TORONTO, Oct. 24, 2019 (GLOBE NEWSWIRE) — Hinterland Metals Inc. (“Hinterland” or the “Company”) announces that it has entered into a non-binding letter of intent with Molecular Science Corp. (“Molecular Science”) in respect of a transaction pursuant to which Molecular Science and its shareholders will complete a business combination with Hinterland (the “Transaction”). Upon completion of the Transaction, the combined entity (the “Resulting Issuer”) will continue to carry on the business of Molecular Science as currently constituted. The Transaction is an arm’s length transaction and will constitute a reverse takeover of Hinterland by Molecular Science. Hinterland is a reporting issuer in British Columbia, Alberta and Quebec and does not currently trade on any stock exchange in Canada. The Transaction is subject to, among other things, the entering into of a binding definitive agreement (the “Definitive Agreement”) between the parties setting out the terms and conditions of the Transaction.
Molecular Science an analytical chemistry services company focused on the Canadian cannabis market. Its services include testing of cannabis and related products in its licensed laboratory for release to market and research purposes, analysis of product profiles for specific medical indications and product positioning, R&D related to specific cannabis-derived compounds and a mobile laboratory service for on-site sampling and testing at client cultivation and processing operations.
Molecular Science has a 3,600 square foot laboratory located in Toronto, Ontario that boasts state-of-the-art infrastructure and instrumentation for complete cannabis quality testing – potency, pesticides, metals, solvents, microbial toxins, terpenes and moisture, with microbial testing conducted by MSC partner labs. The Molecular Science lab was constructed and operates according to pharmaceutical GMP and ISO standards, and is staffed by experienced QC and QA professionals with backgrounds in the pharmaceutical and analytical technology industries. The company’s product specific test methods (flower, oil, resin, edibles, beverages, etc.) and in-licensed technology to predict potential matrix effects on mass spectrometry methods enable Molecular Science to provide highly accurate and reliable test results.
The Molecular Science mobile laboratory is a self-contained unit that provides on-site, same-day testing (such as potency and pesticides) to growers and processors. It is operated by Molecular Science scientific personnel in accordance with the company’s quality assurance policies. The mobile laboratory gives Molecular Science a national presence and direct contact with its clients’ operations.
In conjunction with the Transaction, Molecular Science intends to complete, on or prior to the completion of the Transaction, a private placement (the “Financing”) of subscription receipts (the “Subscription Receipts”) for aggregate gross proceeds of not less than CDN $3 million. The Subscription Receipts are expected to be converted into units (the “Units”) comprised of $1,000 principal amount convertible debentures and warrants to acquire common shares of Molecular Science. The gross proceeds of the Financing will be held in escrow (the “Escrowed Proceeds”) pending satisfaction of certain conditions (the “Escrow Release Conditions”). The Escrow Release Conditions will include the satisfaction of all necessary or required matters relating to the Transaction, and the receipt of conditional approval for trading on a stock exchange acceptable to Molecular Science in respect of the common shares of the Resulting Issuer. Upon satisfaction of the Escrow Release Conditions, it is expect that each Subscription Receipt will be automatically converted into the Units, and the Escrowed Proceeds shall be released from escrow. Upon completion of the Transaction, all securities of Molecular Science, including those issuable upon conversion of the Subscription Receipts, will be exchanged (or exchangeable) for equivalent securities of the Resulting Issuer on the basis of the Exchange Ratio (as defined below) subject to the receipt of tax, corporate and securities laws advice. The net proceeds of the Financing will be used by the Resulting Issuer for expansion of its laboratory operations in Canada, addition of new analytical services, expansion of its R&D program, and for working capital and general corporate purposes. There can be no assurances that the Financing will be completed on the terms set out above, or at all.
It is intended that the Transaction will result in Molecular Science becoming a wholly-owned subsidiary of Hinterland or otherwise combining its corporate existence with a wholly-owned subsidiary of Hinterland. While the final structure of the Transaction will be subject to the receipt of tax, corporate and securities law advice for both Hinterland and Molecular Science, it is currently anticipated that the Transaction will be completed by way of a “three-cornered amalgamation”, whereby:
For purposes of the Transaction, the parties have agreed that the aggregate value of the issued and outstanding common shares of Hinterland shall have a deemed value of $1,250,000 (the “Hinterland Value”). The parties have further agreed that the aggregate value of the issued and outstanding securities of Molecular Science have a value of $24,586,648.75 on a “pre-money” and undiluted basis. Accordingly, prior to the completion of the Financing, it is currently expected that holders of Molecular Science common shares will hold approximately 95.16% of the share of the Resulting Issuer (the “Exchange Ratio”). Subsequent news releases in respect of the Transaction will provide updates in this regard.
The Company intends to seek the approval of its shareholders for the Transaction at a special meeting of shareholders (the “Meeting”), which is expected to be held in the fourth quarter of 2019 or the first quarter of 2020 or such other date as the Company and Molecular Science may determine.
Hinterland has agreed that its liabilities on closing of the Transaction shall be limited a total of $60,000. Prior to the execution of the Definitive Agreement, it may conduct certain securities-based transactions, with the consent of Molecular Science, in order to ensure its liabilities are within such limit (the “Hinterland Reorganization”). The Hinterland Reorganization will not affect the Hinterland Value.
At the Meeting to be held in connection with the Transaction, the shareholders of the Company may be asked to approve a special resolution authorizing an amendment to the articles of Hinterland to consolidate the issued and outstanding common share capital at a ratio to be determined (the “Consolidation”) and to change the name of the Company to “Molecular Science Corp” or such other name as may be acceptable to Molecular Science. Other than the Hinterland Reorganization, the Consolidation and the shares issuable pursuant to the Transaction (including the shares issuable to investors in connection with the Financing), it is not expected that the Company’s share capital will be altered as a result of the Transaction.
Completion of the Transaction is subject to a number of conditions, including but not limited to completion of the Financing, the satisfaction of the Company and Molecular Science in respect of the due diligence investigations to be undertaken by each party, the entering into by the parties of the Definitive Agreement with respect to the Transaction (which shall include such representations, warranties, conditions and covenants typical for a transaction of this nature), the receipt of all necessary corporate approvals of each of Hinterland and Molecular Science, the determination of a new board of directors of the Resulting Issuer (to consist of directors nominated by Molecular Science, in its sole discretion), the receipt of approval of the shareholders of Hinterland at the Meeting, the receipt of approval of the shareholders of Molecular Science and the receipt of all necessary approvals of all regulatory bodies having jurisdiction in connection with the Transaction, including stock exchange approvals. The Transaction cannot close until the required conditions are satisfied or waived, and there can be no assurances that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in a disclosure document of Hinterland or the Resulting Issuer to be prepared in connection with the Transaction, any information released or received with respect to the Transaction including the Financing, and/or other associated transactions may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.
If and when the Definitive Agreement between Hinterland and Molecular Science is executed, Hinterland will issue a subsequent press release in accordance with the policies of any applicable stock exchange containing the details of the Definitive Agreement and certain additional terms of the Transaction.
Disclosure Regarding Forward-Looking Statements: This press release contains certain “Forward-Looking Statements” within the meaning of applicable securities legislation relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction, the Financing, and the use of proceeds of the Financing. The information about Molecular Science contained in the press release has not been independently verified by the Company. We use words such as “will”, “should”, “anticipate”, “expect”, “believe”, “estimate” and similar terminology to identify forward looking statements and forward-looking information. Such statements and information are based on assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments as well as other factors which it believes to be reasonable and relevant. Forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied in the forward-looking statements and information and accordingly, readers should not place undue reliance on such statements and information. Although the Company believes, in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. In evaluating forward-looking statements and information, readers should carefully consider the various factors which could cause actual results or events to differ materially from those expressed or implied in the forward looking statements and forward-looking information depending on, among other things, the risks that the parties will not proceed with the Transaction, the Financing and/or other associated transactions, that the ultimate terms of the Transaction, the Financing and/or other associated transactions will differ from those currently contemplated, and that the Transaction, the Financing and/or other associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this press release are made as of the date of this release. The Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, Molecular Science, their respective securities, or their respective financial or operating results (as applicable).
This press release is intended for distribution in Canada only and is not intended for distribution to United States newswire services or dissemination in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.
All information contained in this press release relating to Molecular Science was provided by Molecular Science to Hinterland for inclusion herein. Hinterland has not independently verified such information and shall bear no liability for any misrepresentation contained therein.
For further information, please contact:
Hinterland Metals Inc.
1 Adelaide Street East
Attention: Binyomin Posen, Director and Chief Executive Officer
Molecular Science Corp.
120 Adelaide St West, Suite #2500
Attention: Christian Carswell, Chief Executive Officer
Original article can be found here: https://www.globenewswire.com/news-release/2019/10/24/1935129/0/en/Hinterland-Announces-Business-Combination-With-Molecular-Science.html