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June 08, 2023

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Feel Foods (FEEL.C) Says Cheese, Completes Acquisition of Black Sheep

Feel Foods Ltd. (FEEL.C) announced today that, further to its release dated September 13, 2021, it has completed its arm’s length acquisition of Black Sheep Vegan Cheeze Company Corp. (Black Sheep), a British Columbia-based vegan cheese company.

“Closing the acquisition of Black Sheep is yet another exciting milestone event as we continue to grow the Feel Foods plant-based family of companies. We look forward to working closely with Black Sheep and its founding team to expand distribution and develop excellent new plant-based products. We are on a mission to transform plant-based food, with no compromises on taste or quality while reducing global environmental impact. Together, by shifting our collective approach to food, we can improve the health of our World, the lives of animals, and preserve valuable resources for generations to come,” said Feel Foods CEO David Greenway.

About Feel Foods Ltd.

 

  • $14.888M Market Capitalization

Feel Foods is an agri-food holdings company focused on developing innovative products and technologies in the foodservice industry. This includes the Company’s wholly-owned Be Good Plant-Based Foods Ltd. (Be Good), a food company dedicated to designing, developing, producing, licensing, distributing, and selling a variety of plant-based meat and other food alternatives. Feel Foods acquired Be Good on March 31, 2021, by issuing 22,050,000 common shares of the Company at a fair value of $7,166,250. Some of Be Good’s products include plant-based chicken, pork, and beef products. Ultimately, Feel Foods is on a mission to provide a unique offering of plant-based food products intended to make it easy for carnivores, flexitarians, and vegans alike to incorporate less meat into their diets. Admittedly, reducing one’s meat consumption is a difficult task, especially if you have been eating meat your entire life as I have. Five years ago, if I had to pick between a plate of icky green vegetables and a plate of succulent chicken tenders, I wouldn’t have hesitated to pick the chicken tenders. On the contrary, if I had to make that same choice today, the decision would be a lot harder due to just how blurred the line between plant-based meat alternatives and meat-based products has become.

I have consumed a plethora of plant-based foods and I can say with confidence that, if put in the same ring, A&W’s Beyond Meat Burger would give McDonald’s Big Mac a Burger King-sized whopping. In all seriousness, I would argue that A&W’s plant-based burger is superior to the Big Mac in every category, including taste and texture. With this in mind, the times are changing and so are some of the largest meat companies. According to an article published by Research Briefs, Americans consumed a record 225 pounds of red meat and poultry per capita in 2020 compared to 167 pounds in 1960. However, following the onset of the COVID-19 pandemic, the meat industry took a serious beating. As a result, consumers were forced to take off their rose-tinted glasses and acknowledge the ugly truth behind the meat industry. Several issues including unsafe working conditions, unethical treatment of animals, as well as health and safety violations are issues that have persisted in the meat supply chain for years. Don’t get me wrong, this hasn’t stopped me from eating meat. On the contrary, it has certainly changed the purchasing habits of many consumers. In fact, the plant-based meat industry saw sales increase 264% in the 9 weeks ended May 2, 2020, according to Bloomberg. Similarly, the dairy alternatives market grew substantially, with products like oat milk seeing its sales surge 347% year-over-year (YOY) in the first week of March 2020.

Baa Baa Black Sheep

Infographic was taken from the Good Food Institute’s website.

Speaking of dairy alternatives, the global vegan cheese market was valued at USD$1.01 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 12.8% from 2020 to 2027. According to the Good Food Institute, dollar sales of plant-based cheese have grown 70% in the past two years, with more than 54 million units of plant-based cheese being sold in 2020. That being said, Black Sheep Vegan Cheeze Company Corp. (Black Sheep) is a British Columbia-based vegan cheese company offering its products at more than 40 grocery stores and close to 30 foodservice locations throughout BC. The company offers a variety of 10 unique vegan dairy substitute products at several recognized retail locations, including select locations at Nesters, Nature’s Fare Markets, The Very Good Butcher’s, and many others. Black Sheep’s products are currently produced at the company’s Okanagan R&D commercial kitchen which has a total annual capacity of over 130,000 cheese units. That’s a lot of cheese. Looking forward, Black Sheep intends to begin scaling its production in anticipation of expanded distribution on the west coast of the United States (US), east of British Columbia (BC) in Canada, as well as the launch of its e-commerce site.

Latest News + Financials

As previously mentioned, Feel Foods announced today that it has completed its arm’s length acquisition of Black Sheep, pursuant to the terms of a share exchange agreement dated September 8, 2021, between Feel Foods, Black Sheep, and the shareholders of Black Sheep. Pursuant to the terms of the agreement, Feel Foods has acquired all of the issued and outstanding common shares of Black Sheep in consideration for the issuance of 3,400,000 common shares of Feel Foods at a deemed price of $0.22875 per share and a cash payment of $750,000. Keep in mind, each share issued in connection with the purchase price is subject to a contractual lock-up adhering to a release schedule. 10% of shares will be released on the date of closing, 30% on the date that is 12 months after the closing date, and another 30% on the date that is 18 months after the closing date. Additionally, Feel Foods has agreed to pay the shareholders of Black Sheep up to an aggregate of $500,000 upon the achievement, by Black Sheep, of an aggregate of $500,000 or greater in net sales during the 12 month period starting on the date that is 7 months from the closing date and ending on the date that is 18 months from the closing date (performance milestone deadline), payable by way of various performance milestones.

According to Feel Foods’ Financial Statement for the six-month period ended June 30, 2021, the Company had a cash position of CAD$2,415,547 on June 30, 2021, compared to CAD$21,894 on December 31, 2020. In the same period, Feel Foods’ total assets and total liabilities increased to CAD$4,559,217 and CAD$1,300,051, respectively. The Company’s revenue increased to CAD$64,571 from CAD$40,653, however, Feel Foods reported an increased net loss of CAD$7,521,489. With this in mind, as of June 30, 2021, Feel Foods had a working capital deficit of CAD$1,745,905 and had not yet achieved profitable operations. Since its inception, the Company has accumulated losses of CAD$11,332,480 and expects to incur further losses in the development of its business, all of which casts significant doubt regarding the Company’s ability to continue as a going concern. Although Feel Foods presently has sufficient financial resources to undertake its planned business and has been successful in the past in obtaining financing, there is no guarantee that Feel Foods will be able to obtain the same in the future. That being said, on August 19, 2021, the Company entered into an asset purchase agreement with Canpac Investment Corp. for the sale of its Langley, Ontario greenhouse lands, whereby Canpac will purchase the property in consideration of $1,500,000 payable in the form of the issuance of 15,000,000 common shares at a deemed price of $0.10 per share. In addition to purchasing Feel Foods’ property, Canpac has agreed to assume $912,517 in the Company’s current debt and long-term liabilities.

Scary numbers aside, Feel Foods may be worth watching from the sidelines until the Company is able to turn a profit through its operations. Keep in mind, Feel Foods’ acquisition of Black Sheep will provide the Company with a foothold in the profitable dairy alternatives market, however, it is unlikely that this will be enough to turn the Company’s finances around. Regardless, Feel Foods’ still has plenty of room to grow. Following its acquisition of Black Sheep, the Company has welcomed the founders of Black Sheep, Jenna and James Johnson, to the Feel Foods Family to hold the positions of VP R&D – Plant-Based Dairy and VP, Sales and Operations – Plant-Based Dairy, respectively. Feel Foods also intends to finance and support a North America-wide expansion of Black Sheep’s brand while working closely with the company’s founders to develop additional products. It is worth noting that the plant-based food market is expected to reach a valuation of $74.2 billion by 2027, expanding at a CAGR of 11.9% between 2020 and 2027. If Feel Foods can capitalize on both the dairy alternatives market and the plant-based food market, the Company could see some substantial growth.

Feel Foods’ share price opened at $0.21, down from a previous close of $0.25. The Company’s shares are down -6% and were trading at $0.235 as of 10:14 AM ET.

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