Enhance Skin Products Inc. Announces dispute with Integumen Inc. and Integumen plc over unpaid liabilities arising from Asset Sale
Reno, Nevada., Sept. 18, 2018 (GLOBE NEWSWIRE) -- Enhance Skin Products Inc., (OTCBB: EHSK) regrets to make the following announcement:
Dispute under Asset Purchase Agreement
On September 7, 2018 Enhance Skin Products Inc. (the “Company”) served formal notice on Integumen plc (“Integumen”) of its intent to progress legal remedies in the event that the parties could not reach agreement on the settlement of various matters, including the payment of liabilities, by September 14, 2018. On September 14, 2018 Integumen requested additional time to respond, which the Company has declined given that Integumen has already had notice of the dispute since August 7, 2018 and consequently the Company intends to pursue legal remedies.
Background to Dispute
On December 2, 2016, the Company, Integumen Inc., Integumen plc (Formerly Integumen Limited), Donald Nicholson and Samuel Asculai completed on the Asset Purchase Agreement (the “APA”) executed on October 1, 2016. Pursuant to the APA, the Company sold to Integumen Inc. substantially all of its assets and certain of its liabilities under a under a plan of reorganization, liquidation and dissolution (the “Plan”).
The Company initially received 2,632,868 ordinary shares in Integumen and following a capital reorganisation by Integumen currently holds 29,488,144 fully paid ordinary shares of one pence each of Integumen plc representing 11.19% of the issued and outstanding shares. This comprised a total nominal consideration of £3,030,000 ($3,963,240 )* less assumed liabilities of £ 320,209 ($416,272) (the “Assumed Liabilities”) and the amount of £76,923 ($100,000) owing under the secured promissory note issued by the Company to Integumen on July 7, 2016. In addition, Integumen Inc. assumed the costs of the Company of up to a maximum of £164,373* ($215,000) from the date of completion of the APA on December 2, 2016 until the date of dissolution under the Plan (the “Post Completion Period Costs”). Under the APA Integumen has guaranteed the performance of all obligations by Integumen Inc.
As of August 31, 2018 Assumed Liabilities of £257,168* ($336,376) and Post Completion Period Costs of £146,254* ($191,300) remain unpaid. Integumen has made numerous representations to the Company with respect to the payment of these liabilities all of which it failed to honour. Consequently, on August 7, 2018 and August 20, 2018 the Company and related parties made various proposals to Integumen in respect of the settlement of obligations. Regrettably, no progress has been made on the settlement and the Company’s UK lawyers served formal notice on Integumen on September 7, 2018 of the intent to progress legal remedies in the event that the parties could not reach agreement on settlement by September 14, 2018. On September 14, 2018 Integumen requested additional time to respond, which the Company has declined given that Integumen has already had notice of the dispute since August 7, 2018 and consequently the Company intends to pursue legal remedies.
Additionally, on August, 29, 2018 Donald Nicholson, Enhance’s President & CEO resigned as a Director from the Board of Integumen citing, amongst other matters, conflict of interest in the negotiation of a settlement and potential legal action by the Company against Integumen.
There can be no certainty that the Company will be successful in its claims or that a settlement can be reached with Integumen.
Since the sale, the Company, acting as manager and trustee, has not engaged in any business activities except to the extent necessary to preserve the value of its assets, transfer its assets and knowhow, and hopes in due course wind up its business affairs and give effect to the dissolution of the Company in accordance with its previously disclosed Plan. Depending on the outcome of any settlement this would include the exchange of the Company’s shares for Integumen shares and the distribution, in due course, of any remaining assets. The Company had intended to complete this before the end of 2017 as contemplated by APA but has been unable to do so due to the continued default by Integumen.
*The UK Pound Sterling (£) amounts have been converted into US dollars at the closing US$/£ sterling interbank spot rate on September 14, 2018 of 1.308 for the convenience of readers.
Donald Nicholson, Enhance’s President & CEO stated that “ we are disappointed that the transaction with Integumen has not worked out as planned and will be endeavouring to retain as much value as possible for Enhance shareholders. We remain hopeful of a settlement with Integumen and completing the Plan”
For your information:
Enhance Skin Products Inc. 50 West Liberty Street, Suite 880, Reno, Nevada 89501 www.visibleyouth.com Tel: 416-306-2493