A Legacy of distribution

CBD Global Sciences Inc., dba Global Sciences (OTC: CBDNF) (CSE: CBDN) (Frankfurt: GS3.F) (Munich: GS3.MU) (the “Company“), further to our press release dated December 16, 2022, we are pleased to provide an update post-closing of the asset purchase agreement with New Age Beverage Corporation and NABC Properties, LLC to acquire the Direct Store Distribution operation (“DSD Operations”). Legacy Distribution Group,“Legacy” (Denver, CO), the Company’s wholly owned subsidiary, completed the acquisition of the DSD operations from New Age Beverage Corporation, a Colorado corporation, and a wholly owned subsidiary of New Age, Inc. effective December 12, 2022. The DSD Operations consist of the purchase and distribution of beverages and snacks to over 5,000 grocers, big box retailers and convenience stores in the Colorado community, with many products on an exclusive basis.   

The Transition of the DSD Team to Legacy

The Company has successfully transitioned all vendors, customers, and 144 employees to Legacy with payroll, revised benefits, and other areas of interest for the transition into Legacy. Important issues have been addressed, including lease agreements, business insurance, alcohol and tobacco licenses, sales licenses, Information Technology, infrastructure support, HR and Compliance teams, and several other aspects. The transition is expected to be fully completed before the end of Q1 2023. The Company expects there will be significant savings realized throughout the transition process, including as a result of successfully negotiating a lower cost for many components of the business, without degradation of the coverages experienced prior to the acquisition.

DSD Operating Volume

Since the closing acquisition of the DSD Operations in mid-December of 2022, the DSD Operations have averaged $145,541.00 in daily sales. The Company expects that approximately $2,765,296.00 in sales for this 19-day period will be consolidated into the financial statements of the Company for the year ended December 31, 2022.  The previous parent company, a multi-level-marketing company, enforced a “Health and Wellness” edict which directly impacted the DSD Operation.  That edict limited the DSD Operation from adding products that didn’t fit into the Health and Wellness category, and with the sale of the DSD Operation to Legacy, we plan to tailor the product assortment to fulfill the demand of the stores that the DSD Operation services.  In the works are over a dozen new brands being added by the DSD Operations to the Colorado market over the next 60-90 days. Adding new brands is expected to improve top-line sales, provide higher price points, and improve the profitability margin for the DSD Operations.  The Company expects daily sales to increase with the addition of new products and vendors in the coming months, and we look forward to reporting the impact of this acquisition on its financial results, as it realizes complete integration of owning the DSD Operations for its first full quarter in 2023 ending March 31, 2023.

Changing the Company’s Direction

The acquisition of the DSD Operations heralds a pivot by the Company to a service industry that is focused on product distribution, brand development, and consultation for new companies that need market recognition and to generate new sales. Known by the industry as the ‘go to’ for brand introduction, the DSD Operations have played a critical role in most all new beverage brands introduced to the market over the past 20 years including brand names like Xing Tea, Monster, Rockstar, Vitamin Water, Smart Water, NOS, Fuze, Nantucket Nectars, Muscle Milk, Izze, Celsius, C4, and many others.

Brad Wyatt, CEO of Global Sciences shared, “This has been a monumental achievement, and I am very excited to be part of it.  I am proud of the Legacy Team and their ability to demonstrate commitment to the company and resiliency through the transition to Legacy Distribution Group. They have worked countless hours to successfully transition the operations and continue to build the ‘Legacy’. I am extremely optimistic about the future of our Company. I look forward to presenting new and exciting information about our progress.”

CTO

The Company applied to the Alberta Securities Commission (ASC) and the Ontario Securities Commission (OSC) for an order to fully revoke the Cease Trade Order (CTO) issued July 2022, and is working to rectify all deficiencies.  The Company is unable to control the timeline, but is working to have the CTO revoked for trading to resume in Canada.

CBD Global Sciences Inc. dba Global Sciences (OTC: CBDNF) (CSE: CBDN) (Frankfurt: GS3.F) (Munich: GS3.MU) (the “Corporation”) is pleased to announce that, further to its press release dated September 9, 2022, it has closed an asset purchase agreement dated September 8, 2022, as amended on December 12, 2022, with New Age Beverage Corporation and NABC Properties, LLC (collectively, “NABC”), to acquire NABC’s direct store distribution division, and related leases and assets, as a going concern (the “DSD Operation”). The DSD Operation consists of operations that have grown over the last 20 years to distribute beverages and snacks to over 5,000 grocers, big box retailers and convenience stores in the Colorado community.

Legacy Distribution Group (“Legacy Distribution”) (Denver, CO), a wholly-owned subsidiary of the Corporation, completed the acquisition of the DSD Operations from New Age Beverage Corporation, a Colorado corporation and a wholly-owned subsidiary of New Age, Inc. The purchase price, after adjustments, was US$2,040,958 on closing, with US$250,000 due within 60 days of closing, for an aggregate purchase price of US$2,290,958. The DSD Operations will continue to be operated by the management team in place, along with hundreds of existing employees. The sale of the DSD Operation was subject to approval by the United States Bankruptcy Court for the District of Delaware in connection with bankruptcy proceeding by New Age, Inc., the parent company of NABC. While NABC was not part of the bankruptcy proceedings, the Court’s authorization for the sale was required and was obtained on November 23, 2022.

Legacy Distribution obtained an asset-based, ledgered line of credit (the “ABL Facility”) for the purposes of acquiring the DSD Operation and for ongoing working capital, from a US-based private lender which provides accounts receivable financing services intended for start-ups and established businesses. The ABL Facility is for a term of three years and carries an annual interest rate of prime plus 8.5%. Advances under the ABL Facility are subject to the lender’s assessment of the borrowing base for the DSD Operation comprised of up to 90% of eligible accounts receivable and eligible inventory (based on a formula of cost and liquidation value). Early repayment of the ABL Facility will attract a 3% fee which declines to 2% if repaid in year two of the term and 1% if repaid in year three of the term. Legacy Distribution granted a first priority security interest in the business assets of the DSD Operation, not including any equipment and real-estate. Legacy Distribution obtained an initial advance under the ABL Facility to cover the initial cash outlay of US$2,040,958. Future advances will be available to Legacy Distribution based on the ongoing value of the collateralized assets of the DSD Operation, up to US$10 million. Legacy Distribution intends to receive regular advances as needed and as permitted under the ABL Facility in order to fund its operations.

Brad Wyatt, CEO of Global Sciences, shared, “This is a positive achievement for both Legacy Distribution and the team at the DSD. The team at the DSD has accomplished a herculean effort to keep the wheels on at the DSD during the tumultuous period of time that led up to the parent company’s bankruptcy and through the transition to new ownership. I can’t say enough about how much we appreciate their accomplishments and that we look forward to supporting their efforts to get the DSD Operation back to the Best-In-Class status it once held, and continuing the legacy. The DSD Operation has done an incredible job at growing brands in its market and we believe this acquisition will enable them to continue the pursuit of excellence. I have complete confidence in the leadership team of the DSD and we intend to support them in achieving our collective goals for continued growth with a focus on profitability in the years to come. I must also share my appreciation for the longstanding, key vendor accounts that are vital to the business. They weathered the storm with the DSD; we appreciate you and look forward to growing your brands.”

 NewAge, Inc. (OTC: NBEVQ) (the “Company”), the Utah-based direct-to-consumer (D2C) organic and healthy products company, today announced that its wholly-owned subsidiaries, NABC, Inc. and NABC Properties, LLC (together, “NABC”), have entered into a definitive agreement to sell the legacy direct store distribution (“DSD”) division to Legacy Distribution Group, a Colorado-based distribution company.

The transaction is expected to be completed in the fourth quarter of 2022, and closing will be subject to court approval in the Company’s pending bankruptcy case.

The Company believes the DSD business is one of the largest independent distributors in Colorado providing beverages and snacks to grocers, big box retailers and convenience stores. It has been serving the Colorado community for more than twenty years, providing what the Company believes to be best-in-class service to over 5,000 outlets, and has been involved in launching and growing some of the biggest brands in the industry.

NABC is not included in the Company’s and certain of its subsidiaries’ previously announced bankruptcy cases, and the DSD division continues to conduct its business independently of the NewAge entities currently in the bankruptcy process. The proposed sale is part of the Company’s overall effort to align its assets and focus the business on maximizing revenue and cash flow generation for its larger scale Direct/Social Selling division.

Legacy Distribution Group is a 100%-owned subsidiary of CBD Global Sciences Inc. (CSE: CBDN), an American multi-national consumer goods and manufacturing company headquartered in Denver, Colorado.

Ed Brennan, NewAge’s Chairman and Interim CEO commented, “Over the past several months, we have conducted a comprehensive strategic review of our company as we endeavor to simplify our business, scale our operations and position NewAge for sustained growth in the direct selling industry. DSD had humble beginnings and has grown to be one of the largest independent distributors in the country. This proposed sale offers what we believe to be an excellent outcome for stakeholders in the DSD business, including our employees and our customers. Legacy Distribution Group has a deep understanding of the industry and the market in which DSD operates, and we believe they will be able to provide strategic ownership of the business moving forward.”

CBD Global Sciences Inc., dba Global Sciences Inc. (OTC: CBDNF) (CSE: CBDN) (Frankfurt: GS3.F) (Munich: GS3.MU) (the “Corporation“), is pleased to announce that today it has entered into a definitive asset purchase agreement earlier today with New Age Beverage Corporation and NABC Properties, LLC (collectively, NABC) to acquire the Direct Store Distribution (“DSD”) operation.  

Legacy Distribution Group, “Legacy Distribution” (Denver, CO) has executed a purchase agreement to acquire the DSD operations from New Age Beverage Corporation, a Colorado corporation, and a wholly owned subsidiary of New Age, Inc. (“New Age”).  The transaction is expected to be completed in the fourth quarter of 2022, and closing will be subject to a 21-day diligence period and court approval in New Age’s pending bankruptcy case.  Legacy Distribution will be financing the acquisition with an operating line of credit to be established for this purchase.  The New Age DSD operation has been serving the Colorado community for over twenty years, providing best-in-class service to over 5,000 outlets, and has been responsible for launching and growing some of the biggest brands in the industry.  From humble beginnings to becoming what is believed by New Age, Inc. as “one of the largest independent distributors in the country”, the DSD now employs hundreds of employees and is proud to keep this great “Legacy” alive.

Brad Wyatt, CEO of Global Sciences shared, “This is a positive achievement for both Legacy Distribution Group and the Operations Team at the DSD.  Our companies have been aligned in the Colorado market with the desire to serve the vendors and stores with best-in-class service.  The DSD has done an incredible job at growing brands in its market, and I believe this acquisition will enable them to continue its pursuit of excellence.  I have complete confidence in the DSD leadership team, and it is my intent to assist them in achieving their goals for continued growth with a focus on profitability in the years to come.  I must also share my appreciation for the key vendor accounts.  Efforts to keep the faith in the team at the DSD are invaluable and we anticipate this transition will prove to be beneficial to all involved.”