GILLA INC. (OTCMKTS:GLLA) Files An 8-K Completion of Acquisition or Disposition of Assets
Item 2.01 Completion of Acquisition or Disposition of Assets.

On July 31, 2017, Gilla Inc. (“Gilla” or the “Company”) acquired all of the issued and outstanding shares of Vape Brands International Inc. (“VBI”), a Canada-based E-liquid manufacturer and distributor, through its wholly owned subsidiary Gilla Enterprises Inc. (“Gilla Enterprises”) to the terms of a share purchase agreement (the “SPA”), dated July 31, 2017.

to the SPA, the Company paid to the vendors of VBI the following consideration: (i) 2,500,000 common shares of the Company valued at $0.14 per share for a total value of $350,000; (ii) warrants for the purchase of 2,000,000 common shares of the Company exercisable over twenty-four (24) months at an exercise price of $0.20 per share from the closing date, such warrants vesting in five (5) equal tranches every four (4) months following the closing date; (iii) a total of $550,000 Canadian Dollars (“CAD”) in non-interest bearing, unsecured vendor-take-back loans due over twenty-four (24) months, with principal repayments beginning five (5) months from the closing date until maturity of up to CAD $25,000 per month; and (iv) an earn-out capped at (a) the total cumulative amount of CAD $2,000,000; or (b) five (5) years from the closing date (the “Earn-Out”). The Earn-Out shall be calculated as: (x) 15% of the gross profit generated in Canada by VBI’s co-pack and distribution business;(y) 10% of the revenue generated in Canada by Gilla’s existing E-liquid brands; and (z) 15% of the revenue generated globally on VBI’s existing E-liquid brands. Furthermore, the Earn-Out shall be calculated and paid to the vendors of VBI quarterly in arrears and only as 50% of the aforementioned amounts on incremental revenue between CAD $300,000 and CAD $600,000 per quarter and 50% of the aforementioned amounts on incremental revenue above CAD $600,000 per quarter with the Earn-Out payable to the vendors in the fifth year repeated and paid to the vendors in four (4) quarterly payments after the end of the Earn-Out period, subject to the cumulative limit of the Earn-Out. No Earn-Out shall be payable to the vendors of VBI if total revenue for the Earn-Out calculation period is less than $300,000 per quarter. On the closing date, Gilla Enterprises also entered into an employment agreement with one of the vendors at a base salary of CAD $155,000 per annum for a minimum term of one (1) year from the closing date and up to twelve (12) months’ severance in the event of involuntary termination as a result of a change of control.

Item 8.01 Other Events.

On August 3, 2017, the Company issued a press release announcing that Gilla Enterprises had closed the acquisition of VBI to the SPA, dated July 31, 2017.

A copy of such press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired

The financial statements required by this Item, with respect to the acquired business described in Item 2.01 herein, will be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed to Item 2.01.

(b) ProForma Financial Information

The pro forma financial information required by this Item, with respect to the acquired business described in Item 2.01 herein, will be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed to Item 2.01.

(d) Exhibits

GILLA INC. Exhibit
EX-99.1 2 glla_ex991.htm PRESS RELEASE Blueprint    Exhibit 99.1   GILLA COMPLETES ACQUISITION OF LEADING CANADIAN VAPE COMPANY   TORONTO,…
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About GILLA INC. (OTCMKTS:GLLA)

Gilla Inc. is engaged in the manufacturing and distribution of E-liquid for the vapor industry (E-liquid). The Company has developed and acquired manufacturing operations, E-liquid brands and a global distribution platform. The Company’s segment is manufacturing, marketing and distributing of E-liquid, vaporizers, E-cigarettes, and vaping accessories in North America and Europe. The Company’s products include generic and premium branded E-liquid, the liquid used in vaporizers, E-cigarettes, and other vaping hardware and accessories. The Company offers over 500 base flavors of generic E-liquid, which are available in nicotine strengths ranging from 0 milligram (mg) to 24 mg with varying proportions of propylene glycol (PG) and vegetable glycerin (VG). The Company’s premium E-liquid portfolio includes Craft Vapes, Craft Clouds, Vape Warriors, Miss Pennysworth’s Elixirs, The Mad Alchemist, Replicant and Coil Glaze.