CALGARY, AB – Simply Solventless Concentrates Ltd. (“SSC”) has entered into a definitive share purchase agreement to acquire all of the shares of ANC Inc.. In addition, SSC will exercise of its right to accelerate the expiry of approximately 15,000,000 of SSC’s outstanding common share purchase warrants that have an exercise price of $0.20 per warrant, which are currently set to expire on August 28, 2026, for expected proceeds of up to approximately $3.0 million (assuming all of the 2026 Warrants are exercised). Following the exercise of the Acceleration Right, any remaining unexercised 2026 Warrants will expire on October 26, 2024.
ANC is a profitable licensed producer, and on a proforma basis, SSC expects strong normalized net income of approximately $10 million annualized by 2024 exit. SSC intends to use the net proceeds of the 2026 Warrant exercises, cash on hand, and cash flow from operations to fund the Acquisition.
Jeff Swainson, SSC’s President & CEO, stated: “We are thrilled to announce the foundational acquisition of ANC, continuing our strategy of profitable organic revenue growth and opportunistic acquisitions. ANC holds significant intellectual property, some of which is patented, and they have garnered industry wide respect for their execution ability. Together with ANC’s incredible team, led by Clayton Bordeniuk, Tairance Rutter, Thomas Facciolo and James Clarke, we will leverage SSC’s strategic positioning, our complimentary core competencies, and our proforma profitability to capture continued opportunity and value for our shareholders.”
Clayton Bordeniuk, President & CEO of ANC, stated: “ANC Solutions is a leader in infused pre-roll manufacturing in Canada, and we are excited to integrate into the SSC family. This partnership allows us to leverage our operational expertise and SSC’s broad network to drive continued innovation; and together, we will expand product offerings and enhance operational efficiencies while continuing to deliver premium cannabis products and services to the market. This deal marks a pivotal moment for ANC, as SSC is the growth partner that we had been looking for. It is our belief that our combined team, coupled with our shared focus on profitability and operational excellence, creates a platform for explosive growth and strong results as we move forward together.”
ANC Profile, Proforma Figures, Transaction Synergies
ANC is a privately owned leading pre-roll and white label manufacturer in Canada. Partnering with LPs nationwide, ANC specializes in crafting traditional, cigarette-style, blunts and infused pre-rolls, ensuring unparalleled quality and innovation in every product. ANC holds significant intellectual property, some of which is patented, and they can produce up to 5,000,000 pre-rolls per month. ANC recently launched its infused pre-roll brand “Status” into the Canadian recreational market. ANC has a Health Canada licensed facility in Edmonton, Alberta.
Current financial figures for ANC and key projected proforma figures following completion of the Acquisition, compared to Q3 2024 guidance, are as follows:
- ANC Revenue: ANC is currently generating approximately $15.0 million of annualized revenue. As it is B2B and tolling revenue, this revenue is not subject to excise taxes.
- ANC Net Income: ANC is currently generating approximately $3.6 million of annualized net income.
- SSC Proforma 2024 Exit Gross Revenue: 96% increase in gross revenue, from $28.0 million annualized Q3 2024 guidance to $55.0 million proforma annualized in Q4 2024.
- SSC Proforma Adjusted EBITDA: 163% increase in adjusted EBITDA, from $4.0 million annualized Q3 2024 guidance to $10.5 million proforma annualized in Q4 2024 (adjusted EBITDA is a non-IFRS measure. See “Non-IFRS Financial Measures” below).
- SSC Proforma Normalized Net Income: 178% increase in normalized net income, from $3.6 million annualized Q3 2024 guidance to $10.0 million proforma annualized in Q4 2024 (normalized net income is a non-IFRS measure. See “Non-IFRS Financial Measures” below).
- SSC Fully Diluted Proforma Adjusted EBITDA per Share: 125% increase in fully diluted adjusted EBITDA per share, from $0.04/share annualized Q3 2024 guidance to $0.09/share proforma annualized in Q4 2024 (adjusted EBITDA is a non-IFRS measure. See “Non-IFRS Financial Measures” below).
- SSC Fully Diluted Proforma Net Income per Share: 125% increase in fully diluted net income per share, from $0.04/share annualized Q3 2024 guidance to $0.09/share proforma annualized in Q4 2024.
- Blended Excise Rate: ANC earns primarily B2B and tolling revenue which is not subject to excise tax, which will lower SSC’s overall corporate blended excise tax rate.
- SSC Proforma Operating Costs: $500,000 estimated proforma annual reduction in operating costs due to significant synergies and the reduction of duplicated resources.
Key synergies of the Acquisition are as follows:
- Team: ANC’s team is comprised of strong professionals across all disciplines, significantly strengthening SSC’s team.
- Complimentary Products: SSC does not currently manufacture pre-rolls in house. The Acquisition will bring pre-roll manufacturing capability in-house with significant intellectual property, some of which is patented.
- Customer Relationships: The Acquisition offers the ability to share customer relationships and provide better service to a greater number of customers.
- Inventory Velocity: ANC will use a significant volume of SSC produced products in its infused pre-rolls.
- Further Acquisitions: Increases the potential value of additional acquisitions of brands that currently rely on third party co-manufacturing for pre-rolls.
- Organic Revenue Growth: SSC can leverage ANC pre-roll capability to maximize the sales of its five pre-roll brands, including Astrolab, Frootyhooty, Lamplighter, Roilty, and Zest.
- Status Brand: SSC can leverage its commercialization and distribution capability to maximize the velocity of ANC’s brand “Status”, which provides unique and demanded product formats.
Share Purchase Agreement
SSC will acquire all the issued and outstanding shares of ANC on the following terms:
Maximum Consideration (Purchase Price Plus Earn Out): $13,500,000 ($11,500,000 net of $2,000,000 working capital of ANC on closing).
Purchase Price: Total $10,000,000 ($8,000,000 net of working capital received):
$7,000,000 in cash, payable pursuant to a non-interest bearing secured promissory note, as follows:
November 15, 2024: $1,750,000.
December 20, 2024: $1,250,000.
May 31, 2025: $4,000,000.
$3,000,000 in units of SSC at a price of $0.50 per Unit, with each Unit comprised of one common share of SSC and one half of one common share purchase warrant, with each whole warrant exercisable into one common share at an exercise price of $0.75/share for a period of two years following issuance. The Units will subject to an escrow agreement and released in 20% tranches in three-month increments beginning on April 1, 2025.
Earn Out: Minimum $nil and maximum $3,500,000, depending on certain EBITDA (as defined in the SPA) thresholds being met (the “Earn Out”):
October 31, 2025: Between $nil and $1,750,000 in common shares of SSC at $0.75 per common share.
October 31, 2025: Between $nil and $1,750,000 in cash or common shares of SSC at $0.75 per common share, at the option of each ANC shareholder.
Common shares issued pursuant to the Earn Out will be subject to an escrow agreement and released in 50% tranches on January 1, 2026, and July 1, 2026.
In no event will the total Earn Out be more than $3,500,000.
Working Capital & Debt: On closing, ANC will have $2.0 million in working capital and no debt.
ANC Assets: Through the Acquisition, SSC will indirectly acquire all of ANC’s provincial product listings, intellectual property (including patents), assets, facility equipment and security systems, and Health Canada licences.
The valuation metrics of the Acquisition are as follows:
EBITDA Multiple: Should the maximum Earn Out of $3,500,000 be achieved, the EBITDA multiple for the Acquisition is 3.2x estimated annual EBITDA of $3,600,000 per year (net of working capital of ANC on closing). EBITDA is a non-IFRS measure. See “Non-IFRS Financial Measures” below.
Closing of the Acquisition is subject to a number of conditions precedent, including but not limited to the approval of the TSXV and a notification to Health Canada. There is no guarantee that the Acquisition will close on the terms set forth herein or at all.
Accelerated Expiry of $0.20 August 2026 Warrants
To date, approximately 5,000,000 of the 2026 Warrants have been voluntarily exercised. SSC is providing notice to all holders of 2026 Warrants that it is accelerating the expiry date of the 2026 Warrants to October 26, 2024. The 2026 Warrants are exercisable at a price of $0.20 per 2026 Warrant. If all of the approximately 15,000,000 outstanding 2026 Warrants are exercised, SSC will receive proceeds of approximately $3,000,000. As noted above, SSC intends to use the net proceeds of the 2026 Warrant exercises (discussed below), cash on hand, and cash flow from operations to fund the Acquisition.
About Simply Solventless Concentrates Ltd.
SSC is a public company incorporated under the Business Corporations Act (Alberta). SSC’s mission is to provide pure, potent, terpene-rich ready to consume cannabis products to discerning cannabis consumers.
