Little more than a decade ago, Leading Brands Inc. (Nasdaq:LBIX) was a Vancouver-based juice maker that regularly placed on Business in Vancouver’s list of the top 100 public companies in B.C.
It is now pivoting with a plan to buy Vancouver-based Liquid Media Group Ltd., a studio that produces content for film, television, gaming, augmented reality and virtual reality through a network of shared services.
Like many companies, Leading Brands is undergoing a metamorphosis without much fanfare, though it isn’t yet evident why.
Leading Brands’ revenue was falling before 2008’s global financial crisis, but it was solidly in the $40 million to $50 million range, while the company had a strong reputation for its blueberry juice and other products under the TrueBlue brand.
The venture is now a shadow of its former self, however.
Gross sales in the year that ended February 28, 2017, were slightly more than $1.7 million while the company lost more than $3 million.
Leading Brands’ market capitalization has fallen below US$4 million and, in January, it received notice from Nasdaq’s listings qualifications staff that the company was not in compliance with the exchange because it did not have US$2.5 million in stockholders’ equity.
Little fanfare or media coverage greeted Leading Brands’ exit from the juice business and its sale of co-packing operations last year.
“On September 15, 2017, the company has disposed of its legacy beverage assets to a company that has certain officers and directors in common with the company for $325,000,” Leading Brands revealed in its third-quarter report, which was released in mid-January.
That figure, the company noted, “is net of assumed liabilities for certain employee obligations and other matters.”
Leading Brands declined to say who bought its juice assets, and no one at the company was available for an interview.
Phone numbers listed on the company’s web page and in corporate filings were dead when BIV called, and emails to Leading Brands CEO Ralph McRae were not returned.
Liquid Media director Charlie Brezer and vice-president of finance Daniel Cruz spoke with BIV on February 5 but would not say why their company wanted to be bought by Leading Brands via a plan of arrangement.
“You have to appreciate the sensitivity of where we are in this transaction,” Brezer said.
The two companies’ integration is expected to close in April, according to a Leading Brands filing. Brezer and Cruz did not provide a timeline and said they would have a better idea of when the transaction could close after an upcoming annual general meeting, though no date has been set for that meeting.
A Liquid Media news release said that under the terms of the agreement with Leading Brands, if the transaction does complete, Leading Brands shareholders will own 25.8% of the new entity while Liquid Media shareholders will hold 74.2%.
Liquid Media announced in mid-January that it had acquired a 51% stake in video game publisher Majesco Entertainment Co.
“The acquisition of Majesco fulfils Liquid Media Group’s obligation to acquire a studio under the arrangement agreement with Leading Brands,” said the release. •
