CEBI CE Brands Inc

CE Brands Inc. (TSXV: CEBI; CEBI.WT) (“CE Brands”, “we”, “our”, or the “Company”), a data-driven consumer-electronics company, is pleased to announce that it intends to close a portion of the previously announced non-brokered private placement (the “Offering”) of senior secured convertible notes (the “Convertible Notes”) on or about May 25, 2022 on the same terms and conditions as previously announced on April 13, 2022. In addition, the Company is announcing that it has secured additional non-dilutive funding through its existing credit facility with Choco-Up (“Choco”).

“The current volatility across both the debt and equity capital markets has proved challenging with respect to our contemplated financings and we are happy to be in a position to close another tranche of convertible debentures with Vesta,” said Craig Smith, CEO of CE Brands. “We have a strong relationship with Choco and are pleased to announce an additional non-dilutive funding commitment that reflects their ongoing support of our current operational momentum. In total, we have secured over CAD$3,812,500 in total funding which positions us to continue to execute on our growth plans,” continued Mr. Smith.

Offering Update

The Company confirms that Vesta Wealth Partners Ltd. (“Vesta”), a leading Canadian investment firm, will subscribe for Convertible Notes for and on behalf of certain investment entities managed or advised by Vesta having an aggregate principal amount of CAD$1,000,000. The Convertible Notes are convertible into common shares (“Common Shares”) of the Company, at the option of the holders, at a conversion price of CAD$1.50 per share. In addition, the holders of the Convertible Notes will receive 500,000 Common Shares purchase warrants (the “Warrants”) with each Warrant having an exercise price of CAD$1.00 per share and being exercisable on or before the second anniversary of the issue date.

The Offering is  subject  to  customary  closing  conditions,  including  the  approval  of  the  TSX Venture Exchange (the “TSXV”) and the listing of the Common Shares underlying the Convertible Notes and the Warrants to be issued under the Offering by the TSXV. The Common Shares are currently listed on the TSXV under the symbol “CEBI”. Neither the Convertible Notes nor the Warrants will be listed on the TSXV.

Choco-Up Funding

The Company has entered into an agreement with Choco for the sale of an aggregate of USD$2,475,000 (CAD$3,093,750) of future receivables for net proceeds of USD$2,250,000 (CAD$2,812,500) (the “Choco Facility”) under its existing credit facility. The funds committed under the Choco Facility will be drawn in three tranches with an initial tranche of USD$1,250,000 (CAD$1,562,500) available to the Company May 25 and two subsequent tranches of USD$500,000 (CAD$625,000) which will be available to the Company on or before August 31, 2022 and on or before October 31, 2022 respectively, subject to certain repayment terms. The repayment term on each of the tranches is 10 months. As of May 24, 2022, CE Brands has cumulative USD$330,653 (CAD$413,316) outstanding under previous draws with Choco. Please see Other Material Contracts dated March 12, 2021 and the Company’s quarterly MD&A and Financial Statements filed on www.sedar.com for more information on the Company’s existing credit facility with Choco.

Proceeds from the Choco Facility will be used to fulfill current manufacturing orders and for general working capital purposes.

Required Disclosure under MI 61-101

The board of directors of CE Brands (the “Board”) determined that the Offering constitutes a “related party transaction” for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”), as it involved the Company issuing securities to and borrowing money from entities over which Vesta, a “related party” of the Company pursuant to MI 61-101, exercises certain discretionary control. The Offering was exempt from both the formal valuation requirements and minority approval requirements of MI 61-101 for related party transactions by virtue of Sections 5.5(g) and 5.7(e) of MI 61-101.

A further discussion and description of the review and approval process adopted by the independent and disinterested members of the Board (the “Independent Directors”) and other information required by MI 61-101 in connection with the Offering will be set forth in the Company’s material change report to be filed following the closing of the Offering under the Company’s SEDAR profile at www.sedar.com.

The closing of the Offering will take place prior to the anticipated filing of the Company’s material change report. In the context of the Company’s liquidity and working capital constraints, it is necessary for the Company to close the Offering on an expedited basis to improve the Company’s financial position and as such, it was not possible to delay closing of the Offering until after the filing of the material change report.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities of the Company in the United States nor shall there be any sale of securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or the securities laws of any state of the United States. Accordingly, any of the securities described herein may not be offered or sold in the United States or to U.S. persons unless an exemption from registration is available.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For more information, please visit www.cebrands.ca.

To be added to the CE Brands’ distribution list please register at www.cebrands.ca/investors.

*USD conversion to CAD calculated at a ratio of 1.25 CAD/USD.

About CE BrandsCE Brands Inc. develops products with leading manufacturers and iconic brand​ licensors by utilizing proprietary data that identifies key market opportunities​. With sales today ​in​ over 70 countries, our innovative, ​highly ​repeatable process, which we call the “CE Method​”,​ has created ​an ​optimal growth ​path for CE Brands to be the premier global licensed brand manufacturer.

Forward-Looking Information

This press release contains forward-looking information within the meaning of applicable securities laws. In general, forward-looking information refers to disclosure about future conditions, courses of action, and events. The use of any of the words “anticipates”, “believes”, “expects”, “intends”, “plans”, “will”, “would”, and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this press release includes forward-looking information with respect to the completion of the Offering, the timing for the completion of the Offering and related matters, the conditions to closing of the Offering, the receipt of any required regulatory and TSXV approvals for the Offering and the funding of the tranches under the Choco Facility.

The forward-looking information is based on certain key expectations and assumptions, including the receipt of all regulatory and related approvals for the Offering and the Company’s ability to manage supply chain and inventory constraints, including the timing of product shipments and deliveries.

There can be no assurance that the Company will be able to successfully complete the Offering and/or the draws under the Choco Facility on the terms contemplated, in a timely manner or at all. If the Company fails to complete the Offering and/or the draws under the Choco Facility or otherwise fails to secure additional financing, then the Company may have insufficient liquidity and capital resources to operate its business resulting in material uncertainty regarding the Company’s ability to meet its financial obligations as they become due and continue as a going concern.

Although CE Brands believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because CE Brands cannot give any assurance that they will prove to be accurate. By its nature, forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed in this press release. Such risks and uncertainties include, among others, the impact of the evolving Covid-19 pandemic on the Company’s business, operations and sales; reliance on third party manufacturers and suppliers; the Company’s ability to stabilize its business and secure sufficient capital, including the funding under the Choco Facility and/or the contemplated Offering, which may not be completed in a timely manner or at all; the Company’s available liquidity being insufficient to operate its business and meet its financial commitments, which could result in the Company having to refinance or restructure its debt, sell assets or seek to raise additional capital, which may be on unfavorable terms; the inability to implement the Company’s objectives and priorities for 2022 and beyond, which could result in financial strain on the Company and continued pressure on the Company’s business; risks associated with developing and launching new products; increased indebtedness and leverage; the fact that historical and projected financial information may not be representative of the Company’s future results; the inability to position the Company for long-term growth; risks associated with issuing new equity including the possible dilution of the Company’s outstanding common shares; the value of existing equity following the completion of any financing transaction; the Company defaulting on its obligations, which could result in the Company having to file for bankruptcy or undertake a restructuring proceeding; the Company being put into a bankruptcy or restructuring proceeding; and the risk factors included in CE Brand’s continuous disclosure documents available on www.sedar.com. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date of this press release, and to not use such forward-looking information other than for its intended purpose. CE Brands undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events, or otherwise, except as required by applicable securities legislation.

Further InformationFor further information about CE Brands or its principal operating subsidiary, eBuyNow eCommerce Ltd., please contact:

Kalvie LegatChief Financial Officer778-771-0901

Rob KnowlesManager, Investor Relations403-472-6382IR@cebrands.ca