Canbud Distribution enters into definitive agreement to acquire Molecular Science Corp. | 2021-06-18 | Press Releases


Toronto, Ontario – (Newsfile Corp. – June 18, 2021) – Canbud Distribution Corp. (CSE: CBDX) (“Canbud“or the”society“) is pleased to announce that following its press release dated May 27, 2021, it has entered into a definitive acquisition agreement (the”Acquisition contract“) with Molecular Science Corp. (“MSC“) and 2847719 Ontario Inc. (“Sub-company“), a wholly owned subsidiary of Canbud, under which it has agreed to acquire all of the outstanding securities of MSC by way of a triangular merger (the”Transaction“). The Transaction is subject to receipt of all necessary regulatory approvals, including, where applicable, approval from the Canadian Securities Exchange (“CST“), and certain other conditions described below.

About MSC

MSC is a private analytical science and service company engaged in testing cannabis and related pharmaceuticals. MSC’s business activities are conducted primarily through Molecular Science Labs Corp, the wholly owned subsidiary of MSC in its laboratories in Scarborough, Ontario and pursuant to an analytical license issued by Health Canada in Cannabis Act.

The transaction

Pursuant to the Acquisition Agreement, the parties have agreed to complete the transaction, pursuant to which Subco will merge with MSC under the Business Corporations Act (Ontario) and continue as a new company, wholly owned by Canbud, and the holders of common shares of MSC (the “MSC Actions“) immediately prior to the merger will receive 3.313 common shares of Canbud (“Canbud Actions“) for each share of MSC, or a total of approximately 68,941,595 shares of Canbud, in exchange for their shares of MSC. All outstanding warrants of common shares of MSC will also be replaced by warrants common shares of Canbud, authorizing their holders to purchase up to a maximum of 3,975,707 Canbud shares for a purchase price of $ 0.30 per Canbud share until the date falling three years after the date Completion of the Transaction In addition, upon closing of the Transaction, the Company will issue up to 1,765,000 Canbud shares as advisory fees (the “Consulting fee actions“).

Upon closing of the transaction, holders of MSC shares prior to the transaction are expected to own approximately 44.7% of the outstanding Canbud shares on an undiluted basis and prior to giving effect to the issuance of shares with consultancy fees. Canbud Shares issued in exchange for MSC Shares will be subject to resale restrictions, such that their holders will be permitted to trade 25% of such Canbud Shares on a date which is four months after the closing date of the Transaction, and another 25% of those Canbud shares on dates falling seven, 10 and 13 months after the closing date.

Pursuant to the terms of the Acquisition Agreement, Canbud advanced to MSC a bridge loan (the “Bridge loan“) of $ 500,000, to be used by MSC for the repayment of certain debts and for working capital purposes. The bridge loan bears interest at 5% per annum, matures sixty days from the date of the loan -relays and is secured by the shares and assets of each of MSC and its principal operating subsidiary. In the event that MSC defaults on its obligations under the Acquisition Agreement or otherwise defaults on its obligations under the loan and guarantee documents with respect to the Bridge Loan, then the principal amount advanced under the Bridge Loan and all interest accrued thereon will become immediately due and payable after any notice period or applicable adjustment.

All existing directors and officers of the Company are expected to remain after the completion of the Transaction. At closing, all directors and officers of MSC are expected to resign, with the exception of Mauro Aiello and Sherry Farsami, who are expected to remain respectively CEO and acting quality assurance manager of the merged entity operating MSC’s business.

The completion of the Transaction is subject to a number of conditions, including, without limitation, the following:

  • receipt of the required approval for the transaction by MSC shareholders within 30 days of the signing of the Acquisition Agreement;
  • receipt of all applicable regulatory approvals;
  • there have been no acquisitions or disposals (other than in the normal course of business), no increase in debt or equity (with the exception of the Company), no significant new contract (with the exception of the Company) or transaction with related parties and no loss of any material license;
  • whether MSC shareholders holding 5% or more of the MSC Shares have exercised their dissent rights with respect to the merger of MSC and Subco;
  • no material adverse change affecting MSC or the Company;
  • satisfaction of Canbud and MSC with their respective due diligence investigation on the other hand; and
  • other customary closing conditions.

Steve Singh, CEO of the Company, said: “We are delighted to have entered into a definitive agreement to acquire an attractive business with high customer loyalty and which we believe will generate revenue and growth potential for Canbud. . MSC provides exceptional and essential services to the cannabis industry and also has the opportunity to expand its current business in the emerging psychedelics industry. Canbud intends to work to complete the transaction and, at the same time, continue to assess other potential acquisitions that could advance management’s goal of anchoring Canbud in key facets of the cannabis and cannabis industry. psychedelics. “

The Transaction is an arm’s length transaction for the Company and, if completed, will not constitute a fundamental change or result in a change of control of the Company, within the meaning of the policies of the CSE.

MSC Selected Financial Information

The following table presents selected financial information relating to MSC as of the dates indicated. The selected financial information is derived from MSC’s audited consolidated financial statements for the year ended December 31, 2019 and its unaudited consolidated financial statements for the year ended December 31, 2020, which have been prepared in accordance with International Standards of financial information, published by the International Accounting Standards Board.

Balance sheet information As of December 31, 2019

($)
As of December 31, 2020

(Unaudited)


($)
Current assets 1,047,184 727,896
Investment 138,000 43,590
Property and equipment 3,542,941 2,476,815
Right of use assets 613 270 130,472
Intangible assets 24 184 8,518
Total assets 5 365 579 3 387 291
Current liabilities 1,340,814 1,051,116
Total responsibilities 1,790,521 1 108 861
Total equity 3,575,058 2,278,430
Information on the income statement Fiscal year ended December 31, 2019

($)
Year ended December 31, 2020 (unaudited)

($)
Service revenues 1,175,890 2,742,208
Operating Expenses 5,418,154 4 890 802
Total operating loss (4,242,264) (2,148,594)
Net loss (4,272,761) (1,572,457)
Total overall loss (4,991,903) (1,674,367)
Adjusted EBITDA(1) (1 982 469) (216,294)

To note:

(1) In this press release, reference is made to Adjusted EBITDA which is not a measure of financial performance under International Financial Reporting Standards (IFRS). This metric and measure is not a recognized measure under IFRS, does not have a prescribed meaning under IFRS and, therefore, is unlikely to be comparable to similar measures presented by other companies. This measure should not be viewed in isolation or in lieu of a review of our financial information presented under IFRS. Adjusted EBITA includes adjustments to net income for non-recurring items, concluded research and development expenses, depreciation, amortization, interest and stock compensation.

Completion of the Transaction is subject to a number of conditions, including approval of the merger by MSC shareholders by special resolution. There can be no assurance that the transaction will be completed as proposed or that it will be completed.

About Canbud Distribution Corp.

Canbud Distribution Corporation is a health and wellness science and technology company operating in the psychedelic pharmaceuticals and non-psychedelic nutraceuticals and hemp cannabinoids (CBD) verticals.

Notice regarding forward-looking information

The information contained in this press release includes certain information and statements about management’s view of future events, expectations, plans and prospects that constitute forward-looking statements. The forward-looking statements contained in this press release include, without limitation, management’s expectations regarding the potential of the transaction to contribute to the growth potential of the Company and its ability to generate income, the objective of management to assess and pursue other potential acquisitions and the completion of the Transaction. These statements are based on assumptions that are subject to significant risks and uncertainties, including assumptions that all the conditions for closing the Transaction will be met, that the Transaction will be completed and assumptions regarding operations, financial position and the future performance of MSC and the Company. Although the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be inaccurate, and the forward-looking statements contained in this press release are subject to numerous risks, uncertainties and other factors that may lead to different future results. materially from those expressed or implied in these forward-looking statements. These risk factors may include, among others, the risk that the required approvals and the fulfillment of material conditions have not been obtained in connection with the Transaction, and the risk that the Transaction will not be approved or carried out in accordance with the conditions set out in the final agreement between the parties. Although the management of the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee that the expectations of the forward-looking statements will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such statements or the like.

For more information, please contact:

Robert Tjandra, president

Phone. : 416-847-7312

Email: [email protected]

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/88012


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