6-K
BRIGHT MINDS BIOSCIENCES INC. (DRUG)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2022
Commission File No. 001-40997
BRIGHT MINDS BIOSCIENCES INC. (Translation of registrant's name into English)
19 Vestry Street, New York, NY 10013 (Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F
Form 20-F [ X ] Form 40-F**[ ]**
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) [ ]
SUBMITTED HEREWITH
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BRIGHT MINDS BIOSCIENCES INC.
/s/ Ryan Cheung __________________________ Ryan Cheung Chief Financial Officer
Date: August 26, 2022
No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This prospectus supplement, together with the short form base shelf prospectus dated June 7, 2021 (the “Base Prospectus”) to which it relates, as amended or supplemented, and each document deemed to be incorporated by reference into the Base Prospectus, as amended or supplemented, and this prospectus supplement constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.
These securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), 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 or persons in the United States unless exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws are available. This prospectus supplement does not constitute an offer to sell or a solicitation or an offer to buy any of the securities offered hereby within the United States or to, or for the benefit of, U.S. persons. “United States” and “U.S. person” have the meanings ascribed to them in Regulation S under the U.S. Securities Act. See “Plan of Distribution”.
Information has been incorporated by reference in this prospectus supplement from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from from Bright Minds Biosciences Inc., c/o 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7 , and are also available electronically at www.sedar.com*.*
PROSPECTUS SUPPLEMENT To the Short Form Base Shelf Prospectus dated June 7, 2021
New IssueAugust 25, 2022
BRIGHT MINDS BIOSCIENCES INC.
Up to $ 4,001,200 $ 1.40 per Unit Up to 2,858,000 Units
This prospectus supplement (the “Prospectus Supplement”), together with the accompanying Base Prospectus, qualifies the distribution of up to 2,858,000 units (the “Units”) of Bright Minds Biosciences Inc. (“Bright Minds” or the “Company”) at the price of $1.40 per Unit (the “Offering Price”) for aggregate gross proceeds to the Company of up to $4,001,200 (the “Offering”). Each Unit will consist of one common share in the capital of the Company (a “Unit Share”) and one common share purchase warrant of the Company (a “Warrant”). Each Warrant will entitle the holder thereof to acquire, subject to adjustment in certain circumstances, one common share of the Company (a “Warrant Share”) at an exercise price of $1.76 per Warrant Share for a period of 24 months from the Closing Date (as defined herein). The Warrants will be governed by a warrant indenture (the “Warrant Indenture”) to be dated as of the Closing Date between the Company and Computershare Trust Company of Canada, as warrant agent thereunder (in such capacity, the “Warrant Ag e nt”). The Unit Shares and the Warrants comprising the Units will separate immediately upon the closing of the Offering. There is no minimum amount of funds that must be raised under the Offering. T he Company could complete this Offering after raising only a small portion of the o ffering amount set out above. See “Plan of Distribution” and “Description of Units”.
The Units will be issued and sold pursuant to the terms of an agency agreement (the “Agency Agreement”) dated August 25, 2022 between the Company and Eight Capital, as sole agent and bookrunner (the “Agent”). The Agent conditionally offers the Units for sale if, as and when issued by the Company and accepted by the Agent on a “best efforts” agency basis in accordance with the conditions contained in the Agency Agreement, as more fully described under the section entitled “Plan of Distribution” in this Prospectus Supplement. The terms of the Offering, including the offering price of the Units, were established in the context of the market and through arm’s length negotiations between the Company and the Agent, and may bear no relationship to the price that will prevail in the public marketplace. The Company has also engaged H.C. Wainwright & Co., LLC as its U.S. capital markets advisor (the “U.S. Capital Markets Advisor”) in connection with the Offering.
The common shares of the Company (the “Common Shares”) are listed and posted for trading on NASDAQ Capital Markets (“NASDAQ”) and the Canadian Securities Exchange (the “CSE”) under the symbol “DRUG”. On August 24, 2022, the last trading date before the date hereof, the closing price of the Common Shares as reported on NASDAQ **** was USD$1.98 per Common Share, and on CSE was $2.64 per Common Share. The completion of the Offering will be subject to the Company meeting the requirements of each of the CSE and NASDAQ.
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| Price<br>to the Public | Agent’s Commission ^(1^ ^)(2)^ | Net Proceeds<br>to the Company ^(^ ^3^ ^)^ | |
|---|---|---|---|
| Per Unit | $1.40 | $0.098 | $1.302 |
| Total^(^^4^^)(^^5^^)^ | $4,001,200 | $280,084 | $3,721,116 |
Notes:
(1)The Company will pay to the Agent a cash commission equal to 7% of the gross proceeds of the Offering, including the proceeds from the exercise of the Over-Allotment Option (as defined herein), if any, (the “Agent ’s Commission”). The amounts set forth above assume the maximum Agent’s Commission of 7% is paid to the Agent. In addition to the Agent’s Commission, the Agent will receive compensation warrants (the “Compensation Warrant s”) equal to 7% of the aggregate number of Units sold under the Offering (including any Additional Units (as defined herein) sold pursuant to the exercise of the Over-Allotment Option). Each Compensation Warrant will be exercisable to acquire one Unit (a “Compensation **** Unit”) at the Offering Price for a period of 24 months from the Closing Date. Each Compensation Unit will consist of one common share of the Company (a “Compensation Unit Shar e”) and one common share purchase warrant of the Company (“Compensation Unit Warrant”), each of which is exercisable into one common share of the Company (a “Compensation Unit Warrant Share”) at a price of $1.76 for a period of 24 months from the Closing Date, subject to adjustment in certain events. The Compensation Unit Warrants shall be issued under, and governed by, the terms of the Warrant Indenture. This Prospectus Supplement also qualifies the distribution of the Compensation Units. In addition, the Company will pay to the Agent a cash corporate finance fee equal to $50,000 (the “Corporate Finance Fee”).
(2)The Company will also (a) pay the U.S. Capital Markets Advisor a cash fee (the “US Advisory Fee”) equal to (i) 7% of the gross proceeds of the Offering derived from investors introduced by the U.S. Capital Markets Advisor to the Company who participate in the Offering, and (ii) 2.33% of the gross proceeds of the Offering from all other investors who participate in the Offering (including any gross proceeds raised on exercise of the Over-Allotment Option); and (b) issue the U.S. Capital Markets Advisor Compensation Warrants equal to (i) 7% of the number of Units sold to investors introduced by the U.S. Capital Markets Advisor to the Company, and (ii) 2.33% of the number of Units sold to all other investors in the Offering (including any Units issued on exercise of the Over-Allotment Option).
(3)After deducting the Agent’s Commission, but before deducting the Corporate Finance Fee, the US Advisory Fee and the expenses of this Offering, estimated to be approximately $200,000, which will be paid from the proceeds of the Offering.
(4)Assumes the Offering is fully subscribed.
(5) The Company has granted the Agent an option (the “Over-Allotment Option”) exercisable in whole or in part for a period of 30 days after and including the closing date of the Offering (the “Closing Date”) to cover over-allotments, if any, and for market stabilization purposes, to arrange for the sale of up to 428,700 **** additional Units (collectively, the “Additional Units”) at the Offering Price, each such Additional **** Unit comprised of one Common Share (each an “Additional Share” and, collectively, the “Additional Shares”) and one Warrant (an “Additional Warrant” and, collectively, the “Additional Warrants”). If the Over-Allotment Option is exercised in full, the Price to the Public, the Agent’s Commission and the Net Proceeds to the Company (before deducting the Corporate Finance Fee, the US Advisory Fee and the estimated expenses of the Offering) will be $4,601,380, $322,096.60 and $4,279,283.40, respectively. This Prospectus Supplement also qualifies (i) the grant of the Over-Allotment Option, and (ii) the distribution of the Additional Units issuable upon exercise of the Over-Allotment Option. See “Plan of Distribution”.
The following table sets forth the number of securities that have been issued or may be issued pursuant to the Over-Allotment Option and the Compensation Warrants:
| Agent ’s Position | M aximum N umber of Securities Available | Exercise Period | Exercise Price or Acquisition Price |
|---|---|---|---|
| Over-Allotment Option | Up to 428,700 Additional Units | Up to 30 days from and including the Closing Date | $1.40 per Additional Unit |
| Compensation Warrants^(1)^^(2)^^(3^^)^ | Up to 200,060 Compensation Units | 24 months from the Closing Date | $1.40 per Compensation Unit |
___________
Notes:
(1)This Prospectus Supplement also qualifies the distribution of the Compensation Warrants.
(2)Assumes the Offering is fully subscribed. If the Over-Allotment Option is exercised in full, the total “Maximum Number of Securities Available” will be 230,069Compensation Units.
(3)Excluding Compensation Units issuable to the U.S. Capital Markets Advisor.
The Company intends to take such action as required by the policies of the CSE to ensure the Common Shares, including any Additional Shares, Warrant Shares, Compensation Unit Shares and Compensation Unit Warrant Shares to be distributed under this Prospectus Supplement, are listed on the CSE. Further, the Company has provided notice to list the Common Shares to be distributed under this Prospectus Supplement on NASDAQ. Listing on NASDAQ is subject to the Company fulfilling all of the listing requirements of NASDAQ.
There is no market through which the Warrants may be sold and the Warrants will not be listed. Accordingly, purchasers may not be able to resell such Warrants purchased under this Prospectus Supplement. This may affect
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the pricing of the Warrants in the secondary market, the transparency and availability of trading prices, the liquidity of the Warrants, and the extent of issuer regulation. See “Risk Factors”.
Due to the nature of the Company’s business, a n investment in the Units involves a high degree of risk. You should carefully review the risks outlined in this Prospectus Supplement and in the documents incorporated by reference in this Prospectus Supplement and consider such risks in connection with an investment in the Units. See “Risk Factors” in this Prospectus Supplement and the accompanying Base Prospectus.
Unless the context otherwise requires, all references to the “Offering” in this Prospectus Supplement shall include the Over-Allotment Option and all references to the “Units”, “Unit Shares” and “Warrants” shall include Additional Units (and the Additional Shares and Additional Warrants comprising the Additional Units) issuable upon exercise of the Over-Allotment Option, as applicable.
Subscriptions for Units will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. The Units qualified for distribution under this Prospectus Supplement (other than those offered or sold to certain persons in the United States or to persons who are **** acting for the account or benefit of such persons, which will be represented by individual definitive certificates bearing U.S. **** restrictive legends) will be available for delivery in book-entry form through CDS Clearing and Depository Services Inc. **** (“CDS”) or its nominee and will be deposited with CDS at the closing of the Offering which is expected to occur on or about August 30, 2022 or such other date as may be agreed between the Company and the Agent (the “Closing Date”). Purchasers of Units will receive only a customer confirmation **** from the registered dealer that is a CDS participant and from or through which the Units are **** purchased.
No securities offered under this Prospectus Supplement will be offered or sold in the Province of Quebec or any of the territories of Canada. Subject to applicable law, the Agent and any selling group members may offer the Units in such other jurisdictions outside of Canada as agreed between the Company and the Agent. See “Plan of Distribution”.
There is no underwriter involved in the Offering and the Offering is not underwritten or guaranteed by any person. The Agent, on behalf of the Company, and any selling group members conditionally offer the Units on a “best efforts” agency basis, subject to prior sale, if, as and when issued by the Company and accepted by the Agent in accordance with the conditions contained in the Agency Agreement referred to under “Plan of Distribution” and subject to approval of certain legal matters by McMillan LLP, on behalf of the Company, and by DLA Piper (Canada) LLP, on behalf of the Agent.
The Agent shall be permitted to appoint a soliciting dealer group of other registered dealers acceptable to the Company for the purpose of arranging for purchases of Units under the Offering.
Subject to applicable laws in connection with the Offering, the Agent may effect transactions intended to stabilize or maintain the market price for the Common Shares at a level above that which might otherwise prevail on the open market. Such transactions, if commenced, may be discontinued at any time. See “Plan of Distribution”.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE OR CANADIAN SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPP LEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
You should rely on the information contained in or incorporated by reference into this Prospectus Supplement and the accompanying Base Prospectus . The Company and the Agent have not authorized anyone to provide you with different information. The Company is not making an offer of the Units in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this Prospectus Supplement or incorporated by reference in this Prospectus Supplement is accurate as of any date other than the date on the front of this Prospectus Supplement or the date of such documents incorporated by reference herein, as applicable.
Prospective investors should be aware that the acquisition , holding and the disposition of the s ecurities described herein may have tax consequences both in the Canada and in the United States that may not be described fully in this Prospectus Supplement or the Base Prospectus. Prospective investors are urged to consult their own tax advisors with respect to their own particular circumstances. See “ Certain Material Canadian Federal Income Tax Considerations ”.
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The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that the Company is incorporated under the laws of British Columbia, and that the majority of its officers and directors are residents of Canada.
Alan Kozikowski, Nils Bottler, Jeremy Fryzuk, and Jan Torleif Pedersen (the “Non-Resident D&O”) are directors and/or officers of the Company, and reside outside of Canada. They have appointed McMillan LLP at Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7 as agent for service of process. Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.
The head office and the registered office of the Company is located at Suite 1500, 1055 West Georgia Street, PO Box 11117, Vancouver, British Columbia V6E 4N7.
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TABLE OF CONTENTS Prospectus Supplement
Page
IMPORTANT NOTICE ABOUT THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND
THE BASE PROSPECTUS6
MARKETING MATERIALS6
MARKET AND INDUSTRY DATA7
FORWARD-LOOKING STATEMENTS AND FINANCIAL OUTLOOK INFORMATION7
CURRENCY PRESENTATION9
DOCUMENTS INCORPORATED BY REFERENCE10
THE BUSINESS11
CONSOLIDATED CAPITALIZATION13
USE OF PROCEEDS14
PLAN OF DISTRIBUTION15
DESCRIPTION OF SECURITIES BEING DISTRIBUTED18
PRIOR SALES21
TRADING PRICE AND VOLUME21
RISK FACTORS22
ELIGIBILITY FOR INVESTMENT25
CERTAIN MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS26
LEGAL MATTERS30
AUDITORS, TRANSFER AGENT AND REGISTRAR30
INTEREST OF EXPERTS30
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION31
CERTIFICATE OF THE COMPANY1
CERTIFICATE OF THE AGENT2
TABLE OF CONTENTS Base Prospectus
GENERAL MATTERS5
ABOUT THIS PROSPECTUS5
DOCUMENTS INCORPORATED BY REFERENCE5
MARKET AND INDUSTRY DATA7
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION7
CURRENCY PRESENTATION10
OUR BUSINESS10
THE SELLING SECURITYHOLDERS20
USE OF PROCEEDS20
CONSOLIDATED CAPITALIZATION20
PLAN OF DISTRIBUTION21
DESCRIPTION OF SECURITIES BEING DISTRIBUTED23
PRIOR SALES27
TRADING PRICE AND VOLUME28
RISK FACTORS29
CERTAIN INCOME TAX CONSIDERATIONS40
INTEREST OF EXPERTS40
AUDITOR40
TRANSFER AGENT AND REGISTRAR40
WHERE YOU CAN FIND ADDITIONAL INFORMATION40
STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION41
CONTRACTUAL RIGHTS OF RESCISSION41
CERTIFICATE OF THE COMPANY42
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IMPORTANT NOTICE ABOUT THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE BASE PROSPECTUS This document is in two parts. The first part is this Prospectus Supplement, which describes the specific terms of the Offering and securities being distributed hereunder and also adds to and updates information contained in the Base Prospectus and the documents that are incorporated by reference into this Prospectus Supplement and the Base Prospectus. The second part is the Base Prospectus, which provides more general information. This Prospectus Supplement is deemed to be incorporated by reference into the Base Prospectus solely for the purposes of the Offering. Other documents are also incorporated or deemed to be incorporated by reference into this Prospectus Supplement and into the Base Prospectus. See “Documents Incorporated by Reference”.
The Company has filed the Base Prospectus with the securities commissions in each of the provinces of Canada, other than Quebec (the “Qualifying Jurisdictions”), in order to qualify the offering of the securities described in the Base Prospectus in accordance with National Instrument 44-102 – Shelf Distributions (“NI 44-102”). The British Columbia Securities Commission issued a receipt dated June 7, 2021 in respect of the final Base Prospectus as the principal regulatory authority under Multilateral Instrument 11-102 – Passport System, and each of the other commissions in the Qualifying Jurisdictions is deemed to have issued a receipt under National Policy 11-202 – Process for Prospectus Review in Multiple Jurisdictions.
You should rely only on the information contained in or incorporated by reference in this Prospectus Supplement and the Base Prospectus. If the description of the Units, Unit Shares and Warrants varies between this Prospectus Supplement and the Base Prospectus, you should rely on the information in this Prospectus Supplement. To the extent that any statement made in this Prospectus Supplement differs from those in the Base Prospectus, the statements made in the Base Prospectus and the information incorporated by reference herein and therein are deemed modified or superseded by the statements made by this Prospectus Supplement. The Company has not authorized any other person to provide investors with additional or different information. If anyone provides you with any additional, different or inconsistent information, you should not rely on it.
You should not assume that the information contained in or incorporated by reference in this Prospectus Supplement or the Base Prospectus is accurate as of any date other than the date of the document in which such information appears. The Company’s business, financial condition, results of operations and prospects may have changed since those dates. Information in this Prospectus Supplement updates and modifies the information in the Base Prospectus and information incorporated by reference herein and therein.
This Prospectus Supplement does not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this Prospectus Supplement by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
Market data and certain industry forecasts used in this Prospectus Supplement, the accompanying Base Prospectus and the documents incorporated by reference in this Prospectus Supplement and the accompanying Base Prospectus were obtained from market research, publicly available information and industry publications. The Company believes that these sources are generally reliable, but the accuracy and completeness of this information is not guaranteed. Neither the Company nor the Agent has independently verified such information, and they do not make any representation as to the accuracy of such information. The links included in this Prospectus Supplement are included as inactive textual reference for reference purposes only and the information on or connected to these websites is not part of, or incorporated by reference into, this Prospectus Supplement.
In this Prospectus Supplement, “Bright Minds”, “we”, “us” and “our” refer, collectively, to Bright Minds Biosciences Inc. and its subsidiaries on a consolidated basis. MARKETING MATERIALS In connection with the Offering, the Agent used the Term Sheet (as hereinafter defined) (the “Marketing Materials”) as “marketing materials” (as such term is defined under applicable Canadian securities laws). The Marketing Materials do not form part of this Prospectus Supplement **** or the Base Prospectus to the extent that the contents of
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the template version of the marketing materials have been modified or superseded by a statement contained in this Prospectus Supplement. Any template version of any marketing materials that has been, or will be, filed on SEDAR before the termination of the distribution under the Offering (including any amendments to, or an amended version of, any template version of any marketing materials) is deemed to be incorporated by reference into this Prospectus Supplement. MARKET AND INDUSTRY DATA This Prospectus Supplement and the accompanying Base Prospectus includes market data and forecasts concerning the industry and markets in which the Company operates. Although the Company is responsible for the disclosure contained in this Prospectus Supplement and the accompanying Base Prospectus, in some cases the Company relies on and refers to market data and certain industry forecasts that were obtained from third party surveys, market research, consultant surveys, publicly available information and industry publications and surveys that it believes to be reliable. Unless otherwise indicated, all market and industry data and other statistical information and forecasts contained in this Prospectus Supplement and the accompanying Base Prospectus are based on independent industry publications, reports by market research firms or other published independent sources and other externally obtained data that the Company believes to be reliable. Any such market data, information or forecast may prove to be inaccurate because of the method by which it was obtained or because it cannot always be verified with complete certainty given the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties, including those discussed under the captions “Risk Factors”. As a result, although the Company believes that these sources are reliable, it has not independently verified the information. FORWARD-LOOKING STATEMENTS AND FINANCIAL OUTLOOK INFORMATION This Prospectus Supplement and the accompanying Base Prospectus, including the documents incorporated by reference herein and therein, contain forward-looking statements within the meaning of applicable Canadian securities legislation and U.S. securities legislation that may not be based on historical fact. Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing and other information that is not historical information. These statements appear in a number of different places in this Prospectus Supplement and can often be identified by words such as “anticipates”, “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, “will”, “could”, “may”, or their negatives or other comparable words. Such forward-looking statements are necessarily based on estimates and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These forward-looking statements include, among other things, statements relating to:
·the duration and effects of COVID-19 and any other pandemics on the Company’s workforce, business, operations and financial condition;
·the Company’s expectations regarding the achievement of clinical and regulatory milestones;
·the executive compensation of the Company;
·the composition of the board of directors (the “Board”) and management of the Company;
·the Company’s expectations regarding its revenue, expenses and research and development operations;
·the Company’s anticipated cash needs and its needs for additional financing;
·the use by the Company of the net proceeds raised from the Offering, including as to achieving the related business objectives described herein;
·expectations of the timing and completion of the Offering and the listing of the Unit Shares, the Warrant Shares and the Compensation Unit Shares (including those issuable upon any exercise of the Over-Allotment Option) on the CSE and NASDAQ, as applicable;
·the Company’s intention to grow the business and its operations;
·expectations with respect to the success of its research and development of serotonergic therapeutics;
·expectations regarding growth rates, growth plans and strategies of the Company;
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·expectations that the provisional patent applications will be refiled as regular patent applications or new provisional patent applications 12 months from their filing dates;
·the Company’s strategy with respect to the expansion and protection of its intellectual property;
·the medical benefits, safety, efficacy, dosing and consumer acceptance of serotonergic therapeutics;
·the Company’s ability to comply with provincial, federal, local and regulatory agencies in the United States, Canada and other jurisdictions in which the Company operates;
·the Company’s competitive position and the regulatory environment in which the Company operates;
·the Company’s expected business objectives for the next 12 months;
·the Company’s plans with respect to the payment of dividends;
·beliefs and intentions regarding the ownership of material trademarks and domain names used in connection with the design, production, marketing, distribution and sale of the Company’s products and services; and
·the Company’s ability to obtain additional funds through the sale of equity or debt commitments.
Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. The material factors and assumptions used to develop the forward-looking statements contained in this Prospectus Supplement and in and the documents incorporated herein by reference include, without limitation:
·obtaining the necessary regulatory approvals;
·that regulatory requirements will be maintained;
·general business and economic conditions;
·the duration of COVID-19 and the extent of its economic and social impact;
·the Company’s ability to successfully execute its plans and intentions;
·the availability of financing on reasonable terms;
·the Company’s ability to attract and retain skilled staff;
·market competition;
·the products, services and technology offered by the Company’s competitors; and
·that the Company’s current good relationships with the Company’s suppliers, service providers and other third parties will be maintained.
Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and the Company cannot assure that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties and assumptions, prospective purchasers of Unit should not place undue reliance on these forward-looking statements. Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under “Risk Factors” and described in the Base Prospectus, which include:
·limited operating history;
·the Company’s actual financial position and results of operations may differ materially from the expectations of the Company’s management;
·the Company may be required to obtain and maintain certain permits, licenses, and approvals in the jurisdictions where its products or technologies are being researched, developed, or commercialized;
·the Company may encounter substantial delays or difficulties with its clinical trial;
·clinical trials are very expensive, time consuming and difficult to design and implement;
·the Company may not be successful in its efforts to identify, license or discover additional product candidates;
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·risks associated with the development of the Company’s products which are at early stages of development;
·there is no assurance that the Company will turn a profit or generate immediate revenues;
·the continued operation of the Company as a going concern;
·the Company’s intellectual property and licenses thereto;
·the Company not achieve timelines for project development set out in this Prospectus Supplement;
·the Company faces product liability exposure;
·the Company has international operations, which subject the Company to risks inherent with operations outside of Canada;
·exchange rate fluctuations between the U.S. dollar and the Canadian dollar;
·changes to patent laws or the interpretation of patent laws;
·the risk of patent-related or other litigation;
·the Company may not be able to enforce its intellectual property rights throughout the world;
·the lack of product for commercialization;
·the lack of experience of the Company/management in marketing, selling, and distribution products;
·the size of the Company’s target market is difficult to quantify;
·potentials for conflicts of interest for the Company’s officers and directors;
·in certain circumstances, the Company’s reputation could be damaged;
·negative operating cash flow;
·need for additional financing;
·uncertainty and discretion of use of proceeds;
·the potential for a material weakness in the Company’s internal controls over financial reporting;
·difficulties with forecasts;
·market price of Common Shares and volatility;
·no market for the Warrants; and
·dilution of Common Shares.
If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking statements prove incorrect, actual results might vary materially from those anticipated in those forward-looking statements. The assumptions referred to above and described in greater detail under “Risk Factors” should be considered carefully by readers.
The Company’s forward-looking statements are based on the reasonable beliefs, expectations and opinions of management on the date of this Prospectus Supplement (or as of the date they are otherwise stated to be made). Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There is no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. We do not undertake to update or revise any forward-looking statements, except as, and to the extent required by, applicable securities laws in Canada. The forward-looking statements contained in this Prospectus Supplement, the accompanying Base Prospectus and the documents incorporated by reference herein are expressly qualified by this cautionary statement. CURRENCY PRESENTATION In this Prospectus Supplement, unless otherwise specified or the context otherwise requires, all references to “$” or CAD$ are to Canadian dollars. U.S. dollars are denoted as “USD$.” On August 25, 2022, the daily exchange rate for the United States dollar in terms of the Canadian dollar, as quoted by the Bank of Canada, was USD$1.00 = $1.2937.
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DOCUMENTS INCORPORATED BY REFERENCE This Prospectus Supplement is deemed, as of the date hereof, to be incorporated by reference into the accompanying Base Prospectus solely for the purposes of the Offering.
Information has been incorporated by reference in this Prospectus Supplement from documents filed with the securities commission in each of the provinces of Canada, other than Quebec (the “Securities Commissions”), or similar authorities in Canada. Copies of the documents incorporated herein by reference may also be obtained on request without charge from Bright Minds Biosciences Inc., Suite 1500-1055 West Georgia Street, Vancouver, British Columbia V6E 4N7. In addition, copies of the documents incorporated by reference herein may be obtained from the Securities Commissions or similar authorities in the provinces and territories of Canada electronically on SEDAR, at www.sedar.com.
The following documents or portions of documents filed with the Securities Commissions or similar authorities in the provinces and territories of Canada are specifically incorporated by reference into, and form an integral part of, this Prospectus Supplement:
·the Company’s annual report on Form 20-F dated December 29, 2021 for the fiscal year ended September 30, 2021 (filed in Canada with the Canadian securities regulatory authorities in lieu of an annual information form), which includes the Company’s audited consolidated financial statements, and the notes thereto for the years ended September 30, 2021 and September 30, 2020, together with the auditors’ report thereon, and the Company’s management’s discussion and analysis of financial condition and results of operations for the year ended September 30, 2021 (collectively, the “Annual Report”);
·the unaudited condensed interim consolidated financial statements of the Company, and the notes thereto, for the three and nine months ended June 30, 2022 and 2021, as filed on SEDAR on August 12, 2022;
·the management’s discussion and analysis of financial condition and results of operations for the nine months ended June 30, 2022, as filed on SEDAR on August 12, 2022;
·the management information circular of the Company dated February 22, 2022 distributed in connection with the Company’s annual general of shareholders to be held on March 24, 2022, as filed on SEDAR on March 1, 2022; and
·the template version of the term sheet dated August 25, 2022 in connection with the Offering (together, the “Term Sheet”). Any documents of the type described inSection 11.1 of Form 44-101F1 – Short Form Prospectuses filed by the Company with a securities commission or similar authority in any province of Canada subsequent to the date of this Prospectus Supplement and before withdrawal or completion of the Offering, will be deemed to be incorporated by reference into this Prospectus Supplement. In addition, to the extent that any document or information incorporated by reference into this Prospectus Supplement is filed with, or furnished to, the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) after the date of this Prospectus Supplement, such document or information will be deemed to be incorporated by reference as an exhibit to the registration statement of which this Prospectus Supplement forms a part (in the case of a report on Form 6-K, if and to the extent expressly provided therein).
Any statement contained in this Prospectus Supplement or in the accompanying Shelf Prospectus, or in a document incorporated or deemed to be incorporated by reference herein or therein will be deemed to be modified or superseded for purposes of this Prospectus Supplement to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not to be deemed an admission
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for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of material fact or an omission to state a material fact that is required to be stated or is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Prospectus Supplement or the accompanying Shelf Prospectus.
Upon a new annual information form, or a new annual report on Form 20-F, as applicable, and the related annual financial statements and accompanying management’s discussion and analysis being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities in Canada during the period that this prospectus supplement is effective, the previous annual information form or annual report on Form 20-F, as applicable, the previous annual financial statements and all interim financial statements, and in each case the accompanying management’s discussion and analysis of financial condition and results of operations, and material change reports, filed prior to the commencement of the financial year of the Company in which the new annual information form or annual report on Form 20-F is filed shall be deemed to no longer be incorporated into the Prospectus Supplement **** for purposes of offers and sales of Units under this Prospectus Supplement. Upon interim financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus Supplement **** is effective, all interim financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations filed prior to such new interim financial statements and management’s discussion and analysis of financial condition and results of operations shall be deemed to no longer be incorporated into this Prospectus Supplement **** for purposes of offers and sales of Units under this Prospectus Supplement. In addition, upon a new management information circular for an annual meeting of shareholders being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus Supplement **** is effective, the previous management information circular filed in respect of the prior annual meeting of shareholders shall no longer be deemed to be incorporated into this Prospectus Supplement **** for offers and sales of Units under this Prospectus Supplement.
References to our website in any documents that are incorporated by reference into this Prospectus Supplement **** and the accompanying Base Prospectus do not incorporate by reference the information on such website into this Prospectus Supplement **** or the accompanying Base Prospectus, and we disclaim any such incorporation by reference. THE BUSINESS The following description of the Company is derived from selected information about the Company contained in the documents incorporated by reference and does not contain all of the information about the Company and its business that should be considered before investing in the securities. This Prospectus Supplement, the accompanying Base Prospectus, and the documents incorporated by reference herein and therein should be reviewed and considered by prospective purchasers in connection with their investment in the securities.
The Company was incorporated under the Business Corporations Act (British Columbia) on May 31, 2019, under the name “1210954 B.C. Ltd.” and changed its name to “Bright Minds Biosciences Inc.” on March 6, 2020.
The head office of the Company is 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7 and the registered and records office of the Company is 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7. The Company’s Common Shares are listed on the CSE and NASDAQ under the trading symbol “DRUG”.
The Company has three wholly owned subsidiaries, Bright Minds Biosciences LLC, incorporated pursuant to the laws of the State of Delaware, Bright Minds Biosciences Pty Ltd., incorporated pursuant to the laws of Australia, and PsilocybinLabs Ltd., incorporated pursuant to the laws of the province of British Columbia, which is not a material subsidiary to the Company.
Summary Description of the Business
The Company is a biotechnology company dedicated to developing the next-generation therapeutics to improve the lives of patients with severe and life-altering diseases. The Company is focused on new chemical entities (NCEs) for a variety of central nervous system disorders, including but not limited to pediatric epilepsies, as well as other neuro-
12
psychiatric disorders, including but not limited to depression. The Company’s R&D efforts focus on medical indications based on its expertise in 5-HT (serotonin) mediated diseases.
Targeted Next Generation CNS and Neuro-Psychiatric Therapies Serotonin (5-HT) is the most prominent neurotransmitter in the brain and modulates many biological functions. Dysfunction of serotonin receptors, transporters, and associated neurocircuits is fundamental to many diseases including epilepsies and neuro-psychiatric disorders such as depression. The class of medications known as selective serotonin reuptake inhibitors (“SSRIs”), such as Prozac®, Zoloft®, and Lexapro®, are widely used in the treatment of depression with a market of US$14.3 Billion^1^. Similarly, other serotoninergic drugs are widely used in the treatment of pain (Triptans in migraine)^2^, Alzheimer’s and Parkinson’s disease related psychosis (Pimavanserin)^3^, and seizures (Fintepla)^4^. The off-label use of psilocybin extracts in depression and cluster headache, as well as encouraging clinical trial data with psilocybin and MDMA in depression and PTSD illustrate the potential for advancing serotoninergic therapies in neuropsychiatry and pain. The full potential of serotonin-based therapeutics has not been achieved due to the lack of medications that are selective and specific to certain serotonin receptor subtypes that are fundamental to disease pathology, without non-specific effects, or other offtarget effects on other serotonin receptors in the body that are associated with cardiac toxicities and have resulted in previous drugs being withdrawn from the market.
Bright Minds has a portfolio of patented, selective serotonin (5-HT2C and 5-HT2C/A-receptor subtypes) agonists that were identified using high-throughput screening methods in combination with advanced molecular modeling techniques to interrogate the interaction between the drug and its targeted receptors to increase downstream signaling while avoiding off-target effects.
Additional information regarding the business of the Company or its operation can be found in the Annual Report and the other documents incorporated by reference into this Prospectus Supplement.
Rec ent Developments Relating to the Company’s Business
Since the start of 2022, the Company has filed three United States provisional applications and one international patent application pursuant to the Patent Cooperation Treaty. A summary of the patent filings in 2022 to date is provided as follows:
| Serial Number | Title | Filing Date |
|---|
^1^Research and Markets, “Global Antidepressants Market (2020 to 2030) - COVID-19 Implications and Growth” (21 April 2020), online: Intrado GlobeNewswire <https://www.globenewswire.com/news-release/2020/04/21/2019282/0/en/Global-Antidepressants-Market-2020-to-2030-COVID-19-Implications-and-Growth.html>.
^2^Samar Nicolas & Diala Nicolas, “Triptans” (26 May 2020), online: National Center for Biotechnology Information <https://www.ncbi.nlm.nih.gov/books/NBK554507/>.
^3^Cerner Multum, “Pimavanserin” (5 February 2020), online: Drugs.com <https://www.drugs.com/mtm/pimavanserin.html>.
^4^“Fintepla FDA Approval History” (accessed 5 May 2021), online: Drugs.com <https://www.drugs.com/history/fintepla.html>.
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| US 63/296,430 | Phenethylamines and Methods of Preparation Thereof | January 4, 2022 |
|---|---|---|
| US 63/338,842 | Heterocyclic Compounds and Methods of Preparation Thereof | May 5, 2022 |
| US 63/338,889 | Heterocyclic Compounds and Methods of Preparation Thereof | May 6, 2022 |
| PCT/CA2022/050833 | Heterocyclic Compounds and Methods of Preparation Thereof | May 25, 2022 |
The Company also has another international patent application pursuant to the Patent Cooperation Treaty, namely PCT/CA2021/050336 filed in 2021, that remains pending.
In addition to investigating pharmaceutical compounds comprising an indole scaffolding, the Company has also begun focusing its attention on pharmaceutical compounds comprising an imidazole scaffolding and has identified a class of such compounds that it is interested in investigating further.
Further, on March 14, 2022, the Company announced the successful completion of 28-day repeat-dose toxicity studies for its lead product, BMB-101. Importantly, there were no major toxicological findings after twice daily oral administration of BMB-101 throughout the study period. The studies were conducted by the Company’s contract research partner, ITR Laboratories Canada in Baie d’Urfé, Québec, Canada. Repeat-dose oral toxicity studies were conducted in mice and dogs. These Good Laboratory Practice (GLP) compliant studies found that BMB-101, at doses up to 40 and 30 mg/kg/day in mice and dogs, respectively, were well tolerated at all dose levels. These data provide new information on a lack of major toxic effects after 28 days, including a lack of any effect to target organs. A no-observed-adverse-effect level (NOAEL) was identified in both species, which will be used in selecting starting dose levels and for establishing safety criteria for human exposure.
C ONSOLIDATED CAPITALIZATION The following table sets forth the consolidated capitalization of the Company as at June 30, 2022, the date of the Company’s most recently filed financial statements, as at such date after given effect to the Offering, and as at such date after given effect to the Offering and the exercise of the Over-Allotment Option. This table should be read in conjunction with the consolidated financial statements of the Company and the related notes and management’s discussion and analysis of financial condition and results of operations in respect of those statements that are incorporated by reference in this Prospectus Supplement.
| As at June 30, 2022 | As at June 30, 2022 after giving effect to the Offering ^(1)^ | As at June 30, 2022 after giving effect to the Offering and the Over-Allotment Option ^(1)^ | |
|---|---|---|---|
| Share Capital<br>(Common Shares - Authorized: unlimited) | $27,188,870<br><br><br>11,871,861 | $30,379,902<br><br><br>14,729,861 Common Shares | $30,896,057<br><br><br>15,158,561 Common Shares |
| Warrants | 3,961,704 | 7,086,451 | 7,555,163 |
| Stock Options | 935,807 | 935,807 | 935,807 |
| RSUs | 540,000 | 540,000 | 540,000 |
| Deficit | ($21,213,783) | ($21,213,783) | ($21,213,783) |
| Equity Reserves | $2,447,107 | $2,447,107 | $2,447,107 |
| Total Shareholders’ Equity | $8,434,194 | $11,625,226 | $15,332,413 |
Notes:
**(1)**Assuming the U.S. Capital Markets Advisor is issued Compensation Warrants equal to 2.33% of Units issued. USE OF PROCEEDS
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The net proceeds to be received by the Company from the sale of the Units (assuming the Offering is fully subscribed), after deducting the Agent’s Commission, the Corporate Finance Fee, the US Advisory Fee (assuming the U.S. Capital Markets Advisor does not introduce any investors to the Offering) and expenses of the Offering in the estimated amount of $200,000, will be (i) $3,377,888.04, if the Over-Allotment Option is not exercised, and (ii) $3,922,071.25, if the Over-Allotment Option is exercised in full.
The Company intends to use the net proceeds from the Offering as follows, which includes certain expenditures incurred in the past months:
| Use of Proceeds | Amount ^(1)^ |
|---|---|
| Preclinical Development Activities | $1,000,000 |
| Clinical Development Activities | $2,200,000 |
| General Working Capital | $177,888.04 |
| Total | $ 3,377,888.04 |
Notes:
(1)Assumes the Offering is fully subscribed and the Over-allotment option is not exercised. Any amount in excess of the estimated net proceeds described in this table due to exercise of the Over-Allotment Option or reduction in estimated expenses of the Offering is anticipated to be credited towards general working capital.
Although the Company intends to use the net proceeds of the Offering as set forth above, the actual allocation of the net proceeds may vary depending on future developments or unforeseen events, including developments or events resulting from the COVID-19 outbreak. There may be circumstances where, for sound business reasons, a reallocation of funds may be deemed prudent or necessary. The actual amount that the Company spends in connection with each of the intended uses of proceeds may vary significantly from the amounts specified above and will depend on a number of factors, including those referred to under “Risk Factors”.
Until applied, the net proceeds of the Offering will be held as cash balances in the Company’s bank account or invested in certificates of deposit and other instruments issued by banks or obligations of or guaranteed by the Government of Canada or any province or territory thereof. Unallocated funds from the Offering will be added to the working capital of the Company, and will be expended at the discretion of management. See” Risk Factors”.
The Company has no history of revenue from its operating activities. During the nine months ended June 30, 2022 the Company had negative cash flow from operating activities, reported a net comprehensive loss of $12,003,926 and net loss per share of $1.01. The Company anticipates it will continue to have negative cash flow from operating activities and net losses in future periods. A portion of the proceeds from the Offering will be used to fund negative cash flow from operating activities in future periods. See “Risk Factors”.
Business Objectives and Milestone
The net proceeds of the Offering are expected to allow the Company to:
| Business Objective | Significant Events | Expected Timing | Expected Use of Capital ^(1)^ |
|---|
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| IND enabling toxicology studies | Successful completion evaluating safety and tolerability of a proposed drug candidate | First Half of 2023 | $1,900,000 |
|---|---|---|---|
| Initiate phase 1/2 of clinical trials | Patient dosing and monitoring of multiple cohorts to evaluate safety and tolerability | Second Half of 2023 | $2,200,000 |
Notes:
(1)Portions of the capital described in respect of these business objectives are pre-funded through the Company’s current cash reserves, and do not form part of the use of proceeds described above. PLAN OF DISTRIBUTION Pursuant to the Agency Agreement, the Company has engaged the Agent to act as its agent to offer for sale to the public on a “best efforts” agency basis up to 2,858,000 Units at the Offering Price for gross proceeds of up to $4,001,200. The Agent has agreed to assist with the Offering on an agency basis and is not obligated to purchase any Units for its own account. The terms of the Offering were established in the context of the market and through arm’s-length negotiations between the Company and the Agent. Among the factors considered in determining such terms were prevailing market conditions, the historical performance and capital structure of the Company, the Agent’s estimates of the business potential of the Company, the availability of comparable investments, an overall assessment of management of the Company and the consideration of the foregoing factors in relation to market valuation of companies in related businesses. There is no minimum amount of funds that must be raised under the Offering. This means that the Company could complete the Offering after raising only a small proportion of the Offering set out above.
The obligations of the Agent under the Agency Agreement are subject to certain closing conditions and may be terminated by the Agent by notice to the Company given prior to the Closing Date if any of the following events occurs at or prior to the Closing Date: (i) the due diligence investigations performed by the Agent or its representatives reveal any material information or fact which, in the sole opinion of the Agent, is materially adverse to the Company or its business, or materially adversely affects the price or value of the securities underlying the Units; (ii) there shall be any material change or a change in any material fact or a new material fact shall arise or there should be discovered any previously undisclosed material fact required to be disclosed or any amendment thereto, in each case, that has or would be expected to have, in the sole opinion of the Agent, acting reasonably, a significant adverse change or effect on the business or affairs of the Company or on the market price or the value of the securities of the Corporation; (iii) there should develop, occur or come into effect or existence any event, action, state, condition (including without limitation, terrorism, pandemic, the COVID-19 pandemic or accident) or major financial occurrence of national or international consequence or a new or change in any law or regulation which in the sole opinion of the Agent, acting reasonably, seriously adversely affects or involves or may seriously adversely affect or involve the financial markets in Canada and the United States generally or the business, operations or affairs of the Company and its subsidiaries taken as a whole or the market price or value of the securities of the Company; (iv) any order to cease or suspend trading in any securities of the Company or prohibiting or restricting the distribution of its Common Shares, is made or proceedings are announced or commenced for the making of any such order, by any securities commission or similar regulatory authority, stock exchange on which the securities of the Company are listed or by any other competent authority, and has not been rescinded, revoked or withdrawn; (v) any inquiry, action, suit, proceeding or investigation (whether formal or informal) is commenced, announced or threatened in relation to the Company or any one of the officers or directors of the Corporation or any of its principal shareholders where wrongdoing is alleged or any order is made by any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality including the CSE or securities authority; (vi) there is any change of law, regulation, or policy or interpretation or administration thereof, if, in the sole opinion of the Agent, acting reasonably, the announcement or commencement thereof or change, as the case may be, materially adversely affects the trading or distribution of the securities of the Company; (vii) the Company is in breach of a term, condition or covenant of the Agency Agreement or any representation or warranty given by
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the Company in the Agency Agreement is or becomes false in any material respect; or (viii) the state of the financial markets in Canada or elsewhere where it is planned to market the Units is such that in the reasonable opinion of the Agent the Units cannot be profitably marketed. While the Agent has agreed to use its best efforts to sell the Units, the Agent is not obligated to purchase any Units not sold.
The Offering is not underwritten or guaranteed by any person. The Offering is made on a best efforts basis by the Agent who conditionally offer the Units, if, as and when issued by the Corporation and accepted by the Agent, in accordance with the terms and conditions contained in the Agency Agreement. All funds received from the subscription for the Units will be deposited and held by the Agent pursuant to the terms and conditions of the Agency Agreement and will not be released until the Agents have consented to such release.
Each Unit will consist of one Unit Share and one Warrant. Each Warrant will entitle the holder thereof to acquire, subject to adjustment in certain circumstances, one Warrant Share at an exercise price of $1.76 per Warrant Share until 4:00 p.m. (Pacific time) on the date that is 24 months following the Closing Date. The Warrants will be created and issued pursuant to the terms of the Warrant Indenture to be dated as of the Closing Date between the Company and the Warrant Agent. The Warrant Indenture will contain provisions designed to protect holders of the Warrants against dilution upon the happening of certain events. No fractional Warrants will be issued and no cash consideration will be paid in lieu of fractional shares issued upon exercise of a Warrant. See “Description of Securities Being Distributed – Warrants”.
The Company intends to take such action as required by the policies of the CSE to ensure the Unit Common Shares (including Additional Shares issuable on exercise of the Over-Allotment Option) to be distributed under this Prospectus Supplement (including Warrant Shares, Additional Shares, Compensation Unit Shares and Compensation Unit Warrant Shares) are listed on the CSE. Further, the Company has provided notice to list the Unit Common Shares (including the Warrant Shares, Additional Shares, Compensation Unit Shares and Compensation Unit Warrant Shares issuable on exercise of the Over-Allotment Option) to be distributed under this Prospectus Supplement on NASDAQ. Listing on NASDAQ is subject to the Company fulfilling all of the listing requirements of NASDAQ.
If the maximum Offering amount is raised in full, the total price to the public, Agent’s Commission and net proceeds to the Company will be approximately $4,001,200, $280,084 and $3,721,116, respectively (before deducting the Corporate Finance Fee, the U.S. Advisory Fee and the estimated expenses of the Offering of $200,000).
The Company has granted the Agent the Over-Allotment Option exercisable in whole or in part for a period of 30 days following Closing to cover over-allotments, if any, and for market stabilization purposes, to arrange for the sale of up to 428,700 Additional Units at the Offering Price. This Prospectus Supplement qualifies the grant of the Over-Allotment Option and the distribution of the Additional Units issuable upon exercise of the Over-Allotment Option. A purchaser who acquires Additional Units forming part of the Agent’s over-allocation position acquires those Additional Units under this Prospectus Supplement, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases.
In consideration for its services in connection with the Offering, the Agent will be paid the Agent’s Commission equal to 7% of the gross proceeds of the Offering ($0.098 per Unit, for an aggregate fee payable by the Company of $280,084 exclusive of any exercise by the Company of the Over-Allotment Option). In addition, the Company has agreed to issue to the Agent on the Closing Date the Compensation Warrants, entitling the Agent to subscribe for such number of Compensation Units as is equal to 7% of the number of Units sold under the Offering. Each Compensation Unit consists of one Compensation Unit Share and one Compensation Unit Warrant, each of which is exercisable into one Compensation Unit Warrant Share at a price of $1.76 for a period of 24 months from the Closing Date. This Prospectus Supplement also qualifies the distribution of the Compensation Warrants. The Agent’s Commission will be paid and additional Compensation Warrants will be issued to the Agent in respect of any Additional Units issued in connection with the exercise of the Over-Allotment Option. The Company will also pay the Agent the Corporate Finance Fee.
The Company will also (a) pay the U.S. Capital Markets Advisor a cash fee equal to (i) 7% of the gross proceeds from investors introduced by the U.S. Capital Markets Advisor to the Company who participate in the Offering, and (ii) 2.33% of the gross proceeds from all other investors who participate in the Offering (including any gross proceeds
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raised on exercise of the Over-Allotment Option); and (b) issue the U.S. Capital Markets Advisor Compensation Warrants equal to (i) 7% of the number of Units sold to investors introduced by the U.S. Capital Markets Advisor to the Company, and (ii) 2.33% of the number of Units sold to all other investors in the Offering (including any Units issued on exercise of the Over-Allotment Option).
The Company has agreed to indemnify the Agent and its affiliates, and their respective directors, officers, partners, employees and agents thereof against certain civil liabilities and expenses and to contribute to payments that the Agent may be required to make in respect thereof.
The Units, Unit Shares, Warrants and Warrant Shares have not been registered under the U.S. Securities Act or any U.S. 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 or persons in the United States, except that the Units may be offered on a private placement basis by the Agent acting through its U.S. registered broker-dealer affiliates to “accredited investors” as defined in Rule 501(a) of Regulation D under the U.S. Securities Act (“Accredited Investors”), provided that such offers and sales are made in accordance with section 4(a)(2) of the U.S. Securities Act and/or Rule 506(b) of Regulation D under the U.S. Securities Act, in each case in compliance with similar exemptions under applicable state securities laws (collectively, the “U.S. Private Placement”). Securities issued pursuant to the U.S. Private Placement will be “restricted securities” within the meaning of Rule 144 under the U.S. Securities Act subject to certain restrictions on transfer set forth therein, and will be represented by definitive certificates or other instruments bearing a legend regarding such restrictions. This Prospectus Supplement does not constitute an offer to sell or a solicitation of an offer to buy any of the Units in the United States or to, or for the account or benefit of, U.S. persons or persons in the United States. The terms “United States” and “U.S. person” are as defined in Regulation S (“Regulation S”) under the U.S. Securities Act.
Moreover, the Agency Agreement provides that the Agent may offer and sell the Units, and any Unit Share or Warrant underlying such Units, outside the United States to purchasers that are neither U.S. persons nor purchasing for the account or benefit of U.S. persons or persons in the United States, only in accordance with Rule 903 of Regulation S. The Agent has agreed that, except as permitted in the Agency Agreement, it will not offer or sell the Units within the United States or to, or for the account or benefit of, U.S. persons or persons in the United States. In addition, until 40 days after the Closing Date, an offer or sale of the Units distributed under the Offering within the United States or to a U.S. Person or person in the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from such registration requirements.
The Company will agree under the Agency Agreement that, for a period of 90 days from the Closing Date, it will not, without the prior written consent of the Agent, , issue, agree to issue, or announce any intention to issue any Common Shares or any securities convertible into or exchangeable for Common Shares, other than issuances pursuant to: (i) the exchange, transfer, conversion or exercise rights of existing outstanding securities; (ii) the exchange, transfer, conversion or exercise rights of existing outstanding securities; (iii) an arm’s length acquisition (including to acquire assets or intellectual property rights; or (iv) the Offering.
In addition, the Company has agreed to use its best efforts to cause each of the Company’s officers and directors to enter into lock-up agreements in favour of the Agent pursuant to which each will agree, for a period of 90 days from the Closing Date, to not, directly or indirectly, without the prior written consent of the Agent, such consent to not be unreasonably withheld, offer, sell, contract to sell, lend, swap or enter into any other agreement to transfer the economic consequences of, grant or sell any option to purchase, hypothecate, pledge, transfer, assign, purchase any option or contract to sell, lend, swap or enter into any agreement to transfer the economic consequences of, or otherwise dispose of or deal with, whether through the facilities of a stock exchange, by private placement or otherwise, or publicly announce any intention to do any of the foregoing, any Common Shares or securities convertible or exchangeable into Common Shares (“Convertible **** Securities”), whether now owned directly or indirectly, or under their control or direction, or with respect to which each has beneficial ownership, subject to customary carve outs and exceptions.
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In connection with the Offering, the Agent may over-allot or effect transactions that maintain the market price of the Common Shares at levels other than those that might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time.
Subscriptions for Units will be received by the Agent subject to rejection or allotment in whole or in part by the Agent and the Agent reserves the right to close the subscription books at any time without notice. Other than securities issued in connection with the sale of Units in the United States or to, or for the account or benefit of, U.S. persons or persons in the United States, which may be represented by physical certificates or other instruments bearing a U.S. restrictive legend in customary form, the securities qualified hereunder will be issued in registered or electronic form to CDS or its nominee and deposited with CDS, in each case against payment of the aggregate purchase price for such securities, less applicable commissions. Purchasers of Units which are issued in registered or electronic form to CDS or its nominee and deposited with CDS will receive only a customer confirmation from the registered dealer through which such Units are purchased.
The Units will be offered in each of the province of Canada, other than Quebec, through the Agent or its affiliates who are registered to offer the Units for sale in such provinces and such other registered dealers as may be designated by the Agent in accordance with the Agency Agreement. DESCRIPTION OF SECURITIES BEING DISTRIBUTED Authorized Capital
The Company’s authorized share capital consists of an unlimited number of Common Shares without par value. As of the date of this Prospectus Supplement, there were 12,351,861 Common Shares issued and outstanding as fully paid and non-assessable shares in the capital of the Company.
Common Shares
The holders of Common Shares are entitled to dividends, if, as and when declared by the Board, to one vote per Common Share at the meetings of shareholders of the Company, and upon liquidation, to receive such assets of the Company as are distributable to the holders of Common Shares.
Warrants
The Warrants (including any Compensation Unit Warrants issuable upon exercise of the Compensation Warrants) will be governed by the terms of the warrant indenture (the “Warrant Indenture”) to be entered into between the Company and Computershare Trust Company of Canada (the “Warrant Agent”) and dated the Closing Date. The following summary of certain anticipated provisions of the Warrant Indenture does not purport to be complete and is subject in its entirety to the detailed provisions of the Warrant Indenture. Reference is made to the Warrant Indenture for the full text of the attributes of the Warrants which will be filed by the Company under its corporate profile on SEDAR following the closing of the Offering. A register of holders will be maintained at the principal offices of the Warrant Agent in Vancouver, British Columbia.
The Unit Shares and the Warrants comprising the Units will separate upon the closing of the Offering. Each Warrant will entitle the holder to acquire, subject to adjustment in certain circumstances, one Warrant Share at an exercise price of $1.76 until 4:00 p.m. (Pacific time) on the date that is 24 months following the Closing Date, subject to certain exceptions and the terms of the Warrants, after which time the Warrants will be void and of no value.
The Warrant Indenture will provide for adjustment in the number of Warrant Shares issuable upon the exercise of the Warrants and/or the exercise price per Warrant Share upon the occurrence of certain events, including:
(a)if, at any time during the Adjustment Period (as such term will be defined in the Warrant Indenture), the Company shall:
a.issue Common Shares or securities exchangeable for, or convertible into, Common Shares to all or substantially all of the holders of the Common Shares by way of a stock dividend or other
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distribution (other than a distribution of Common Shares upon the exercise of any Warrants or options outstanding as of the date of the Warrant Indenture);
b.subdivide, re-divide or change the Common Shares into a greater number of Common Shares; or
c.consolidate, reduce or combine the Common Shares into a lesser number of Common Shares;
(collectively, a “Share Reorganization”, as such term will be defined in the Warrant Indenture)
(b)if and whenever at any time during the Adjustment Period (as such term will be defined in the Warrant Indenture), the Company shall fix a record date for the issuance of rights, options or warrants to all or substantially all of the holders of the Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible or exchangeable into Common Shares) at a price per Common Share (or having a conversion or exchange price per Common Share) less than 95% of the “Current Market Price” (“Current Market Price” will be defined in the Warrant Indenture as the weighted average of the trading price per Common Share for such Common Shares for each day there was a closing price for the twenty consecutive Trading Days (as such term will be defined in the Warrant Indenture) ending three days prior to such date on the CSE) for the Common Shares on such record date (a “Rights Offering”, as such term will be defined in the Warrant Indenture); and
(c)if and whenever at any time during the Adjustment Period (as such term will be defined in the Warrant Indenture), the distribution to all or substantially all of the holders of the Common Shares of (i) securities of any class, whether of the Company or any other entity (other than Common Shares); (ii) rights, options or warrants to subscribe for or to purchase Common Shares, or other securities convertible into or exchangeable for Common Shares (other than a “Rights Offering”, as such term will be defined in the Warrant Indenture); (iii) evidence of indebtedness; or (iv) any property or other assets.
The Warrant Indenture will also provide for adjustment in the class and/or number of securities issuable upon the exercise of the Warrants and/or exercise price per security in the event of the following additional events at any time during the Adjustment Period (as such term will be defined in the Warrant Indenture):
(a)reclassifications of the Common Shares or capital reorganizations, other than a Share Reorganization;
(b)reclassifications, changes, capital reorganizations, consolidations, amalgamations, arrangements or mergers of the Company with or into any other body corporate, trust, partnership or other entity; or
(c)the transfer, sale or conveyance of the property and assets of the Company as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity.
No adjustment in the exercise price or the number of Warrant Shares issuable upon the exercise of the Warrants will be required to be made unless the cumulative effect of such adjustment or adjustments would result in a change of at least 1% in the exercise price.
The Company will covenant in the Warrant Indenture that, during the period in which the Warrants are exercisable, it will give notice to the Warrant Agent **** and to the holders of the Warrants of certain stated events, including events that would result in an adjustment to the Exercise Price for the Warrants or the number of Warrant Shares issuable upon exercise of the Warrants. The notice shall be given in each case not less than 14 days prior to any such applicable record date. If notice has been given and the adjustment is not then determinable, the Company shall promptly, after the adjustment is determinable, file with the Warrant Agent **** a computation of the adjustment and give notice to the holders of the Warrants of such adjustment computation.
No fractional Warrant Shares will be issuable upon the exercise of any Warrants and no compensation will be paid in lieu of fractional Warrant Shares. Except as may be specifically provided in the Warrant Indenture, nothing in the Warrant Indenture or in the holding of a Warrant certificate, entitlement to a Warrant or otherwise, shall, in itself, confer or be construed as conferring upon holders of Warrants any right or interest whatsoever as a shareholder of
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the Company, including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings the Company’s shareholders or any other proceedings of the Company, or the right to dividends and other allocations.
The Warrant Indenture will provide that, from time to time, the Warrant Agent **** may amend or supplement the Warrant Indenture for certain purposes, without the consent of the holders of the Warrants, including curing defects or inconsistencies that do not prejudice the rights of any holder of Warrants or the Warrant Agent. Any amendment or supplement to the Warrant Indenture that would prejudice the interests of the holders of Warrants may only be made by "extraordinary resolution", which will be defined in the Warrant Indenture as a resolution either: (i) proposed at a meeting of the holders of Warrants duly convened for that purpose and held in accordance with the provisions of the Warrant Indenture at which there are holders of Warrants present in person or by proxy representing of at least 20% of the aggregate number of Common Shares that could be acquired on exercise of the Warrants and passed by an affirmative vote of such holders of Warrants representing not less than 66 2/3% of the aggregate number of Common Shares that could be acquired on exercise of the Warrants at the meeting and voting on the poll upon such resolution; or (ii) adopted by an instrument in writing signed by the holders of Warrants representing not less than 66 2/3% of the aggregate number of the then outstanding Warrants.
The Warrants and the Warrant Shares issuable upon the exercise of the Warrants have not been and will not be registered under the U.S. Securities Act or any state securities laws. The Warrants will not be exercisable in the United States, or by, or on behalf of, a person in the United States or a U.S. Person (as such term is defined in Regulation S under the U.S. Securities Act), nor will any certificates representing the Warrant Shares issuable upon exercise of the Warrants be delivered to an address in the United States, absent an available exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.
Compensation Warrants
The Company has agreed to issue the Compensation Warrants, the distribution of which are qualified by this Prospectus. The Compensation Warrants will be exercisable for a period of 24 months following the Closing Date at an exercise price of $1.40, subject to adjustment in certain events. The terms of the Compensation Warrants will set out in the definitive certificates representing the Compensation Warrants and will include, among other things, customary provisions for the appropriate adjustment of the number of Compensation Units issuable pursuant to any exercise of the Compensation Warrants upon the occurrence of certain events, including any subdivision, consolidation or reclassification of the Common Shares, any capital reorganization of the Company, or any arrangement, merger, consolidation or amalgamation of the Company with or into another corporation or entity, as well as customary amendment provisions.
The Compensation Warrants will not be listed or quoted on any securities exchange. The holders of the Compensation Warrants do not have the rights or privileges of holders of Common Shares and any voting rights until they exercise their Compensation Warrants and receive the Compensation Unit Shares issuable upon exercise thereof. PRIOR SALES For the 12-month period prior to the date of this Prospectus Supplement, the Company has issued the following Common Shares, or securities that are convertible or exchangeable into Common Shares: ****
| Date of Issuance | Security | Number of Securities | Issue/Exercise Price<br>Per Security ($) |
|---|---|---|---|
| November 9, 2021 | Common Shares | 12,500 | $9.46 |
| September 21, 2021 | Options | 8,707 | $7.64 |
| February 4, 2022 | Restricted Share Units (“RSUs”) | 25,000 | Market Price on the Settlement Date^(1)^ |
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| February 11, 2022 | RSUs | 35,000 | Market Price on the Settlement Date^(2)^ |
|---|---|---|---|
| April 27, 2022 | RSUs | 100,000 | Fair Market Value on the Vesting Date^(3)^ |
| May 5, 2022 | Common Shares | 25,000 | $1.57 (deemed) |
| July 19, 2022 | Common Shares | 240,000 | $0.05^(4)^ |
| August 22, 2022 | Common Shares | 240,000 | $0.05^(4)^ |
(1)25% of the RSUs will vest on February 1, 2023; 25% of the RSUs will vest on February 1, 2024; 25% of the RSUs will vest on February 1, 2025; and 25% of the RSUs will vest on February 1, 2026.
(2)25% of the RSUs will vest on February 1, 2023; 25% of the RSUs will vest on February 1, 2024; 25% of the RSUs will vest on February 1, 2025; and 25% of the RSUs will vest on February 1, 2026.
(3)25% of the RSUs will vest on April 27, 2022; 25% of the RSUs will vest on April 27, 2024; 25% of the RSUs will vest on April 27, 2025; and 25% of the RSUs will vest on April 27, 2026.
(4)Issued upon exercise of warrants. TRADING PRICE AND VOLUME
The Common Shares are listed on the CSE and NASDAQ under the trading symbol “DRUG”. The following tables set forth information relating to the trading of the Common Shares on the CSE for the months indicated.
| Month | CSE Price Range () | Total Volume |
|---|---|---|
| High | ||
| August 2021 | 7.10 | 145,868 |
| September 2021 | 10.77 | 225,657 |
| October 2021 | 9.64 | 150,909 |
| November 2021 | 11.00 | 885,295 |
| December 2021 | 5.49 | 148,430 |
| January 2022 | 4.25 | 201,703 |
| February 2022 | 3.14 | 212,175 |
| March 2022 | 2.65 | 258,100 |
| April 2022 | 2.02 | 102,863 |
| May 2022 | 1.60 | 99,440 |
| June 2022 | 1.38 | 86,925 |
| July 2022 | 1.55 | 160,810 |
| August 1 – 24, 2022 | 6.07 | 1,734,238 |
All values are in US Dollars.
The following tables set forth information relating to the trading of the Common Shares on the NASDAQ for the months indicated.
| Month | NASDAQ Price Range () | Total Volume |
|---|---|---|
| High | ||
| August 2021 | 5.69 | 130,490 |
| September 2021 | 8.83 | 248,030 |
| October 2021 | 8.00 | 208,528 |
| November 2021 | 8.95 | 9,750,686 |
All values are in US Dollars.
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| December 2021 | 4.337 | 3.16 | 508,900 |
|---|---|---|---|
| January 2022 | 3.50 | 2.0101 | 291,191 |
| February 2022 | 2.66 | 2.07 | 222,227 |
| March 2022 | 2.15 | 1.435 | 2,770,108 |
| April 2022 | 1.658 | 0.9075 | 2,334,551 |
| May 2022 | 1.38 | 0.7614 | 730,906 |
| June 2022 | 1.10 | 0.76 | 482,131 |
| July 2022 | 1.25 | 0.75 | 2,091,893 |
| August 1 – 24, 2022 | 4.75 | 0.81 | 337,453,659 |
RISK FACTORS Investors who will receive Units should consider carefully the risk factors set out herein and contained in and incorporated by reference in the accompanying Base Prospectus. Discussions of certain risks affecting the Company in connection with the Company’s business are set out under the heading “Risk Factors” in the accompanying Base Prospectus as well as in the documents incorporated by reference therein and herein, including, specifically, under the heading “R isk Factors” in the Company’s Annual Report , financial statements and accompanying management’s discussion and analysis.
Risks Relating to the Offering
The Company has discretion with respect to the use of proceeds from the Offering.
Management will have broad discretion with respect to the use of the net proceeds from the Offering, and investors will be relying on the judgment of management regarding the application of these proceeds. At the date of this Prospectus Supplement, the Company intends to use the net proceeds from the Offering as described under the heading “Use of Proceeds”. However, the Company’s needs may change as its business and the industry in which the Company operates may evolve. As a result, the proceeds to be received in the Offering may be used in a manner significantly different from the Company’s current expectations. The failure by management to apply these funds effectively could have a material adverse effect on the Company’s business.
The Offering Price may not be indicative of the price at which the Common Shares will trade following the completion of the Offering.
The Offering Price was established by arm’s length negotiation between the Company and the Agent with reference to the market price of the Common Shares and other factors, and may not be indicative of the price at which the Common Shares will trade following the completion of the Offering.
You may lose your entire investment
An investment in the Units is speculative and may result in the loss of your entire investment. Only potential investors who are experienced in high-risk investments and who can afford to lose their entire investment should consider purchasing the Units.
Dilution from exercise of the Warrants and other outstanding convertible securities
The exercise of the Warrants and other outstanding convertible securities, and the subsequent resale of any Common Shares issued upon the exercise thereof in the public market could adversely affect the prevailing market price of the Common Shares and the Company’s ability to raise equity capital in the future at a time and price which
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deems it appropriate. The Company may also enter into commitments in the future which would require the issuance of additional Common Shares or may grant additional share purchase warrants and the Company is expected to grant additional stock options. Any share issuances from the Company’s treasury will result in immediate dilution to existing shareholders’ percentage interest in the Company.
Warrants are Speculative
The Warrants do not confer any rights of Common Share ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire Common Shares at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Warrants may exercise their right to acquire Warrant Shares and pay an exercise price of $1.76 per Warrant Share, subject to adjustment in certain events, prior to the date that is 24 months following the Closing Date, after which date any unexercised Warrants will expire and have no further value. Moreover, following completion of the Offering, the market value of the Warrants, if any, is uncertain and there can be no assurance that the market value of the Warrants will equal or exceed their imputed offering price. There can be no assurance that the market price of the Common Shares will ever equal or exceed the exercise price of the Warrants, and consequently, whether it will ever be profitable for holders of the Warrants to exercise the Warrants.
Market Price of Common Shares and Volatility
Securities of companies with a small market capitalization have experienced substantial volatility in the past, often based on factors unrelated to the companies’ financial performance or prospects. These factors include macroeconomic developments in North America and globally, as well as market perceptions of the attractiveness of particular industries. Factors unrelated to the Company’s performance that may affect the price of the Common Shares include the following: the extent of analytical coverage available to investors concerning the Company’s business may be limited if investment banks with research capabilities do not follow the Company; lessening in trading volume and general market interest in the Common Shares may affect an investor’s ability to trade significant numbers of Common Shares; the size of the Company’s public float may limit the ability of some institutions to invest in Common Shares; and a substantial decline in the price of the Common Shares that persists for a significant period of time could cause the Common Shares to be delisted, further reducing market liquidity. As a result of any of these factors, the market price of the Common Shares at any given point in time may not accurately reflect the Company’s long-term value. Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management’s attention and resources. The fact that no market currently exists for the Common Shares may affect the pricing of the Common Shares in the secondary market, the transparency and availability of trading prices and the liquidity of the Common Shares.
The market price of the Common Shares is affected by many other variables which are not directly related to the Company’s success and are, therefore, not within the Company’s control. These include other developments that affect the breadth of the public market for the Common Shares, the release or expiration of lock-up or other transfer restrictions on the Common Shares, and the attractiveness of alternative investments. The effect of these and other factors on the market price of the Common Shares is expected to make the Common Share price volatile in the future, which may result in losses to investors. The value of the Units issued pursuant to the Offering will be affected by such volatility.
Volatile Stock Price
The stock price of the Company is expected to be volatile and will be drastically affected by governmental and regulatory regimes and other factors outside of the control of the Company. The Company cannot fully predict the results of its operations expected to take place in the future. The results of these activities will inevitably affect the Company’s decisions related to future operations and will likely trigger major changes in the trading price of the Company shares
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Non-Issuer Submission to Jurisdiction.
The Non-Resident D&O resides outside of Canada. Although the Non-Resident D&O has appointed McMillan LLP as agent for service of process in Canada, purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.
Liquidity
The Company cannot predict at what prices the Company’s Common Shares will trade, and there can be no assurance that an active trading market in the Company will be sustained. There is a significant liquidity risk associated with an investment in the Company.
Negative Operating Cash Flow
The Company’s business has incurred losses since its inception. Although the Company expects to become profitable, there is no guarantee that will happen, and the Company may never become profitable. The Company currently has a negative operating cash flow and may continue to have a negative operating cash flow for the foreseeable future. To date, the Company has not generated any revenues and a large portion of the Company’s expenses are fixed, including expenses related to facilities, equipment, contractual commitments and personnel. As a result, the Company expects for its net losses from operations to improve. The Company’s ability to generate additional revenues and potential to become profitable will depend largely on its ability to manufacture and market its products and services. There can be no assurance that any such events will occur or that the Company will ever become profitable. Even if the Company does achieve profitability, the Company cannot predict the level of such profitability. If the Company sustains losses over an extended period of time, the Company may be unable to continue its business.
Need for additional financing
The Company believes that it will have sufficient capital to operate its business for at least 12 months following Listing. However, it is possible that costs associated with the operation of the Company’s business will exceed its projections depending on the timing of future operating and capital expenses. Assuming the Company’s existing funds sustain its operations for this period, the Company believes that it may thereafter require additional capital for additional product development, sales and marketing operations, other operating expenses and for general corporate purposes to fund growth in the Company’s markets. The Company does not know how much additional funding it may require. The Company may therefore be required to seek other sources of financing in the future, which sources (assuming it is able to locate such alternative sources of financing) may be on terms less favorable to the Company than those in the Offering. Any additional equity financing may be dilutive to shareholders, and debt financing, if available, may involve restrictive covenants. If additional funds are raised through the issuance of equity securities, the percentage ownership of the shareholders of the Company will be reduced, shareholders may experience additional dilution in net book value per share, or such equity securities may have rights, preferences or privileges senior to those of the holders of the Common Shares. If adequate funds are not available on acceptable terms, the Company may be unable to develop or enhance its products and services, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on its business, financial condition and operating results, or the Company may be forced to cease operations. Financial and Accounting Risks Capital Requirements Associated with Expanded Operations
The Company may not generate sufficient internal cash flow to sustain capital requirements or to expand its business in accordance with its business plans. Accordingly, the Company may need to engage in equity or debt financings to secure additional funds. If the Company raises additional funds through further issuances of equity or convertible debt securities, its existing shareholders could suffer significant dilution, and any new equity securities the Company issues could have rights, preferences and privileges superior to those of holders of its Common Shares. Any debt
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financing secured by the Company in the future could include restrictive covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, the Company may not be able to obtain additional financing on terms favorable to it or at all. If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when the Company requires it, the Company’s ability to continue to support business growth and respond to business challenges could be significantly limited. In addition, the terms of any additional equity or debt issuances may adversely affect the value and price of the Common Shares.
Estimates or Judgments Relating to Critical Accounting Policies
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, as provided in the notes to the Audited Financial Statements and Interim Financial Statements, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. The Company’s operating results may be adversely affected if the assumptions change or if actual circumstances differ from those in the assumptions, which could cause the Company’s operating results to fall below the expectations of investors, resulting in a decline in the share price of the Company.
Tax Risks
The Company will operate and will be subject to income tax and other forms of taxation in multiple tax jurisdictions. Taxation laws and rates which determine taxation expenses may vary significantly in different jurisdictions, and legislation governing taxation laws and rates is also subject to change. Therefore, the Company’s earnings may be impacted by changes in the proportion of earnings taxed in different jurisdictions, changes in taxation rates, changes in estimates of liabilities and changes in the amount of other forms of taxation. The Company may have exposure to greater than anticipated tax liabilities or expenses. The Company will be subject to income taxes and non-income taxes in a variety of jurisdictions and its tax structure is subject to review by both domestic and foreign taxation authorities and the determination of the Company’s provision for income taxes and other tax liabilities will require significant judgment. ELIGIBILITY FOR INVESTMENT In the opinion of McMillan LLP, counsel to the Company, and DLA Piper (Canada) LLP, counsel to the Agent, based on the current provisions of the Income Tax Act (Canada) and the regulations thereunder (collectively, the “Tax Act”) and any proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”), as of the date of this Prospectus Supplement, the Unit Shares, Warrants and Warrant Shares, if issued on the date hereof, would be “qualified investments” under the Tax Act for trusts governed by a registered retirement savings plan, registered retirement income fund, registered education savings plan, registered disability savings plan, tax-free savings account (as those terms are defined in the Tax Act), first home savings account (as defined in the Tax Proposals) (collectively referred to as “Registered Plans”) or a deferred profit sharing plan (as defined in the Tax Act) (“DPSP”), provided that:
(i)the Unit Shares and Warrant Shares are listed on a “designated stock exchange” as defined in the Tax Act (which currently includes the CSE and the NASDAQ) or the Company is a “public corporation” as defined in the Tax Act; and
(ii)in the case of the Warrants either (a) the Warrants are listed on a “designated stock exchange” as defined in the Tax Act (which currently includes the CSE and the NASDAQ), or (b) the Unit Shares are qualified investments as described in (i) above and neither the Company, nor any person with whom the Company does not deal at arm’s length for the purposes of the Tax Act, is an annuitant, a beneficiary, an employer or a subscriber under, or a holder of, the particular Registered Plan or DPSP.
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Notwithstanding the foregoing, the holder of, or annuitant or subscriber under, a Registered Plan (the “Controlling Individual”) will be subject to a penalty tax in respect of Unit Shares, Warrants and Warrant Shares held in the Registered Plan if such securities are a “prohibited investment” (as defined in the Tax Act) for the particular Registered Plan. A Unit Share, Warrant and Warrant Share generally will not be a “prohibited investment” for a Registered Plan provided that the Controlling Individual deals at arm’s length with the Company for the purposes of the Tax Act and does not have a “significant interest” (as defined in the Tax Act for purposes of the prohibited investment rules) in the Company. In addition, the Unit Shares and Warrant Shares generally will not be a prohibited investment if such securities are “excluded property” (as defined in the Tax Act for purposes of the prohibited investment rules) for trusts governed by a Registered Plan.
Purchasers who intend to hold Unit Shares, Warrants or Warrant Shares through a Registered Plan or DPSP should consult their own tax advisors with respect to the application of these rules in their particular circumstances . CERTAIN MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS The following is, as at the date of this Prospectus Supplement, a general summary of the principal Canadian federal income tax considerations under the Tax Act generally applicable to an investor who acquires Units as beneficial owner pursuant to the Offering and who, for the purposes of the Tax Act and at all relevant times, (i) deals at arm’s length with the Company and the Agent, (ii) is not affiliated with the Company or the Agent, and (iii) acquires and holds the Unit Shares and Warrants, and will hold the Warrant Shares issuable on the exercise of the Warrants, as capital property. For purposes of this summary, references to Common Shares include the Unit Shares and Warrant Shares unless otherwise indicated. A holder who meets all of the foregoing requirements is referred to as a “Holder” in this summary, and this summary only addresses such Holders. Generally, the Common Shares and Warrants will be considered as capital property of a Holder thereof provided that the Holder does not hold or use the Common Shares or Warrants in the course of carrying on a business of trading or dealing in securities and such Holder has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.
This summary does not apply to a Holder (i) that is a “financial institution” for the purposes of the mark-to-market rules contained in the Tax Act, (ii) that is a “specified financial institution” as defined in the Tax Act, (iii) an interest in which would be a “tax shelter investment” as defined in the Tax Act, (iv) that has made a functional currency reporting election under the Tax Act to report the holder’s “Canadian tax results” (as defined in the Tax Act) in a currency other than Canadian currency, (v) that is exempt from tax under Part I of the Tax Act, (vi) that receives dividends on the Common Shares under or as part of a “dividend rental arrangement” as defined in the Tax Act, (vii) that is a partnership, or (viii) that has entered into or will enter into a “derivative forward agreement” or “synthetic disposition arrangement”, as those terms are defined in the Tax Act, with respect to the Common Shares or Warrants, or (ix) that is a “substantive CCPC” as defined in the Tax Proposals. All such Holders should consult their own tax advisors with respect to an investment in Units. In addition, this summary does not address the deductibility of interest by a Holder who has borrowed money or otherwise incurred debt in connection with the acquisition of Units.
Additional considerations, not discussed herein, may be applicable to a Holder that is a corporation resident in Canada and is, or becomes (or does not deal at arm’s length within the meaning of the Tax Act with a corporation resident in Canada that is or becomes) as part of a transaction or event or series of transactions or events that includes the acquisition of the Units, controlled by a non-resident person or a group of non-resident persons not dealing with each other at arm’s length, for purposes of the “foreign affiliate dumping” rules in section 212.3 of the Tax Act. Such Holders should consult their own tax advisors with respect to the consequences of acquiring Units.
This summary is based on the current provisions of the Tax Act in force as of the date of this Prospectus Supplement and counsel’s understanding of the current published administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”). This summary takes into account all Tax Proposals and assumes that the Tax Proposals will be enacted in the manner and form proposed, although no assurance can be given that the Tax Proposals will be enacted in their current form or at all. If the Tax Proposals are not enacted or otherwise implemented as presently proposed, the tax consequences described below may be different. This summary does not otherwise take into account any changes in law or in the administrative policies or assessing practice of the CRA, whether by legislative, governmental or judicial decision or action, nor does it take into account or consider any provincial, territorial or
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foreign tax considerations, or any other federal considerations, which considerations may differ significantly from the Canadian federal income tax considerations discussed in this summary.
This summary is of a general nature only, is not exhaustive of all possible Canadian federal income tax considerations and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder. All investors, including Holders as defined above, should consult their own tax advisors with respect to their particular circumstances.
Allocation of Cost
The total purchase price of a Unit to a Holder must be allocated on a reasonable basis between the Unit Share and the Warrant which such Unit comprises to determine the cost of each to the Holder for purposes of the Tax Act.
For its purposes, the Company intends to allocate $1.39 of the Offering Price of each Unit as consideration for the issue of each Unit Share and $0.01 of the Offering Price of each Unit for the Warrant which such Unit comprises. Although the Company believes its allocation is reasonable, it is not binding on the CRA or the Holder, and no valuation or related opinion has been sought or obtained in this regard. The Holder’s adjusted cost base of the Unit Share composing a part of each Unit will be determined by averaging the cost allocated to the Unit Share with the adjusted cost base to the Holder of all Common Shares (if any) owned by the Holder as capital property immediately prior to such acquisition.
Exercise of Warrants
The exercise of a Warrant to acquire a Warrant Share will be deemed not to constitute a disposition of property for purposes of the Tax Act. As a result, no gain or loss will be realized by a Holder upon the exercise of a Warrant to acquire a Warrant Share. When a Warrant is exercised, the Holder’s cost of the Warrant Share acquired thereby will be equal to the aggregate of the Holder’s adjusted cost base of such Warrant and the exercise price paid for the Warrant Share. The Holder’s adjusted cost base of the Warrant Share so acquired will be determined by averaging the cost of the Warrant Share with the adjusted cost base to the Holder of all Common Shares (if any) owned by the Holder as capital property immediately prior to such acquisition. Holders Resident in Canada The following section of this summary applies to Holders who, for the purposes of the Tax Act and any applicable income tax treaty or convention, are or are deemed to be resident in Canada at all relevant times (“Resident Holders”) and this portion of the summary only addresses such Resident Holders. Certain Resident Holders whose Common Shares might not otherwise constitute capital property may make, in certain circumstances, an irrevocable election permitted by subsection 39(4) of the Tax Act to deem the Common Shares, and every other “Canadian security” as defined in the Tax Act, held by such persons in the taxation year of the election and each subsequent taxation year to be capital property. This election does not apply to Warrants. Resident Holders should consult their own tax advisors regarding the availability and/or advisability of making this election in their particular circumstances.
Expiry of Warrants In the event of the expiry of an unexercised Warrant, a Resident Holder generally will realize a capital loss equal to the Resident Holder’s adjusted cost base of such Warrant immediately before the disposition. The tax treatment of capital gains and capital losses is discussed in greater detail below under the subheading “Capital Gains and Capital Losses ”. Dividends
Dividends received or deemed to be received on the Common Shares by a Resident Holder, if any, will be included in computing the Resident Holder’s income. In the case of a Resident Holder that is an individual (other than certain trusts), such dividends will be subject to the gross-up and dividend tax credit rules normally applicable in respect of “taxable dividends” received from “taxable Canadian corporations” (each as defined in the Tax Act), including the
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enhanced gross-up and dividend tax credit in respect of “eligible dividends”, if any, so designated by the Company to the Resident Holder in accordance with the provisions of the Tax Act. There may be restrictions on the Company’s ability to so designate any dividends as “eligible dividends”, and the Company has made no commitments in this regard.
Dividends received or deemed to be received by a Resident Holder that is a corporation must be included in computing its income but generally will be deductible in computing its taxable income, subject to certain restrictions and special rules under the Tax Act. A Resident Holder that is a “private corporation” (as defined in the Tax Act) and certain other corporations controlled by or for the benefit of an individual (other than a trust) or related group of individuals (other than trusts) generally will be liable to pay a special tax under Part IV of the Tax Act (refundable in certain circumstances) on dividends received or deemed to be received on the Common Shares to the extent such dividends are deductible in computing the Resident Holder’s taxable income. In certain circumstances, subsection 55(2) of the Tax Act will treat a taxable dividend received or deemed to be received by a Resident Holder that is a corporation as proceeds of disposition or a capital gain. Resident Holders that are corporations should consult their own tax advisors having regard to their particular circumstances. Dispositions of Common Shares and Warrants
Upon a disposition (or a deemed disposition) of a Common Share (other than a disposition to the Company in a transaction that is not a sale in the open market in the manner in which such shares would normally be purchased by any member of the public in an open market) or a Warrant (other than a disposition arising on exercise), a Resident Holder generally will realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition of such security, as applicable, net of any reasonable costs of disposition, are greater (or are less) than the adjusted cost base of such security, as applicable, to the Resident Holder. The tax treatment of capital gains and capital losses is discussed in greater detail below under the subheading “Capital Gains and Capital Losses”.
Capital Gains and Capital Losses Generally, a Resident Holder is required to include in computing income for a taxation year one-half of the amount of any capital gain (a “taxable capital gain”) realized in the year. Subject to and in accordance with the provisions of the Tax Act, a Resident Holder is required to deduct one-half of the amount of any capital loss (an “allowable capital loss”) realized in a taxation year from taxable capital gains realized in the year by such Resident Holder. Allowable capital losses in excess of taxable capital gains realized in a year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any following taxation year against net taxable capital gains realized in such year to the extent and under the circumstances described in the Tax Act.
The amount of any capital loss realized on the disposition or deemed disposition of Common Shares by a Resident Holder that is a corporation may be reduced by the amount of dividends received or deemed to have been received by it on such shares or shares substituted for such shares to the extent and in the circumstances specified by the Tax Act. Similar rules may apply where a Resident Holder that is a corporation is a member of a partnership or a beneficiary of a trust that owns Common Shares, directly or indirectly, through a partnership or trust. Resident Holders to whom these rules may be relevant should consult their own tax advisors.
Alternative Tax es
Capital gains realized (or deemed to be realized) and dividends received (or deemed to be received) by a Resident Holder that is an individual or a trust, other than certain specified trusts, may give rise to minimum tax under the Tax Act. Such Resident Holders should consult their own advisors with respect to the application of the minimum tax.
A Resident Holder that is throughout the relevant taxation year a “Canadian-controlled private corporation” (as defined in the Tax Act) also may be liable to pay a special additional tax (refundable in certain circumstances) on its “aggregate investment income” (as defined in the Tax Act) for the year which will generally include taxable capital gains and dividends. Tax Proposals released by the Minister of Finance (Canada) on April 7, 2022 are intended to extend this additional tax and refund mechanism in respect of aggregate investment income to “substantive CCPCs”
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as defined in the Tax Proposals. Resident Holders should consult their own tax advisors with regard to this additional tax and refund mechanism.
Holders Not Resident in Canada
The following section of this summary is generally applicable to Holders who, for the purposes of the Tax Act and any applicable income tax treaty or convention, (i) are not, and will not be deemed to be, resident in Canada at any time while they hold the Common Shares or Warrants, and (ii) do not use or hold, and are not deemed to use or hold, the Common Shares or Warrants in carrying on a business in Canada at any relevant time (“Non-Resident Holders”), and this portion of the summary only addresses such Non-Resident Holders.
Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that carries on, or is deemed to carry on, an insurance business in Canada and elsewhere or that is an “authorized foreign bank” (as defined in the Tax Act). Such Holders should consult their own tax advisors.
Dividends
Dividends paid or credited or deemed to be paid or credited to a Non-Resident Holder by the Company are subject to Canadian withholding tax at the rate of 25% on the gross amount of the dividend unless such rate is reduced by the terms of an applicable income tax treaty or convention. For example, under the Canada-United States Tax Convention (1980), as amended (the “Treaty”), the rate of withholding tax on dividends paid or credited to a Non-Resident Holder that is the beneficial owner of the dividend, who is resident in the U.S. for purposes of the Treaty, and can substantiate entitlement to the full benefits under the Treaty (a “U.S. Holder”) is generally limited to 15% of the gross amount of the dividend (or 5% in the case of a U.S. Holder that is a company that beneficially owns at least 10% of the Company’s voting shares). The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, of which Canada is a signatory, affects many of Canada’s bilateral tax treaties, including the ability to claim benefits thereunder. Affected Non-Resident Holders should consult their own tax advisors in this regard.
Dispositions of Common Shares and Warrants
A Non-Resident Holder generally will not be subject to tax under the Tax Act in respect of a capital gain realized on the disposition or deemed disposition of a Common Share or a Warrant, nor will capital losses arising therefrom be recognized under the Tax Act, unless the Common Share or Warrant, as applicable, constitutes, or is deemed to constitute, “taxable Canadian property” to the Non-Resident Holder thereof for purposes of the Tax Act at the time of disposition, and the gain is not exempt from tax pursuant to the terms of an applicable income tax treaty or convention.
Provided the Common Shares are listed on a “designated stock exchange” as defined in the Tax Act (which currently includes the CSE and the NASDAQ) at the time of disposition, the Common Shares and Warrants generally will not constitute taxable Canadian property of a Non-Resident Holder at that time unless, at any time during the 60-month period immediately preceding the disposition, the following two conditions are simultaneously met: (i) one or any combination of (a) the Non-Resident Holder, (b) persons with whom the Non-Resident Holder did not deal at arm’s length (for the purposes of the Tax Act), and (c) partnerships in which the Non-Resident Holder or such non-arm’s length person referred to be in (b) holds a membership interest (either directly or indirectly through one or more partnerships), owned 25% or more of the issued shares of any class or series of shares of the Company; and (ii) more than 50% of the fair market value of the shares of the Company was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, Canadian resource properties (as defined in the Tax Act), timber resource properties (as defined in the Tax Act) or an option, an interest or right in such property, whether or not such property exists. Notwithstanding the foregoing, a Common Share or Warrant may also be deemed to be taxable Canadian property to a Non-Resident Holder under other provisions of the Tax Act.
In cases where a Non-Resident Holder disposes (or is deemed to have disposed) of a Common Share or Warrant that is taxable Canadian property to that Non-Resident Holder, and the Non-Resident Holder is not entitled to an exemption under an applicable income tax treaty or convention, the consequences described above under the
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headings “Holders Resident in Canada - Dispositions of Common Shares and Warrants” and “Holders Resident in Canada – Capital Gains and Capital Losses” will generally be applicable to such disposition.
Non-Resident Holders who may hold Common Shares or Warrants as taxable Canadian property should consult their own tax advisors with respect to all tax consequences applicable in their particular circumstances. LEGAL MATTERS Certain legal matters relating to the offering under this Prospectus Supplement will be passed on behalf of the Company by McMillan LLP, with respect to matters of Canadian securities laws and on behalf of the Agent by DLA Piper (Canada) LLP. A UDITORS, TRANSFER AGENT AND REGISTRAR The independent auditors of the Company are De Visser Gray LLP, of Vancouver, British Columbia.
The transfer agent and registrar of the Company is Computershare Trust Company of Canada at its office located in Vancouver, British Columbia. INTEREST OF EXPERTS Name of Experts
The following are the names of each person or company who has prepared or certified a report, valuation, statement or opinion in this Prospectus Supplement, either directly or in a document incorporated by reference and whose profession or business gives authority to the report, valuation, statement or opinion made by the person or the company:
·McMillan LLP, the Company’s legal counsel;
·DLA Piper (Canada) LLP, the Agent’s legal counsel; and
·De Visser Gray LLP, the Company’s independent auditors, prepared independent audit reports for the Company’s financial statements for the year ended September 30, 2021 and September 30, 2020;
Interests of Experts
De Visser Gray LLP, report that they are independent with respect to the Company in accordance with the Chartered Professional Accountants of British Columbia Code of Professional Conduct.
As at the date hereof, the “designated professionals” (as such term is defined in Form 51-102F2 – Annual Information Form) of McMillan LLP beneficially own, directly or indirectly, less than one percent of the Company’s securities of any class. As of the date hereof, the partners and associates of DLA Piper (Canada) LLP, as a group, beneficially own, directly or indirectly, less than 1% of the Common Shares. STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus or a prospectus supplement (including a pricing supplement) relating to the securities purchased by a purchaser and any amendment thereto. In several of the provinces of Canada, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, damages if the prospectus or prospectus supplement (including any pricing supplement) relating to the securities purchased by a purchaser and any amendment thereto contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission, or damages are exercised by the purchaser within the time limit prescribed by the
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securities legislation of the purchaser’s province. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of these rights or consult with a legal advisor.
In an offering of warrants, investors are cautioned that the statutory right of action for damages for a misrepresentation contained in the prospectus is limited, in certain provincial securities legislation, to the price at which the warrants are offered to the public under the offering. This means that, under the securities legislation of certain provinces, if the purchaser pays additional amounts upon exercise of the security, those amounts may not be recoverable under the statutory right of action for damages that applies in those provinces. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of this right of action for damages or consult with a legal advisor.
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CERTIFICATE OF THE COMPANY Dated: August 25, 2022
The short form prospectus, together with the documents incorporated in the Shelf Prospectus by reference, as supplemented by the foregoing, constitutes full, true and plain disclosure of all material facts relating to the securities offered by the Shelf Prospectus and this supplement as required by the securities legislation of each of the provinces of Canada, except Quebec.
(Signed) Ian McDonald*(Signed) Ryan Cheung*
Chief Executive OfficerChief Financial Officer
On Behalf of the Board of Directors
(Signed) Jeremy Fryzuk*(Signed)* Alan Kozikowski
Director Director
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CERTIFICATE OF THE AGENT Date: August 25, 2022
To the best of our knowledge, information and belief, the short form prospectus, together with the documents incorporated in the prospectus by reference, as supplemented by the foregoing, constitutes full, true and plain disclosure of all material facts relating to the securities offered by the prospectus and this supplement as required by the securities legislation of each of the provinces of Canada, except Quebec.
| EIGHT CAPITAL<br><br><br><br><br><br>( S igned) “Stephen Delaney”<br>Principal, Managing Director |
|---|
This short form prospectus is a base shelf prospectus. This short form base shelf prospectus has been filed under legislation in each of the provinces of Canada, other than Quebec, that permit certain information about these securities to be determined after the short form base shelf prospectus has become final and that permit the omission of that inf ormation from this prospectus. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities, except in cases where an exemption from such delivery requirements has been obtained.
No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form base shelf prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.
Information has been incorporated by reference in this prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from Bright Minds Biosciences Inc. , c/o 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7 , and are also available electronically at www.sedar.com*.*
SHORT FORM BASE SHELF PROSPECTUS
New IssueJune 7, 2021
BRIGHT MINDS BIOSCIENCES INC.
$ 50,000,000
Common Shares Warrants
Subscription Receipts Units This short-form base shelf prospectus (the “Prospectus”) relates to the offering for sale of common shares (the “Common Shares”), warrants (the “Warrants”) and subscription receipts (the “Subscription Receipts”), or any combination of such securities (the “Units”) (all of the foregoing, collectively, the “Securities”) by Bright Minds Biosciences Inc. (the “Company” or “Bright Minds”) from time to time, during the 25-month period that this Prospectus, including any amendments hereto, remains effective, in one or more series or issuances, with a total offering price of the Securities, in the aggregate, of up to $50,000,000. The Securities may be offered in amounts and at prices to be determined based on market conditions at the time of the sale and set forth in an accompanying prospectus supplement (a “Prospectus Supplement”). This Prospectus may qualify an “at-the-market distribution”, as defined in National Instrument 44-102—Shelf Distributions (“NI 44-102”). The consideration for any such acquisition may consist of any of the Securities separately, a combination of Securities or any combination of, among other things, Securities, cash and assumption of liabilities. In addition, one or more securityholders of the Company (each, a “Selling Securityholder”) may also offer and sell Securities under this Prospectus. See “The Selling Securityholders”. The Company’s outstanding Common Shares are listed and posted for trading on the Canadian Securities Exchange (the “CSE”) under the symbol “DRUG”. On June 4, 2021, the last trading day prior to the date of this Prospectus, the closing price of the Common Shares on the CSE was $5.48. Unless a Prospectus Supplement provides otherwise, any offering of Warrants, Subscription Receipts and Units will be a new issue of securities with no established trading market and, accordingly, such securities will not be listed on any securities or stock exchange or on any automated dealer quotation system. There is no market through which the Warrants, Subscription Receipts or Units may be sold and purchasers may not be able to resell any such securities under this Prospectus or any Prospectus Supplement. This may affect the pricing of such securities in the secondary market (if any), the transparency and availability of trading price (if any), the liquidity of such securities and the extent of issuer regulation. See “Plan of Distribution”. The Company has not authorized anyone to provide purchasers with information different from that contained or incorporated by reference in this Prospectus. Investing in the Securities of the Company is highly speculative and involves a high degree of risk, and should only be made by persons who can afford the t otal loss of their investment.
Investors should carefully review the risks outlined in this Prospectus (together with any Prospectus Supplement) and in the documents incorporated by reference in this Prospectus and consider such risks in connection with an investment in such Securities. Prospective investors are advised to consult their legal counsel and other
ii
professional advisors in order to assess income tax, legal and other aspects of the investment. **See “**Risk Factors **” and “**Cautionary Statement Regarding Forward-Looking Information .” Prospective investors should be aware that the acquisition or disposition of the Securities described herein may have tax consequences both in th e United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States may not be described fully herein. Prospective investors should read the tax discussion contained in the applicable Prospectus Supplement with respect to a particular offering of Securities.
The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that the Company is incorporated under the laws of British Columbia, Canada, and that the majority of its officers and dir ectors are not residents of the United States.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE OR CANADIAN SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
The specific terms of the Securities with respect to a particular offering will be set out in one or more Prospectus Supplements and may include, where applicable: (i) in the case of Common Shares, the number of Common Shares offered, the offering price (in the event the offering is a fixed price distribution), the manner of determining the issue price (in the event the offering is a non-fixed price distribution, including sales in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102) and any other specific terms; (ii) in the case of Warrants, the offering price, the designation, number and terms of the Common Shares issuable upon exercise of the Warrants, any procedures that will result in the adjustment of these numbers, the exercise price, dates and periods of exercise, the currency in which the Warrants are issued and any other specific terms; (iii) in the case of Subscription Receipts, the number of Subscription Receipts being offered, the offering price, the procedures for the exchange of the Subscription Receipts for Common Shares or Warrants, as the case may be, and any other specific terms; and (iv) in the case of Units, the designation, number and terms of the Common Shares, Warrants or Subscription Receipts comprising the Units. The Securities may be offered separately or together in any combination (including in the form of Units). Where required by statute, regulation or policy, and where Securities are offered in currencies other than Canadian dollars, appropriate disclosure of foreign exchange rates applicable to the Securities will be included in the Prospectus Supplement describing the Securities.
All information permitted under applicable securities legislation to be omitted from this Prospectus will be contained in one or more Prospectus Supplement(s) that will be delivered to purchasers together with the Prospectus, except in cases where an exemption from such delivery requirements has been obtained. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of applicable securities legislation as of the date of the Prospectus Supplement and only for the purposes of the distribution of the Securities to which the Prospectus Supplement pertains. Investors should read this Prospectus and any applicable Prospectus Supplement carefully before investing in the Securities.
This Prospectus constitutes a public offering of the Securities only in those jurisdictions where they may be lawfully offered for sale and only by persons permitted to sell the Securities in such jurisdictions. The Company may offer and sell Securities to, or through, underwriters, dealers or Selling Securityholders, directly to one or more other purchasers, or through agents pursuant to exemptions from registration or qualification under applicable securities laws. A Prospectus Supplement relating to each issue of Securities will set forth the names of any underwriters, dealers, agents or Selling Securityholders involved in the offering and sale of the Securities and will set forth the terms of the offering of the Securities, the method of distribution of the Securities, including, to the extent applicable, the proceeds to us and any fees, discounts, concessions or other compensation payable to the underwriters, dealers or agents, and any other material terms of the plan of distribution.
The sale of Securities may be effected from time to time in one or more transactions at non-fixed prices pursuant to transactions that are deemed to be “at-the -market distributions” as defined in NI 44-102, including sales made directly on the CSE or other existing trading markets for the Securities, as set forth in the Prospectus Supplement describing the Securities.
In connection with any offering of the Securities, other than an “at-the-market distribution” (as defined under applicable Canadian securities legislation) unless otherwise specified in a Prospectus Supplement, the underwriters
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or agents may over-allot or effect transactions which stabilize or maintain the market price of the Securities offered at a higher level than that which might exist in the open market. Such transaction, if commenced, may be interrupted or discontinued at any time. No underwriter or dealer involved in an “at-the-market distribution” under this Prospectus, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an underwriter or dealer will over-allot securities in connection with such distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Securities. See “Plan of Distribution”. No underwriter has been involved in the preparation of the Prospectus or performed any review of the contents of the Prospectus.
Some of the directors of the Company, namely Alan Kozikowski, a director and the Chief Science Officer of the Company, Nils Bottler, a director of the Company, and Jeremy Fryzuk, a director of the Company, reside outside of Canada. Such persons have appointed the following agent for service of process:
| Name of Agent | Address of Agent |
|---|---|
| McMillan LLP | Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7 |
Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.
The head office and the registered office of the Company is located at Suite 1500, 1055 West Georgia Street, PO Box 11117, Vancouver, British Columbia V6E 4N7.
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TABLE OF CONTENTS
GENERAL MATTERS5
ABOUT THIS PROSPECTUS5
DOCUMENTS INCORPORATED BY REFERENCE5
MARKET AND INDUSTRY DATA7
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION7
CURRENCY PRESENTATION10
OUR BUSINESS10
THE SELLING SECURITYHOLDERS20
USE OF PROCEEDS20
CONSOLIDATED CAPITALIZATION20
PLAN OF DISTRIBUTION21
DESCRIPTION OF SECURITIES BEING DISTRIBUTED23
PRIOR SALES27
TRADING PRICE AND VOLUME28
RISK FACTORS29
CERTAIN INCOME TAX CONSIDERATIONS40
INTEREST OF EXPERTS40
AUDITOR40
TRANSFER AGENT AND REGISTRAR40
WHERE YOU CAN FIND ADDITIONAL INFORMATION40
STATUTORY RIGHTS OF WITHDRAWAL AND RECISSION41
CONTRACTUAL RIGHTS OF RESCISSION41
CERTIFICATE OF THE COMPANY42
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GENERAL MATTERS In this Prospectus, “Bright Minds”, “we”, “us” and “our” refers to Bright Minds Biosciences Inc. ABOUT THIS PROSPECTUS Bright Minds is a British Columbia company that is a “reporting issuer” under Canadian securities laws in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. Its common shares are traded in Canada on the CSE under the symbol “DRUG”.
This Prospectus is a base shelf prospectus that the Company has filed with the securities commissions in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island (the “Qualifying Jurisdictions”) in order to qualify the offering of the Securities described in this Prospectus in accordance with NI 44-102.
Under this shelf registration process, Bright Minds may sell any combination of the Securities described in this Prospectus in one or more offerings up to a total aggregate initial offering price of $50,000,000. This Prospectus provides you with a general description of the Securities that the Company may offer. Each time the Company sells Securities under this Prospectus the Company will provide a Prospectus Supplement that will contain specific information about the terms of that specific offering. The specific terms of the Securities in respect of which this Prospectus is being delivered will be set forth in the Prospectus Supplement. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of the Prospectus Supplement and only for the purposes of the distribution of the securities to which the Prospectus Supplement pertains.
Prospectus investors should rely only on the information contained in or incorporated by reference into this Prospectus and in any applicable Prospectus Supplement. The Company has not authorized anyone to provide you with information other than that contained in this Prospectus and in any applicable Prospectus Supplement. The Company is not making any offer of these Securities in any jurisdiction where the offer is not permitted. Prospective investors should not assume that the information contained in this Prospectus and any Prospectus Supplement is accurate as of any date other than the date on the front of those documents or that any information contained in any document incorporated by reference is accurate as of any date other than the date of that document. The business, financial condition, operating results and future prospects of the Company may have changed since those dates. DOCUMENTS INCORPORATED BY REFERENCE
Information has been incorporated by reference in this Prospectus from documents filed with securities commissions or similar authorities in Canada. **** Copies of the documents incorporated herein by reference may be obtained from the Company upon requestwithout charge from Bright Minds Biosciences Inc., c/o 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7, or by accessing the Company’s disclosure documents available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. The following documents (“documents incorporated by reference” or “documents incorporated herein by reference”) have been filed by the Company with various securities commissions or similar authorities in the provinces of Canada in which the Company is a reporting issuer, and are specifically incorporated herein by reference and form an integral part of this Prospectus: 1.the Company’s final long form non-offering prospectus dated January 28, 2021 (the “Non-Offering Prospectus”);
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2.the Company’s audited financial statements for the year ended September 30, 2020 and the period ended September 30, 2019, together with the notes thereto and the auditors’ report thereon (the “Annual **** Financial Statements”);
3.the Company’s management’s discussion and analysis for the period from incorporation until September 30, 2019 and for the year ended September 30, 2020 (the “Annual MD&A”);
4.the Company’s material change report dated February 26, 2021 in respect of the pricing of the Company’s public offering under the preliminary short form prospectus dated February 22, 2021;
5.the Company’s material change report dated March 17, 2021 in respect of the completion of the Company’s public offering of units pursuant the final short form prospectus dated February 26, 2021 (the “Short Form Prospectus”);
6.the Company’s material change report dated April 23, 2021 in respect of the Company entering into an exclusive license agreement with the Board of Trustees of the University of Illinois (the “University”) **** dated April 23, 2021 (the “License Agreement”);
7.the Company’s interim financial statements for the period ended March 31, 2021 and the period ended March 31, 2020; and
8.the Company’s management’s discussion and analysis for the period ended March 31, 2021. A reference to this Prospectus includes a reference to any and all documents incorporated by reference in this Prospectus. Any document of the type referred to in paragraphs (1)-(8) above or similar material and any documents required to be incorporated by referred herein pursuant to National Instrument 44-101 – Short Form Prospectus Distributions including any annual information form, all material change reports (excluding confidential reports, if any), all annual and interim financial statements and management’s discussion and analysis relating thereto, or information circular or amendments thereto filed by the Company after the date of this Prospectus and prior to the termination of the offering under any Prospectus Supplement. In addition, the Company may determine to incorporate into any Prospectus Supplement to this Prospectus, including any Prospectus Supplement that it files in respect of an “at-the-market” offering, any news release that the Company disseminates in respect of previously undisclosed information that, in the Company’s determination, constitutes a “material fact” (as such term is defined under applicable Canadian securities laws). In this event, the Company will identify such news release as a “designated news release” for the purposes of the Prospectus in writing on the face page of the version of such news release that the Company files on SEDAR (any such news release, a “Designated News Release”), and any such Designated News Release shall be deemed to be incorporated by reference into the Prospectus Supplement for the offering in respect to which the Prospectus Supplement relates. These documents will be available through the internet on SEDAR.
Upon a new annual information form and related annual financial statements being filed by the Company with, and where required, accepted by, the applicable securities regulatory authority during the currency of this Prospectus, the previous annual financial statements and all interim financial statements, material change reports and information circulars filed prior to the commencement of the Company’s financial year in which a new annual information form is filed shall be deemed no longer to be incorporated into this Prospectus for purposes of future offers and sales of Securities hereunder. Upon consolidated interim financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus is effective, all consolidated interim financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations filed prior to such new consolidated interim financial statements and management’s discussion and analysis of financial condition and results of operations shall be deemed to no longer be incorporated into this Prospectus for purposes of future offers and sales of Securities
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under this Prospectus. In addition, upon a new management information circular for an annual meeting of shareholders being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities during the period that this Prospectus is effective, the previous management information circular filed in respect of the prior annual meeting of shareholders shall no longer be deemed to be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus.
Any statement contained in this Prospectus or a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not constitute a part of this Prospectus, except as so modified or superseded. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document which it modifies or supersedes. The making of such a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Information on any of the websites maintained by the Company does not constitute a part of this Prospectus.
All information permitted under applicable securities legislation to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus, except in cases where an exemption from such delivery requirements has been obtained. A Prospectus Supplement containing the specific terms of an offering of Securities will be delivered to purchasers of such Securities together with this Prospectus and will be deemed to be incorporated by reference into this Prospectus as of the date of such Prospectus Supplement, but only for the purposes of the offering of Securities covered by that Prospectus Supplement. Investors should read this Prospectus and any applicable Prospectus Supplement carefully before investing in the Securities.
Any template version of any “marketing materials” (as such term is defined in NI 44-101) filed after the date of a Prospectus Supplement and before the termination of the distribution of the Securities offered pursuant to such Prospectus Supplement (together with this Prospectus) is deemed to be incorporated by reference in such Prospectus Supplement. MARKET AND INDUSTRY DATA
Unless otherwise indicated, information contained in this Prospectus concerning the industry and markets in which Bright Minds operates, including its general expectations and market position, market opportunity and market share is based on information from independent industry organizations, and other third-party sources (including industry publications, surveys and forecasts), and management estimates. Unless otherwise indicated, management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from the Company’s internal research, and are based on assumptions made by the Company based on such data and its knowledge of such industry and markets, which it believes to be reasonable. The Company’s internal research has not been verified by any independent source, and it has not independently verified any third-party information. While the Company believes the market position, market opportunity and market share information included in this Prospectus is generally reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of the Company’s future performance and the future performance of the industry in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the heading “Risk Factors”.
C AUTIONARY S TATEMENT R EGARDING F ORWARD- LOOKING I NFORMATION This Prospectus and the documents incorporated herein by reference contain statements and information that, to the extent that they are not historical fact, may constitute “forward-looking information” within the meaning of
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applicable securities legislation. Forward-looking information may include financial and other projections, as well as statements regarding future plans, objectives or economic performance, or the assumption underlying any of the foregoing. This Prospectus and the documents incorporated herein by reference use words such as “may”, “would”, “could”, “will”, “likely”, “except”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “project”, “estimate”, “outlook”, and other similar expressions to identify forward-looking information. These forward-looking statements include, among other things, statements relating to:
·the duration and effects of COVID-19 and any other pandemics on the Company’s workforce, business, operations and financial condition;
·the Company’s expectations regarding the achievement of clinical and regulatory milestones;
·the executive compensation of the Company;
·the composition of the board of directors (the “Board”) and management of the Company;
·the Company’s expectations regarding its revenue, expenses and research and development operations;
·the Company’s anticipated cash needs and its needs for additional financing;
·the Company’s intention to grow the business and its operations;
·expectations with respect to the success of its research and development of serotonergic therapeutics;
·expectations regarding growth rates, growth plans and strategies of the Company;
·expectations that the provisional patent applications will be refiled as regular patent applications or new provisional patent applications 12 months from their filing dates;
·the Company’s strategy with respect to the expansion and protection of its intellectual property;
·the medical benefits, safety, efficacy, dosing and consumer acceptance of serotonergic therapeutics;
·the Company’s ability to comply with provincial, federal, local and regulatory agencies in the United States, Canada and other jurisdictions in which the Company operates;
·the Company’s competitive position and the regulatory environment in which the Company operates;
·the Company’s expected business objectives for the next 12 months;
·the Company’s plans with respect to the payment of dividends;
·beliefs and intentions regarding the ownership of material trademarks and domain names used in connection with the design, production, marketing, distribution and sale of the Company’s products and services; and
·the Company’s ability to obtain additional funds through the sale of equity or debt commitments.
Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. The material factors and assumptions used to develop the forward-looking statements contained in this Prospectus and in and the documents incorporated herein by reference include, without limitation:
·obtaining the necessary regulatory approvals;
·that regulatory requirements will be maintained;
·general business and economic conditions;
·the duration of COVID-19 and the extent of its economic and social impact;
·the Company’s ability to successfully execute its plans and intentions;
·the availability of financing on reasonable terms;
·the Company’s ability to attract and retain skilled staff;
·market competition;
·the products, services and technology offered by the Company’s competitors; and
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·that the Company’s current good relationships with the Company’s suppliers, service providers and other third parties will be maintained.
Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and the Company cannot assure that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties and assumptions, prospective purchasers of Securities should not place undue reliance on these forward-looking statements. Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under “Risk Factors”, which include:
·limited operating history;
·the Company’s actual financial position and results of operations may differ materially from the expectations of the Company’s management;
·the Company may be required to obtain and maintain certain permits, licenses, and approvals in the jurisdictions where its products or technologies are being researched, developed, or commercialized;
·the Company may encounter substantial delays or difficulties with its clinical trial;
·clinical trials are very expensive, time consuming and difficult to design and implement;
·the Company may not be successful in its efforts to identify, license or discover additional product candidates;
·risks associated with the development of the Company’s products which are at early stages of development;
·there is no assurance that the Company will turn a profit or generate immediate revenues;
·the continued operation of the Company as a going concern;
·the Company’s intellectual property and licenses thereto;
·the Company not achieve timelines for project development set out in this Prospectus;
·the Company faces product liability exposure;
·the Company has international operations, which subject the Company to risks inherent with operations outside of Canada;
·exchange rate fluctuations between the U.S. dollar and the Canadian dollar;
·changes to patent laws or the interpretation of patent laws;
·the risk of patent-related or other litigation;
·the Company may not be able to enforce its intellectual property rights throughout the world;
·the lack of product for commercialization;
·the lack of experience of the Company/management in marketing, selling, and distribution products;
·the size of the Company’s target market is difficult to quantify;
·potentials for conflicts of interest for the Company’s officers and directors;
·in certain circumstances, the Company’s reputation could be damaged;
·negative operating cash flow;
·need for additional financing;
·uncertainty and discretion of use of proceeds;
·the potential for a material weakness in the Company’s internal controls over financial reporting;
·difficulties with forecasts;
·market price of Common Shares and volatility; and
·dilution of Common Shares.
If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking statements prove incorrect, actual results might vary materially from those anticipated in those forward-looking statements. The assumptions referred to above and described in greater detail under “Risk Factors” should be considered carefully by readers.
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The Company’s forward-looking statements are based on the reasonable beliefs, expectations and opinions of management on the date of this Prospectus (or as of the date they are otherwise stated to be made). Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There is no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. We do not undertake to update or revise any forward-looking statements, except as, and to the extent required by, applicable securities laws in Canada.
All of the forward-looking statements contained in this Prospectus and the documents incorporated herein by reference are expressly qualified by the foregoing cautionary statements. **** Investors should read this entire Prospectus and consult their own professional advisors to assess the income tax, legal, risk factors and other aspects of their investment. CURRENCY PRESENTATION ****
In this Prospectus, unless otherwise specified or the context otherwise requires, all references to US$ are to United State (US) dollars. Canadian dollars are denoted as $ or C$. The daily exchange rate on June 4, 2021, as reported by the Bank of Canada for the conversion of Canadian dollars into United States dollars was C$1.2084 equals US$1.00. OUR BUSINESS
This summary does not contain all the information about the Company that may be important to you. Investors should read the more detailed information and financial statements and related notes that are incorporated by reference into and are considered to be a part of this Prospectus. Incorporation and Offices
Bright Minds was incorporated under the BCBCA on May 31, 2019 under the name “1210954 B.C. Ltd.”. On March 6, 2020, the Company changed its name under the BCBCA to “Bright Minds Biosciences Inc.” The head office of the Company is 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7 and the registered and records office of the Company is 1500 – 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7.
The Company has one wholly owned subsidiary PsilocybinLabs Ltd. which is not a material subsidiary to the Company.
The Common Shares are listed on the CSE under the trading symbol “DRUG”. The Company is a reporting issuer in Canada in the provinces of British Columbia, Alberta, Manitoba, and Ontario.
Business of the Company
Overview Bright Minds is a biotechnology company dedicated to developing therapeutics to improve the lives of patients with severe and life-altering diseases. Bright Minds initially focused on new chemical entities for a variety of pain indications, seizures, and neuropsychiatric disorders. By leveraging the extensive drug discovery experience of the Bright Minds team, the Company is endeavouring to create a pipeline of best-in-class 5-HT (serotonin) medicines. While psychedelic medicines like psilocin are currently in clinical trials for the treatment of depression^1^, the
^1^ Multidisciplinary Association for Psychedelic Studies, “Psilocybin Studies: In Progress” (accessed 5 May 2021), online: MAPS.org <https://maps.org/other-psychedelic-research/211-psilocybin-research/psilocybin-studies-in-progress/research/psilo/passiepsilocybin1.html%7D>.
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Company’s patented, lead product candidates feature next generation characteristics, such as lower or eliminated cardiac issues, improved pharmacokinetics and shorter half-life, and higher oral bioavailability. The Bright Minds molecules have been designed to offer greater safety over the first-generation serotonergic compounds, as they bind with greater selectivity to specific 5-HT receptor subtypes, thus avoiding off-target related side effects such as heart valve disease.
Bright Minds does not advocate for the legalization of psychedelic substances for recreational use or otherwise, and its business is oriented to the discovery of novel serotonergic therapeutics rather than the use of substances such as psilocybin or other psychedelics in new therapies. Bright Minds does not have any direct or indirect involvement with illegal selling, production or distribution of substances in jurisdictions in which it operates.
Principal Products
Serotonin (5-HT) is the most prominent neurotransmitter in the brain and modulates many functions. Dysfunction of serotonin receptors, transporters, and associated neurocircuits is fundamental to many diseases including epilepsy, pain, and neuropsychiatry. Selective serotonin reuptake inhibitors are widely used in the treatment of depression with a market of $14.3 Billion^2^. Similarly, other serotoninergic drugs are widely used in the treatment of pain (Triptans in migraine)^3^, Parkinson’s disease related psychosis (Pimavanserin)^4^, and seizures (Fintepla)^5^. The Company believes the off-label use of psilocybin extracts in depression and cluster headache, as well as encouraging clinical trial data with psilocybin and Methylenedioxymethamphetamine (MDMA) in depression and post-traumatic stress disorder (PTSD) illustrate the potential for advancing serotoninergic therapies in neuropsychiatry and pain. The Company further believes the full potential of serotonin-based therapeutics has not been achieved due to the lack of drugs that are specific to certain serotonin receptor subtypes that are fundamental to disease pathology, without non-specific effects on other serotonin receptors in the body that are associated with cardiac toxicities and have resulted in previous drugs being withdrawn from the market.^6^
^2^ Research and Markets, “Global Antidepressants Market (2020 to 2030) - COVID-19 Implications and Growth” (21 April 2020), online: Intrado GlobeNewswire <https://www.globenewswire.com/news-release/2020/04/21/2019282/0/en/Global-Antidepressants-Market-2020-to-2030-COVID-19-Implications-and-Growth.html>.
^3^ Samar Nicolas & Diala Nicolas, “Triptans” (26 May 2020), online: National Center for Biotechnology Information <https://www.ncbi.nlm.nih.gov/books/NBK554507/>.
^4^ Cerner Multum, “Pimavanserin” (5 February 2020), online: Drugs.com <https://www.drugs.com/mtm/pimavanserin.html>.
^5^ “Fintepla FDA Approval History” (accessed 5 May 2021), online: Drugs.com <https://www.drugs.com/history/fintepla.html>.
^6^ Joshua D. Hutcheson, et al., “Serotonin Receptors and Heart Valve Disease – it was meant 2B” (2 April 2011), 132(2) Pharmacol Ther 146-157, online: PMC <https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3179857/>; Nistala Pallavi, “5-HT2B Receptor-mediated Cardiac Valvulopath” (2018), online (pdf): <https://scholarscompass.vcu.edu/cgi/viewcontent.cgi?article=6777&context=etd>.
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Bright Minds has a portfolio of patented, selective serotonin (5-HT2C and 5-HT2C/A-receptor subtypes) agonists that were identified using high-throughput screening methods in combination with advanced molecular modeling techniques to interrogate the interaction between the drug and its targeted receptors to increase downstream signaling while avoiding off-target effects.
The Company believes its portfolio of selective 5-HT receptor agonists do not face competition from the non-selective 5-HT agonist psychedelic drug psilocybin. The Company’s lead 5-HT2 subtype selective drug portfolio candidate is a “best in class” synthetic 5-HT2C receptor agonist without psychedelic effects. The Company expects its 5-HT2A and 5-HT2A/C selective compounds will possess desirable pharmacokinetic and pharmacodynamic effects and a wide effective dose range in the target populations, and could thus be used without the need for close supervision by psychotherapists in the clinic. Bright Minds is partnered with the National Institutes of Health on the Epilepsy Therapy Screening Program (ETSP) for epilepsy and the pre-clinical screening (PSPP) program for pain.
Research and Development
The Company is advancing a drug development pipeline based on early-stage compound in-licensing and in-house drug proprietary drug discovery programs. The Company has been encouraged by its data and has thus accelerated this development pipeline. Among the Company’s primary business objectives is the advancement of its drug development pipeline, which is achieved through completion of pre-clinical development and clinical development.
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| Stage | Significant Events | Time Period in which Significant Event is Expected to Occur | Costs related to Significant Event |
|---|---|---|---|
| Pre-Clinical Development | Laboratory creation of compounds for testing by chemists on behalf of the Company | June 2021 | $2.5 million |
| Animal Studies – testing safety and toxicology through the use of studies on animals that take the produced compounds | September 2021 | $4 million | |
| Production of regulatory reports and other document preparation, including toxicology reports and data interpretation | September 2021 | $1.35 million | |
| Clinical Development | Laboratory creation of compounds for testing by chemists on behalf of the Company, for use in clinical trials | October 2021 | $2 million |
| Organization of clinical trials, including selection of the physical site for clinical trials, and coordination of regulatory review, preparation, and submissions | November 2021 | $1.4 million | |
| Commencement of Phase 1 clinical trials – the beginning of testing of the Company’s compounds in humans | December 2021 | $4 million |
The Company incurs research and development costs to further advance its pipeline of 5-HT medicines, which target serotonin receptors: 5-HT2C, 5-HT2A and 5-HT2A/C. During the year ended September 30, 2020, the Company spent $193,552 in research and development costs with an estimated $54,219 allocated towards 5-HT2A development, $110,794 allocated 5-HT2C development, and $28,539 allocated towards 5-HT2A/C development. During the period ended December 31, 2020, the Company spent $272,467 in research and development costs with an estimated $108,024 allocated towards 5-HT2A development, $85,067 allocated 5-HT2C development, and $79,376 allocated towards 5-HT2A/C development. Research and development costs comprise lab costs, external scientific consultants, internal Company scientific personnel costs, and payments to key university partners.
Licenses and Patents
In support of its drug development pipeline, the Company is an applicant of the following patent applications:
| Patent Application Number | Region | Title | Applicant | Filing Date | Status |
|---|---|---|---|---|---|
| PCT/CA2021/050336<br><br><br><br><br><br>(claiming priority to US 62/988,926, filed March 12, 2020) | Patent Cooperation Treaty | Indole Compounds<br><br><br>and Methods of<br><br><br>Preparation Thereof | Bright Minds Biosciences Inc.;<br><br><br><br><br><br>The Medical College of Wisconsin Inc. | March 12, 2021 | Pending |
| 63/184,040<br><br><br><br><br><br>(intended to be converted into a regular patent application or re-filed as a new provisional application by May 4, 2022) | USA | Heterocyclic Compounds and Methods of Preparation Thereof | Bright Minds Biosciences Inc. | May 4, 2021 | Pending |
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| 63/193,062<br><br><br><br><br><br>(intended to be converted into a regular patent application or re-filed as a new provisional application by May 26, 2022) | USA | Heterocyclic Compounds and Methods of Preparation Thereof | Bright Minds Biosciences Inc.;<br><br><br><br><br><br>The Medical College of Wisconsin Inc. | May 26, 2021 | Pending |
|---|
Additionally, the Company has exclusively licensed the following families of patents:
| Title: HIGHLY SELECTIVE 5-HT(2C) RECEPTOR AGONISTS HAVING ANTAGONIST ACTIVITY AT THE 5-HT(2B) RECEPTOR | ||||
|---|---|---|---|---|
| Serial Number | Region | Applicant | Filing Date<br><br><br>(Registration Date, if any) | Expiry |
| PCT/US2011/023535 | PCT | The Board of Trustees of the University of Illinois<br><br><br><br><br><br>The University of North Carolina at Chapel Hill | February 3, 2011 | Expired |
| AU2011212930 | AU | February 3, 2011<br><br><br>(May 26, 2016) | February 3, 2031 | |
| CA2788416 | CA | February 3, 2011<br><br><br>(August 14, 2018) | February 3, 2031 | |
| EP 2531485<br><br><br><br><br><br>(validated to FR, GB, DE, | EU | February 3, 2011<br><br><br>(March 22, 2019) | February 3, 2031 | |
| JP 5810099 | JP | February 3, 2011<br><br><br>(September 18, 2015) | February 3, 2031 | |
| US 8,492,591 | US | February 3, 2011<br><br><br>(July 23, 2013) | February 3, 2031 | |
| US 8,754,132 | US | February 3, 2011<br><br><br>(June 17, 2014) | February 3, 2031 | |
| Title: HIGHLY SELECTIVE 5 HT2c Serotonin Receptor Agonists for Treating CNS Disorders | ||||
| PCT/US2016/015019 | PCT | The Board of Trustees of the University of Illinois | January 27, 2016 | Expired |
| CN 107810175 | CN | January 27, 2016 | Pending | |
| EU 3250549 | EU | January 27, 2016 | Pending – grant intended | |
| HK 1251831 | HK | January 27, 2016 | Pending | |
| US 10,407,381 | US | January 27, 2016<br><br><br>(September 10, 2019) | January 27, 2036 |
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Recent Developments
On May 26, 2020, the Company entered into an option agreement (the “Option Agreement”) with the University in which the University granted the Company an exclusive option to: (i) evaluate the inventions described in PCT/US2011/023535 and all counterpart patents related thereto and described in PCT/US2016/015019 and all counterpart patents related thereto (collectively, the “Inventions”); and (ii) obtain an exclusive license to the Inventions.
On January 28, 2021, the Company filed the Non-Offering Prospectus with the securities regulatory authorities in British Columbia, Alberta, Manitoba and Ontario qualifying the distribution of an aggregate of 16,000 Common Shares issuable upon the exercise of 40,000 special warrants of the Company (the “Special Warrants”) issued at a price of $0.50 per Special Warrant.
On February 8, 2021, the Common Shares of the Company were listed on the CSE under the symbol “DRUG”.
On February 26, 2021, the Company filed the Short Form Prospectus with the security regulatory authorities in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island pursuant to which the Company issued 3,419,883 units (the “Units”) at a price per Unit of $7.57 for aggregate proceeds of $25,888,514.31 (the “Unit Offering”). Each Unit consisted of one Common Share and one-half of one Common Share purchase warrant (each whole Common Share purchase warrant, a “Unit Warrant”). Each Unit Warrant is exercisable into a Common Share (a “Warrant Share”) at a price of $9.46 per Warrant Share until March 17, 2024. In connection with the Unit Offering, the Company issued 132,666 compensation warrants (the “Compensation Warrants”), each of which is exercisable into one Common Share (a “Compensation Warrant Share”) at a price of $7.57 per Compensation Warrant Share until March 17, 2024.
On March 12, 2021, the Company filed a patent cooperation treaty patent application that was assigned the serial number PCT/CA2021/050336 and entitled “Indole Compounds and Methods of Preparation Thereof”. PCT/CA2021/050336 claims priority to US provisional patent application number 62/988,926 which was filed on March 12, 2020.
On April 23, 2021, the Company entered into the License Agreement with the University pursuant to the exercise of its option under the Option Agreement. Pursuant to the terms and conditions of the License Agreement, the University granted the Company an exclusive license to the Inventions (the “License”). In consideration for the License, the Company (i) paid the University a signing fee of USD$100,000, less USD$15,000 paid by the Company pursuant to the Option Agreement; and (ii) issued 63,000 Common Shares at a deemed price of $5.85 per Common Share to the University (part of which was received by the University on behalf of the University of North Carolina at Chapel Hill). Additionally, the Company agreed to pay the University a royalty on net sales of products derived from the Inventions and a portion of all revenue received by the Company from sublicensees.
On April 29, 2021, US 63/017,627, which was filed on April 29, 2020, expired.
On May 4, 2021, the Company filed a United States provisional patent application that was assigned the serial number US 63/184,040 and entitled “Heterocyclic Compounds and Methods of Preparation Thereof”. The subject matter of this provisional application includes the subject matter presented in now expired US 63/017,627.
On May 26, 2021, Bright Minds further filed a new United States provisional application that has been assigned a serial number of US 63/193,062 and that is entitled “Heterocyclic Compounds and Methods of Preparation Thereof”. This patent application focuses on substitutions at a particular position on an indole structure.
Regulatory Framework
Drug products must be approved by the appropriate governing body before it can be sold in that country or area. The United States Food and Drug Administration (the “FDA”) approves products for the United States market and Health Canada approves products for the Canadian market. The European Medicines Agency approves products for the European Union. While the process by which products are approved by the FDA and Health Canada is very similar, each regulatory body has its own unique requirements for a product. In both cases, the development of a product through to approval can be a lengthy process and, in some cases, can take over 10 years. While early studies
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conducted in one jurisdiction will usually be accepted in the other, further and somewhat modified studies may be required to have a product approved in another jurisdiction.
Canada Government Regulation
Drug products in Canada are regulated by Health Canada under the Food and Drugs Act and the Food and Drugs Regulations. Health Canada regulates, among other things, research and development activities and the testing, approval, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, advertising and promotion of any product candidates or commercial products.
For a drug product to be approved in Canada, it must provide sufficient evidence of safety, efficacy and chemical quality based on preclinical investigation and Phase I, II and III clinical trials using approved and compliant manufacturing and clinical sites.
To obtain approval to market a drug in Canada, a sponsor usually requests a pre-submission meeting with the review division of Health Canada responsible for the therapeutic field. If the meeting is granted, the sponsor must submit a Pre-Submission Information package to the Therapeutic Products Directorate (“TPD”) to meet with the review division. This process occurs prior to submitting the New Drug Submission (“NDS”) application. The purpose of the pre-submission meeting is to review the evidence (non-clinical and clinical research, quality information, indication) that will be submitted in the NDS application.
During the drug development process, the sponsor prepares study reports. Once the sponsor releases the last study required for the submission, the sponsor completes the NDS application and submits it to the TPD. Prior to submitting the NDS and, if applicable, based on the intended use of the product in the identified patient population, the sponsor may submit in advance a request for priority review status.
After submitting the NDS application, the file undergoes a screening process prior to being accepted for review. TPD has 45 calendar days from receipt to complete the screening review process. If granted a priority review, the screening period is reduced to 25 calendar days.
After a comprehensive review of an NDS application, Health Canada will issue a Notice of Compliance (“NOC”) if the product is approved or a Notice of Non-Compliance (“NON”) if further questions remain. If a NOC is issued, a Drug Identification Number (“DIN”) is also issued that is required to be printed on each label of the product, as well as the final version of the Product Monograph that has been agreed to between Health Canada and the sponsor.
The average target time for reaching a first decision on an NDS is 300 calendar days, unless the submission has received a priority review in which case the time is 180 calendar days. Fees are levied for a review of an NDS application.
The regulatory approval process is generally lengthy and expensive, with no guarantee of a positive result. Once approved, Health Canada continues to monitor the product and license holders have obligations related to reporting to Health Canada, record keeping and ensuring continued safety and efficacy of the product. Failure to comply with any of the above applicable regulations, regulatory authorities or other requirements may result in civil or criminal penalties, recall or seizure of products, injunctive relief including partial or total suspension of production, or withdrawal of a product from the market.
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United States Government Regulation
In the United States, the FDA regulates drugs under the United States Food, Drug, and Cosmetic Act (the “FDCA”), and its implementing regulations, and biologics under the FDCA and the Public Health Service Act, and its implementing regulations. FDA approval is required before any new unapproved drug or biologic or dosage form, including a new use of a previously approved drug, can be marketed in the United States. In some cases, changes to aspects of an approved drug product also require pre-approval prior to implementation of these changes. Drugs and biologics are also subject to other federal, state, and local statutes and regulations. If Bright Minds fails to comply with applicable FDA or other requirements at any time during the product development process, clinical testing, the approval process or after approval, Bright Minds may become subject to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, civil monetary penalties or criminal prosecution. Any FDA enforcement action could have a material adverse effect on Bright Minds.
The process required by the FDA before drug products may be marketed in the United States generally involves the following:
·completion of extensive preclinical laboratory tests and preclinical animal studies, some performed in accordance with the GLP regulations;
·submission to the FDA of an Investigational New Drug (“IND”) Application, which must be reviewed by the FDA and become active before human clinical trials may begin and must be updated annually;
·approval by an independent review board (“IRB”) or ethics committee representing each clinical site before each clinical trial may be initiated;
·performance of adequate and well-controlled human clinical trials conducted under Good Clinical Practices (“GCP”) to establish the safety and efficacy of the product candidate for each proposed indication;
·preparation of and submission to the FDA of a New Drug Application (“NDA”) or Biologics License Application (“BLA”) after completion of all pivotal clinical trials;
· a determination by the FDA within 60 days of its receipt of an NDA or BLA to file the application for review;
· potential review of the product application by an FDA advisory committee, where appropriate and if applicable;
·satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities where the proposed product is produced to assess compliance with current GMP (“cGMP”);
·a potential FDA audit of the preclinical research and clinical trial sites that generated the data in support of the NDA or BLA; and
·FDA review and approval of an NDA or BLA prior to any commercial marketing or sale of the product in the United States.
The preclinical research, clinical testing and approval process require substantial time, effort, and financial resources, and Bright Minds cannot be certain that any approvals for the Company’s product candidates will be granted on a timely basis, if at all. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans in clinical trials. The central focus of an IND submission is on the general investigational plan and the protocol(s) for human clinical trials. The IND also includes results of animal studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product; chemistry, manufacturing, and controls information; and any available human data or literature to support the use of the investigational new drug.
An IND must become effective before human clinical trials may begin in the US. An IND will automatically become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to the proposed clinical trials. In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA
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must resolve any outstanding concerns or questions before clinical trials can begin. Accordingly, submission of an IND may or may not result in the FDA allowing clinical trials to commence. As drug product programs continue in development, clinical trial protocols, additional preclinical testing results, and manufacturing information is submitted with the IND to facilitate discussions with the FDA and approval of additional clinical trials.
Clinical Trials
Clinical trials involve the administration of the IND to human subjects under the supervision of qualified investigators in accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety, and the efficacy criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. Additionally, approval must also be obtained from each clinical trial site’s IRB or ethics committee, before the trials may be initiated, and the IRB or ethics committee must monitor the trial until completed. All subjects must provide informed consent prior to participating in the trial. There are also requirements governing the reporting of ongoing clinical trials and clinical trial results to public registries.
The clinical investigation of a drug is generally divided into three or four phases. Although the phases are usually conducted sequentially, they may overlap or be combined.
·Phase I. The drug is initially introduced into healthy human subjects or, in some cases, patients with the target disease or condition. These studies are designed to evaluate the safety, tolerance, metabolism, pharmacokinetic and pharmacologic actions of the investigational new drug in humans, and the side effects associated with increasing doses.
·Phase II. The drug is administered to a limited patient population to evaluate safety and optimal dose levels for safety and efficacy, identify possible adverse side effects and safety risks, and preliminarily evaluate efficacy.
·Phase III. The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites to generate sufficient data to statistically evaluate dose levels, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the IND product, and to provide an adequate basis for physician labeling.
·Phase IV. In some cases, the FDA may conditionally approve an NDA or BLA for a drug product with the sponsor’s agreement to conduct additional clinical trials after approval. In other cases, a sponsor may voluntarily conduct additional clinical trials after approval to gain more information about the drug. Such post-approval studies are typically referred to as Phase IV clinical trials.
Clinical trial sponsors must also report to the FDA, within certain timeframes: (i) serious and unexpected adverse reactions, (ii) any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator’s brochure, or (iii) any findings from other studies or animal testing that suggest a significant risk in humans exposed to the product candidate. The FDA, the IRB, the ethics committee or the clinical trial sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether or not a trial may move forward at designated check points based on access to certain data from the trial.
The clinical trial process can take years to complete, and there can be no assurance that the data collected will support FDA approval or licensing of the product. Results from one trial are not necessarily predictive of results from later trials. The Company may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.
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Submiss ion of an NDA or BLA to the FDA
Assuming successful completion of all required preclinical studies and clinical testing in accordance with all applicable regulatory requirements, detailed IND product information is submitted to the FDA in 34 the form of an NDA or BLA requesting approval to market the product for one or more indications. Under federal law, the submission of most NDAs and BLAs is subject to an application user fee. Applications for Oppositional Defiant Disorder (“ODD”) products are exempted from the NDA and BLA application user fee, unless the application includes an indication for other than a rare disease or condition, and may be exempted from product and establishment user fees under certain conditions. An NDA or BLA must include all relevant data available from pertinent preclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things. Data comes from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, and may also come from several alternative sources, including clinical trials initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational new drug product to the satisfaction of the FDA.
Once an NDA or BLA has been submitted, the FDA’s goal is to review the application within ten months after it accepts the application for filing, or, if the application relates to an unmet medical need in a serious or life-threatening indication, six months after the FDA accepts the application for filing. The review process is often significantly extended by the FDA’s requests for additional information or clarification. Before approving an NDA or BLA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP and related regulations.
The FDA is required to refer an NDA or BLA for a novel drug (in which no active ingredient has been approved in any other application) to an advisory committee or explain why such referral was not made. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and the conditions thereof. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
The FDA’s Decision on an NDA or BLA
After the FDA evaluates the NDA or BLA and conducts inspections of manufacturing facilities where the product will be produced, the FDA will issue either an approval letter or a complete response letter (“Complete Response Letter”). An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application is not ready for approval. To satisfy deficiencies identified in a Complete Response Letter, additional clinical data and/or an additional Phase III clinical trial(s), and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical studies or manufacturing may be required for the drug product. Even if such additional information is submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy the criteria for approval. The FDA could also approve the NDA or BLA with a risk evaluation and mitigation strategy, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA may also conditionally approve a drug product subject to, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct one or more post-market studies or clinical trials. Such post-market testing may include Phase IV clinical trials and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization. New government requirements, including those resulting from new legislation, may be established during the review process, or the FDA’s policies may change, which could delay or prevent regulatory approval of the Company’s products under development.
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**The Company is subject to changes in Canadian and United States laws, regulations and guidelines which could adversely affect the Company’s business, financial condition and results of operations. See “**Risk Factors ”.
THE SELLING SECURITYHOLDERS Securities may be sold under this Prospectus by way of secondary offering by or for the account of the Selling Securityholders. The Prospectus Supplement that we will file in connection with any offering of Securities by Selling Securityholders will include the following information:
·the names of the Selling Securityholders;
·the number or amount of Securities owned, controlled or directed of the class being distributed by each Selling Securityholder;
·the number or amount of Securities of the class being distributed for the account of each Selling Securityholder;
·the number or amount of Securities of any class to be owned, controlled or directed by the Selling Securityholders after the distribution and the percentage that number or amount represents of the total number of our outstanding Securities;
·whether the Securities are owned by the Selling Securityholders both of record and beneficially, of record only, or beneficially only; and
·all other information that is required to be included in the applicable Prospectus Supplement. USE OF PROCEEDS Unless otherwise specified in a Prospectus Supplement, the net proceeds from the sale of the Securities will be used for general corporate purposes, including to fund working capital, potential future acquisitions and capital expenditures. Each Prospectus Supplement will contain specific information concerning the use of proceeds from the sale of Securities. The Company will not receive any proceeds from any sale of any Securities by the Selling Securityholders.
The Company had negative operating cash flow during the year ended September 30, 2020. To the extent that the Company has negative cash flow in future periods, the Company may need to deploy a portion of proceeds from an offering of Securities to fund such negative cash flow.
Due to the nature of the Company’s business, management does not at this time anticipate significant disruptions of its operations due to the COVID-19 pandemic. Each Prospectus Supplement will contain details regarding the impact of the COVID-19 pandemic, if any, on the Company’s use of proceeds.
All expenses relating to an offering of Securities and any compensation paid to underwriters, dealers or agents, as the case may be, will be paid out of our general funds, unless otherwise stated in the applicable Prospectus Supplement.
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CONSOLIDATED CAPITALIZATION Except as described below, there have been no material changes in the Company’s share and debt capital, on a consolidated basis, since September 30, 2020, being the date of the Annual Financial Statements incorporated by reference in this Prospectus, other than as follows:
·On November 2, 2020, 4,072,843 Common Shares were issued pursuant to the second tranche of the Company’s non-brokered private placement of 5,632,690 pre-Consolidation Common Shares at a price of $0.50 per pre-Consolidation Common Share for total gross proceeds of $2,816,345 (the “Private Placement”).
·On November 10, 2020, the Common Shares were consolidated on the basis of 2.5 pre-consolidation Common Shares for each one post-consolidation Common Share, resulting in 6,372,679 Common Shares issued and outstanding (the “Consolidation”).
·On January 13, 2021, 14,799 Common Shares were issued in connection with a debt settlement agreement between the Company and a consultant to settle an aggregate amount of $18,499.95 in debt owed to the consultant by the Company for past services rendered.
·On February 3, 2021, 16,000 Common Shares were issued upon the deemed exercise of 40,000 Special Warrants, as adjusted to give effect to the Consolidation, resulting in 6,403,478 Common Shares issued and outstanding.
·On March 17, 2021, 3,419,883 Units, each comprised of one Common Share and one-half of one Unit Warrant, were issued pursuant to the Short Form Prospectus at a price of $7.57 per Unit for total gross proceeds of $25,888,514.31 (the “Unit Offering”).
·On April 26, 2021, the Company issued 1,948,000 Common Shares pursuant to the exercise of Warrants at a price of $0.05 per Common Share.
·On April 29, 2021, 63,000 Common Shares were issued to the University (part of which was received by the University on behalf of the University of North Carolina at Chapel Hill) pursuant to the License Agreement. PLAN OF DISTRIBUTION
The Company may offer and sell Securities directly to one or more purchasers, to underwriters or dealers acting as principal or through agents, underwriters or dealers designated by us from time to time. The Company may distribute the Securities from time to time in one or more transactions at fixed prices (which may be changed from time to time), at market prices prevailing at the times of sale, at varying prices determined at the time of sale, at prices related to prevailing market prices or at negotiated prices. The Securities may be sold in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102, including sales made directly on the CSE or other existing trading markets for the Securities. A description of such manner of sale and pricing will be disclosed in the applicable Prospectus Supplement. The Company may offer different classes of Securities in the same offering, or the Company may offer different classes of Securities in separate offerings.
This Prospectus may also, from time to time, relate to the offering of Securities by certain Selling Securityholders. The Selling Securityholders may sell all or a portion of Securities beneficially owned by them and offered thereby from time to time directly or through one or more underwriters, broker-dealers or agents. Securities may be sold by the Selling Securityholders in one or more transactions at fixed prices (which may be changed from time to time), at
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market prices prevailing at the time of the sale, at varying prices determined at the time of sale, at prices related to prevailing market prices or at negotiated prices.
A Prospectus Supplement will describe the terms of each specific offering of Securities, including: (i) the terms of the Securities to which the Prospectus Supplement relates, including the type of Security being offered; (ii) the name or names of any agents, underwriters or dealers involved in such offering of Securities; (iii) the name or names of any Selling Securityholders; (iv) the purchase price of the Securities offered thereby and the proceeds to, and the portion of expenses borne by, the Company from the sale of such Securities; (v) a description to be provided by agents, underwriters or dealers in relation to the offering; (vi) any agents’ commission, underwriting discounts and other items constituting compensation payable to agents, underwriters or dealers; and (vi) any discounts or concessions allowed or re-allowed or paid to agents, underwriters or dealers.
If underwriters are used in an offering, the Securities offered thereby will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase Securities will be subject to the conditions precedent agreed upon by the parties and the underwriters will be obligated to purchase all Securities under that offering if any are purchased. Any public offering price and any discounts or concessions allowed or re-allowed or paid to agents, underwriters or dealers may be changed from time to time.
In connection with any offering of Securities, other than an “at-the-market distribution”, the underwriters may over-allot or effect transactions which stabilize or maintain the market price of the Securities offered at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time. No underwriter or dealer involved in an “at-the-market distribution” under this Prospectus, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an underwriter or dealer will over-allot securities in connection with such distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Securities.
The Securities may also be sold: (i) directly by the Company or the Selling Securityholders at such prices and upon such terms as agreed to; or (ii) through agents designated by the Company or the Selling Securityholders from time to time. Any agent involved in the offering and sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by the Company and/or Selling Securityholder to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any agent is acting on a “best efforts” basis for the period of its appointment.
The Company and/or the Selling Securityholders may agree to pay the underwriters a commission for various services relating to the issue and sale of any Securities offered under any Prospectus Supplement. Agents, underwriters or dealers who participate in the distribution of the Securities may be entitled under agreements to be entered into with the Company and/or the Selling Securityholders to indemnification by the Company and/or the Selling Securityholders against certain liabilities, including liabilities under securities legislation, or to contribution with respect to payments which such agents, underwriters and dealers may be required to make in respect thereof. Such underwriters, and dealers and agents may be customers of, engage in transactions with, or perform services for, the Company in the ordinary course of business.
Each class or series of Warrants, Subscription Receipts and Units will be a new issue of Securities with no established trading market. Unless otherwise specified in the applicable Prospectus Supplement, Warrants, Subscription Receipts or Units will not be listed on any securities or stock exchange. Unless otherwise specified in the applicable Prospectus Supplement, there is no market through which the Warrants, Subscription Receipts or Units may be sold and purchasers may not be able to resell Warrants, Subscription Receipts or Units purchased under this Prospectus or any Prospectus Supplement. This may affect the pricing of the Warrants, Subscription Receipts or Units in the secondary market, the transparency and availability of trading prices, the liquidity of the Securities, and the extent of issuer regulation. Subject to applicable laws, certain dealers may make a market in the Warrants, Subscription
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Receipts or Units, as applicable, but will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given that any dealer will make a market in the Warrants, Subscription Receipts or Units or as to the liquidity of the trading market, if any, for the Warrants, Subscription Receipts or Units.
In connection with any offering of Securities, unless otherwise specified in a Prospectus Supplement, underwriters or agents may over-allot or effect transactions which stabilize, maintain or otherwise affect the market price of Securities offered at levels other than those which might otherwise prevail on the open market. Such transactions may be commenced, interrupted or discontinued at any time. DESCRIPTION OF SECURITIES BEING DISTRIBUTED The Securities may be offered under this Prospectus in amounts and at prices to be determined based on market conditions at the time of the sale and such amounts and prices will be set forth in the accompanying Prospectus Supplement. The Securities may be issued alone or in combination and for such consideration determined by our board of directors.
Common Shares
The authorized share capital of the Company consists of an unlimited number of Common Shares without par value, of which 11,834,361 Common Shares were issued and outstanding as at the date of this Prospectus. Holders of Common Shares are entitled to receive notice of, and to attend and vote at, all meetings of the shareholders of the Company, and each Common Share confers the right to one vote, provided that the shareholder is a holder on the applicable record date declared by the Board. The holders of Common Shares, subject to the prior rights, if any, of any other class of shares of the Company with special rights as to dividends, are entitled to receive such dividends in any financial year as the Board may determine. In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Common Shares are entitled to receive, subject to the prior rights, if any, of the holders of any other class of shares of the Company, the remaining property and assets of the Company. The Common Shares are not subject to call or assessment rights, redemption rights, rights regarding purchase for cancellation or surrender, or any pre-emptive or conversion rights. See “Consolidated Capitalization”. Warrants
This section describes the general terms that will apply to any Warrants for the purchase of Common Shares that the Company may offer under this Prospectus by way of a Prospectus Supplement. To the extent required under applicable law, the Company will not offer Warrants for sale unless the applicable Prospectus Supplement containing the specific terms of the Warrants to be offered separately is first approved, in accordance with applicable laws, for filing by the securities commissions or similar regulatory authorities in each of the jurisdictions where the Warrants will be offered for sale.
Subject to the foregoing, the Company may issue Warrants independently or together with other Securities, and Warrants sold with other securities may be attached to or separate from the other Securities. Warrants may be issued directly by us to the purchasers thereof or under one or more warrant indentures or warrant agency agreements to be entered into by us and one or more banks or trust companies acting as warrant agent. Warrants, like other Securities that may be sold, may be listed on a securities exchange subject to exchange listing requirements and applicable legal requirements.
This summary of some of the provisions of the Warrants is not complete. Any statements made in this Prospectus relating to any warrant agreement or indenture and Warrants to be issued under this Prospectus are summaries of certain anticipated provisions thereof and do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all provisions of the applicable warrant agreement. Investors should refer to the warrant indenture or warrant agency agreement relating to the specific Warrants being offered for the complete
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terms of the Warrants. A copy of any warrant indenture or warrant agency agreement relating to an offering of **** Warrants will be filed by us with the applicable securities regulatory authorities in Canada following its execution.
The particular terms of each issue of Warrants will be described in the applicable Prospectus Supplement. This description will include, where applicable:
·the designation and aggregate number of Warrants;
·the price at which the Warrants will be offered;
·the currency or currencies in which the Warrants will be offered;
·the date on which the right to exercise the Warrants will commence and the date on which the right will expire;
·if applicable, the identity of the Warrant agent;
·whether the Warrants will be listed on any securities exchange;
·any minimum or maximum subscription amount;
·the number of Common Shares that may be purchased upon exercise of each Warrant and the price at which and currency or currencies in which the Common Shares may be purchased upon exercise of each Warrant;
·the designation and terms of any securities with which the Warrants will be offered, if any, and the number of the Warrants that will be offered with each security;
·the date or dates, if any, on or after which the Warrants and the related securities will be transferable separately;
·whether the Warrants will be subject to redemption and, if so, the terms of such redemption provisions;
·whether the Warrants are to be issued in registered form, “book-entry only” form, non-certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;
·any material risk factors relating to such Warrants and the Common Shares to be issued upon exercise of the Warrants;
·any other rights, privileges, restrictions and conditions attaching to the Warrants and the Common Shares to be issued upon exercise of the Warrants;
·material Canadian and United States federal income tax consequences of owning and exercising the Warrants; and
·any other material terms or conditions of the Warrants and the Securities to be issued upon exercise of the Warrants.
The terms and provisions of any Warrants offered under a Prospectus Supplement may differ from the terms described above, and may not be subject to or contain any or all of the terms described above.
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Prior to the exercise of any Warrants, holders of Warrants will not have any of the rights of holders of the Common Shares purchasable upon such exercise, including the right to receive payments of dividends or the right to vote such underlying securities.
Subscription Receipts
This section describes the general terms that will apply to any Subscription Receipts that may be offered by the Company pursuant this Prospectus by way of a Prospectus Supplement. Subscription Receipts may be offered separately or together with Common Shares or Warrants, as the case may be. The Subscription Receipts will be issued under a Subscription Receipt agreement.
The applicable Prospectus Supplement will include details of the Subscription Receipt agreement covering the subscription receipts being offered. A copy of the Subscription Receipt agreement relating to an offering of subscription receipts will be filed by us with the applicable securities regulatory authorities after it has been entered into by us. The specific terms of the Subscription Receipts, and the extent to which the general terms described in this section apply to those Subscription Receipts, will be set forth in the applicable Prospectus Supplement. This description will include, where applicable:
·the number of Subscription Receipts;
·the price at which the Subscription Receipts will be offered;
·the currency at which the Subscription Receipts will be offered and whether the price is payable in installments;
·the procedures for the exchange of the Subscription Receipts into Common Shares, Warrants, or Units;
·the number of Common Shares, Warrants or Units that may be issued upon exercise or deemed conversion of each Subscription Receipt;
·the designation and terms of any other Securities with which the Subscription Receipts will be offered, if any, and the number of Subscription Receipts that will be offered with each Security;
·conditions to the conversion or exchange of Subscription Receipts into other Securities and the consequences of such conditions not being satisfied;
·terms applicable to the gross or net proceeds from the sale of the Subscription Receipts plus any interest earned thereon;
·the dates or periods during which the Subscription Receipts may be converted or exchanged;
·the circumstances, if any, which will cause the Subscription Receipts to be deemed to be automatically converted or exchanged;
·provisions applicable to any escrow of the gross or net proceeds from the sale of the Subscription Receipts plus any interest or income earned thereon, and for the release of such proceeds from such escrow;
·if applicable, the identity of the Subscription Receipt agent;
·whether the Subscription Receipts will be listed on any securities exchange;
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·whether the Subscription Receipts will be issued with any other Securities and, if so, the amount and terms of these Securities;
·any minimum or maximum subscription amount;
·whether the Subscription Receipts are to be issued in registered form, “book-entry only” form, non-certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;
·any material risk factors relating to such Subscription Receipts and the Securities to be issued upon conversion or exchange of the Subscription Receipts;
·any other rights, privileges, restrictions and conditions attaching to the Subscription Receipts and the Securities to be issued upon exchange of the Subscription Receipts;
·material Canadian and United States income tax consequences of owning or converting or exchanging the Subscription Receipts; and
·any other material terms and conditions of the Subscription Receipts and the Securities to be issued upon the exchange of the Subscription Receipts.
The terms and provisions of any Subscription Receipts offered under a Prospectus Supplement may differ from the terms described above, and may not be subject to or contain any or all of the terms described above.
Prior to the exchange of any Subscription Receipts, holders of such Subscription Receipts will not have any of the rights of holders of the Securities for which the Subscription Receipts may be exchanged, including the right to receive payments of dividends or the right to vote such underlying securities.
Units
The Company may issue Units comprised of one or more of the other Securities described in this Prospectus in any combination, as described in the applicable Prospectus Supplement. Each Unit will be issued so that the holder of the Unit is also the holder of each of the Securities included in the Unit. Thus, the holder of a Unit will have the rights and obligations of a holder of each included Security. The unit agreement, if any, under which a Unit is issued may provide that the Securities included in the Unit may not be held or transferred separately, at any time or at any time before a specified date.
The particular terms and provisions of Units offered by any Prospectus Supplement, and the extent to which the general terms and provisions described below may apply thereto, will be described in the Prospectus Supplement filed in respect of such Units. This description will include, where applicable:
·the number of Units offered;
·the price or prices, if any, at which the Units will be issued;
·the currency at which the Units will be offered;
·the Securities comprising the Units;
·whether the Units will be issued with any other Securities and, if so, the amount and terms of these Securities;
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·any minimum or maximum subscription amount;
·whether the Units and the Securities comprising the Units are to be issued in registered form, “book-entry only” form, non-certificated inventory system form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof;
·any material risk factors relating to such Units or the Securities comprising the Units;
·any other rights, privileges, restrictions and conditions attaching to the Units or the Securities comprising the Units; and
·any other material terms or conditions of the Units or the Securities comprising the Units, including whether and under what circumstances the Securities comprising the Units may be held or transferred separately.
The terms and provisions of any Units offered under a Prospectus Supplement may differ from the terms described above, and may not be subject to or contain any or all of the terms described above. PRIOR SALE S This table sets out particulars of the Common Shares that have been issued or sold within the 12 months prior to the date of this Prospectus.
| Date of Issuance/Sale | Security Type | Number of Securities | Issue/Sale Price |
|---|---|---|---|
| September 30, 2020 | Common Shares | 623,941**^(1^** ^)(2)^ | $1.25**^(1)^** |
| November 2, 2020 | Common Shares | 1,629,138**^(1)(3)^** | $1.25**^(1)^** |
| January 13, 2021 | Common Shares | 14,799^(4)^ | $1.25 |
| February 3, 2021 | Common Shares | 16,000^(5)^ | $1.25 |
| March 17, 2021 | Common Shares | 3,419,883^(6)^ | $7.57 |
| April 26, 2021 | Common Shares | 1,948,000^(^^7^^)^ | $0.05 |
| April 29, 2021 | Common Shares | 63,000^(^^8^^)^ | $5.85 |
Notes:
(1)After giving effect to the Consolidation on the basis of 2.5 pre-consolidation Common Shares for every 1 post-Consolidation Common Share; the issue price listed is the price after adjustment in connection with the Consolidation.
(2)Issued in connection with the first tranche of the Private Placement.
(3)Issued in connection with the second tranche of the Private Placement.
(4)Issued in connection with a debt settlement agreement between the Company and a consultant to settle an aggregate amount of $18,499.95 in debt owed to the consultant by the Company for past services rendered.
(5)Issued on the deemed exercise of Special Warrants, with every 2.5 Special Warrants being exercised into 1 Common Share at an effective price of $0.50 per Special Warrant or $1.25 per Common Share. The issue price listed is the price after adjustment in connection with the Consolidation.
(6)Issued in connection with the Unit Offering. Each Unit consisted of one Common Share and one-half of one Unit Warrant.
(7)Issued pursuant to the exercise of Warrants at a price of $0.05 per Common Share.
(8)Issued to the University (part of which was received by the University on behalf of the University of North Carolina at Chapel Hill) pursuant to the License Agreement.
This table sets out particulars of securities exercisable for or exchangeable into Common Shares issued within the 12 months prior to the date of this Prospectus.
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| Date of Issuance | Security Type | Number of Securities | Issue/Exercise Price |
|---|---|---|---|
| July 23, 2020 | Options | 150,000^(1)^ | $1.25 |
| July 23, 2020 | RSUs | 150,000^(1)^ | N/A |
| September 18, 2020 | RSUs | 230,000^(1)^ | N/A |
| November 2, 2020 | Special Warrants | 40,000^(2)^ | $0.50 |
| November 17, 2020 | Options | 447,000 | $1.25 |
| March 17, 2021 | Unit Warrants | 1,709,938^(3)^ | $9.46 |
| March 17, 2021 | Compensation Warrants | 132,666^(4)^ | $7.57 |
| April 28, 2021 | Options | 240,000 | $7.60 |
Notes: (1)After giving effect to the Consolidation on the basis of 2.5 pre-consolidation Common Shares for every 1 post-Consolidation Common Share; the issue price listed is the price after adjustment in connection with the Consolidation. (2)Issued in connection with the Special Warrant Offering on a pre-Consolidated basis. In accordance with the terms thereof, on February 3, 2021, every 2.5 Special Warrants were deemed exercised in exchange for one Common Share, resulting in the issuance of 16,000 Common Shares. The issue price per Special Warrant was $0.50, however after adjustment, holders of Special Warrants received one Common Share upon deemed exercise of 2.5 Special Warrants, resulting in an adjusted price of $1.25 per Common Share.
(3)Issued in connection with the Unit Offering. Each Unit consisted of one Common Share and one-half of one Unit Warrant. Each Unit Warrant is exercisable into a Unit Share at a price of $9.46 per Unit Share until March 17, 2024.
(4)Issued in connection with the Unit Offering. Each Compensation Warrant is exercisable into a Compensation Warrant Share at a price of $7.57 per Compensation Warrant Share until March 17, 2024.
Previous Financings – Use of Proceeds
This table sets out the particulars of how the Company used the proceeds of the sale of Common Shares and securities exercisable for or exchangeable into Common Shares issued within the 12 months prior to the date of this Prospectus, as well as variations, if any, from the Company’s anticipated used of proceeds as disclosed in documents previously filed with securities commissions or similar authorities in Canada. ****
| Date of Issuance/Sale | Number and Security Type | Gross Proceeds | Variation from Anticipated Use of Proceeds |
|---|---|---|---|
| September 30, 2020 | 623,941 Common Shares^(1)^ | 779,923.50 | N/A |
| November 2, 2020 | 1,629,138 Common Shares^(1)^ | 2,036,421.50 | N/A |
| February 3, 2021 | 16,000 Common Shares^(2)^ | 20,000.00 | N/A |
| March 17, 2021 | 3,419,883 Common Shares and 1,709,938 Unit Warrants^(3)^ | 25,888,514.31 | N/A |
All values are in US Dollars.
Notes:
(1)After giving effect to the Consolidation on the basis of 2.5 pre-consolidation Common Shares for every 1 post-Consolidation Common Share; the issue price listed is the price after adjustment in connection with the Consolidation.
(2)Issued on the deemed exercise of Special Warrants, with every 2.5 Special Warrants being exercised into 1 Common Share at an effective price of $0.50 per Special Warrant or $1.25 per Common Share. The issue price listed is the price after adjustment in connection with the Consolidation.
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(3)Issued in connection with the Unit Offering. Each Unit consisted of one Common Share and one-half of one Unit Warrant. Each Unit Warrant is exercisable into a Unit Share at a price of $9.46 per Unit Share until March 17, 2024. TRADING PRICE AND VOLUME On February 8, 2021, the Company began trading on the CSE under the trading symbol “DRUG”. The following table sets forth trading information for the Common Shares since listing on the CSE on February 8, 2021.
| Price Range | |||
|---|---|---|---|
| Month | High | Low | Trading<br>Volume |
| June 1-4, 2021 | $5.69 | $5.48 | 5,449 |
| May, 2021 | $6.00 | $5.40 | 113,230 |
| April, 2021 | $6.05 | $4.35 | 216,755 |
| March, 2021 | $8.25 | $4.60 | 350,119 |
| February 8-26, 2021 | $9.15 | $5.55 | 258,784 |
RISK F ACTORS Investing in Securities of the Company involves a significant degree of risk and must be considered speculative due to the high-risk nature of the Company’s business. Investors should carefully consider the information included or incorporated herein by reference in this Prospectus (including subsequently filed documents incorporated by reference) and the Company’s historical consolidated financial statements and related notes thereto before making an investment decision concerning the Securities. There are various risks that could have a material adverse effect on, among other things, the operating results, earnings, properties, business and condition (financial or otherwise) of the Company. These risk factors, together with all of the other information included, or incorporated by reference in this Prospectus, including information contained in the section entitled “ Forward-Looking Statements ” should be carefully reviewed and considered before a decision to invest in the Securities is made. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems immaterial, may also materially and adversely affect its business. In addition, risks relating to a particular offering of Securities will be set out in a Prospectus Supplement relating to such offering.
Risks Relating to the Company’s Business
Limited Operating History
The Company has a very limited history of operations and is considered a start-up company. As such, the Company is subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues. There is no assurance that the Company will be successful in achieving a return on shareholders’ investment and the likelihood of the Company’s success must be considered in light of its early stage of operations.
The Company’s actual financial position and results of operations may differ materially from the expectations of the Company’s management.
The Company’s actual financial position and results of operations may differ materially from management’s expectations. The Company has experienced some changes in its operating plans and certain delays in its plans. As a result, the Company’s revenue, net income and cash flow may differ materially from the Company’s projected revenue, net income and cash flow. The process for estimating the Company’s revenue, net income and cash flow requires the use of judgment in determining the appropriate assumptions and estimates. These estimates and assumptions may be revised as additional information becomes available and as additional analyses are performed.
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In addition, the assumptions used in planning may not prove to be accurate, and other factors may affect the Company’s financial condition or results of operations.
Regulatory Approval, Licenses, and Permits
The Company, or its service providers, may be required to obtain and maintain certain permits, licenses, and approvals in the jurisdictions where its products or technologies are being researched, developed, or commercialized. The Company has not obtained regulatory approval for any product candidate and it is possible that none of its existing product candidates or any future product candidates will ever obtain regulatory approval. There can be no assurance that the Company will be able to obtain or maintain any necessary licenses, permits, or approvals. Any material delay or inability to receive these items is likely to delay and/or inhibit the Company’s ability to conduct its business, and would have an adverse effect on its business, financial condition, and results of operations. In particular, the Company will require approval from the FDA and equivalent organizations in other countries before any of its products can be marketed. There is no assurance that such approvals will be forthcoming. Furthermore, the exact nature of the studies these regulatory agencies will require is not known and can be changed at any time by the regulatory agencies, increasing the financing risk and potentially increasing the time to market the Company faces, which could adversely affect the Company’s business, financial condition or results of operations.
The Company may encounter substantial delays or difficulties with its clinical trials.
The Company may not commercialize, market, promote or sell any product candidate without obtaining marketing approval from the FDA or comparable foreign regulatory authorities, and the Company may never receive such approvals. It is impossible to predict when or if any of the Company’s product candidates will prove effective or safe in humans and will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of its product candidates, the Company must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of its product candidates. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products.
The Company may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent its ability to receive marketing approval or commercialize current and any future product candidates, including:
·delays in reaching a consensus with regulatory authorities on design or implementation of clinical trials;
·regulators or institutional review boards, or IRBs, may not authorize the Company or its investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
·delays in reaching agreement on acceptable terms with prospective clinical research organizations and clinical trial sites;
·the number of patients required for clinical trials of the Company’s product candidates may be larger than the Company anticipates, enrollment in these clinical trials may be slower than the Company anticipates, patients may drop out of these clinical trials at a higher rate than Company anticipates or fail to return for post-treatment follow-up or the Company may fail to recruit suitable patients to participate in a trial;
·clinical trials of the Company’s product candidates may produce negative or inconclusive results;
·imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, concerns with a class of product candidates or after an inspection of the Company’s clinical trial operations, trial sites or manufacturing facilities;
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·occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;
·changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; or
·the Company may decide, or regulators may require the Company, to conduct additional clinical trials or abandon product development programs.
Any inability to successfully complete preclinical and clinical development could result in additional costs to the Company or impair the Company’s ability to generate revenue. In addition, if the Company makes manufacturing or formulation changes to its product candidates, it may need to conduct additional testing to bridge its modified product candidate to earlier versions. Clinical trial delays could also shorten any periods during which the Company may have the exclusive right to commercialize its product candidates, if approved, or allow competitors to bring competing drugs to market before the Company, which could impair the Company’s ability to successfully commercialize its product candidates and may harm the Company’s business, financial condition, results of operations and prospects.
Additionally, if the results of the Company’s clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with product candidates, the Company may:
·be delayed in obtaining marketing approval, if at all;
·obtain approval for indications or patient populations that are not as broad as intended or desired;
·obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;
·be subject to additional post-marketing testing requirements;
·be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements;
·be subject to the addition of labeling statements, such as warnings or contraindications;
·be sued; or
·experience damage to its reputation.
The Company’s product development costs will also increase if the Company experiences delays in testing or obtaining marketing approvals. The Company does not know whether any of its preclinical studies or clinical trials will begin as planned, need to be restructured or be completed on schedule, if at all.
Further, the Company, the FDA or an IRB may suspend the Company’s clinical trials at any time if it appears that the Company or its collaborators are failing to conduct a trial in accordance with regulatory requirements, such as the FDA’s current GCP, that the Company is exposing participants to unacceptable health risks, or if the FDA finds deficiencies in the Company’s INDs, or in the conduct of these trials. Therefore, the Company cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If the Company experiences delays in the commencement or completion of its clinical trials, or if the Company terminate a clinical trial prior to completion, the commercial prospects of the Company’s product candidates could be negatively impacted, and the Company’s ability to generate revenues from its product candidates may be delayed.
Clinical trials are very expensive, time consuming and difficult to design and implement.
The Company’s product candidates will require clinical testing before the Company can submit an NDA or BLA for regulatory approval. The Company cannot predict with any certainty if or when it might submit an NDA or BLA for regulatory approval for any of its product candidates or whether any such NDA or BLA will be approved by the FDA. Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. For instance, the FDA may not agree with the Company’s proposed endpoints for any future clinical trial of its product candidates, which may delay the commencement of the Company’s clinical
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trials. The clinical trial process is also time consuming. Furthermore, failure can occur at any stage, and the Company could encounter problems that cause it to abandon or repeat clinical trials
The Company may not be successful in its efforts to identify, license or discover additional product candidates.
Although a substantial amount of the Company’s effort will focus on the continued research and pre-clinical testing, potential approval and commercialization of its existing product candidates, the success of its business also depends in part upon its ability to identify, license or discover additional product candidates. The Company’s research programs or licensing efforts may fail to yield additional product candidates for clinical development for a number of reasons, including but not limited to the following:
•the Company’s research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates;
•the Company may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates;
•the Company’s product candidates may not succeed in pre-clinical or clinical testing;
•the Company’s product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval;
•competitors may develop alternatives that render the Company’s product candidates obsolete or less attractive;
•product candidates the Company develops may be covered by third parties’ patents or other exclusive rights;
•the market for a product candidate may change during the Company’s program so that such a product may become unreasonable to continue to develop;
•a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
•a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.
If any of these events occurs, the Company may be forced to abandon its development efforts to identify, license or discover additional product candidates, which would have a material adverse effect on its business and could potentially cause the Company to cease operations. Research programs to identify new product candidates require substantial technical, financial and human resources. The Company may focus its efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
There is no assurance that the Company will turn a profit or generate immediate revenues.
There is no assurance as to whether the Company will be profitable, earn revenues, or pay dividends. The Company has incurred and anticipates that it will continue to incur substantial expenses relating to the development and initial operations of its business. The payment and amount of any future dividends will depend upon, among other things, the Company’s results of operations, cash flow, financial condition, and operating and capital requirements. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividends.
The Company as a going concern
The continued operation of the Company as a going concern is dependent upon the Company’s ability to generate positive cash flows and/or obtain additional financing sufficient to fund continuing activities and acquisitions. While the Company continues to review its operations in order to identify strategies and tactics to increase revenue streams and financing opportunities, there is no assurance that the Company will be successful in such efforts; if the
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Company is not successful, it may be required to significantly reduce or limit operations, or no longer operate as a going concern. It is also possible that operating expenses could increase in order to grow the business. If the Company does not significantly increase its revenue to meet these increased operating expenses and/or obtain financing until its revenue meets these operating expenses, its business, financial condition and operating results could be materially adversely affected. The Company cannot be sure when or if it will ever achieve profitability and, if it does, it may not be able to sustain or increase that profitability.
The Company’s intellectual property and licences thereto
The Company’s success will depend in part on its ability to protect and maintain its intellectual property rights and its licenses. No assurance can be given that the license or rights used by the Company will not be challenged, invalidated, infringed or circumvented, nor that the rights granted thereunder will provide competitive advantages to the Company. It is not clear whether the pending patent applications will result in the issuance of patents. There is no assurance that the Company will be able to enter into licensing arrangements, develop or obtain alternative technology in respect of patents issued to third parties that incidentally cover its production processes. Moreover, the Company could potentially incur substantial legal costs in defending legal actions which allege patent infringement or by instituting patent infringement suits against others. The Company’s commercial success also depends on the Company not infringing patents or proprietary rights of others and not breaching any license granted to the Company. There can be no assurance that the Company will be able to maintain such licenses that it may require to conduct its business or that such licences have been obtained at a reasonable cost. Furthermore, there can be no assurance that the Company will be able to remain in compliance with its licenses. Consequently, there may be a risk that such licenses may be withdrawn with no compensation or penalties to the Company.
The Company not achieving timelines for project development set out in this Prospectus
The Company’s business is dependent on a number of key inputs and their related costs including raw materials and supplies related to its operations, as well as electricity, water and other utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition operating results, and timelines for project development of the Company. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the business, financial condition, operating results, and timelines for project development of the Company.
Need for additional financing
The Company believes that it will have sufficient capital to operate its business for at least 12 months following Listing. However, it is possible that costs associated with the operation of the Company’s business will exceed its projections depending on the timing of future operating and capital expenses. Assuming the Company’s existing funds sustain its operations for this period, the Company believes that it may thereafter require additional capital for additional product development, sales and marketing operations, other operating expenses and for general corporate purposes to fund growth in the Company’s markets. The Company does not know how much additional funding it may require. The Company may therefore be required to seek other sources of financing in the future, which sources (assuming it is able to locate such alternative sources of financing) may be on terms less favorable to the Company than those in the offering of Securities under any Prospectus Supplement. Any additional equity financing may be dilutive to shareholders, and debt financing, if available, may involve restrictive covenants. If additional funds are raised through the issuance of equity securities, the percentage ownership of the shareholders of the Company will be reduced, shareholders may experience additional dilution in net book value per share, or such equity securities may have rights, preferences or privileges senior to those of the holders of the Common Shares. If adequate funds are not available on acceptable terms, the Company may be unable to develop or enhance its products and services, take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on its business, financial condition and operating results, or the Company may be forced to cease operations.
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The Company faces product liability exposure, which, if not covered by insurance, could result in significant financial liability.
The risk of product liability is inherent in the research, development, manufacturing, marketing and use of pharmaceutical products. Product candidates and products that we may commercially market in the future may cause, or may appear to have caused, injury or dangerous drug reactions, and expose the Company to product liability claims. These claims might be made by patients who use the product, healthcare providers, pharmaceutical companies, corporate collaborators or others selling such products. If the Company’s product candidates during clinical trials were to cause adverse side effects, the Company may be exposed to substantial liabilities. Regardless of the merits or eventual outcome, product liability claims or other claims related to the Company’s product candidates may result in:
•decreased demand for our products due to negative public perception;
•injury to our reputation;
•withdrawal of clinical trial participants or difficulties in recruiting new trial participants;
•initiation of investigations by regulators;
•costs to defend or settle related litigation;
•a diversion of management’s time and resources;
•substantial monetary awards to trial participants or patients;
•product recalls, withdrawals or labeling, marketing or promotional restrictions;
•loss of revenues from product sales; and
•the inability to commercialize any of product candidates, if approved.
The Company intends to obtain clinical trial insurance once a clinical trial is initiated. However, the insurance coverage may not be sufficient to reimburse the Company for any expenses or losses it may suffer. Insurance coverage is becoming increasingly expensive, and, in the future, the Company, or any of its collaborators, may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts or at all to protect against losses due to liability. Even if the Company’s agreements with any future collaborators entitle it to indemnification against product liability losses, such indemnification may not be available or adequate should any claim arise. The Company’s inability to obtain sufficient product liability insurance at an acceptable cost to protect against product liability claims could prevent or inhibit the commercialization of its product candidates. If a successful product liability claim or series of claims is brought against the Company for uninsured liabilities or in excess of insured liabilities, its assets may not be sufficient to cover such claims and its business operations could be impaired.
Should any of the events described above occur, this could have a material adverse effect on the Company’s business, financial condition and results of operations.
Health and Safety Issues
Health and safety issues related to the Company’s products may arise that could lead to litigation or other action against the Company or to regulation of certain of its product components. The Company may be required to modify its products and may also be required to pay damages that may reduce its profitability and adversely affect its financial condition. Even if these concerns prove to be baseless, the resulting negative publicity could affect the Company’s ability to market certain of its products and, in turn, could harm its business and results from operations.
The Company has international operations, which subject us to risks inherent with operations outside of Canada.
The Company has international operations and may seek to obtain market approvals in foreign markets that it deems could generate significant opportunities. However, even with the cooperation of a commercialization partner, conducting drug development in foreign countries involves inherent risks, including, but not limited to: difficulties in staffing, funding and managing foreign operations; different and unexpected changes in regulatory requirements;
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export restrictions; tariffs and other trade barriers; different reimbursement systems; economic weaknesses or political instability in particular foreign economies and markets; compliance with tax, employment, immigration and labour laws for employees living or travelling abroad; supply chain and raw materials management; difficulties in protecting, acquiring, enforcing and litigating intellectual property rights; fluctuations in currency exchange rates; and potentially adverse tax consequences.
If the Company were to experience any of the difficulties listed above, or any other difficulties, its international development activities and its overall financial condition may suffer and cause it to reduce or discontinue the Company’s international development and market approval efforts.
Exchange rate fluctuations between the U.S. dollar and the Canadian dollar may negatively affect the Company’s earnings and cash flows.
The Company’s functional currency is the Canadian dollar. The Company may incur expenses Canadian Dollars and U.S. dollars. As a result, we are exposed to the risks that the Canadian dollar may devalue relative to the U.S. Dollar, or, if the Canadian dollar appreciates relative to the U.S. Dollar, that the inflation rate in Canada may exceed such rate of devaluation of the Canadian dollar, or that the timing of such devaluation may lag behind inflation in Canada. The Company cannot predict any future trends in the rate of inflation in Canada or the rate of devaluation, if any, of the Canadian dollar against the U.S. Dollar.
If patent laws or the interpretation of patent laws change, the Company’s competitors may be able to develop and commercialize our discoveries.
Important legal issues remain to be resolved as to the extent and scope of available patent protection for biopharmaceutical products and processes in Canada and other important markets outside Canada, such as Europe or the United States. As such, litigation or administrative proceedings may be necessary to determine the validity, scope and ownership of certain of the Company’s and others’ proprietary rights. Any such litigation or proceeding may result in a significant commitment of resources in the future and could force the Company to do one or more of the following: cease selling or using any of its future products that incorporate a challenged intellectual property, which would adversely affect its revenue; obtain a license or other rights from the holder of the intellectual property right alleged to have been infringed or otherwise violated, which license may not be available on reasonable terms, if at all; and redesign its future products to avoid infringing or violating the intellectual property rights of third parties, which may be time-consuming or impossible to do. In addition, changes in patent laws in Canada and other countries may result in allowing others to use its discoveries or develop and commercialize the Company’s products. The Company cannot provide assurance that the patents it obtains will afford it significant commercial protection.
The Company may not be able to enforce its intellectual property rights throughout the world. This risk is exacerbated because it expects that one or more of its product candidates will be manufactured and used in a number of foreign countries.
The laws of foreign countries may not protect intellectual property rights to the same extent as the laws of Canada. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This risk is exacerbated for the Company because it expects that future product candidates could be manufactured, and used in a number of foreign countries.
The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to life sciences. This could make it difficult to stop the infringement or other misappropriation of the Company’s intellectual property rights. For example, several foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, some countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents and trade secrets may provide limited or no benefit.
Most jurisdictions in which the Company intends to apply for patents have patent protection laws similar to those of Canada, but some of them do not. For example, the Company may do business in the future in countries that may not provide the same or similar protection as that provided in Canada. Additionally, due to uncertainty in patent protection law, the Company has not filed applications in many countries where significant markets exist.
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Proceedings to enforce patent rights in foreign jurisdictions could result in substantial costs and divert the Company’s efforts and attention from other aspects of its business. Accordingly, efforts to protect intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in Canada, the U.S., and foreign countries may affect the ability of the Company to obtain adequate protection for the Company’s technology and the enforcement of its intellectual property.
T he lack of product for commercialization
If the Company cannot successfully develop, manufacture and distribute its products, or if the Company experiences difficulties in the development process, such as capacity constraints, quality control problems or other disruptions, the Company may not be able to develop market-ready commercial products at acceptable costs, which would adversely affect the Company’s ability to effectively enter the market. A failure by the Company to achieve a low-cost structure through economies of scale or improvements in cultivation and manufacturing processes would have a material adverse effect on the Company’s commercialization plans and the Company’s business, prospects, results of operations and financial condition.
Development of News Products
The Company’s success will depend, in part, on its ability to develop, introduce and market new and innovative products. If there is a shift in consumer demand, the Company must meet such demand through new and innovative products or else its business will fail. The Company’s ability to develop, market and produce new products is subject to it having substantial capital. There is no assurance that the Company will be able to develop new and innovative products or have the capital necessary to develop such products.
The lack of experience of the Company/Management in marketing, selling, and distribution products
The Company’s management’s lack of experience in marketing, selling, and distributing our products could lead to poor decision-making, which could result in cost-overruns and/or the inability to produce the desired products. Although management of the Company intends to hire experienced and qualified staff, this inexperience could also result in the company’s inability to consummate revenue contracts or any contracts at all. Any combination of the aforementioned may result in the failure of the Company and a loss of your investment. The size of the Company’s target market is difficult to quantify, and investors will be reliant on their own estimates on the accuracy of market data . **** Because the industry in which the Company operates is in a nascent stage with uncertain boundaries, there is a lack of information about comparable companies available for potential investors to review in deciding whether to invest in the Company and, few, if any, established companies whose business model the Company can follow or upon whose success the Company can build. Accordingly, investors will have to rely on their own estimates in deciding about whether to invest in the Company. There can be no assurance that the Company’s estimates are accurate or that the market size is sufficiently large for its business to grow as projected, which may negatively impact its financial results.
The Company continues to sell shares for cash to fund operations, capital expansion, mergers and acquisitions that will dilute the current shareholders.
There is no guarantee that the Company will be able to achieve its business objectives. The continued development of the Company will require additional financing. The failure to raise such capital could result in the delay or indefinite postponement of current business objectives or the Company going out of business. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company.
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If additional funds are raised through issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those of holders of Common Shares. The Company’s articles permit the issuance of an unlimited number of Common Shares, and shareholders will have no pre-emptive rights in connection with such further issuance. The directors of the Company have discretion to determine the price and the terms of issue of further issuances. In addition, from time to time, the Company may enter into transactions to acquire assets or the shares of other companies. These transactions may be financed wholly or partially with debt, which may temporarily increase the Company’s debt levels above industry standards. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. The Company may require additional financing to fund its operations to the point where it is generating positive cash flows. Negative cash flow may restrict the Company’s ability to pursue its business objectives.
If you purchase the Common Shares in an offering, you will experience substantial and immediate dilution, because the price that you pay will be substantially greater than the net tangible book value per share of the Common Shares that you acquire. This dilution is due in large part to the fact that the Company’s earlier investors will have paid substantially less than a public offering price when they purchased the Common Shares. The Company’s officers and directors may be engaged in a range of business activities resulting in conflicts of interest. The Company may be subject to various potential conflicts of interest because some of its officers and directors may be engaged in a range of business activities. In addition, the Company’s executive officers and directors may devote time to their outside business interests, so long as such activities do not materially or adversely interfere with their duties to the Company. In some cases, the Company’s executive officers and directors may have fiduciary obligations associated with these business interests that interfere with their ability to devote time to the Company’s business and affairs and that could adversely affect the Company’s operations. These business interests could require significant time and attention of the Company’s executive officers and directors.
In addition, the Company may become involved in other transactions which conflict with the interests of its directors and officers who may from time to time deal with persons, firms, institutions or companies with which the Company may be dealing, or which may be seeking investments similar to those desired by it. The interests of these persons could conflict with those of the Company. In addition, from time to time, these persons may be competing with the Company for available investment opportunities. Conflicts of interest, if any, will be subject to the procedures and remedies provided under applicable laws. In particular, if such a conflict of interest arises at a meeting of the Company’s directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In accordance with applicable laws, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company.
In certain circumstances, the Company’s reputation could be damaged.
Damage to the Company’s reputation can be the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not. The increased usage of social media and other web-based tools used to generate, publish and discuss user-generated content and to connect with other users has made it increasingly easier for individuals and groups to communicate and share opinions and views regarding the Company and its activities, whether true or not. Although the Company believes that it operates in a manner that is respectful to all stakeholders and that it takes care in protecting its image and reputation, the Company does not ultimately have direct control over how it is perceived by others. Reputation loss may result in decreased investor confidence, increased challenges in developing and maintaining community relations and an impediment to the Company’s overall ability to advance its projects, thereby having a material adverse impact on financial performance, financial condition, cash flows and growth prospects.
Negative Operating Cash Flow
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The Company’s business has incurred losses since its inception. Although the Company expects to become profitable, there is no guarantee that will happen, and the Company may never become profitable. The Company currently has a negative operating cash flow and may continue to have a negative operating cash flow for the foreseeable future. To date, the Company has not generated any revenues and a large portion of the Company’s expenses are fixed, including expenses related to facilities, equipment, contractual commitments and personnel. As a result, the Company expects for its net losses from operations to improve. The Company’s ability to generate additional revenues and potential to become profitable will depend largely on its ability to manufacture and market its products and services. There can be no assurance that any such events will occur or that the Company will ever become profitable. Even if the Company does achieve profitability, the Company cannot predict the level of such profitability. If the Company sustains losses over an extended period of time, the Company may be unable to continue its business.
Forward-Looking Statements May Prove to be Inaccurate
Investors should not place undue reliance on forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, of both general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking statements or contribute to the possibility that predictions, forecasts or projections will prove to be materially inaccurate. Additional information on the risks, assumptions and uncertainties can be found in this Prospectus under the heading “Forward-Looking Statements”.
Uncertainty of Use of Proceeds
Although the Company will have set out its intended use of proceeds from an offering under any Prospectus Supplement as well as timing of the expenditure of the proceeds thereof, these intended uses are estimates only and may be subject to change. As a result, investors will be relying on the judgment of management as to the specific application of the proceeds of any offering of Securities under any Prospectus Supplement. Management may use the net proceeds of any offering of Securities under any Prospectus Supplement in ways that an investor may not consider desirable. The results and effectiveness of the application of the net proceeds are uncertain. The failure by the Company to apply these funds effectively could have a material adverse effect on the Company's business, including the Company’s ability to achieve its stated business objectives.
If the Company has a material weakness in its internal controls over financial reporting, investors could lose confidence in the reliability of its financial statements, which could result in a decrease in the value of its securities.
One or more material weaknesses in the Company’s internal controls over financial reporting could occur or be identified in the future. In addition, because of inherent limitations, the Company’s internal controls over financial reporting may not prevent or detect misstatements, and any projections of any evaluation of effectiveness of internal controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the Company’s policies or procedures may deteriorate. If the Company fails to maintain the adequacy of its internal controls, including any failure or difficulty in implementing required new or improved controls, its business and results of operations could be harmed, the Company may not be able to provide reasonable assurance as to its financial results or meet its reporting obligations and there could be a material adverse effect on the price of its securities.
Difficulties with Forecasts
The Company must rely largely on its own market research to forecast sales as detailed forecasts are not generally obtainable from other sources at this early stage of the medical marijuana industry in Canada. A failure in the demand for its products and services to materialize as a result of competition, technological change or other factors could have a material adverse effect on the business, results of operations and financial condition of the Company.
COVID-19 may materially and adversely affect the Company’s business and financial results.
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The Company’s business could be materially and adversely affected by health epidemics in regions where the Company conducts research and development activities.
In December 2019, a novel strain of COVID-19 was reported in China. Since then, COVID-19 has spread globally. On March 11, 2020, the World Health Organization (WHO) declared the outbreak of COVID-19 as a “pandemic”, or a worldwide spread of a new disease. Many countries around the world, including Canada, the United States and most countries in Europe, have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus, and have closed non-essential businesses.
The COVID-19 pandemic and any other health epidemics have the potential to cause significant disruption in the operations of the laboratories upon whom the Company relies, including laboratories situated in various parts of the United States and Europe. The Company is reliant on the continued operations of such laboratories. The regulations imposed by governments in response to the COVID-19 pandemic may cause laboratories to operate at limited occupancy rates, which may slow the rate at which research and development activities can be conducted. The Company may not have control over the protocols adopted in response to the COVID-19 pandemic by such laboratories in response to the regulations imposed by the governments in the regions in which they operate. The effects of such protocols and/or regulations may negatively impact productivity, disrupt the Company’s business and delay the Company’s research and development timelines, as well as potentially impact the Company’s financial condition and result of operations. The magnitude of these potential effects is uncertain and will depend, in part, on the length and severity of the COVID-19 pandemic and the restrictions imposed by governments in response.
To the knowledge of the Company’s management as of the date hereof, COVID-19 does not present, at this time, any specific known impacts to the Company in relation to the Company’s plan of distribution and use of proceeds related to any offering of Securities under any Prospectus Supplement, nor the timelines, business objectives or disclosed milestones related thereto. The Company relies on third parties to process and manufacture its products.
Risks Relating to the Common Shares
Market Price of Common Shares and Volatility
Securities of companies with a small market capitalization have experienced substantial volatility in the past, often based on factors unrelated to the companies’ financial performance or prospects. These factors include macroeconomic developments in North America and globally, as well as market perceptions of the attractiveness of particular industries. Factors unrelated to the Company’s performance that may affect the price of the Common Shares include the following: the extent of analytical coverage available to investors concerning the Company’s business may be limited if investment banks with research capabilities do not follow the Company; lessening in trading volume and general market interest in the Common Shares may affect an investor’s ability to trade significant numbers of Common Shares; the size of the Company’s public float may limit the ability of some institutions to invest in Common Shares; and a substantial decline in the price of the Common Shares that persists for a significant period of time could cause the Common Shares, if listed on an exchange, to be delisted from such exchange, further reducing market liquidity. As a result of any of these factors, the market price of the Common Shares at any given point in time may not accurately reflect the Company’s long-term value. Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management’s attention and resources. The fact that no market currently exists for the Common Shares may affect the pricing of the Common Shares in the secondary market, the transparency and availability of trading prices and the liquidity of the Common Shares.
The market price of the Common Shares is affected by many other variables which are not directly related to the Company’s success and are, therefore, not within the Company’s control. These include other developments that affect the breadth of the public market for the Common Shares, the release or expiration of lock-up or other transfer restrictions on the Common Shares, and the attractiveness of alternative investments. The effect of these and other factors on the market price of the Common Shares is expected to make the Common Share price volatile in the future, which may result in losses to investors.
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Volatile Stock Price
The stock price of the Company is expected to be volatile and will be drastically affected by governmental and regulatory regimes and other factors outside of the control of the Company. The Company cannot fully predict the results of its operations expected to take place in the future. The results of these activities will inevitably affect the Company’s decisions related to future operations and will likely trigger major changes in the trading price of the Company shares.
Liquidity
The Company cannot predict at what prices the Company’s Common Shares will trade, and there can be no assurance that an active trading market in the Company will develop or be sustained. There is a significant liquidity risk associated with an investment in the Company.
Dividends The Company intends to retain earnings, if any, to finance the growth and development of the Company’s business and does not intend to pay cash dividends on the Common Shares in the foreseeable future. The payment of future cash dividends, if any, will be reviewed periodically by the Board and will depend upon, among other things, conditions then existing including earnings, financial condition and capital requirements, restrictions in financing agreements, business opportunities and conditions and other factors. Dilution
Future sales or issuances of equity securities could decrease the value of the Common Shares, dilute shareholders’ voting power and reduce future potential earnings per Common Share. The Company intends to sell additional equity securities in subsequent offerings (including through the sale of securities convertible into Common Shares) and may issue additional equity securities to finance its operations, development, exploration, acquisitions or other projects. The Company cannot predict the size of future sales and issuances of equity securities or the effect, if any, that future sales and issuances of equity securities will have on the market price of the Common Shares. Sales or issuances of a substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing market prices for the Common Shares. With any additional sale or issuance of equity securities, investors will suffer dilution of their voting power and may experience dilution in the Company’s earnings per Common Share. CERTAIN INCOME TAX CONSIDERATIONS The applicable Prospectus Supplement will describe certain Canadian federal income tax consequences to investors described therein of acquiring Securities. INTEREST OF EXPERTS The following are the names of each person or company who has prepared or certified a report, valuation, statement or opinion in this Prospectus, either directly or in a document incorporated by reference and whose profession or business gives authority to the report, valuation, statement or opinion made by the person or the Company.
De Visser Gray LLP is the external auditor of the Company and reported on the Company’s audited consolidated financial statements for the year ended September 30, 2020 and the period ended September 30, 2019, which are filed on SEDAR.
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AUDITOR The independent auditors of the Company are De Visser Gray LLP, of Vancouver, British Columbia. De Visser Gray LLP is independent of the Company in accordance with the Code of Professional Conduct of the Chartered Professional Accountants of British Columbia. TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar of the Company is Computershare Trust Company of Canada at its office located in Vancouver, British Columbia.
WHERE YOU CAN FIND ADDITIONAL INFORMATION The Company is subject to the information requirements of applicable Canadian securities legislation and, in accordance therewith, files reports and other information with the securities regulators in Canada. You may read and download any public document that the Company has filed with the Canadian securities regulatory authorities under the Company’s profile on the SEDAR website at www.sedar.com. STATUTORY RIGHTS OF WITHDRAWAL AND RECISSION Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase Securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus or a Prospectus Supplement (including a pricing supplement) relating to the Securities purchased by a purchaser and any amendment thereto. In several of the provinces of Canada, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, damages, if the prospectus or Prospectus Supplement (including a pricing supplement) relating to the Securities purchased by a purchaser and any amendment thereto contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of these rights or consult with a legal adviser.
In an offering of convertible, exchangeable or exercisable Securities, investors are cautioned that the statutory right of action for damages for a misrepresentation contained in the prospectus is limited, in certain provincial securities legislation, to the price at which the convertible, exchangeable or exercisable Securities is offered to the public under the prospectus offering. This means that, under the securities legislation of certain provinces, if the purchaser pays additional amounts upon conversion, exchange or exercise of the security, those amounts may not be recoverable under the statutory right of action for damages that applies in those provinces. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of this right of action for damages or consult with a legal adviser. CONTRACTUAL RIGHTS OF RE S CISSION In addition to statutory rights of withdrawal and rescission, original purchasers of Warrants (if offered separately from other Securities) and Subscription Receipts (or Units comprised partly thereof) will have a contractual right of rescission against the Company in respect of the exercise of such Warrant or Subscription receipt, as the case may be.
The contractual right of rescission will entitle such original purchasers to receive, in addition to the amount paid on original purchase of the Warrant or Subscription Receipt (or Units comprised partly thereof), as the case may be, the amount paid upon exercise upon surrender of the underlying Securities gained thereby, in the event that this Prospectus (as supplemented or amended) contains a misrepresentation, provided that: (i) the conversion, exchange or exercise takes place within 180 days of the date of the purchase of the Warrant or Subscription Receipt under this Prospectus; and (ii) the right of rescission is exercised within 180 days of the date of purchase of the Warrant or
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Subscription Receipt under this Prospectus. This contractual right of rescission will be consistent with the statutory right of rescission described under Section 131 of the Securities Act (British Columbia) and is in addition to any other right or remedy available to original purchasers under Section 131 of the Securities Act (British Columbia) or otherwise at law.
Original purchasers are further advised that, in certain provinces, the statutory right of action for damages in connection with a prospectus misrepresentation is limited to the amount paid for the security that was purchased under a prospectus, and therefore a further payment at the time of exercise may not be recoverable in a statutory action for damages. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province for the particulars of these rights, or consult with a legal adviser.
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CERTIFICATE OF THE COMPANY Dated: June 7, 2021
This short form prospectus, together with the documents incorporated by reference, will, as of the date of the last supplement to this prospectus relating to the securities offered by this prospectus and the supplement(s), constitutes full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement(s) as required by the securities legislation of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island.
| “ Ian McDonald ”<br><br><br>Ian McDonald<br>Chief Executive Officer, President<br>and Director | “ Ryan Cheung ”<br><br><br>Ryan Cheung <br>Chief Financial Officer |
|---|
ON BEHALF OF THE BOARD OF DIRECTORS
| “ Alan Kozikowski ”<br><br><br>Alan Kozikowski<br>Director | “ Nils Bottler ”<br><br><br>Nils Bottler<br>Director |
|---|
BRIGHT MINDS BIOSCIENCES INC.
OVERNIGHT MARKETED PUBLIC OFFERING OF UNITS
FINAL TERM SHEET AUG 23, 2022
A final short form base shelf prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the Provinces of Canada, other than Quebec.
Copies of the final short form base shelf prospectus and any applicable shelf prospectus supplement may be obtained from Eight Capital (the “Agent”) at ecm@viiicapital.com.
This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the final short form base shelf prospectus, any amendment and any applicable prospectus supplement for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.
The securities offered under the Base Prospectus and any applicable shelf prospectus supplement have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state of the United States (as such term is defined in Regulation S under the U.S. Securities Act) (the “United States”), and may not be offered or sold within the United States, or to, or for the account or benefit of a U.S. Person (as defined in Rule 902(k) of Regulation S under the U.S. Securities Act) or a person in the United States, except in transactions exempt from registration under the U.S. Securities Act and applicable U.S. state securities laws. This short form prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby within the United States or to, or for the account or benefit of, U.S. persons.
| Issuer: | Bright Minds Biosciences Inc. (the “Company”) |
|---|---|
| Issue: | Treasury offering of 2,858,000 units (the “Units”). Each Unit shall be comprised of one common share of the Company (a “Share”), and one common share purchase warrant (a “Warrant”). Each Warrant shall entitle the holder thereof to purchase one Share at an exercise price of $1.76, for a period of 24 months following the closing of the Offering. |
| Issue Price: | $1.40 per Unit (“Issue Price”) |
| Issue Size: | $4,001,200 |
| Agent’s Option: | The Company has granted Eight Capital an option to purchase up to an additional 15% of the Units and/or the components thereof, at the Issue Price, exercisable in whole or in part at any time for a period of 30 days after and including the Closing Date. |
| Use of Proceeds: | The net proceeds of the Offering will be used for working capital and general corporate purposes. |
| Form of Agency: | Best efforts overnight marketed offering, subject to termination clauses including “material adverse change” out, “diligence” out, “disaster” out, and “breach” out. |
| Form of Offering: | Public offering pursuant to a prospectus supplement to the short form base shelf prospectus of the Company dated June 7, 2021, to be filed in all provinces of Canada, excluding Quebec.<br><br><br>Private placement in the United States pursuant to available exemptions from the registration requirements of the United States Securities Act of 1933, as amended.<br><br><br>The Offering will also be made available to investors as agreed to by the Agent and the Company, outside Canada and the United States, provided such Offering does not (A) give rise to any requirement under the laws of such jurisdiction to prepare and/or file a prospectus, registration statement or document having similar effect; or (B) create any ongoing compliance or continuous disclosure obligations for the Company pursuant to the laws of such jurisdiction. |
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BRIGHT MINDS BIOSCIENCES INC.
OVERNIGHT MARKETED PUBLIC OFFERING OF UNITS
| Listing: | The Company’s Shares trade on the Canadian Securities Exchange (the “Exchange”) **** and on NASDAQ Capital Market (“NASDAQ”) under the symbol “DRUG”. The Company will use its best efforts to obtain the necessary approvals to list the Shares on the Exchange and NASDAQ, which listing shall be a condition of Closing. |
|---|---|
| Eligibility: | The Units will be qualified investments under the Income Tax Act (Canada) for registered accounts. |
| Agent: | Eight Capital |
| Commission: | 7% cash commission and that number of compensation warrants equal to 7% of the number of Units sold pursuant to the Offering. Each compensation warrant will be exercisable into one Unit at the Issue Price for a period of 24 months following the Closing Date. |
| Closing Date: | On or about August 30, 2022 |
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AGENCY AGREEMENT
August 25, 2022
Bright Minds Biosciences Inc. 19 Vestry Street
New York, NY
10013
**Attention:**Mr. Ian McDonald, President and Chief Executive Officer
Dear Sir:
The undersigned, Eight Capital, as the sole agent and bookrunner (the “Agent”), understands that Bright Minds Biosciences Inc. (the “Corporation”) proposes to issue up to 2,858,000 units of the Corporation (“Units”) at a price of $1.40 per Unit (the “Purchase Price”) for aggregate gross proceeds of up to $4,001,200, pursuant to the terms of this agency agreement (this “Agreement”). Each Unit will consist of (i) one common share in the capital of the Corporation (“Common Shares” or in respect of the Offering (as defined below), each, an “Offered Share”); and (ii) one Common Share purchase warrant (a “Warrant”). Each Warrant shall entitle the holder thereof to purchase one Common Share (each, a “Warrant Share”) at an exercise price of $1.76 per Warrant Share at any time before 5:00 p.m. (Vancouver time) on the day that is 24 months following the Closing Date (as hereinafter defined). The Units, Offered Shares and Warrants are referred to collectively as the “Offered Securities”.
The description of the Warrants herein is a summary only and is subject to the specific attributes and detailed provisions of the Warrants to be set forth in the Warrant Indenture (as hereinafter defined) to be entered into between the Warrant Agent (as hereinafter defined) and the Corporation to be dated as of the Closing Date. In case of any inconsistency between the description of the Warrants in this Agreement and the terms of the Warrants as set forth in the Warrant Indenture, the provisions of the Warrant Indenture shall govern. The Units will separate at Closing (as hereinafter defined).
In addition, the Corporation hereby grants the Agent an over-allotment option (the “Over-Allotment Option”), exercisable in whole or in part, at the sole discretion of the Agent, for a period of 30 days from and including the Closing Date, under which the Agent may purchase up to an additional 15% of the number of Units sold pursuant to the Offering, being up to 428,700 Units (the “Additional Units”), at the Purchase Price, each such Additional **** Unit comprised of one Common Share (each an “Additional Offered Share” and, collectively, the “Additional Offered Shares”) and one Warrant (an “Additional Warrant” and, collectively, the “Additional Warrants”, to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option may be exercised by the Agent to acquire Additional Units, Additional Offered Shares and/or Additional Warrants so long as the aggregate number of Additional Offered Shares and Additional Warrants which may be issued under the Over-Allotment Option does not exceed does not exceed 15% of the number of Offered Shares and Warrants, respectively, issued under the Offering.
Upon and subject to the terms and conditions set forth herein, the Corporation hereby appoints the Agent, and the Agent hereby agree to act, as exclusive agents to the Corporation to arrange for the sale of the Offered Securities, on a “best effort” basis, to Purchasers (as hereinafter defined) resident in the Selling Jurisdictions (as hereinafter defined) and in such other jurisdictions as may be agreed to by the Corporation and the Agent, provided that the Offered Securities are lawfully offered and sold on a basis exempt from the prospectus, registration or similar requirements of such jurisdictions. The offer and sale of the Offered Securities is referred to as the “Offering”.
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Unless the context otherwise requires, all references to: (i) the “Offering” shall be deemed to include the Over-Allotment Option; (ii) “Offered Securities” shall be deemed to include the Additional Securities; (iii) “Units” shall be deemed to include the Additional Units; (iv) “Offered Shares” shall include the Additional Offered Shares; and (v) “Warrants” shall include the Additional Warrants, which may be issued pursuant to the Over-Allotment Option on the Option Closing Date (as hereinafter defined).
The Corporation has prepared and filed with the British Columbia Securities Commission (the “Reviewing Authority”) and the other Securities Commissions (as defined herein) in accordance with National Instrument 44-101 – Short Form Prospectus Distributions and National Instrument 44-102 – Shelf Distributions (collectively, the “Shelf Procedures”), a (final) short form base shelf prospectus dated June 7, 2021 relating to the offering of common shares, debt securities, subscription receipts, warrants and units of the Corporation with a total offering price in the aggregate of up to $50,000,000 (the “Base Prospectus”) and has obtained from the Reviewing Authority a Decision Document (as defined herein) for the Base Prospectus for and on behalf of itself and each of the other Securities Commissions pursuant to National Policy 11-202 – Process for Prospectus Reviews in Multiple Jurisdictions (“NP 11-202”). The Offering will be made by way of a prospectus supplement to the Base Prospectus dated the date hereof (the “Prospectus Supplement”) and filed in the Qualifying Jurisdictions (as defined below) pursuant to the Shelf Procedures.
The Agent will solicit offers in the Selling Jurisdictions. Offers to purchase the Units solicited by the Agent will be subject to acceptance by the Corporation and to the requirements of Applicable Securities Laws (as defined herein) or other applicable laws. The Corporation will have the sole right to accept offers to purchase Units and reserves the right to withdraw, cancel or modify the offer made pursuant to the Prospectus Supplement and may, in its absolute discretion, reject any proposed purchase of Units, in whole or in part. For greater certainty, the Agent are under no obligation to purchase any Units
In consideration of the services to be rendered by the Agent in connection with the Offering hereunder, the Corporation agrees to pay to the Agent at the Closing Time (as hereinafter defined) a cash commission equal to 7.0% of the gross proceeds of the Offering (the “Agent’s Fee”). As additional compensation for the services rendered by the Agent in connection with the Offering, the Corporation shall issue to the Agent compensation warrants (the “Compensation Warrants”) exercisable to purchase that number of Units (each, a “Compensation Unit”) as is equal to 7.0% of the aggregate number of Units issued pursuant to the Offering. Each Compensation Warrant will entitle the holder thereof to acquire one Compensation Unit at the Purchase Price, subject to adjustment in certain customary events, at any time prior to 5:00 p.m. (Vancouver time) on the date which is 24 months from the Closing Date. Each Compensation Unit will consist of one Common Share (each, a “Compensation Unit Share”) and one common share purchase warrant of the Corporation (each, a “Compensation Unit Warrant”), with each Compensation Unit Warrant exercisable to acquire one Common Share (each, a “Compensation Warrant Share”) at an exercise price of $1.76 per Compensation Warrant Share at any time for a period of 24 months following the Closing Date, subject to adjustment in certain events. At the Closing Time, the Corporation shall execute and deliver to the Agent certificates evidencing the Compensation Warrants (the “Compensation Warrant Certificates”) to which the Agent are entitled, in a form to be agreed upon by the Agent and the Corporation, each acting reasonably.
The Corporation shall also pay the Agent, at the Closing Time, a corporate finance fee in the amount of $50,000 plus GST (the “Corporate Finance Fee”). At the discretion of the Agent, the Corporate Finance Fee may be deducted from the gross proceeds of the Offering otherwise payable to the Corporation at the Closing Time. It is understood and agreed that: (i) the Agent and any Selling Firm shall not be required to conduct a suitability review in respect of sales by the Corporation of the Units to any of the Purchasers on the President’s List (as defined herein); (ii) the Agent and any Selling Firm shall not be obligated, and may, in their sole discretion, refuse to process any subscription for Units
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from any Purchasers on the President’s List; and (iii) the Corporation shall indemnify and save harmless the Agent, any Selling Firm and any Indemnified Party (as defined herein) for and against all losses relating to any sales of Units by the Corporation to any Purchasers on the President’s List.
The parties acknowledge that the Offered Securities, the Warrant Shares, the Compensation Warrants, the Compensation Units issuable upon exercise of the Compensation Warrants, and the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrant, have not been and will not be registered under the U.S. Securities Act (as hereinafter defined) or any U.S. state securities laws and may not be offered or sold in the United States (as hereinafter defined) or to, or for the account or benefit of, U.S. Persons (as hereinafter defined), nor may the Warrants or the Compensation Warrants be exercised in the United States or by or on behalf of a U.S. Person, except in transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws in the manner specified in this Agreement, the U.S. Placement Memorandum and Schedule “A” hereto which is incorporated into and forms part of this Agreement. All actions to be undertaken by the Agent in the United States in connection with the matters contemplated herein will be undertaken through the U.S. Affiliate (as defined in Schedule “A” hereto).
The terms and conditions relating to the purchase and sale of the Offered Securities are as follows: 1****Definitions and Interpretatio n **** (a)In this Agreement:
“Accredited Investor” means an accredited investor meeting one or more of the criteria in Rule 501(a) of Regulation D;
“affiliate” shall have the meaning ascribed thereto in the Business Corporations Act (British Columbia);
“Agent’s Counsel” means DLA Piper (Canada) LLP;
“Agent’s Expenses” has the meaning given to the term in Section 10;
“Agent’s Fee” has the meaning ascribed to such term on the second page of this Agreement;
“Agreement” means this agency agreement, including all schedules hereto, as it may be amended, restated or supplemented;
“Applicable Securities Laws” means the Securities Laws in each of the Qualifying Jurisdictions;
“Auditors” means DeVisser Gray LLP, the auditors of the Corporation, or such other duly appointed and qualified auditor appointed by the Corporation from time-to-time;
“Base Prospectus” has the meaning given to that term on the second page of this Agreement;
“Business” **** means the business carried on by the Corporation and the Subsidiaries as described in the Prospectus, including the development of therapeutics to improve the lives of patients with severe and life-altering diseases;
“Business Data” means all data and personal information accessed, processed, collected, stored or disseminated by the Corporation or the Subsidiaries;
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“Business Day” means a day, other than a Saturday, a Sunday or a day on which chartered banks are not open for business in Toronto, Ontario or Vancouver, British Columbia;
“Canadian Securities Regulators” means, collectively, the Securities Regulators in the Qualifying Jurisdictions; “Claims” has the meaning given to that term in Section11(a)of this Agreement; “Closing” means the completion of the issue and sale by the Corporation of the Units pursuant to this Agreement;
“Closing Date” means the date of Closing;
“Closing Time” means 5:00 a.m. (Vancouver time) on the Closing Date, as applicable, or any other time on the Closing Date, as may be agreed to by the Corporation and the Agent, each acting reasonably;
“Common Share” means one common share in the capital of the Corporation as presently constituted;
“Compensation Unit” has the meaning ascribed to such term on the second page of this Agreement;
“Compensation Unit Share” has the meaning ascribed to such term on the second page of this Agreement;
“Compensation Unit Warrants” has the meaning ascribed to such term on the second page of this Agreement;
“Compensation Warrant” has the meaning ascribed to such term on the second page of this Agreement;
“Compensation Warrant Certificates” has the meaning ascribed to such term on the second page of this Agreement;
“Compensation Warrant Share” has the meaning ascribed to such term on the second page of this Agreement;
“Corporate Finance Fee” has the meaning ascribed to such term on the third page of this Agreement;
“Corporation” means Bright Minds BioSciences Inc. and includes any successor corporation to or of the Corporation;
“CSE” means the Canadian Securities Exchange;
“Debt Instrument” means any loan, bond, debenture, promissory note or other instrument evidencing indebtedness (demand or otherwise) for borrowed money or other liability, including any convertible debentures issued by the Corporation;
“Decision Document” means a receipt for the Base Prospectus issued by or on behalf of the Securities Commissions in accordance with the Passport System;
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“distribution”, “material change”, **** “material fact” and “misrepresentation” shall have the respective meanings ascribed thereto in the Securities Act (British Columbia);
“Documents Incorporated by Reference” means all financial statements, management information circulars, annual information forms, material change reports, Marketing Materials, business acquisition reports or other documents issued by the Corporation, whether before or after the date of this Agreement, that are required by Applicable Securities Laws to be incorporated by reference into the Prospectus;
“Exempt Plans” means trusts governed by registered retirement savings plans, registered retirement income funds, registered disability savings plans, deferred profit sharing plans, registered education savings plans and tax-free savings accounts, each as defined in the Income Tax Act (Canada);
“Financial Statements” means the financial statements of the Corporation included in the Documents Incorporated by Reference, including the notes to such statements and the related auditors’ report on such statements, prepared in accordance with international financial reporting standards as in force at the applicable time;
“Governmental Authority” means and includes, without limitation, any national, federal government, province, state, municipality or other political subdivision of any of the foregoing, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing and for greater certainty, includes, but is not limited to, Health Canada, the Securities Commissions, NASDAQ and the CSE;
“Health Care Laws” means and includes, without limitation: (i) the United States Federal Food, Drug, and Cosmetic Act; (ii) all applicable supranational, foreign, federal, state, provincial, and local health care related fraud and abuse laws and regulations and all criminal laws relating to health care fraud and abuse, and (iii) any and all other applicable supranational, foreign, federal, state, provincial, and local laws relating to the manufacturing, development, testing, labeling, marketing, advertising, promotion, or distribution of medical devices, the billing, payment, or reimbursement of or for medical devices or medical procedures involving those devices, kickbacks, referrals, the hiring of employees or acquisition of services or supplies from those who have been excluded from government health care programs;
“including” means including, without limitation;
“Intellectual Property” means any of the following, as they exist anywhere in the world, whether registered or unregistered, all trade or brand names, business names, trademarks, service marks, copyrights, patents, patent rights, industrial designs, know-how (including trade secrets and other unpatented or unpatentable proprietary or confidential information, systems or procedures), software, inventions, designs and other industrial or intellectual property;
“Laws” means Applicable Securities Laws and all other statutes, regulations, statutory rules, orders, by-laws, codes, ordinances, decrees, the terms and conditions of any grant of approval, permission, authority or licence, or any judgment, order, decision, ruling, award, policy or guideline, of any Governmental Authority, and the term “applicable” with respect to such Laws and in the context that refers to one or more persons, means that such Laws apply to such person or persons or its or their business, undertaking, property or securities and emanate from a Governmental Authority, having jurisdiction over the person or persons or its or their business, undertaking, property or securities;
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“Licensed IP” means the Intellectual Property that is licensed to the Corporation and/or the Subsidiaries and material to the business of the Corporation and the Subsidiaries (and as described in the Prospectus) and that is owned by any person other than the Corporation;
“Licenses” means all licences, permits, approvals, consents, certificates, registrations and authorizations (whether governmental, regulatory or otherwise), including without limitation, those administered by Health Canada or any other Governmental Authority;
“Liens” means any encumbrance or title defect of whatever kind or nature, regardless of form, whether or not registered or registrable and whether or not consensual or arising by law (statutory or otherwise), including any mortgage, lien, charge, pledge or security interest, whether fixed or floating, or any assignment, lease, option, right of pre-emption, privilege, encumbrance, easement, servitude, right of way, restrictive covenant, right of use or any other right or claim of any kind or nature whatever which affects ownership or possession of, or title to, any interest in, or the right to use or occupy such property or assets; “Losses” has the meaning given to that term in Section11(a) of this Agreement; “Marketing Materials” has the meaning ascribed thereto in NI 41-101 (as defined herein);
“Material Adverse Effect” means any change (including a decision to implement such a change made by the board of directors or by senior management who believe that confirmation of the decision of the board of directors is probable), event, violation, inaccuracy, circumstance, development or effect that is materially adverse to the business, assets (including intangible assets), capitalization, liabilities (contingent or otherwise), condition (financial or otherwise), prospects, Intellectual Property or results of operations of the Corporation and the Subsidiaries, taken as a whole, whether or not arising in the ordinary course of business;
“Material Contract” means any material Debt Instrument, indenture, contract, commitment, agreement (written or oral), instrument, lease, joint operating agreement, option, joint venture agreement or other document, including license agreements and agreements relating to real property or the Intellectual Property, to which the Corporation or any Subsidiaries are a party or by which any one of them are bound;
“Material Subsidiary” means any subsidiary of the Corporation which accounts for 10% of the assets of the Corporation on the consolidated audited financial statements for the year ended September 30, 2021;
“NASDAQ” means the Nasdaq Capital Market;
“NI 41-101” means National Instrument 41-101 – General Prospectus Requirements;
“Offered Securities” has the meaning ascribed to such term on the first page of this Agreement;
“Offered Share” has the meaning ascribed to such term on the first page of this Agreement;
“Offering” has the meaning ascribed to such term on the first page of this Agreement;
“Offering Documents” means, collectively, the Prospectus, the U.S. Placement Memorandum, the Marketing Materials and any Supplementary Material;
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“Offshore Transaction” means an “offshore transaction” as that term is defined in Regulation S;
“Passport System” means the system for review of prospectus filings set out in Multilateral Instrument 11-102 – Passport System and National Policy 11-202 – Process for Prospectus Reviews in Multiple Jurisdictions;
“Permitted Liens” means any of the following that do not adversely affect the present use or value of the property affected thereby: (i) liens for taxes not yet due, (ii) other assessments and governmental charges not yet due, (iii) liens that can be (but have not yet been) filed by builders, mechanics, repairers or similar Persons in respect of services performed or goods provided in the ordinary course of business, (iv) easements, covenants, rights of way and other restrictions that are registered as of the date of this Agreement, and (v) transfer restrictions imposed on securities by applicable Law;
“Person” means an individual, a firm, a corporation, a syndicate, a partnership, a trust, an association, an unincorporated organization, a joint venture, an investment club, a government or an agency or political subdivision thereof and every other form of legal or business entity of any nature or kind whatsoever;
“President’s List” means a list of Purchaser’s provided by the Corporation for an amount to be agreed upon by the Agent and the Corporation;
“Prospectus” means, collectively, the Base Prospectus and the Prospectus Supplement, including the Documents Incorporated by Reference;
“Prospectus Supplement” has the meaning ascribed to such term on the second page of this Agreement;
“Principal Regulator” means the British Columbia Securities Commission;
“Public Record” means all information filed by or on behalf of the Corporation with a securities commission that is accessible to the public on www.sedar.com;
“Purchasers” means, collectively, each of the purchasers of the Offered Securities pursuant to the Offering including, if applicable, the Agent;
“Qualifying Jurisdictions” means all of the provinces of Canada, other than Quebec;
‘Regulation D” means Regulation D adopted by the SEC under the U.S. Securities Act;
“Regulation S” means Regulation S adopted by the SEC under the U.S. Securities Act;
“Rule 144A” means Rule 144A adopted by the SEC under the U.S. Securities Act;
“SEC” means the United States Securities and Exchange Commission;
“Securities Commissions” means, collectively, the Principal Regulator and the securities regulatory authorities in the Qualifying Jurisdictions;
“Securities Laws” **** means, unless the context otherwise requires, all applicable securities laws in each of the Qualifying Jurisdictions and the applicable securities laws of all other jurisdictions other than the Qualifying Jurisdictions in which the Offered Securities are offered
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for sale, as applicable, and the respective regulations made thereunder, together with applicable published fee schedules, prescribed forms, policy statements, national or multilateral instruments, orders, blanket rulings and other regulatory instruments of the securities regulatory authorities in such jurisdictions;
“Securities Regulators” means, collectively, the Securities Commissions, the CSE, NASDAQ, SEC and the securities regulators or other securities regulatory authorities in any jurisdictions in which the Offered Securities are offered for sale;
“Selling Firm” has the meaning given to the term in Section 2(f);
”Selling Jurisdictions” means, collectively, each of the Qualifying Jurisdictions and such states in the United States and any other jurisdictions outside of Canada and the United States as mutually agreed to by the Corporation and the Agent;
“Shelf Procedures” has the meaning ascribed to such term on the first page of this Agreement;
“Standard Listing Conditions” has the meaning given to the term in Section 4(a)(iv);
“Subsequent Disclosure Documents” **** means any financial statements, management information circulars, annual information forms, material change reports, Marketing Materials, business acquisition reports or other documents issued by the Corporation after the date of this Agreement that are required by Applicable Securities Laws to be incorporated by reference in the Prospectus;
“Subsidiaries” means PsilocybinLabs Ltd., Bright Minds Biosciences LLC and Bright Minds Bioscience Pty. Ltd;
“Supplementary Material” means, collectively, any amendment to the Prospectus and any amendment or supplemental prospectus or ancillary materials that may be filed by or on behalf of the Corporation under Applicable Securities Laws relating to the distribution of the Offered Securities and any supplement to the U.S. Placement Memorandum; “Taxes” has the meaning given to the term in Section6(z);
“Transaction Documents” has the meaning given to the term in Section6(i); “United States” or “U.S.” means, as the context requires, the United States of America, its territories and possessions, any State of the United States, and/or the District of Columbia;
“U.S. Affiliate” of the Agent means the U.S. registered broker-deal affiliate of the Agent;
“U.S. Exchange Act” means the United States Exchange Act of 1934, as amended;
“U.S. Person” means a U.S. person as that term is defined in Rule 902(k) of Regulation S;
“U.S. Placement Memorandum” means the U.S. private placement memorandum delivered together with the Prospectus to offerees and Purchasers of the Offered Securities in the United States or to or for the account or benefit of a U.S. Person or a person in the United States, including any Supplementary Material thereto;
“U.S. Securities Act” means the United States’ Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
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“Warrant” has the meaning ascribed to such term on the first page of this Agreement; “Warrant Agent” means Computershare Trust Company of Canada;
“Warrant Indenture” means the warrant indenture to be entered into on the Closing Date between the Corporation and the Warrant Agent; and
“Warrant Share” has the meaning ascribed to such term on the first page of this Agreement.
Prospectus Defined Terms. ****Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus.
Divisions and Headings. The division of this Agreement into Sections, subsections, paragraphs and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. Unless something in the subject matter or context is inconsistent therewith, references herein to Sections, subsections, paragraphs and other subdivisions are to Sections, subsections, paragraphs and other subdivisions of this Agreement.
Number and Gender. All words and personal pronouns relating thereto shall be read and construed as the number and gender of the party or parties referred to in each case required and the verb shall be construed as agreeing with the required word and/or pronoun.
Currency. Any reference in this Agreement to $ or to dollars shall refer to the lawful currency of Canada, unless otherwise specified.
Knowledge. The phrases “knowledge of the Corporation” or “to the Corporation’s knowledge” or similar expressions, mean the actual knowledge of Ian McDonald, President and Chief Executive Officer, Ryan Cheung, Chief Financial Officer of the Corporation after due inquiry. 2****Filing of Prospectus Supplement; The Offering (a)The Corporation shall comply with the Shelf Procedures to prepare and file, on the date hereof, the Prospectus Supplement with the Securities Commissions in each of the Qualifying Jurisdictions.
(b)The Corporation shall comply with the Securities Laws with respect to the filing of the template version of any Marketing Materials that have been approved by the Corporation and the Agent in the manner required under the Securities Laws (with any comparables and all disclosure relating to such comparables being redacted).
(c)Until the distribution of the Units has been completed, the Corporation will use commercially reasonable efforts to promptly take, or cause to be taken, all additional steps and proceedings that are in its power to take or cause to be taken and which may from time to time be required under the Applicable Securities Laws to continue to qualify the distribution of the Units in the Qualifying Jurisdictions and the grant of the Over-Allotment Option to the Agent or, if the Units or the Over-Allotment Option have, for any reason, ceased to so qualify, to again so qualify them.
(d)Prior to the filing of the Prospectus Supplement and any Supplementary Material, the Corporation shall have permitted the Agent to review each of the Prospectus Supplement and such Supplementary Material and shall have allowed the Agent to
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conduct any due diligence investigations which the Agent reasonably requires in order to fulfil their obligations as an agent under Securities Laws and in order to enable them to responsibly execute the certificate in the Prospectus Supplement and such Supplementary Material required to be executed by it where applicable. Following the filing of the Prospectus Supplement and prior to the completion of the distribution of the Units, the Corporation shall allow the Agent to conduct any due diligence investigations which the Agent reasonably require to confirm as at any date that they continue to have reasonable grounds for the belief that the Prospectus does not contain a misrepresentation as at such date.
(e)The sale of the Offered Securities to the Purchasers shall be effected in a manner that is in compliance with Securities Laws and upon the terms set out in the Prospectus and in this Agreement. The Agent will use best efforts to arrange for Purchasers for the Offered Securities in the Selling Jurisdictions in connection with the Offering.
(f)The Corporation agrees that the Agent shall have the right to invite one or more investment dealers (each, a “Selling Firm”) to form a selling group to participate in the soliciting of offers to purchase the Offered Securities. The Agent have the exclusive right to control all compensation arrangements between the members of the selling group. The Corporation grants all of the rights and benefits of this Agreement to any Selling Firm so appointed by the Agent and appoints the Agent as trustee of such rights and benefits for such Selling Firms, and the Agent hereby accept such trust and agree to hold such rights and benefits for and on behalf of such Selling Firms.
(g)The Agent shall ensure that any Selling Firm appointed pursuant to the provisions of subsection 2(f), if any, shall: (i) be compensated by the Agent from their compensation hereunder; and (ii) agree to comply with the covenants and obligations given by the Agent herein.
(h)The Agent have delivered one copy of the Prospectus (together with any Supplementary Material, if any) to all persons resident in the Selling Jurisdictions who are to acquire the Offered Securities.
(i)The Corporation and the Agent covenant and agree:
(i)not to provide any potential investor of Offered Securities with any Marketing Materials unless a template version of such Marketing Materials has been filed by the Corporation with the Securities Commissions on or before the day such Marketing Materials are first provided to any potential investor of Offered Securities; (ii)not to provide any potential investor with any materials or information in relation to the Offering or the Corporation other than: (A) such Marketing Materials that have been approved and filed in accordance with this Section2; (B) the Prospectus or any Supplementary Material; and (C) any “standard term sheets”, as defined in NI 41-101, approved in writing by the Corporation and the Agent; and
(iii)that any Marketing Materials approved and filed in accordance with this Section2 and any standard term sheets approved in writing by the Corporation and the Agent shall only be provided to potential investors in the Selling
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Jurisdictions where the provision of such Marketing Materials or standard term sheets does not contravene Applicable Securities Laws.
(j)The Corporation and the Agent acknowledge that the Offered Securities have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. Persons, nor may the Warrants or the Compensation Warrants be exercised in the United States or by or on behalf of a U.S. Person, except pursuant to exemptions from the registration requirements of the U.S. Securities Act and the applicable laws of any state of the United States in the manner specified in this Agreement.
3****Distribution and Certain Obligations of the Agent. ****
(a)The Agent have complied with and shall, and shall require any Selling Firm to agree to, comply with the Securities Laws in connection with the distribution of the Offered Securities and shall offer the Offered Securities upon the terms and conditions set out in the Prospectus and this Agreement. The Agent have and shall, and shall require any Selling Firm to, directly offer for sale to the **** public and sell the Offered Securities only in those jurisdictions where they may be lawfully offered for sale. The Agent shall (i) use best efforts to complete and cause each Selling Form to complete the distribution of the Offered Securities as soon as reasonably practicable; and (ii) promptly notify the Corporation when, in their opinion, the Agent and the Selling Firms have ceased distribution of the Offered Securities and provide a breakdown of the number of Offered Securities distributed in each of the Selling Jurisdictions (and any other applicable jurisdiction where the Offered Securities have been distributed) where such breakdown is required for the purpose of calculating fees payable to Securities Regulators. ****
(b)The Agent shall, and shall require any Selling Firm to agree to, distribute the Offered Securities in a manner which complies with and observes all applicable laws and regulations, including, for greater certainty, all Securities Laws in each jurisdiction into and from which they may offer to sell the Offered Securities or distribute the Prospectus or any Supplementary Material in connection with the distribution of the Offered Securities and will not, directly or indirectly, offer, sell or deliver any Offered Securities or deliver the Prospectus or any Supplementary Material to any person in any jurisdiction, subject to Section 3(d) below, other than in the Selling Jurisdictions unless agreed to in accordance with Section 3(a) hereof and completed in a manner which will not require the Corporation to comply with the registration, prospectus, filing, continuous disclosure or other similar requirements under the applicable Securities Laws of such other jurisdictions or pay any additional governmental filing fees which relate to such other jurisdictions.
(c)For the purposes of this Section 3, the Agent and any Selling Firm shall be entitled to assume that the Offered Securities are qualified for distribution in any Qualifying Jurisdiction where the Decision Document has been obtained or deemed to have been obtained from the Canadian Securities Regulators.
(d)The Agent will offer for sale and sell the Offered Securities in the United States, or to or for the account or benefit of a U.S. Person or a person in the United States, through the U.S. Affiliate, as U.S. placement agent, pursuant to applicable exemptions from the registration requirements of the U.S. Securities Act. Any offer for sale or sale of the Offered Securities in the United States, or to or for the account or benefit of a U.S.
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Person or a person in the United States, will be made pursuant to the U.S. Placement Memorandum and in accordance with Schedule “A” to this Agreement.
4****Deliveries of Prospectus and Related Matters
(a)The Corporation shall deliver to the Agent:
(i)a copy of the Prospectus Supplement and the Base Prospectus signed and certified if and as required by Securities Laws, concurrently with the filing of the Prospectus Supplement;
(ii)a copy of any other document filed with, or delivered to, Securities Regulators under applicable Securities Laws in connection with the Offering;
(iii)a “long-form” comfort letter dated the date of the Prospectus Supplement, in form and substance satisfactory to the Agent, acting reasonably, addressed to the Agent and the directors of the Corporation from the Auditors with respect to financial and accounting information relating to the Corporation contained in the Prospectus, which letter shall be based on a review by the Auditors within a cut-off date of not more than two Business Days prior to the date of the letter and which letter shall be in addition to the Auditors’ consent letter and any comfort letter addressed to the Canadian Securities Regulators; and (iv)prior to filing of the Prospectus Supplement with Canadian Securities Regulators, copies of correspondence indicating that the application for the listing and posting for trading on the CSE and NASDAQ of(i) the Offered Shares; (ii) the Warrant Shares, (iii) the Compensation Unit Shares issuable upon exercise of the Compensation Warrants, and (iv) the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrants, has been made, subject only to satisfaction by the Corporation of customary post-closing filings required by the CSE and NASDAQ (the “Standard Listing Conditions”). (b)The Corporation has delivered to the Agent signed copies of all Supplementary Material, if any. The Corporation has delivered to the Agent, with respect to such Supplementary Material or Subsequent Disclosure Document, to the extent that such Supplementary Material contains any financial and accounting information, a comfort letter substantially similar to that referred to in subsection 4(a)(iii).
(c)The Corporation confirms that it has or will deliver to the Agent copies of the Prospectus signed and the U.S. Placement Memorandum as required by Applicable Securities Laws.
(d)Each delivery of an Offering Document by the Corporation to the Agent shall constitute the consent of the Corporation to the use by the Agent and the Selling Firms, if any, of such Offering Document in connection with the Offering of the Units and shall constitute the representation and warranty of the Corporation to the Agent that, at the respective times of such delivery:
(i)all information and statements contained therein (except information and statements relating solely to the Agent and provided by the Agent in writing expressly for inclusion therein):
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(A)are true and correct in all material respects and contain no misrepresentation; and
(B)constitute full, true and plain disclosure of all material facts relating to the Units and to the Corporation and the Subsidiaries considered as a whole;
(ii)such document does not contain an untrue statement of a material fact or omit to state a material fact (except information and statements relating to the Agent and furnished by the Agent for use in the Offering Document) required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made; and
(iii)such document (except information and statements relating to the Agent and furnished by the Agent for use in the Offering Document) complies in all material respects with Securities Laws at the time filed.
(e)During the period commencing on the date hereof and until completion of the distribution of the Offered Securities, the Corporation will promptly provide to the Agent drafts of any press releases of the Corporation for review by the Agent, and each such press release shall comply with Rule 135c or Rule 135e of the U.S. Securities Act.
(f)The Corporation has filed with the CSE all necessary documents and shall take or cause to be taken all necessary steps to ensure that, prior to the filing of the Prospectus Supplement with Canadian Securities Regulators, the Corporation has obtained all necessary approvals for: (i) the Offered Shares; (ii) the Warrant Shares; (iii) the Compensation Unit Shares issuable upon exercise of the Compensation Warrants; and (iv) the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrants, to be conditionally listed on the CSE and NASDAQ, subject only to the Standard Listing Conditions.
5****Material Changes
(a)The Corporation will promptly inform the Agent in writing during the period prior to the completion of the distribution of the Offered Securities of the full particulars of:
(i)any material change (actual, anticipated, threatened, contemplated, or proposed by, to, or against) in the condition (financial or otherwise), assets, liabilities (contingent or otherwise), business, affairs, operations, properties, capital or prospects of the Corporation and the Subsidiaries, taken as a whole;
(ii)any material fact that has arisen or has been discovered and would have been required to have been stated in any of the Offering Documents had that fact arisen or been discovered on, or prior to, the date of the Offering Documents, as the case may be;
(iii)any legislative, regulatory or administrative policy or guideline changes which, if implemented could have a material effect upon the Corporation’s operations or the manner in which the Corporation carries on business; and
(iv)any change in any material fact or any misstatement of any material fact contained in any of the Offering Documents, or the existence of any new
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material fact, in each case which is of a nature as to render any of the Offering Documents misleading or untrue in any material respect or would result in a misrepresentation therein.
(b)The Corporation shall comply with the prospectus amendment requirements of Section 6.6 of NI 41-101 and Section 57 of the Securities Act (Ontario), and the Corporation will prepare and file promptly any Supplementary Material which may be necessary and will otherwise comply with all legal requirements necessary to continue to qualify the Offered Securities for distribution in each of the Qualifying Jurisdictions.
(c)In addition to the provisions of subsections 5(a) and 5(b) hereof, the Corporation shall in good faith discuss with the Agent any change, event or fact contemplated in subsections 5(a) and 5(b) which is of such a nature that there is or could be reasonable doubt as to whether notice should be given to the Agent under subsection 5(a) hereof and shall consult with the Agent with respect to the form and content of any Supplementary Material proposed to be filed **** by the Corporation, it being understood and agreed that no such amendment or other Supplementary Material shall be filed with any Securities Regulator prior to the review thereof by the Agent.
(d)If during the period of distribution of the Offered Securities there shall be any change in applicable Securities Laws which, in the opinion of the Agent, acting reasonably, requires the filing of any Supplementary Material, upon written notice from the Agent, the Corporation shall, to the satisfaction of the Agent, acting reasonably, promptly prepare and file any such Supplementary Material with the appropriate Securities Regulators where such filing is required. 6****Rep resentations and Warranties of the Corporation **** The Corporation represents and warrants to the Agent and the Purchasers, and acknowledges that they are relying upon such representations and warranties and covenants in purchasing the Offered Securities, as follows:
(a)each of the Corporation and the Subsidiaries has been duly incorporated and organized and is validly existing as a corporation under the laws of the jurisdiction in which it was incorporated, amalgamated or continued, as the case may be, and no steps or proceedings have been taken by any person, voluntary or otherwise, requiring or authorizing the dissolution or winding up of the Corporation or the Subsidiaries;
(b)each of the Corporation and the Subsidiaries are duly qualified to carry on its business in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification (except for such jurisdictions where the failure to be so qualified would not result in a Material Adverse Effect) and has all requisite corporate power and authority to conduct its business and to own, lease and operate its properties and assets and to execute, deliver and perform its obligations under this Agreement, the Warrant Indenture, the Compensation Warrant Certificates and any other document, filing, instrument or agreement delivered in connection with the Offering;
(c)neither the Corporation nor the Subsidiaries are (i) in violation of its constating documents or (ii) to the knowledge of the Corporation, in default of the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, trust deed, joint venture, mortgage, loan agreement, note, lease or other agreement or instrument to which it is a party or by which it or its property may
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be bound, except in the case of clause (ii) for any such violations or defaults that would not result in a Material Adverse Effect;
(d)the Corporation has no Material Subsidiaries, and it has no direct or indirect subsidiaries other than the Subsidiaries, nor any investment in any person which, for the year ended September 30, 2021 or which, for the financial year ended September 30, 2022, is expected to account for, more than five percent of the consolidated assets or consolidated revenues of the Corporation or would otherwise be material to the business and affairs of the Corporation on a consolidated basis. The Corporation owns, directly or indirectly, all of the issued and outstanding shares of the Subsidiaries, all of the issued and outstanding shares of the Subsidiaries are issued as fully paid and non-assessable shares, free and clear of all Liens whatsoever, and no person, firm or corporation has any agreement, option, right or privilege (whether pre-emptive or contractual) capable of becoming an agreement, for the purchase from the Corporation or the Subsidiaries of any interest in any of the shares in the capital of the Subsidiaries;
(e)the Corporation and the Subsidiaries (i) each conducted and have each been conducting their business in compliance in all material respects with all applicable Laws of each jurisdiction in which its business is carried on or in which its services are provided and has not received a notice of non-compliance, nor knows of, nor has reasonable grounds to know of, any facts that could give rise to a notice of non-compliance with any such Laws, (ii) are not in breach or violation of any judgment, order or decree of any Governmental Authority having jurisdiction over the Corporation or the Subsidiaries, as applicable, and (iii) hold all, and are not in breach of any, Licenses that enable its business to be carried on as now conducted, and all such Licenses are valid and subsisting and in good standing, except in each case where the failure to be in such compliance or to hold such Licenses could not reasonably be expected to result in a Material Adverse Effect;
(f)each of the Corporation and each Subsidiaries are the absolute legal and beneficial owner, and has good and valid title to, all of the material property or assets thereof as described in the Offering Documents, and no other material property or assets are necessary for the conduct of the business of the Corporation or the Subsidiaries as currently conducted, (B) the Corporation does not know of any claim or the basis for any claim that might or could materially and adversely affect the right of the Corporation or the Subsidiaries to use, transfer or otherwise exploit such property or assets, and (C) other than in the ordinary course of business and as disclosed in the Offering Documents, neither the Corporation nor the Subsidiaries have any responsibility or obligation to pay any commission, royalty, licence fee or similar payment to any person with respect to the property and assets thereof;
(g)the authorized and issued share capital of the Corporation conforms to the description thereof contained in the Offering Documents. All of the issued and outstanding Common Shares have been duly and validly authorized and issued as fully paid and non-assessable, and none of the outstanding shares of the Corporation were issued in violation of the pre-emptive or similar rights of any securityholder of the Corporation;
(h)all Material Contracts to which the Corporation and the Subsidiaries, are a party are in good standing and in full force and effect and no material default or breach exists in respect of any of them on the part of any of the parties to them and, to the knowledge of the Corporation, no event has occurred which, after the giving of notice or the lapse of time or both would constitute such a default or breach and which would have a Material Adverse Effect; the foregoing includes all the presently outstanding Material
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Contracts entered into by the Corporation and the Subsidiaries in the course of carrying out their operations and all operations related thereto; (i)at the Closing Time, all necessary corporate action will have been taken by the Corporation to: (i) authorize the execution, delivery and performance of this Agreement, the Warrant Indenture and the Compensation Warrant Certificates (the “Transaction Documents”); (ii) grant the Over-Allotment Option, and (iii) validly create, issue and sell the Units and the Compensation Warrants and the Warrant Shares issuable upon exercise of the Warrants and the Compensation Warrant Shares issuable on exercise of the Compensation Warrants, as applicable; (j)the terms and the number of options to purchase Common Shares granted by the Corporation currently outstanding conforms to the description thereof contained in the Offering Documents and, other than as contemplated by this Agreement, and (i) options granted to directors, officers, employees and consultants of the Corporation to purchase Common Shares, and (ii) common share purchase warrants, in each case as described in the Offering Documents, no person, firm or corporation has any agreement or option, right or privilege (contractual or otherwise) capable of becoming an agreement (including convertible or exchangeable securities and warrants) for the purchase or acquisition from the Corporation or any Subsidiaries of any interest in any Common Shares or other securities of the Corporation or any Subsidiaries whether issued or unissued;
(k)there are no contracts or agreements between either the Corporation or a Subsidiaries and any person granting such person the right to require the Corporation or the Subsidiaries to file a registration statement under U.S. Securities Laws or, except as contemplated by this Agreement, a prospectus under Applicable Securities Laws, with respect to any securities of the Corporation or any Subsidiaries owned or to be owned by such person that require the Corporation or a Subsidiaries to include such securities in the securities qualified for distribution under the Offering Documents;
(l)except as described in the Offering Documents, there are no voting trusts or agreements, shareholders’ agreements, buy sell agreements, rights of first refusal agreements, agreements relating to restrictions on transfer, pre-emptive rights agreements, tag-along agreements, drag-along agreements or proxies relating to any of the securities of the Corporation or the Subsidiaries, to which the Corporation or the Subsidiaries is a party;
(m)the Common Shares to be issued as described in this Agreement and in the Offering Documents (including, for greater certainty, the Warrant Shares , the Compensation Unit Shares and the Compensation Warrant Shares) have been, or prior to the Closing Time will be, duly created and reserved for issuance and, when issued, delivered and paid for in full, will be validly issued and fully paid shares in the capital of the Corporation, and will not have been issued in violation of or subject to any pre-emptive rights or contractual rights to purchase securities issued by the Corporation;
(n)at the Closing Time the Corporation shall have taken all necessary corporate action to allot and authorize the issuance of the Offered Shares, the Warrants and the Compensation Warrants and, upon the due exercise of the Warrants, the Warrant Shares, and upon due exercise of the Compensation Warrants, the Compensation Unit Shares and Compensation Unit Warrants, and upon due exercise of the Compensation Unit Warrants, the Compensation Warrant Shares, all in accordance with their
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respective provisions thereof, and such shares will be validly issued as fully paid and non-assessable Common Shares;
(o)each of the Transaction Documents has been, or at the Closing Time will be, duly authorized, executed and delivered by the Corporation and constitutes a legal, valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally, general principles of equity, and the qualifications that equitable remedies may only be granted in the discretion of a court of competent jurisdiction and except that rights of indemnity, contribution, waiver and the ability to sever unenforceable terms may be limited under applicable Laws;
(p)no authorization, approval, consent, licence, permit, order or filing of, or with, any Government Authority or court, domestic or foreign, (other than those which have already been obtained or will be obtained prior to the Closing Date and except for post-closing filings to be made with the CSE and post-closing distribution reports to be filed and other post-closing filings to be made with certain securities regulatory authorities) is required for the valid sale and delivery of the Units or for the execution and delivery or performance of the Transaction Documents by the Corporation;
(q)each of the execution and delivery of the Transaction Documents, the performance by the Corporation of its obligations hereunder and thereunder, the sale of the Units hereunder by the Corporation, the granting of the Over-Allotment Option by the Corporation and the consummation of the transactions contemplated in this Agreement, (i) do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under (whether after notice or lapse of time or both), (A) any statute, rule, regulation or Law applicable to the Corporation or the Subsidiaries; (B) the notice of articles, articles, constating documents or resolutions of the directors or shareholders of the Corporation or the Subsidiaries; (C) any mortgage, note, indenture, contract, agreement, joint venture, partnership, instrument, lease or other document to which the Corporation or the Subsidiaries are a party or by which it is bound; or (D) any judgment, decree or order binding the Corporation or the Subsidiaries or the property or assets thereof, except where such conflict, breach, violation or default would not result in a Material Adverse Effect; and (ii) do not affect the rights, duties and obligations of any parties to any mortgage, note, indenture, contract, agreement, joint venture, partnership, instrument, lease or other document to which the Corporation or the Subsidiaries are a party or by which it is bound (including, for greater certainty, any such agreements relating to the Investments), nor give a party the right to terminate any mortgage, note, indenture, contract, agreement, joint venture, partnership, instrument, lease or other document to which the Corporation or the Subsidiaries are a party or by which it is bound, by virtue of the application of terms, provisions or conditions therein, except where those rights, duties or obligations, or rights to terminate, are affected in a manner that would not result in a Material Adverse Effect;
(r)the Corporation is in compliance in all respects with its timely and continuous disclosure obligations under the securities laws of the Qualifying Jurisdictions and the policies, rules and regulations of the CSE and NASDAQ;
(s)the Financial Statements have been prepared in accordance with international financial reporting standards and present fully, fairly and correctly in all material respects, the financial condition of the Corporation and its Subsidiaries as at the dates thereof and
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the results of the operations and the changes in the financial position of the Corporation for the periods then ended, on a basis consistent throughout the periods indicated and in accordance with the books and records of the Corporation;
(t)the Financial Statements (i) comply with the requirements of Applicable Securities Laws, (ii) are, in all material respects, consistent with the books and records of the Corporation, (iii) contain and reflect all material adjustments for the fair presentation of the results of operations and the financial condition of the business of the Corporation for the periods covered thereby, (iv) contain and reflect adequate provision or allowance for all reasonably anticipated liabilities, expenses and losses of the Corporation, and (v) do not omit to state any material fact that is required by generally accepted accounting principles or by applicable Law to be stated or reflected therein or which is necessary to make the statements contained therein not misleading, and there has been no material change in accounting policies or practices of the Corporation since September 30, 2021, except as has been disclosed in the Prospectus. There are no “non-GAAP financial measures” (as such term is defined by Applicable Securities Laws) contained in or incorporated by reference into the Prospectus;
(u)to the knowledge of the Corporation, the Auditors are independent public accountants as required under the Applicable Securities Laws and there has never been a reportable event (within the meaning of National Instrument 51-102 – Continuous Disclosure Obligations) between the Corporation and such auditors or, to the knowledge of the Corporation, any former auditors of the Corporation;
(v)subject to the exemption included in Part 6 of National Instrument 52-110 – Audit Committees (“NI 52-110”), the responsibilities and composition of the Corporation’s audit committee comply with NI 52-110;
(w)the Corporation maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in all material respects in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with international financial reporting standards and to maintain accountability for assets; and (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences;
(x)the Corporation maintains disclosure controls and procedures and internal control over financial reporting as those terms are defined in National Instrument 52-109 Certification of Disclosure of Issuer’s Annual and Interim Filings and as at September 30, 2021, such controls were effective. Except as disclosed in the Offering Documents since the end of the Corporation’s most recent audited fiscal year, the Corporation is not aware of any material weakness in the Corporation’s internal control over financial reporting (whether or not remediated) or in the Corporation’s internal control over financial reporting that has materially affected or is reasonably likely to materially affect the Corporation’s internal control over financial reporting;
(y)except as disclosed in the Offering Documents, none of the directors, executive officers or shareholders who beneficially own, directly or indirectly, or exercise control or direction over, more than 10% of the outstanding Common Shares on a fully-diluted basis or any known associate or affiliate of any such person, had or has any material interest, direct or indirect, in any transaction or any proposed transaction (including,
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without limitation, any loan made to or by any such person) with the Corporation which, as the case may be, materially affects, is material to or will materially affect the Corporation on a consolidated basis; (z)all taxes (including income tax, capital tax, payroll taxes, employer health tax, workers’ compensation payments, property taxes, custom and land transfer taxes), duties, royalties, levies, imposts, assessments, deductions, charges or withholdings and all liabilities with respect thereto including any penalty and interest payable with respect thereto (collectively, “Taxes”) due and payable by the Corporation and its Subsidiaries have been paid, except where the failure to pay Taxes would not have a Material Adverse Effect. All tax returns, declarations, remittances and filings required to be filed by the Corporation and its Subsidiaries have been filed with all appropriate authorities and all such returns, declarations, remittances and filings are complete and accurate and no material fact or facts have been omitted therefrom which would make any of them misleading, except where the failure to file such documents would not have a Material Adverse Effect. To the knowledge of the Corporation, no examination of any tax return of the Corporation or the Subsidiaries is currently in progress and there are no issues or disputes outstanding with any Governmental Authority respecting any Taxes that have been paid, or may be payable, by the Corporation or its Subsidiaries, except where such examinations, issues or disputes would not have a Material Adverse Effect; (aa)the statistical, industry and market related data included in the Offering Documents are derived from sources which the Corporation reasonably believes to be accurate, reasonable and reliable, and such data agrees with the sources from which it was derived;
(bb)since the respective dates as of which information is given in the Offering Documents, except as otherwise stated therein or contemplated thereby, there has not been: (i) any material change in the condition (financial or otherwise), or in the earnings, business, affairs, capital, prospects, operations or management of the Corporation or the Subsidiaries, whether or not arising in the ordinary course of business from that set forth therein; (ii) any transaction entered into by the Corporation or the Subsidiaries, other than in the ordinary course of business, that is material to the Corporation; or (iii) any dividend or distribution of any kind declared, paid or made by the Corporation or the Subsidiaries on shares in the capital of the Corporation or any of the Subsidiaries, as applicable;
(cc)no material labour dispute with current and former employees of the Corporation or its Subsidiaries exists, or, to the knowledge of the Corporation, is imminent and the Corporation is not aware of any existing, threatened or imminent labour disturbance by the employees of any of the principal suppliers, manufacturers or contractors of the Corporation or the Subsidiaries that would have a Material Adverse Effect;
(dd)no union has been accredited or otherwise designated to represent any employees of the Corporation or its Subsidiaries and, to the knowledge of the Corporation, no accreditation request or other representation question is pending with respect to the employees of the Corporation or its Subsidiaries and no collective agreement or collective bargaining agreement or modification thereof has expired or is in effect in any of the facilities of the Corporation or its Subsidiaries and none is currently being negotiated by the Corporation or its Subsidiaries;
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(ee)other than usual and customary health and related benefit plans for employees, the Prospectus discloses to the extent required by the Applicable Securities Laws to be disclosed in the Prospectus each material plan for retirement, bonus, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, incentive or otherwise contributed to, or required to be contributed to, by the Corporation or its Subsidiaries for the benefit of any current or former director, officer, employee or consultant of the Corporation or any subsidiary, as applicable (the “Employee Plans”), each of which has been maintained in all material respects with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations that are applicable to such Employee Plans;
(ff)all material accruals for unpaid vacation pay, premiums for unemployment insurance, health premiums, pension plan premiums, accrued wages, salaries and commissions and employee benefit plan payments of the Corporation and its Subsidiaries have been recorded in accordance with generally accepted accounting principles in Canada or international financial reporting standards, as applicable, and are reflected on the books and records of the Corporation;
(gg)other than as disclosed in the Offering Documents, neither the Corporation nor its Subsidiaries has made any loans to or guaranteed the obligations of any person;
(hh)all of the material contracts and agreements of the Corporation (including, for greater certainty, any contracts and agreements relating to the Intellectual Property) have been disclosed in the Offering Documents and, if required under the Applicable Securities Laws, have or will be filed with the Securities Commissions. Neither the Corporation nor its Subsidiaries has received any notification from any party that it intends to terminate any such material contract;
(ii)each of the material agreements and other documents and instruments pursuant to which the Corporation or the Subsidiaries holds its Intellectual Property, property and assets and conducts its business is a valid and subsisting agreement, document and instrument in full force and effect, enforceable in accordance with the terms thereof, the Corporation is not in default of any of the material provisions of any such agreements, instruments or documents nor has any such default been alleged;
(jj)there is no action, suit, proceeding, inquiry or investigation before or brought by any court or Governmental Authority, governmental instrumentality or body, domestic or foreign, now pending or, to the knowledge of the Corporation, threatened against or affecting the Corporation or any subsidiary which is required to be disclosed in the Offering Documents, and which if not so disclosed, or which if determined adversely, would have a Material Adverse Effect, or would materially and adversely affect the consummation of the transactions contemplated in this Agreement or the performance by the Corporation of its obligations hereunder. The aggregate of all pending legal or governmental proceedings to which the Corporation or any subsidiary is a party or of which any of their respective property or assets is subject, which are not described in the Offering Documents include only ordinary routine litigation incidental to the business, properties and assets of the Corporation and the Subsidiaries and would not reasonably be expected to result in a Material Adverse Effect;
(kk)the minute books and records of the Corporation and the Subsidiaries made available to counsel for the Agent in connection with its due diligence investigation of the
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Corporation are all of the minute books and records of the Corporation and each Subsidiaries and contain copies of all significant proceedings of the shareholders and the boards of directors of the Corporation and the Subsidiaries and there have not been any other formal meetings, resolutions or proceedings of the shareholders or boards of directors of the Corporation or the Subsidiaries not reflected in such minute books and other records, other than those concerning the Offering or which have been disclosed in writing to the Agent or at or in respect of which no material corporate matter or business was approved or transacted;
(ll)no order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of the Corporation has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or, to the knowledge of the Corporation, are pending, contemplated or threatened by any regulatory authority;
(mm)the Corporation is a reporting issuer in good standing in each of the Qualifying Jurisdictions under Applicable Securities Laws;
(nn)the Corporation is qualified under NI 44-102 to file a prospectus supplement in each of the Qualifying Jurisdictions and on the date of and upon filing of the Prospectus there will be no documents required to be filed under Applicable Securities Laws in connection with the distribution of the Units that will not have been filed as required;
(oo)the Corporation is in compliance in all material respects with its continuous and timely disclosure obligations under Applicable Securities Laws and the rules and regulations of the CSE and has filed all documents required to be filed by it with the Securities Commissions in the Qualifying Jurisdictions and under the Applicable Securities Laws, and no document has been filed on a confidential basis with the Securities Commissions that remains confidential at the date hereof. None of the documents filed in accordance with applicable Canadian Securities Laws contained, as at the date of filing thereof, a misrepresentation;
(pp)no securities commission, stock exchange or comparable authority has issued any order preventing or suspending the use or effectiveness of the Offering Documents or preventing the distribution of the Units in any Qualifying Jurisdiction nor instituted proceedings for that purpose and, to the knowledge of the Corporation, no such proceedings are pending or contemplated;
(qq)no forward-looking information (within the meaning of Applicable Securities Laws) included or incorporated by reference in the Prospectus has been made or reaffirmed by the Corporation without a reasonable basis in terms of the data and assumptions used, or has been disclosed other than in good faith;
(rr)the directors and “named executive officers” (as defined under NI 51-102) of the Corporation and the Subsidiaries and their compensation arrangements with the Corporation, whether as directors, officers or employees of the Corporation, are as disclosed in the Offering Documents;
(ss)the Corporation has not completed any “significant acquisition” nor has it entered into a binding agreement in respect of any “probable acquisition” (as such terms are defined in NI 51-102) and no proposed acquisition has progressed to a state where a reasonable person would believe that the likelihood of the Corporation completing the acquisition is high such that Canadian Securities Laws would require the inclusion or incorporation
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by reference of any additional financial statements or pro forma financial statements in the Prospectus or the filing of a Business Acquisition Report pursuant to Applicable Canadian Securities Laws;
(tt)neither the Corporation nor the Subsidiaries own any real property;
(uu)neither the Corporation nor the Subsidiaries leases premises for the Corporation or the Subsidiaries which are material to the Corporation and the Subsidiaries on a consolidated basis and which the Corporation or the Subsidiaries occupies as tenant;
(vv)each of the Corporation and the Subsidiaries are currently in compliance with any and all applicable Laws or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to the environment or environmental issues (including air, surface, water and stratospheric matters), pollution or protection of human health and safety; and there are no pending or, to the knowledge of the Corporation, any threatened, administrative, regulatory or judicial actions, suits, demands, claims, liens, notices of non-compliance or violation, investigation or proceedings relating to any environmental laws, except where any non-compliance with any such provisions could not reasonably be expected to have a Material Adverse Effect. The facilities and operations of the Corporation and the Subsidiaries are currently being conducted, and to the knowledge of the Corporation have been conducted, in all material respects in accordance with all applicable workers’ compensation and health and safety and workplace laws, regulations and policies;
(ww)except as mandated by an applicable regulatory or Governmental Authority, which mandates have not materially affected the Corporation, as at the date hereof, and except as disclosed in the Prospectus, there has been no material effect on the operations of the Corporation or the Subsidiaries as a result of the novel coronavirus disease (COVID-19) outbreak (the “COVID-19 Outbreak”). The Corporation has been monitoring the COVID-19 Outbreak and the potential impact at all of its operations, and management believes it has implemented appropriate measures to support the wellness of its employees where the Corporation and the Subsidiaries operate while continuing to operate;
(xx)the Corporation and/or the Subsidiaries are the exclusive owners of and possess all right, title and interest in and to all Corporation IP, or have an exclusive license or right to use, and sub-license the Licensed IP as disclosed in the Offering Documents, such Intellectual Property being used by the Corporation or the Subsidiaries in connection with their businesses and operations, with good and marketable title or valid licenses thereto, free and clear of all Liens and subject to the terms and conditions of the licenses;
(yy)the Corporation and the Subsidiaries have taken commercially reasonable steps to maintain, and have not taken any steps that could constitute abandonment of, the Corporation IP, including paying all necessary fees and filing all appropriate registrations, affidavits and renewals with the appropriate Governmental Authorities;
(zz)the Corporation and the Subsidiaries, as applicable, have entered into valid and enforceable written agreements pursuant to which the Corporation and the Subsidiaries, as applicable, have been granted all licenses and permissions to use, reproduce, sub-license, modify, update, enhance or otherwise exploit any Licensed IP to the extent required in the business of the Corporation and the Subsidiaries;
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(aaa)all of the Corporation IP owned by the Corporation or the Subsidiaries was created by employees in the course of their employment or by contractors who have transferred and assigned all of their rights in and to such Corporation IP to the Corporation or the Subsidiaries pursuant to written assignment agreements and have waived their moral rights in and to such Intellectual Property;
(bbb)except for such licenses, sublicenses and other agreements relating to off-the-shelf software, which is commercially available on a retail basis, each of the Corporation and the Subsidiaries has performed all obligations imposed upon it pursuant to all licenses, sublicenses, distributor agreements, and other agreements under which the Corporation or the Subsidiaries is either a licensor, licensee or distributor, relating to the Corporation IP or the Licensed IP, all of which are, to the knowledge of the Corporation, valid, enforceable and in full force and effect and which contain terms and conditions prohibiting the unauthorized use, reproduction, disclosure, reverse engineering or transfer of such Intellectual Property, and neither the Corporation nor its Subsidiaries, nor to the knowledge of the Corporation any other party thereto, is in breach of or default thereunder in any material respect, nor is there any event which with notice or lapse of time or both would constitute a material default thereunder;
(ccc)to the knowledge of the Corporation, the business operations, or the products or services owned, used, developed, sold, provided, imported, made or licensed by the Corporation or the Subsidiaries, does not infringe upon or otherwise violate any Intellectual Property rights of others;
(ddd)except as disclosed in the Offering Documents, none of the Corporation IP or the Licensed IP is subject to any outstanding order, and no claims are pending or, to the knowledge of the Corporation, threatened, which: (i) challenge the validity, enforceability, use, ownership or right in or to any such Intellectual Property, (ii) allege that the operation of the Corporation or the Subsidiaries’ business infringes or otherwise violates any Intellectual Property right or other proprietary rights(s) of a third party, and the Corporation has no knowledge of any facts which would form a valid basis for any such claim; or (iii) contest the right of the Corporation or the Subsidiaries to sell, license or use any material products or services of the Corporation or the Subsidiaries;
(eee)to the knowledge of the Corporation, no person is infringing upon or otherwise violating the Corporation IP or the Licensed IP and neither the Corporation nor its Subsidiaries have brought or threatened any action, suit or proceeding for unauthorized use, disclosure, infringement or misappropriation of such Intellectual Property or breach of any license or agreement involving such Intellectual Property against any third party;
(fff)each of the Corporation and the Subsidiaries has taken commercially reasonable actions to maintain and protect each item of the Corporation IP, including taking commercially reasonable actions and precautions to protect the secrecy, confidentiality and value of its trade secrets and the proprietary and confidential nature and value of its Intellectual Property;
(ggg)all forms of testing and investigation that have been sponsored by or otherwise been conducted by, on behalf of, or for the benefit of the Corporation or any Subsidiaries in furtherance of product development and improvement have been and, to the extent pending, are being conducted in accordance in all material respects with all applicable Laws (including, without limitation, those administered by Health Canada, the Food
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and Drug Administration of the U.S. Department of Health and Human Services (the “FDA”) or by any supranational, foreign, federal, state, provincial, or local governmental or regulatory authority performing functions similar to those performed by Health Canada and/or the FDA), and neither the Corporation nor the Subsidiaries has received any notices or other correspondence questioning the material compliance or acceptability of any such testing in any material respect to support regulatory filings. To the knowledge of the Corporation, to the extent any studies or clinical trials cited in the Offering Documents are not captured by the preceding sentence, such studies or clinical trials were and are also being conducted in accordance in all material respects with all Laws. All statements regarding or reference to studies, clinical evidence, and testing, performance or other product data (regardless of the source or sponsor) that are included in the Offering Documents are accurate and complete in all material respects and fairly and accurately present the subject information, and each of the Corporation and the Subsidiaries has no knowledge of other data which are materially inconsistent with or otherwise call into question in any material respect such information described or referred to in the Prospectus;
(hhh)except as would not be reasonably expected to result in a Material Adverse Effect, neither the Corporation nor its Subsidiaries has failed to file with the applicable regulatory authorities (excluding Health Canada, the FDA or any foreign, federal, state or local governmental or regulatory authority performing functions similar to those performed by Health Canada and/or the FDA) any filing, declaration, listing, registration, report or submission that is required to be so filed. Except as would not be reasonably expected to result in a Material Adverse Effect, neither the Corporation nor the Subsidiaries has failed to file with Health Canada, the FDA or any foreign, federal, state or local Governmental Authority performing functions similar to those performed by Health Canada and/or the FDA, any filing, declaration, listing, registration, report or submission that is required to be so filed. All such filings were in material compliance with applicable Laws when filed and no deficiencies have been asserted by any applicable Governmental Authority (including, without limitation, Health Canada, the FDA or any foreign, federal, state or local Governmental Authority performing functions similar to those performed by Health Canada and/or the FDA) with respect to any such filings, declarations, listings, registrations, reports or submissions;
(iii)the Corporation and the Subsidiaries are and at all times have been, in compliance with all Health Care Laws to the extent applicable to the Corporation, the Subsidiaries, and it’s or their products, operations, and activities, and have not engaged in activities which are, as applicable, cause for false claims liability, civil penalties, criminal conviction, or mandatory or permissive exclusion from any federal, state or provincial health care program, other than any instances of non-compliance or activities that would not reasonably be expected to result in a Material Adverse Effect. Neither the Corporation nor the Subsidiaries have received notice of any claim, action, suit, audit, proceeding, hearing, enforcement, investigation, arbitration or other action from any court, arbitrator, or any other Governmental Authority, or third party alleging or asserting any liability under, any non-compliance with, or that any product, operation or activity is in violation of any Health Care Laws, and, to the knowledge of the Corporation, no such claim, action, suit, audit, proceeding, hearing, enforcement, investigation, arbitration or other action is threatened. To the knowledge of the Corporation, there are no facts or circumstances that would reasonably be expected to give rise to liability of the Corporation under Health Care Laws;
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(jjj)the Corporation and the Subsidiaries have filed, obtained, maintained, and submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Health Care Law or any Permit (“Filings”) in all material respects, and all such Filings were complete and correct in all material respects and not misleading in any material respect on the date filed (or were corrected or supplemented by a subsequent Filing). Neither the Corporation nor its Subsidiaries have offered, paid, solicited or received any remuneration, discount, or rebate, to or from any Person except in compliance in all respects with all Health Care Laws, other than any instance of non-compliance as would not reasonably be expected to result in a Material Adverse Effect;
(kkk)neither the Corporation nor the Subsidiaries has filed an investigational new drug application (“IND”) with the FDA, and neither the Corporation nor the Subsidiaries is required to submit information to the FDA, including but not limited to any information relating to an IND of the Corporation or the Subsidiaries;
(lll)all testing, product research and development activities, including quality assurance, quality control, testing, and research and analysis activities, conducted by the Corporation or the Subsidiaries in connection with their Business is being conducted in compliance, in all respects, with all industry, laboratory safety, management and training standards applicable to its current and proposed Business and all such processes, procedures and practices, required in connection with such activities are in place as necessary and are being complied with, in all respects;
(mmm)the currently outstanding Common Shares are listed and posted for trading on the CSE and NASDAQ and all necessary notices and filings have been made with, and all necessary consents, approvals and authorizations obtained by, the Corporation from the CSE and NASDAQ to ensure that (i) the Offered Shares; (ii) the Warrant Shares issuable upon exercise of the Warrants; (iii) the Compensation Unit Shares issuable upon exercise of the Compensation Warrants and (iv) the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrants, will be listed and posted for trading on the CSE and NASDAQ upon their issuance, subject only to the Standard Listing Conditions;
(nnn)the Corporation has not withheld, and will not withhold from the Agent prior to the Closing Time, any material facts relating to the Corporation, the Subsidiaries or the Offering;
(ooo)Computershare Investor Services Inc. is the duly appointed registrar and transfer agent of the Corporation with respect to the Common Shares and Computershare Trust Company of Canada is the warrant agent in respect of the Warrants;
(ppp)other than the term sheet filed by the Corporation on SEDAR on August 25, 2022, the Corporation has not and will not provide to prospective purchasers any document or other material that would constitute an offering memorandum or future oriented financial information within the meaning of Securities Laws. The Corporation has and will not engage in any form of general solicitation or general advertising in connection with the offer and sale of the Offered Securities, including but not limited to, causing the sale of the Offered Securities to be advertised in any newspaper, magazine, printed public media, printed media or similar medium of general and regular paid circulation, broadcast over radio, television or telecommunications, including electronic display, or conduct any seminar or meeting relating to the offer and sale of the Offered Securities whose attendees have been invited by general solicitation or advertising;
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(qqq)other than the Agent and H.C. Wainwright & Co. LLC, the Corporation’s U.S. capital markets advisor, there is no person, firm or company acting or purporting to act at the request of the Corporation who is entitled to any finder’s fee in connection with the transactions contemplated herein and in the event that any person, firm or company acting for the Corporation at the request of the Corporation establishes a claim for any fee from the Agent, except as identified in writing to the Corporation and the Agent prior to Closing, the Corporation covenants to indemnify and hold harmless the Agent with respect thereto and with respect to all costs reasonably incurred in the defence thereof;
(rrr)the Corporation has provided the Agent with all information requested by the Agent in connection with the sale of the Offered Securities and such information is true and correct in all material respects and no material fact or material facts have been omitted therefrom which would make such information misleading. There is no material fact known to the Corporation that has not been disclosed herein, or to the Agent, or in any other agreement, document or written instrument furnished by the Corporation to the Agent in connection with the transactions contemplated hereby and thereby and which has resulted in or would reasonably be expected to result in a Material Adverse Effect;
(sss)the statements set forth in the Prospectus under the headings “Eligibility for Investment” and “Certain Material Canadian Federal Income Tax Considerations” are accurate, subject to the limitations and qualifications set out therein;
(ttt)all information which has been prepared by the Corporation relating to the Corporation and its business, properties and liabilities and made available to the Agent, including all financial, marketing, sales and operational information provided to the Agent was, as of the date of such information, true and correct in all material respects, taken as a whole, and no fact or facts have been omitted therefrom which would make such information materially misleading and did not contain a misrepresentation; and
(uuu)as of the date of the delivery of an Offering Document by the Corporation:
(i)the information and statements (except information and statements relating to the Agent and provided in writing by the Agent for inclusion therein) contained or incorporated by reference in any of the Offering Documents, as the case may be, are true and correct, in all material respects, and contain no misrepresentation and constitute full, true and plain disclosure of all material facts relating to the Corporation and the Offered Securities;
(ii)no material fact or information has been omitted therefrom (except for facts or information relating to the Agent) which is required to be stated in such disclosure or is necessary to make the statements or information contained in such disclosure not misleading in light of the circumstances in which they were made;
(iii)except with respect to any information relating solely to the Agent and provided by the Agent for inclusion therein, the Offering Documents comply in all material respects with the requirements of Applicable Securities Laws; and
(iv)except as set forth or contemplated in the Offering Documents, there has been no adverse material change (actual, anticipated, contemplated, proposed or threatened) in the business, affairs, prospects, operations, properties, assets,
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liabilities (contingent or otherwise) or capital of the Corporation since the end of the period covered by the Financial Statements;
(vvv)the delivery of each Offering Document by the Corporation shall constitute the Corporation’s consent to the Agent’s use of the Offering Documents in connection with the distribution of the Offered Securities in the Selling Jurisdictions in compliance with this Agreement unless otherwise advised in writing;
(www)none of the Corporation or any of its affiliates or any persons acting on any of their behalf has offered or sold, or will offer or sell, (i) any of the Offered Securities in the United States or to or for the account or benefit of a U.S. Person or a person in the United States, except for offers and sales made directly by the Corporation in full compliance and reliance on the exemption from registration under the U.S. Securities Act provided by Section 4(a)(2) and/or Rule 506(b) of Regulation D; or (ii) any of the Offered Securities outside the United States, except for offers and sale made in Offshore Transactions in accordance with Rule 903 of Regulation S; and
(xxx)the offering of the Offered Securities in the United States or to or for the account or benefit of a U.S. Person or a person in the United States by the Corporation is not prohibited pursuant to a court order issued pursuant to Section 12(j) of the U.S. Exchange Act and any rules or regulations promulgated thereunder
Notwithstanding any contrary provision in this Agreement including any schedule hereto, no investigation or opportunity afforded to the Agent or its advisors to conduct due diligence shall in any way affect, or limit liability for, any representation, warranty or covenant of the Corporation contained in this Agreement and the Agent will be deemed to have relied solely upon the representations, warranties and covenants contained in this Agreement, notwithstanding any contrary information that may have been provided or made available to the Agent or any of the Agent’s representatives or that the Agent discovered in the course of any such investigation either prior to or subsequent to the date of this Agreement. 7****Covenants of the Corporation The Corporation hereby covenants to the Agent that the Corporation:
(a)will advise the Agent, promptly after receiving notice or obtaining knowledge thereof, of:
(i)the issuance by any Canadian Securities Regulators of any order suspending or preventing the use of any of the Offering Documents;
(ii)the suspension of the qualification of the Offered Securities and the Compensation Warrants in any of the Qualifying Jurisdictions or the institution, threatening or contemplation of any proceeding for any such purposes; or
(iii)any requests made by any Canadian Securities Regulators for amending or supplementing the Prospectus or for additional information, and will use its best efforts to prevent the issuance of any order referred to in (i) above and, if any such order is issued, to obtain the withdrawal thereof as quickly as possible;
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(b)will use commercially reasonable efforts to maintain its status as a “reporting issuer” (or the equivalent thereof) not in default of the requirements of the Applicable Securities Laws in the Qualifying Jurisdictions for a period of 24 months following the Closing Date, provided that the foregoing requirement shall not prevent the Corporation from completing a sale of all or substantially all of its assets or any transaction which would result in the Corporation ceasing to be a “reporting issuer” pursuant to a take-over bid or other transaction that requires a vote by shareholders of the Corporation;
(c)will use its commercially reasonable efforts to maintain the listing of (i) the Offered Shares; (ii) the Warrant Shares issuable upon exercise of the Warrants; (iii) the Compensation Unit Shares issuable upon exercise of the Compensation Warrants; (iv) the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrants, on the CSE or another recognized stock exchange or quotation system for a period of at least 24 months following the Closing Date, provided that the foregoing requirement shall not prevent the Corporation from completing a sale of all or substantially all of its assets or any transaction which would result in the Corporation ceasing to be a “reporting issuer” pursuant to a take-over bid or other transaction that requires a vote by shareholders of the Corporation;
(d)will duly execute and deliver the Warrant Indenture and the Compensation Warrant Certificate at the Closing Time and comply with and satisfy all terms, conditions and covenants therein contained to be complied with or satisfied by the Corporation;
(e)will ensure that, at the Closing Time, the Offered Shares shall be duly issued as fully paid and non-assessable Common Shares on payment of the purchase price therefor;
(f)will ensure that, at the Closing Time, the Warrants and the Compensation Warrants shall be duly and validly created and issued and shall have attributes corresponding in all material respects to the description set forth in this Agreement, the Compensation Warrants Certificates and the Warrant Indenture, as applicable;
(g)will ensure that at all times following the grant of the Compensation Warrants and prior to the expiry of the Compensation Warrants, a sufficient number of Compensation Unit Shares and Compensation Unit Warrants are allotted and reserved for issuance upon the due exercise of the Compensation Warrants in accordance with their terms;
(h)will ensure that at all times following the grant of the Compensation Warrants and prior to the expiry of the Compensation Unit Warrants, a sufficient number of Compensation Warrant Shares are allotted and reserved for issuance upon the due exercise of the Compensation Unit Warrants in accordance with their terms;
(i)will ensure that at all times following the grant of the Warrants and prior to the expiry of the Warrants, a sufficient number of Warrant Shares are allotted and reserved for issuance upon the due exercise of the Warrants in accordance with their terms;
(j)will ensure that, upon due exercise of the Compensation Warrants in accordance with their terms, the Compensation Unit Shares shall be duly issued as fully paid and non-assessable shares in the capital of the Corporation on payment of the purchase price therefor;
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(k)will ensure that, upon due exercise of the Compensation Unit Warrants in accordance with their terms, the Compensation Warrant Shares shall be duly issued as fully paid and non-assessable shares in the capital of the Corporation on payment of the purchase price therefor;
(l)will ensure that, upon due exercise of the Warrants in accordance with their terms, the Warrant Shares shall be duly issued as fully paid and non-assessable shares in the capital of the Corporation on payment of the purchase price therefor;
(m)will ensure ensure that the Offered Shares, the Warrant Shares, the Compensation Unit Shares and the Compensation Warrant Shares, are listed and posted for trading on the CSE and NASDAQ upon their respective dates of issuance;
(n)use its commercially reasonable efforts to maintain the Warrant Agent or a substituted warrant agent in respect of the Warrants issued to the Purchasers until the exercise or expiry of all of such Warrants;
(o)will use the net proceeds of the Offering in the manner specified in the Prospectus Supplement, subject to the qualifications contained therein;
(p)for the period of 90 days following the Closing Date (the “Standstill Period”), not to, without the prior written consent of Eight, issue, agree to issue or announce any intention to issue, any additional debt, Common Shares or any securities convertible into or exchangeable for shares of the Corporation, except in respect of: (i) the grant of stock options and other similar issuances pursuant to the stock option plans, other employee incentive plans of the Corporation or any other employee incentive arrangements for directors, officers, employees and consultants; (ii) issuances in connection with the exchange, transfer, conversion or exercise rights of existing outstanding options, warrants, convertible debentures and other securities or existing commitments to issue securities; (iii) the issuance of securities as consideration pursuant to one or more arm’s length acquisition(s); and (iv) the filing a base shelf prospectus provided that the Corporation does not qualify the issuance of any Common Shares or any securities convertible into or exchangeable for shares of the Corporation thereunder during the Standstill Period;
(q)use its best efforts to cause each of the senior officers and directors to enter into a lock-up agreement in favour of the Agent pursuant to which he, she or it shall covenant and agree that he, she or it will not, directly or indirectly, offer, issue, sell, grant, secure, pledge, or otherwise transfer, dispose of or monetize, or engage in any hedging transaction, or enter into any form of agreement or arrangement the consequence of which is to alter economic exposure to, or announce any intention to do so, in any manner whatsoever, any Common Shares or any securities convertible into or exchangeable for, or otherwise exercisable to acquire Common Shares or other equity securities of the Corporation for a period of 90 days after the Closing Date, without the prior written consent of the Agent, such consent not to be unreasonably withheld or delayed, provided that such lock-up agreement shall be subject to customary and reasonable carve-outs, exceptions and exclusions; and
(r)promptly do, make, execute or deliver, or cause to be done, made, executed or delivered, such further acts, documents and things for the purpose of giving effect to this Agreement and the transactions contemplated herein.
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8****Conditions of Closing
The following are conditions precedent to the obligations of the Agent to complete the Closing and of the Purchasers to purchase the Offered Securities at the Closing Time, which conditions the Corporation covenants and agrees to use its best efforts to fulfil within the time set out herein therefor, and which conditions may be waived in writing in whole or in part by the Agent:
(a)the Corporation shall have caused its counsel, McMillan LLP, to deliver to the Agent legal opinions dated and delivered on the Closing Date, as applicable, addressed to the Agent and the Purchasers, in form and substance satisfactory to the Agent acting reasonably, with respect to the following matters:
(i)the Corporation being a “reporting issuer”, or its equivalent, in each of the Qualifying Jurisdictions and not in default under Applicable Securities Laws in the Qualifying Jurisdictions;
(ii)the Corporation being a corporation existing under the laws of the Business Corporations Act (British Columbia);
(iii)the Corporation having the corporate power and capacity to own and lease its property and assets and to conduct its Business as described in the Prospectus;
(iv)the authorized and issued share capital of the Corporation;
the Corporation having all necessary corporate power and capacity to execute and deliver the Transaction Documents and to perform its obligations hereunder and thereunder, including to grant the Over-Allotment Option, to create, issue and sell the Offered Securities, the Compensation Warrants, to issue the Warrant Shares issuable upon the exercise of the Warrants, to issue the Compensation Unit Shares and Compensation Unit Warrants issuable upon the exercise of the Compensation Warrants and to issue the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrants;
(vi)the Corporation has the necessary corporate power and authority to sign and deliver the Prospectus and all necessary corporate action having been taken by the Corporation to authorize the execution and delivery of each of the Prospectus and any Supplementary Material and the filing thereof with the Securities Commissions and the delivery of the U.S. Placement Memorandum;
(vii)the Offered Shares having been duly and validly authorized for issuance and that, at the Closing Time and upon payment of the purchase price therefor and the issuance thereof, the Offered Shares will be duly and validly issued as fully paid and non-assessable Common Shares;
(viii)the form and terms of the Compensation Warrant Certificates having been approved by the board of directors of the Corporation and complying in all material respects with the requirements of the Business Corporations Act (British Columbia);
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(ix)the Warrants and the Compensation Warrants have been validly authorized, issued and created;
(x)the Warrant Shares issuable upon exercise of the Warrants having been reserved for issuance by the Corporation and, upon the payment of the exercise price therefor and the issue thereof in accordance with the terms of the Warrant Indenture, being validly issued as fully paid and non-assessable Common Shares;
(xi)the Compensation Unit Shares issuable upon exercise of the Compensation Warrants having been reserved for issuance by the Corporation and, upon the payment of the exercise price therefor and the issue thereof in accordance with the terms of the Compensation Warrant Certificates, being validly issued as fully paid and non-assessable Common Shares;
(xii)the Compensation Unit Warrants issuable upon exercise of the Compensation Warrants having been reserved for issuance by the Corporation and, upon the payment of the exercise price therefor and the issue thereof in accordance with the terms of the Compensation Warrant Certificates, being validly issued;
(xiii)the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrants having been reserved for issuance by the Corporation and, upon the payment of the exercise price therefor and the issue thereof in accordance with the terms of the Compensation Unit Warrant certificates, being validly issued as fully paid and non-assessable Common Shares;
(xiv)all necessary corporate action having been taken by the Corporation to authorize the execution and delivery of the Transaction Documents and the performance of its obligations hereunder and thereunder, including the grant of the Over-Allotment Option, the issuance and sale of the Offered Securities, and the Compensation Warrants, the issuance of the Warrant Shares upon exercise of the Warrants, and the issuance of the Compensation Unit Shares and Compensation Unit Warrants upon exercise of the Compensation Warrants, the issuance of the Compensation Warrant Shares upon exercise of the Compensation Unit Warrants, and the Transaction Documents having been executed and delivered by the Corporation and constituting legal, valid and binding obligations of the Corporation, enforceable against the Corporation in accordance with their respective terms, subject to standard qualifications, including that specific performance and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction, that the provisions thereof relating to indemnity, contribution and waiver of contribution may be unenforceable;
(xv)the execution and delivery of the Transaction Documents, the fulfilment of the terms hereof and thereof by the Corporation, including the grant of the Over-Allotment Option, the issuance and sale of the Offered Securities and the Compensation Warrants, the issuance of the Warrant Shares upon exercise of the Warrants, the issuance of the Compensation Unit Shares and Compensation Unit Warrants upon exercise of the Compensation Warrants, and the issuance of the Compensation Warrant Shares upon exercise of the Compensation Unit Warrants, do not and will not (as the case may be) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, whether after notice or lapse of time or both: (i) the
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constating documents and by-laws of the Corporation; or (iii) the Applicable Laws of the Province of British Columbia and federal laws applicable therein;
(xvi)all necessary documents having been filed, all requisite proceedings having been taken and all approvals, permits, authorizations and consents of the appropriate regulatory authority in each of the Qualifying Jurisdictions having been obtained by the Corporation to qualify the distribution of the Offered Securities through persons who are registered under Applicable Securities Laws and who have complied with the relevant provisions of Applicable Securities Laws;
(xvii)that the statements set forth in the Prospectus under the caption “Eligibility for Investment” and “Certain Material Canadian Federal Income Tax Considerations” in the Prospectus Supplement are accurate, subject to the limitations and qualifications set out therein;
(xviii)the attributes of the Offered Securities are consistent, in all material respects, with the descriptions in the Prospectus;
(xix)all necessary documents have been filed, all proceedings have been taken and all legal requirements have been fulfilled as required under the Applicable Securities Laws in order to qualify the Offered Securities and the Compensation Warrants for distribution in the Qualifying Jurisdictions by or through investment dealers or brokers who are registered under the Applicable Canadian Securities Laws of the Qualifying Jurisdictions and who have complied with the relevant provisions of the Applicable Canadian Securities Laws of the Qualifying Jurisdictions;
(xx)the issue and delivery by the Corporation in the Qualifying Jurisdictions of the Warrant Shares to the holders of Warrants upon their exercise pursuant to the terms and conditions of the Warrant Indenture being exempt from, or not subject to, the prospectus requirements of Applicable Canadian Securities Laws of the Qualifying Jurisdictions and no prospectus or other documents being required to be filed, proceedings taken or approvals, permits, consents or authorizations required to be obtained under Applicable Canadian Securities Laws of the Qualifying Jurisdictions (other than such as will have already been filed or obtained) to permit such issue;
(xxi)the first trade in, or resale of, the Warrant Shares issuable upon exercise of the Warrants being exempt from, or not subject to, the prospectus requirements of Applicable Canadian Securities Laws of the Qualifying Jurisdictions and no prospectus or other documents being required to be filed, proceedings taken or approvals, permits, consents or authorizations required to be obtained under Applicable Canadian Securities Laws of the Qualifying Jurisdictions (other than such as will have already been filed or obtained) to permit such trade, provided that the trade will not be a “control distribution” (as defined in National Instrument 45-102 – Resale of Securities), the Corporation is a reporting issuer at the time of the trade, and such trade is not a transaction or series of transactions involving purchases and sales or repurchases and resales in the course of or incidental to a “distribution” (as defined under Applicable Canadian Securities Laws of the Qualifying Jurisdictions);
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(xxii)the issue and delivery by the Corporation in the Qualifying Jurisdictions of the Compensation Unit Shares, Compensation Unit Warrants and Compensation Warrant Shares to the holders of Compensation Warrants and Compensation Unit Warrants, as applicable, upon their exercise pursuant to the terms and conditions of the Compensation Warrant Certificates and Compensation Unit Warrant certificate being exempt from, or not subject to, the prospectus requirements of Applicable Canadian Securities Laws of the Qualifying Jurisdictions and no prospectus or other documents being required to be filed, proceedings taken or approvals, permits, consents or authorizations required to be obtained under Applicable Canadian Securities Laws of the Qualifying Jurisdictions (other than such as will have already been filed or obtained) to permit such issue;
(xxiii)the first trade in, or resale of, the Compensation Unit Shares issuable upon exercise of the Compensation Warrants and the Compensation Warrant Shares issuable upon exercise of the Compensation Unit Warrants being exempt from, or not subject to, the prospectus requirements of Applicable Canadian Securities Laws of the Qualifying Jurisdictions and no prospectus or other documents being required to be filed, proceedings taken or approvals, permits, consents or authorizations required to be obtained under Applicable Canadian Securities Laws of the Qualifying Jurisdictions (other than such as will have already been filed or obtained) to permit such trade, provided that the trade will not be a “control distribution” (as defined in National Instrument 45-102 – Resale of Securities), the Corporation is a reporting issuer at the time of the trade, and such trade is not a transaction or series of transactions involving purchases and sales or repurchases and resales in the course of or incidental to a “distribution” (as defined under Applicable Canadian Securities Laws of the Qualifying Jurisdictions);
all filing have been made with the CSE in connection with the issuance and listing of the (i) the Offered Shares; (ii) the Warrant Shares; (iii) the Compensation Unit Shares; and (iv) the Compensation Warrant Shares, subject only to the Standard Listing Conditions;
(xxv)Computershare Trust Company of Canada having been duly appointed as the warrant agent pursuant to the Warrant Indenture; and
(xxvi)Computershare Investor Services Inc. having been duly appointed as the transfer agent and registrar for the Common Shares.
In connection with such opinions, counsel to the Corporation may rely on the opinions of local counsel in the Selling Jurisdictions acceptable to counsel to the Agent, acting reasonably, as to qualification for distribution of the Offered Securities and the Compensation Warrants or opinions may be given directly by local counsel of the Corporation with respect to those items and as to other matters governed by the laws of jurisdictions other than the province in which they are qualified to practise and may rely, to the extent appropriate in the circumstances, as to matters of fact on certificates of officers of the Corporation and others;
(b)if any Offered Securities are sold to Purchasers in the United States or to, or for the account or benefit of, U.S. Persons or persons in the United States, the Agent receiving, at the Closing Time, a legal opinion dated the Closing Date, addressed to the Agent, in form and substance acceptable to the Agent, acting reasonably, of United States legal
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counsel to the Corporation (who may rely, to the extent appropriate in the circumstances, as to matters of fact, on certificates of officers of the Corporation, public and exchange officials or the auditors or transfer agent of the Corporation), to the effect that the offer and sale of the Offered Securities in the United States or to, or for the account or benefit of, U.S. Persons or persons in the United States are not required to be registered under the U.S. Securities Act, provided such offers and sales are made in accordance with Schedule “A” hereto; it being understood that such counsel need not express its opinion with respect to any resale of the Offered Securities;
(c)the Agent shall have received a certificate, dated as of the Closing Date, signed by the Chief Executive Officer and the Chief Financial Officer of the Corporation, or such other officer(s) of the Corporation as the Agent may agree, certifying for and on behalf of the Corporation with respect to: (i) the constating documents of the Corporation; (ii) the resolutions of the Corporation’s board of directors relevant to the Offering and the authorization of the other agreements and transactions contemplated herein; and (iii) the incumbency and signatures of signing officers of the Corporation;
(d)the Corporation shall cause the Auditors to deliver to the Agent a comfort letter, dated as of the Closing Date, in form and substance satisfactory to the Agent, acting reasonably, bringing forward to a date not more than two Business Days prior to the Closing Date, the information contained in the comfort letter referred to in subsection 4(a)(iii) hereof;
(e)the Agent shall have received a certificate, dated as of the Closing Date, signed by the Chief Executive Officer and Chief Financial Officer of the Corporation, or such other officers of the Corporation as the Agent may request, certifying for and on behalf of the Corporation, after having made due enquiry and after having carefully examined the Prospectus and any Supplementary Material, that:
(i)the Corporation has complied **** in all material respects (except where already qualified by a materiality or Material Adverse Effect qualification, in which case the Corporation has complied in all respects) with all of the covenants and satisfied in all material respects (except where already qualified by materiality, in which case the Corporation has complied in all respects) all of the terms and conditions of this Agreement on its part to be complied with and satisfied at or prior to the Closing Time;
(ii)no order, ruling or determination having the effect of ceasing or suspending the trading in the Common Shares or prohibiting the sale of the Offered Securities or any other securities of the Corporation has been issued by any regulatory authority and continuing in effect and no proceedings for such purpose having been instituted or being pending or, to the knowledge of such officers, contemplated or threatened under any relevant securities laws (including Applicable Securities Laws) or by any regulatory authority;
(iii)subsequent to the respective dates as at which information is given in the Prospectus, there has not occurred a Material Adverse Effect or any change or development involving a prospective Material Adverse Effect, other than as disclosed in the Prospectus or any Supplementary Material, as the case may be;
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no material change relating to the Corporation and the Subsidiaries, taken as a whole, has occurred since the date hereof with respect to which the requisite material change report has not been filed and no such disclosure having been made on a confidential basis that remains confidential; and
the representations and warranties of the Corporation contained in this Agreement and in any certificates of the Corporation delivered pursuant to or in connection with this Agreement, are true and correct as at the Closing Time in all material respects (or, in the case of any representation or warranty containing a materiality or Material Adverse Effect qualification, in all respects) as if such representations and warranties were made as at the Closing Time of Closing, after giving effect to the transactions contemplated hereby;
(f)all consents, approvals, permits, authorizations or filings as may be required to be made or obtained by the Corporation under Applicable Securities Laws in the Selling Jurisdictions necessary for the offer and sale of the Offered Securities, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, will have been made or obtained, as applicable (other than, in respect of the Offering, the filing of reports required under Applicable Securities Laws in the Selling Jurisdictions within the prescribed time periods and the filing of standard documents with the CSE and NASDAQ, which documents will be filed as soon as practicable after the Closing Date and, in any event, within such deadline as may be imposed by such Securities Laws, the CSE or NASDAQ) and the Agent will have received copies of correspondence indicating that the Corporation has made all of the necessary filings for the issuance and listing of (i) the Offered Shares; (ii) the Warrant Shares; (iii) the Compensation Unit Shares; and (iv) the Compensation Warrant Shares, subject only to the Standard Listing Conditions;
(g)the Agent shall have completed and be satisfied, in their sole discretion, with the results of its due diligence investigations regarding the Corporation, its business, operations and financial condition and market conditions at the Closing Time;
(h)the Agent shall have received a certificate from Computershare Investor Services Inc. as to the number of Common Shares issued and outstanding as at the date immediately prior to the Closing Date;
(i)the Agent shall have received a certificate of status (or the equivalent) in respect of the Corporation and the Subsidiaries issued by the appropriate regulatory authority in each jurisdiction in which the Corporation and the Subsidiaries are incorporated, amalgamated or continued, as the case may be, which certificate shall be dated no more than two Business Days prior to the Closing Date;
(j)the Agent shall have received duly executed copies of the Compensation Warrant Certificates in form and substance satisfactory to the Agent, acting reasonably; and
(k)each of the directors and senior officers of the Corporation shall have delivered to the Agent a signed copy of the Form of Lock-Up Agreement attached hereto as Schedule “B”.
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9****Closing
The Closing shall be completed via electronic exchange of documents unless otherwise agreed to by the Corporation and the Agent.
At or prior to the Closing Time, the Corporation shall duly and validly deliver to the Agent one or more certificate(s) in definitive form (including such other form of evidence of ownership) or in the form of an electronic deposit pursuant to the non-certificated issue system maintained by CDS Clearing and Depository Services Inc. representing the Offered Securities registered in such name or names as the Agent may notify the Corporation in writing, against payment by the Agent to the Corporation, at the direction of the Corporation, in the lawful money of Canada by wire transfer or, if permitted by applicable law, by certified cheque or bank draft, payable at par in Vancouver, British Columbia, of an amount equal to the proceeds of the Offering net of the Corporate Finance Fee, Agent’s Fees and estimated Agent’s Expenses in accordance with Section 10 hereof. Any Offered Securities sold to Purchasers in the United States or to, or for the account or benefit of, U.S. Persons or persons in the United States that are Accredited Investors shall be issued as definitive physical certificates and such certificates shall include the legends required by the U.S. Placement Memorandum.
The obligation of the Agent to complete the purchase of any Additional Units under this Agreement, upon the exercise of the Over-Allotment Option, is subject to the receipt by the Agent of those documents contemplated, and the satisfaction of those conditions set forth, in Section 8 as the Agent may request. In the event that the Corporation shall subdivide, consolidate, reclassify or otherwise change its Common Shares during the period in which the Over-Allotment Option is exercisable, appropriate adjustments will be made to the exercise price and to the number of the Additional Units issuable on exercise thereof such that the Agent are entitled to arrange for the sale of the same number and type of securities that the Agent would have otherwise arranged for had they exercised such Over-Allotment Option immediately prior to such subdivision, consolidation, reclassification or change. 10****Expenses
The Corporation shall pay all reasonable expenses and fees in connection with the Offering including, without limitation: (i) all expenses of or incidental to the creation, issue, sale or distribution of the Offered Securities; (ii) the fees and expenses of the Corporation’s legal counsel, auditors and other advisors; (iii) all costs incurred in connection with the preparation of documentation related to the Offering, including filing fees; (iv) the fees and disbursements of the Agent’s legal counsel and all applicable taxes thereon (to a maximum of $100,000, exclusive of disbursements and taxes); and (v) all “out-of-pocket expenses” of $10,000 of the Agent (plus all taxes thereon) in connection with due diligence and marketing meetings ((iv) and (v) collectively, the “Agent’s Expenses”). All expenses payable by the Corporation to the Agent in accordance with this Agreement shall be payable whether or not the Offering is completed. Such fees and expenses shall be deducted from the gross proceeds otherwise payable to the Corporation at the Closing Time. Where taxes are applicable and payable by the Agent under the terms of this Agreement, an additional amount will be charged to and shall be payable by the Corporation to the Agent at the Closing Time from the gross proceeds of the Offering to reimburse the Agent for such taxes.
11****Indemnities ****
(a)Subject to Section 11(j), The Corporation and its subsidiaries or affiliated companies, as the case may be (collectively, the “Indemnitor”) hereby agrees to indemnify and hold the Agent and their respective affiliates and subsidiaries and the respective directors, officers, partners,
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agents, employees and shareholders and each other person, if any, controlling any of the Agent or their subsidiaries or affiliates (each an “Indemnified Party” and collectively, the “Indemnified Parties”) from and against any and all expenses, losses (other than losses of profit), claims, actions (including shareholder actions, derivative or otherwise), suits, proceedings, damages, liabilities or expenses of whatever nature or kind (excluding loss of profits), whether joint or several, including the aggregate amount paid in reasonable settlement of any actions, suits, proceedings, investigations or claims, and the fees, disbursements and taxes of their counsel (collectively, the “Losses”) that may be incurred in investigating or advising with respect to and/or defending or settling any actual or threatened third party action, suit, proceeding, investigation or claim (collectively, the “Claims”) that may be made against the Indemnified Parties or to which the Indemnified Parties may become subject or otherwise involved in any capacity under any statute or common law or otherwise insofar as such Losses and/or Claims arise out of or are based, directly or indirectly, upon the performance of professional services rendered to the Corporation by the Indemnified Parties hereunder or otherwise in connection with the matters referred to in this Agreement, whether performed before or after the execution and delivery of this Agreement.
(b)The Indemnitor agrees to waive any right they may have of first requiring an Indemnified Party to proceed against or enforce any other right, power, remedy or security or claim payment from any other person before claiming under this indemnity. The Indemnitor also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Corporation or any person asserting Claims on behalf of or in right of the Corporation for or in connection with the Offering except to the extent any Losses suffered by the Corporation are determined by a court of competent jurisdiction in a final judgment that has become non-appealable to have resulted solely from fraud, the gross negligence or willful misconduct of such Indemnified Party.
(c)Promptly after receiving notice of a Claim against an Indemnified Party or receipt of notice of the commencement of any investigation which is based, directly or indirectly, upon any matter in respect of which indemnification may be sought from the Indemnitor, the Indemnified Party will notify the Indemnitor in writing of the particulars thereof, provided that the omission so to notify the Indemnitor shall not relieve the Indemnitor of any liability which the Indemnitor may have to the Indemnified Party except and only to the extent that any such delay in or failure to give notice as herein required prejudices the defense of such Claim or results in any material increase in the liability which the Indemnitor has under this indemnity. The Indemnitor shall have 14 days after receipt of the notice to undertake, conduct and control, through counsel of its own choosing and at its own expense, the settlement or defense of the Claim. If the Indemnitor undertakes, conducts and controls the settlement or defense of the Claim, the relevant Indemnified Parties shall have the right to participate in the settlement or defense of the Claim, at the expenses of the relevant Indemnified Party to the extent additional counsel or other external advisors are retained by such Indemnified Party.
(d)In any such Claim, such Indemnified Party shall have the right to retain separate legal counsel to act on such Indemnified Party’s behalf, the reasonable fees and expenses of which counsel shall be at the expense of the Indemnitor if: (i) the Indemnitor does not assume the defence of the Claim within such 14 day period after receiving notice; (ii) the Indemnitor agrees to separate representation for the Indemnified Party, or (iii) the representation of the Indemnitor and such Indemnified Party by the same legal counsel would be inappropriate due to actual or potential differing interests, provided that in no circumstances will the Indemnitor be required to pay the reasonable fees and expenses of more than one legal counsel for all Indemnified Parties.
(e)The Indemnitor agrees that in case any legal proceeding shall be brought against the Corporation and/or the Agent by any governmental commission or regulatory authority or any
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stock exchange or other entity having regulatory authority, either domestic or foreign, shall investigate the Corporation and/or the Indemnified Parties shall be required to testify in connection therewith or shall be required to respond to procedures designed to discover information regarding, in connection with, or by reason of the performance of professional services rendered to the Corporation by the Agent, the Indemnified Parties shall have the right to employ their own counsel in connection therewith, and the reasonable fees and expenses of such counsel as well as the reasonable costs (including a reasonable amount to reimburse the Agent for time spent by the Indemnified Parties in connection therewith) and out-of-pocket expenses incurred by Indemnified Parties in connection therewith shall be paid by the Indemnitor as they occur.
(f)The Indemnitor will not, without the Indemnified Party’s prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any Claim in respect of which indemnification may be sought hereunder (whether or not any Indemnified Party is a party thereto) unless the Indemnitor has acknowledged in writing that the Indemnified Parties are entitled to be indemnified in respect of such Claim and such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Party from any liabilities arising out of such Claim without any admission of negligence, misconduct, liability or responsibility by or on behalf of any Indemnified Party.
(g)To the extent that any Indemnified Party is not a party to this Agreement, the Agent shall obtain and hold the right and benefit of the above-noted indemnity in trust for and on behalf of such Indemnified Party.
(h)The Corporation agrees to reimburse the Agent for the time spent by their personnel in connection with any Claim at their normal per diem rates.
(i)The indemnity and the contribution obligations of the Corporation pursuant to Section 14 shall be in addition to any liability which the Corporation may otherwise have, shall extend upon the same terms and conditions to the personnel of the Agent and shall be binding upon and enure to the benefit of any successors, assigns, heirs and personal representatives of the Corporation and any of the Indemnified Parties. The foregoing provisions shall survive the completion of professional services rendered under this Agreement or any termination of the authorization given by this Agreement.
(j)Notwithstanding anything to the contrary contained herein, the foregoing indemnity shall cease to apply to the extent that a court of competent jurisdiction in a final judgement shall determine that such Losses to which the Indemnified Party may be subject were caused by the negligence, dishonesty, fraud or willful misconduct of the Indemnified Party.
12****Contribution
(a)In the event that the indemnity of the Corporation provided for in Section 11 hereof is declared by a court of competent jurisdiction to be illegal or unenforceable as being contrary to public policy or is unavailable for any other reason, the Agent and the Corporation shall severally, and not jointly, contribute to the aggregate of all Claims and all Losses of the nature contemplated in Section 11 hereof and suffered or incurred by the Indemnified Parties in proportions as is appropriate to reflect: (i) the relative benefits received by the Agent, on the one hand (being the Agent's Fee), and the relative benefits received by the Corporation, as applicable, on the other hand (being the gross proceeds derived from the sale of the Units less the Agent's Fee), (ii) the relative fault of the Corporation, on the one hand and the Agent on the other hand, and (iii) relevant equitable consideration; provided that the Corporation shall in any event contribute to the amount paid or payable by the Indemnified Parties as a result of such
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Claim any excess of such amount over the amount paid or payable to the Agent or any other Indemnified Party under this Agreement. For greater certainty and notwithstanding anything to the contrary contained herein, the Agent shall not in any event be liable to contribute, in the aggregate, any amount in excess of the Agent's Fee or any portion thereof actually received. However, no party who has been determined by a court of competent jurisdiction in a final judgement to have engaged in any fraud, dishonesty, wilful misconduct or negligence shall be entitled to claim contribution from any person who has not been so determined to have engaged in such fraud, dishonesty, wilful misconduct or negligence.
(b)Any party entitled to contribution will, promptly after receiving notice of commencement of any claim, action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this section, notify such party or parties from whom contribution may be sought, but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any obligation it may have otherwise under this section, except to the extent that the party from whom contribution may be sought is materially prejudiced by such omission. The right to contribution provided herein shall be in addition and not in derogation of any other right to contribution which the Agent may have by statute or otherwise by law..
13****Termination Rights
In addition to any other remedies which may be available to the Agent, the Agent (or any one of them) shall be entitled to terminate and cancel, without any liability on its part, all of its obligations under this Agreement and the obligations of any Person whom the Agent have solicited to purchase the Offered Securities, by notice in writing to that effect delivered to the Corporation prior to the Closing Time if:
(a)the due diligence investigations performed by the Agent or its representatives reveal any material information or fact, which, in the sole opinion of the Agent, is materially adverse to the Corporation or its business, or materially adversely affects the price or value of the Offered Securities;
(b)there is a material change or a change in a material fact or new material fact shall arise or there should be discovered any previously undisclosed material fact required to be disclosed in the Prospectus or any amendment thereto, in each case, that has or would be expected to have, in the sole opinion of the Agent, a significant adverse change or effect on the business or affairs of the Corporation or on the market price or the value of the securities of the Corporation;
(c)(i) there should develop, occur or come into effect or existence any event, action, state, condition (including without limitation, terrorism, accident or any outbreak or escalation of international hostilities or war) or major financial occurrence of national or international consequence including by way of COVID-19 (which, in the case of COVID-19, the parties are not aware of as of the date hereof only to the extent that there are material adverse developments related thereto on or after August 22, 2022) or a new or change in any law, regulation, or policy which in the sole opinion of the Agent, seriously adversely affects or involves or may seriously adversely affect or involve the financial markets or the business, operations or affairs of the Corporation and its Subsidiaries taken as a whole or the market price or value of the securities of the Corporation, (ii) any inquiry, action, suit, proceeding or investigation (whether formal or informal) is commenced, announced or threatened in relation to the Corporation or any one of the officers or directors of the Corporation or any of its principal shareholders where wrong-doing is alleged or any order is made by any federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality including without limitation the CSE, NASDAQ or securities commission which involves a finding of
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wrong-doing, or (iii) any order, action or proceeding which cease trades or otherwise operates to prevent or restrict the trading of the common shares or any other securities of the Corporation is made or threatened by a regulatory authority;
(d)the state of the financial markets in Canada or the United States is such that in the reasonable opinion of the Agent the Offered Securities cannot be profitably marketed;
(e)the Corporation is in breach of a material term, condition or covenant of this Agreement or any representation or warranty given by the Corporation in this Agreement becomes or is false in any material respect; If any of the Agent terminate this Agreement pursuant to this Section there shall be no further liability on the part of such Agent or of the Corporation to such Agent except in respect of any liability which may have arisen or may thereafter arise under Sections10, 11 or 12 hereof. 14****Breach of Agreement All terms and conditions of this Agreement to be performed or satisfied by the Corporation shall be constituted as conditions and any material breach of, or failure by the Corporation to comply with, any term or condition of this Agreement shall entitle the Agent, acting reasonably, on behalf of the Purchasers of the Offered Securities, to terminate their respective obligations to purchase the Offered Securities by notice to that effect given to the Corporation prior to the Closing Time. In the event of any such termination, there shall be no further liability on the part of the Corporation or the Agent except in respect of any liability which may have arisen or may thereafter arise under Section10, 11 or 12 hereof. The Agent may waive, in whole or in part, or extend the time for compliance with, any terms and conditions without prejudice to its rights in respect of any other terms and conditions or any other or subsequent breach or non-compliance provided, however, that any waiver or extension must be in writing and signed by the Agent in order to be binding upon it. 15****Over-Allotment
In connection with the distribution of the Units, the Agent and members of their selling group (if any) may over-allot or effect transactions which stabilize or maintain the market price of the Common Shares at levels above those which might otherwise prevail in the open market, in compliance with Applicable Securities Laws. Those stabilizing transactions, if any, may be discontinued at any time.
16Notices
Any notice under this Agreement shall be given in writing and either delivered or telecopied to the party to receive such notice at the address or telecopy numbers indicated below:
To the Corporation:
Bright Minds BioSciences Inc.
1500 - 1055 West Georgia Street
Vancouver, BC V6E 4N7
Attention: Ian McDonald, President and Chief Executive Officer
Email: [REDACTED]
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with a copy to:
McMillan LLP
1500 - 1055 W Georgia St
Vancouver, BC V6E 4N7
Attention: Sasa Jarvis
e-mail:[REDACTED]
to the Agent:
Eight Capital
EY Tower
100 Adelaide St. West, Suite 2900
Toronto, Ontario M5H 1S3
Attention:Stephen Delaney
Email:[REDACTED]
with a copy (but not as notice) to:
DLA Piper (Canada) LLP
Suite 6000, 1 First Canadian Place
PO Box 367, 100 King St W
Toronto, Ontario M5X 1E2
Attention: Derek Sigel
Email: [REDACTED]
or to such other address as any of the parties may designate by notice given to the others.
Any notice or other communication required or permitted under this Agreement shall be deemed to have been duly given and made if (a) in writing and served by personal delivery upon the party for whom it is intended; (b) if delivered by email upon the earlier of (i) with receipt confirmed or (ii) one Business Day following sending by email; or (c) if delivered by certified mail, registered mail or courier service, upon the earlier of (i) return receipt received to the party at the address set forth below, to the persons indicated or (ii) one Business Day following sending such certified mail, registered mail or courier service.
17****Relationship between the Corporation and the Agent
In connection with the services described herein, the Agent shall act as independent contractor, and any duties of the Agent arising out of this Agreement shall be owed solely to the Corporation. The Corporation acknowledges that each of the Agent is a securities firm that is engaged in securities trading and brokerage activities, as well as providing investment banking and financial advisory services, which may involve services provided to other companies engaged in businesses similar or competitive to the Business and that the Agent shall have no obligation to disclose such activities and services to the Corporation. The Corporation acknowledges and agrees that in connection with all aspects of the engagement contemplated hereby, and any communications in connection therewith, the Corporation, on the one hand, and the Agent and any of their respective affiliates through which they may be acting, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Agent or such affiliates, and each party hereto agrees that
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no such duty will he deemed to have arisen in connection with any such transactions or communications. The Corporation acknowledges and agrees that it waives, to the fullest extent permitted by law, any claims the Corporation and its affiliates may have against any of the Agent for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Agent shall have no liability (whether direct or indirect) to the Corporation or any of its affiliates in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Corporation, including stockholders, employees or creditors of the Corporation. Information which is held elsewhere within any of the Agent, but of which none of the individuals in the investment banking department or division of any of the Agent involved in providing the services contemplated by this Agreement actually has knowledge (or without breach of internal procedures can properly obtain) will not for any purpose he taken into account in determining any of the responsibilities of the Agent to the Corporation under this Agreement.
18****Survival The obligations of the Corporation set out in Sections10, 11 or 12 shall survive the purchase of the Offered Securities by the Purchasers and shall continue indefinitely in full force and effect unaffected by any subsequent disposition of the Offered Securities, and the Agent shall not be limited or prejudiced by any investigation made by or on behalf of the Agent in the course of the distribution of the Offered Securities. All other representations, warranties, covenants, and agreements of the Corporation contained herein or contained in any document submitted pursuant to this Agreement or in connection with the purchase of the Offered Securities shall survive the purchase of the Offered Securities by the Purchasers and shall continue in full force and effect unaffected by any subsequent disposition of the Offered Securities, for a period of two years from the Closing Date, and the Agent shall not be limited or prejudiced by any investigation made by or on behalf of the Agent in the course of the distribution of the Offered Securities. 19****Entire Agreement
This Agreement constitutes the entire agreement between the parties pertaining to the Offering and the transactions contemplated thereby and supersedes any and all prior negotiations, agreements and understandings between the parties pertaining to the Offering and the transactions contemplated thereby. There are no representations, warranties, covenants, agreements, conditions, indemnities or other provisions, whether oral or written, express or implied, collateral, statutory or otherwise, relating to the Offering or the transactions contemplated thereby except as expressly contained in this Agreement. No reliance is placed on any representation, warranty, opinion, advice or assertion of fact made either prior to, contemporaneous with, or after entering into this Agreement by any party or its directors, officers, employees, partners or agents, to any other party or its directors, officers, employees, partners or agents, except to the extent that the same has been reduced to writing and included as a term of this Agreement, and none of the parties has been induced to enter into this Agreement by reason of any such representation, warranty, opinion, advice or assertion of fact.
20****Further Assurances.
Each of the parties hereto shall do or cause to be done all such acts and things and shall execute or cause to be executed all such documents, agreements and other instruments as may reasonably be necessary or desirable for the purpose of carrying out the provisions and intent of this Agreement.
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21****Severability
If any provision of this Agreement is determined to be void or unenforceable, in whole or in part, such void or unenforceable provision shall not affect or impair the validity of any other provision of this Agreement and shall be severable from this Agreement.
22****Counterparts
This Agreement may be executed in any number of counterparts and by fax or email all of which when taken together shall be deemed to be one and the same document and not withstanding its actual date of execution shall be deemed to be dated as of the date first above written.
23****General
The Agreement shall be governed by and interpreted in accordance with the laws of British Columbia and the federal laws of Canada applicable therein and time shall be of the essence hereof. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the courts of British Columbia with respect to any matter arising hereunder or related thereto.
24****Successors and Assigns
The terms and provisions of this Agreement shall be binding upon and enure to the benefit of the Corporation and the Agent and their respective successors and permitted assigns.
25****Effective Date.
This Agreement is intended to and shall take effect as of the date first set forth above, notwithstanding its actual date of execution or delivery.
[Signature Page Follows.]
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If the above is in accordance with your understanding, please sign and return to the Agent a copy of this letter, whereupon this letter and your acceptance shall constitute a binding agreement between the Corporation and the Agent.
| EIGHT CAPITAL | |
|---|---|
| Per: | /s/ Stephen Delaney |
| Name: Stephen Delaney | |
| Title: Principal, Managing Director,<br><br><br>Co-Head of Investment Banking |
The above offer is hereby accepted and agreed to as of the date first above written.
| BRIGHT MINDS BIOSCIENCES INC. | |
|---|---|
| Per: | /s/ Ian McDonald |
| Name: Ian McDonald | |
| Title: CEO |
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SCHEDULE “A”
U.S. OFFERS AND SALES
Definitions
As used in this Schedule “A”, the following terms shall have the meanings indicated:
| Accredited Investor | means an accredited investor meeting one or more of the criteria in Rule 501(a) of Regulation D; |
|---|---|
| Accredited Investor Letter | means the accredited investor investment letter in the form attached as Exhibit “A” to the U.S. Placement Memorandum. |
| Directed Selling Efforts | means “directed selling efforts” as that term is defined in Regulation S; |
| FINRA | means the Financial Industry Regulatory Authority, Inc.; |
| Foreign Issuer | means a “foreign issuer” as that term is defined in Regulation S; |
| Offshore Transaction | means an “offshore transaction” as that term is defined in Regulation S; |
| Substantial U.S. Market Interest | means “substantial U.S. market interest” as that term is defined in Regulation S; |
| U.S. Exchange Act | means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; |
| U.S. Affiliate | means any U.S. registered broker-dealer affiliate of any Agent; |
All other capitalized terms used herein without definition have the meanings ascribed thereto in the Agency Agreement to which this Schedule “A” is attached (the “Agency Agreement”).
**A.**Representations, Warranties and Covenants of the Agent
The Agent (on their own behalf and on behalf of their U.S. Affiliates) severally, but not jointly or jointly and severally, acknowledge that the Offered Securities have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and may not be offered, sold or delivered, directly or indirectly, to any U.S. Person or any person within the United States, except to Accredited Investors pursuant to an available exemption from the registration requirements of the U.S. Securities Act and similar exemptions under applicable state securities laws. Accordingly, the Agent (on their own behalf and on behalf of their U.S. Affiliates) severally, but not jointly or jointly and severally, represent, warrant and covenant to the Corporation, as of the date hereof and as of the Closing Date, and will cause any U.S. Affiliate to comply with such representations, warranties and covenants, that:
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The Agent (on its own behalf and on behalf of its U.S. Affiliate) severally, but not jointly or jointly and severally, acknowledge that the Offered Securities have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws and may not be offered, sold or delivered, directly or indirectly, to any U.S. Person or any person within the United States, except to Accredited Investors pursuant to an available exemption from the registration requirements of the U.S. Securities Act and similar exemptions under applicable U.S. state securities laws. Accordingly, the Agent (on its own behalf and on behalf of its U.S. Affiliates) severally, but not jointly or jointly and severally, represent, warrant and covenant to the Corporation, as of the date hereof and as of the Closing Date, and will cause any U.S. Affiliate to comply with such representations, warranties and covenants, that:
Except with respect to offers and sales in accordance with this Schedule “A” to Accredited Investors pursuant to an available exemption from registration under the U.S. Securities Act and available exemptions under applicable U.S. state securities laws, it has offered and sold, and will offer and sell, the Offered Securities forming part of its allotment only in an Offshore Transaction in accordance with Rule 903 of Regulation S. Accordingly, none of the Agent, their affiliates or any persons acting on its or their behalf, has made or will make (except as permitted in this Schedule “A”): (i) any offer to sell or any solicitation of an offer to buy, any Offered Securities to any U.S. Person or person in the United States; (ii) any sale of Offered Securities to any purchaser unless, at the time the buy order was or will have been originated, the purchaser was outside the United States, or the Agent, their affiliates or persons acting on its or their behalf reasonably believed that such purchaser was outside the United States and a non-U.S. Person; or (iii) any Directed Selling Efforts in the United States with respect to the Offered Securities.
Any offer, sale or solicitation of an offer to buy Offered Securities that has been made or will be made by it or a U.S. Affiliate in the United States or to, or for the account or benefit of, U.S. Persons or persons in the United States was or will be made only to persons reasonably believed by it and its U.S. Affiliate to be Accredited Investors purchasing Offered Securities for their own accounts.
3.It has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities other than the Agency Agreement.
- All offers and sales of the Offered Securities in the United States to be completed with the assistance of the Agent will be effected through a U.S. Affiliate as agent for the Corporation, and such U.S. Affiliate is, and shall be on the date of each offer and sale of Offered Securities by it, duly registered as a broker-dealer pursuant to Section 15(b) of the U.S. Exchange Act and under the securities laws of each U.S. state in which such offers and sales of Offered Securities were or will be made (unless exempted from the respective state’s broker-dealer registration requirements) and is, and shall be on the date of each offer and sale of Offered Securities by it, a member in good standing with FINRA. All offers and sales of Offered Securities in the United States by it were made and will be made by its U.S. Affiliate in compliance with all applicable United States federal and state broker-dealer requirements and all applicable rules of FINRA.
5.Offers and sales of the Offered Securities by it and its U.S. Affiliate in the United States or to, or for the account or benefit of, a person in the United States or a U.S. Person have not been and will not be made (i) by any form of general solicitation or general advertising as used in Rule 502(c) of Regulation D or (ii) in any manner involving a public offering within the meaning of Section 4(a)(2) of the U.S. Securities Act.
- Immediately prior to soliciting offerees in the United States and at the time of completion of each sale to a purchaser in the United States, it, its U.S. Affiliate and any person acting on its or their behalf had reasonable grounds to believe and did believe that each offeree or purchaser, as
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applicable, was an Accredited Investor purchasing Offered Securities directly from the Corporation.
7.Prior to the completion of any sale of Offered Securities in the United States to an Accredited Investor, each such Accredited Investor will be required to execute and deliver to the Corporation, the Agent and the U.S. Affiliate, the Accredited Investor Letter.
At least one Business Day prior to the time of delivery, it will provide the Corporation and its transfer agent with a list of all purchasers of the Offered Securities in the United States, together with their addresses (including state of residence), the number of Offered Securities purchased and the registration and delivery instructions for the Offered Securities.
At the Closing, each Agent (together with its U.S. Affiliate) that participated in the offer or sale of Offered Securities in the United States will provide the Corporation with a certificate, substantially in the form of Appendix 1 to this Schedule “A”, relating to the manner of the offer and sale of the Offered Securities in the United States, or will be deemed to have represented and warranted for the benefit of the Corporation that neither it nor its U.S. Affiliate offered or sold Offered Securities in the United States.
None of such Agent, its affiliates or any person acting on its or their behalf has taken or will take, directly or indirectly, any action in violation of Regulation M under the U.S. Exchange Act in connection with the offer and sale of the Offered Securities.
11.All purchasers of the Offered Securities in the United States shall be informed that the Offered Securities have not been and will not be registered under the U.S. Securities Act or any U.S. state securities laws, and the Offered Securities are being offered and sold to such purchasers pursuant to an available exemption from the registration requirements of the U.S. Securities Act and similar exemptions under applicable U.S. state securities laws. 12.As of the Closing Date, with respect to Offered Securities offered and sold hereunder in reliance on Rule 506(b) of Regulation D (“Regulation D Securities”), the Agent represents that none of (i) the Agent or its U.S. Affiliate, (ii) the Agent’s or its U.S. Affiliate’s general partners or managing members, (iii) any of the Agent’s or its U.S. Affiliate’s directors, executive officers or other officers participating in the offering of the Regulation D Securities, or (iv) any of the Agent’s or its U.S. Affiliate’s general partners’ or managing members’ directors, executive officers or other officers participating in the offering of the Regulation D Securities (each, a “Dealer Covered Person” and, collectively, the “Dealer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1) under Regulation D (a “Disqualification Event”). **B.**Representations, Warranties and Covenants of the Corporation
The Corporation represents, warrants, covenants and agrees that:
The Corporation is, and as of the Closing Date will be, a Foreign Issuer and reasonably believed at the commencement of the Offering that there was no Substantial U.S. Market Interest with respect to the Offered Securities.
The Corporation is not, and as a result of the sale of the Offered Securities contemplated hereby will not be, registered or required to be registered as an “investment company” under the United States Investment Company Act of 1940, as amended.
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- Except with respect to offers and sales in accordance with this Schedule “A” to Accredited Investors in reliance upon the exemption from registration afforded by Section 4(a)(2) of the U.S. Securities Act and/or Rule 506(b) of Regulation D, none of the Corporation, its affiliates or any person acting on its or their behalf (other than the Agent, their respective affiliates, any members of the selling group or any person acting on their behalf, in respect of which no representation, warranty or covenant is made) has made or will make: (i) any offer to sell, or any solicitation of an offer to buy, any Offered Securities to a U.S. Person or a person in the United States; or (ii) any sale of Offered Securities unless, at the time the buy order was or will have been originated, the purchaser is (x) outside the United States or (y) the Corporation, its affiliates, and any person acting on their behalf reasonably believe that the purchaser is outside the United States and is a not a U.S. Person.
4.During the period in which the Offered Securities are offered for sale, neither it nor any of its affiliates, nor any person acting on its or their behalf (other than the Agent, their respective affiliates, any members of the selling group or any person acting on their behalf, in respect of which no representation, warranty or covenant is made) has engaged in or will engage in any Directed Selling Efforts in the United States with respect to the Offered Securities, or has taken or will take any action in violation of Regulation M under the U.S. Exchange Act with respect to the Offered Securities or that would cause the exemption from registration afforded by Section 4(a)(2) of the U.S. Securities Act and/or Rule 506(b) under Regulation D to be unavailable for offers and sales of Offered Securities in the United States in accordance with this Schedule “A”, or the exclusion from registration afforded by Rule 903 of Regulation S to be unavailable for offers and sales of the Offered Securities outside the United States in accordance with the Agency Agreement and this Schedule “A”.
- The Corporation has not sold, offered for sale or solicited any offer to buy, during the period beginning six months prior to the start of the Offering and will not sell, offer for sale or solicit any offer to buy during the period ending six months after the completion of the Offering, any of its securities in the United States in a manner that would be integrated with the Offering and would cause the exemption from registration relied upon in the Offering to be unavailable with respect to offers and sales of the Offered Securities pursuant to this Schedule “A” or the exclusion from registration provided by Rule 903 of Regulation S to be unavailable for offers and sales of the Offered Securities to persons outside of the United States who are not (a) U.S. Persons or (b) acting for the account or benefit of U.S. Persons or persons in the United States.
6.The Corporation will not take any action that would cause the exemptions or exclusions provided (i) by Section 4(a)(2) of the U.S. Securities Act and/or Rule 506(b) under Regulation D and applicable state securities laws to be unavailable with respect to offers and sales of the Offered Securities by the Agent in accordance with this Schedule “A”, or (ii) by Rule 903 of Regulation S to be unavailable with respect to offers and sales of the Offered Securities by the Corporation pursuant to this Schedule “A”.
- The Corporation will, within the prescribed time periods, prepare and file any forms or notices required under the U.S. Securities Act or any U.S. state securities laws in connection with the sale of the Offered Securities.
8.Neither the Corporation nor any of its predecessors or affiliates has been subject to any order, judgment or decree of any court of competent jurisdiction temporarily, preliminarily or permanently enjoining such person for failure to comply with Rule 503 of Regulation D.
9.None of the Corporation or any of its predecessors or subsidiaries has had the registration of a class of securities under the U.S. Exchange Act revoked by the United States Securities and Exchange
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Commission pursuant to Section 12(j) of the U.S. Exchange Act and any rules and regulations promulgated under the U.S. Exchange Act.
10.As of the Closing Date, with respect to the Regulation D Securities, none of the Corporation, any of its predecessors, any “affiliated” (as such term is defined in Rule 501(b) of Regulation D) issuer of the Corporation, any director or executive officer of the Corporation, any other officer of the Corporation participating in the Offering of the Regulation D Securities, any beneficial owner of 20% or more of the Corporation’s outstanding voting equity securities, calculated on the basis of voting power, or any promoter (as that term is defined in rule 405 under the U.S. Securities Act) connected with the Corporation in any capacity at the time of sale of the Regulation D Securities (each an “Issuer Covered Person” and, collectively, the “Issuer Covered Persons”, other than any Dealer Covered Person, as to whom no representation, warranty, acknowledgement, covenant or agreement is made) is subject to any Disqualification Event. The Corporation has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Corporation is not disqualified from relying on Rule 506 under the U.S. Securities Act for any of the reasons stated in Rule 506(d) in connection with the issuance and sale of the Offered Securities. If applicable, the Corporation has furnished to each purchaser, a reasonable time prior to the date hereof, a description in writing of any matters that would have triggered disqualification under Rule 506(d) but which occurred before September 23, 2013, in each case, in compliance with the disclosure requirements of Rule 506(e). The Corporation has not paid and will not pay, nor is it aware of any other person that has paid or will pay, directly or indirectly, any remuneration to any person (other than the Agent, the U.S. Affiliate and any selling group member) for solicitation of purchasers of the Offered Securities.
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Appendix 1
to Schedule “A”
Agent’s Certificate
In connection with the private placement in the United States of the units (the “Units”) of Bright Minds BioSciences Inc. (the “Corporation”) pursuant to the agency agreement dated as of August 25, 2022 (the “Agency Agreement”) among the Corporation and the agents named therein, the undersigned does hereby certify as follows:
(i) The U.S. Affiliate is on the date hereof, and was at the time of each offer and sale of Units in the United States made by it, (a) a duly registered broker or dealer under the U.S. Exchange Act and all applicable U.S. state securities laws (unless exempted from the respective state’s broker-dealer registration requirements) and (b) a member of and is in good standing with FINRA;
(ii)all offers and sales of the Units in the United States or to, or for the account or benefit of, U.S. Persons or persons in the United States were made only through the U.S. Affiliate as agent for the Corporation in accordance with the terms of the Agency Agreement, including Schedule “A” thereto;
(iii) all purchasers of the Units in the United States or who are, or are purchasing for the account or benefit of, U.S. Persons or who were offered the Units in the United States have been informed that the Units have not been and will not be registered under the U.S. Securities Act and such securities are being offered and sold to such purchasers without registration in reliance on exemptions from the registration requirements of the U.S. Securities Act;
(iv) immediately prior to offering, or soliciting any offers to buy, Units to any person in the United States, or to or for the account or benefit of, any U.S. Person, it had reasonable grounds to believe and did believe that each such offeree and purchaser was an Accredited Investor and, on the date hereof, it continues to believe that each such offeree or purchaser is an Accredited Investor;
(v)prior to any sale of the Units in the United States or to, or for the benefit or account of, a U.S. Person, it caused each purchaser that is an Accredited Investor to execute and deliver to the Corporation an Accredited Investor Letter;
(vi) neither the undersigned nor any of their affiliates have taken or will take any action that would constitute a violation of Regulation M under the U.S. Exchange Act in connection with the offer and sale of the Units; and
(vii)all offers and sales of the Units have been conducted by it in accordance with the terms of the Agency Agreement, including Schedule “A” thereto.
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Terms used in this certificate have the meanings given to them in the Agency Agreement unless otherwise defined herein.
DATED this ___ day of ________________, 2022.
| [AGENT] | [U.S. AFFILIATE] |
|---|---|
| By: | By: |
| _______________________________________ | _______________________________________ |
| Authorized Signing Officer | Authorized Signing Officer |
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