfaction or waiver of terms and conditions, customary or otherwise, including all other applicable approvals. There can be no assurance that the Amalgamation will be completed as proposed or at all. All information contained in this news release with respect to GEA and DropLeaf was supplied by the parties respectively for inclusion herein. About GEA GEA is a technology company with licensed rights to a wireless technology able to provide high- speed, self-healing networks in remote locations. A successful transaction with DropLeaf would involve the disposition by GEA of its technology assets. Completion of the transaction is subject to a number of conditions, including but not limited to, CSE acceptance. 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 GEA 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 press release. Forward Looking Statements This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of GEA and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Resulting Issuer, are forward looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the parties' expectations are risks detailed from time to time in the filings made by GEA with securities regulations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of GEA and DropLeaf. As a result, GEA and DropLeaf cannot guarantee that the Amalgamation will be completed and that any forward-looking statement will materialize and the reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and Primary will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law. -30- FOR FURTHER INFORMATION PLEASE CONTACT: GEA Technologies Ltd. Antonio Ruggieri President and CEO (403) 703-8395 email@example.com or DropLeaf, Inc. Jeffrey Britz President (201) 394-7882 firstname.lastname@example.org INDUSTRY: Computers and Software - Hardware, Computers and Software - Internet, Computers and Software - Networking, Computers and Software - Software SUBJECT: BFC
GEA Technologies and DropLeaf Jointly Announce Entering Into Definitive Agreement for Proposed Merger
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