Business Rationale
The Company has initiated preliminary discussions with potential licensing partners about licensing its technology with the goal of commercialization. It has also had discussions with its advisors about the potential for raising capital in the public markets. Feedback from such potential partners and advisors has consistently been that the current JV Agreement, including 194’s exclusive license in and to Biosenta’s technology pursuant to such agreement, presents a barrier to commercialization and to raising capital. Pursuant to the Agreement, the exclusive license in favour of 194 will be terminated thereby allowing
For certainty, while the Company has had initial conversations with potential licensees, these conversations are preliminary, and the Company has not entered into any definitive agreements with any such partners.
Description of Agreement
Pursuant to the Agreement, the JV Agreement (which was originally announced on
The Common Shares issued to 194 and the Note will carry substantially the following legend: “Unless permitted under securities legislation, the holder of this security must not trade the security before [the date that is 4 months and a day after the distribution date].”
If the closing of the Transaction occurs, the Agreement provides that 194 will be granted the right to nominate two nominees to serve on the board of directors of
The Agreement may be terminated by all parties on mutual agreement, or at any time by any party if the counterparty is in breach or closing conditions in favour of such party will not be satisfied by the outside date (
The JV Agreement will be terminated on the closing date of the Transaction. Closing of the Transaction is subject to the satisfaction of certain customary closing conditions.
A copy of the Agreement will be available on SEDAR within the time required by applicable law.
MI 61-101
As 194 is considered a “related party” of
In connection with the Transaction, 194, will be issued 3,000,000 Common Shares and may be issued up to 500,000 additional Common Shares. As of the date hereof, 194 and its shareholders,
Following completion of the Transaction and assuming 500,000 additional Common Shares are issued on conversion of the interest under the Note, 194 and its shareholders,
The Company is exempt from the formal valuation requirement per section 5.5(b) of MI 61-101 as the Company is listed only on the CSE, and no exchanges specified in 5.5(b) of MI 61-101. To the knowledge of the Company and its directors and senior officers, after reasonable inquiry, there is no prior valuation as to the subject matter of, or is otherwise relevant to, the Transaction that has been made in the 24 months prior to the date hereof. The Company is relying on the financial hardship exemption from the requirement to obtain minority approval, pursuant to section 5.7(e) of MI 61-101 based on the following: (i) the Company is in serious financial difficulty; (ii) the Transaction is designed to improve the financial position of the Company; (iii) the Company has one or more independent directors (as defined in MI 61-101) in respect of the Transaction; (iv) paragraph (f) of section 5.5 of MI 61-101 is not applicable; (v) each director of the Company (including for certainty, all independent directors) acting in good faith, has determined that items (i) and (ii) above apply and that the terms of the Transaction are reasonable in the circumstances of the Company; and (vi) there is no other requirement, corporate or otherwise, to hold a meeting to obtain any approval of the holders of any class of affected securities.
In the coming days, a material change report will be filed under the Company’s profile on SEDAR in connection with the Transaction. In light of the Company’s financial situation, closing is expected to proceed before the expiration of 21 days from the date of filing the material change report, a delay contemplated in section 5.2(2) of MI 61-101. This shorter period is reasonable and necessary in the circumstances due to the Company’s liquidity constraints and the fact that any delay in closing could further result in lost opportunity costs to the Company in respect of finding and advancing conversations with potential licensing partners.
Other than the Agreement itself,
The Transaction has been unanimously approved by the Board. As no member of the Board has an interest in the Transaction, no special committee of the Board was formed to evaluate the Transaction.
Additional Disclosure Required by 61-101
Pursuant to section 5.2(1) of 61-101, the table below sets out the securities beneficially owned, controlled or directed by 194 and its shareholders,
Registered Shareholder | Owned/ Controlled/ Directed By | Securities | Percentage of Securities prior to completion of the Transaction(1) | Percentage of Securities following completion of the Transaction(1)(2) | ||
1943391 | 50% owned by 50% owned by | 753,207 Common Shares 376,604 Warrants | 4.69 | % | 16.78 | % |
1698791 | 4,120,126 Common Shares 310,871 Warrants | 18.39 | % | 16.06 | % | |
41,066 Common Shares | 0.17 | % | 0.15 | % | ||
2,187,425 Common Shares | 9.08 | % | 7.93 | % |
Notes:
(1) Partially diluted basis.
(2) Includes 500,000 additional Common Shares assuming conversion of the interest under the Note.
About
Forward Looking Information
This press release contains forward-looking information within the meaning of applicable securities laws (“forward-looking statements”), including forward-looking statements relating to completion of the Transaction; the consequences of not completing the Transaction; and other expectations and assumptions concerning the Transaction. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the failure of the parties to satisfy the conditions to the completion of the Transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the Agreement; significant transaction costs and unknown liabilities. If any such risks actually occur, they could impact the potential for discussion, agreement or completion of the Transaction and/or materially adversely affect the Company’s business, financial condition or results of operations. In that case, the trading price of the Company’s common shares could decline, perhaps materially. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Forward-looking statements are provided for the purposes of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Disclaimer
The CSE has in no way passed upon the contents of this news release and further, has neither approved nor disapproved of the contents of this news release. Neither the CSE nor its Regulation Services Provider (as such term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.
For further information please contact:
Am Gill, President and CEO
Source:
2023 GlobeNewswire, Inc., source