On May 17, 2018, Gilla Inc (“Gilla”), a designer, marketer and manufacturer of e-liquid for vaporizers and developer of cannabis concentrate products, announced its plan to pursue a spin-off of its cannabis related business to its shareholders. The plan was to spin out its cannabis-
related assets through one of its wholly owned subsidiaries located in Ontario, Hystyle Brands (“Hystyle”). Hystyle is the subsidiary that Gilla uses to manufactures and distributed its hemp-derived CBD products in the United States and throughout Europe.
Shortly thereafter, Beau Lakhani, Anthony and Andrew Diab, the former owners of Vape Brands International Inc. (“Vape Brands”), a manufacturer of e-liquids for e-cigarettes commenced a litigation. So, what do these gentlemen have to do with Gilla’s operations?
Lakhani, Diab and Diab were the owners of Vape Brands. In the summer of 2017, they sold the company to Gilla pursuant to a Share Purchase Agreement. Prior to the sale, Lakhani, Diab and Diab owned all the common shares of Vape Brands. Lakhani owned 70%, and the Diabs each owned 15% of the remaining shares. These shares were sold to Gilla.
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