BUZBUZ CAPITAL AND INOLIFE ANNOUNCE PROPOSED QUALIFYING TRANSACTION

Buzbuz Capital Corp. and Inolife R&D Inc. have entered into a non-binding letter of intent to complete a business combination. The letter of intent was negotiated at arm’s length and is effective as of Aug. 6, 2020.

Information concerning Buzbuz

Buzbuz is a company existing under the laws of Ontario, a reporting issuer in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, and a capital pool company listed on the TSX Venture Exchange. Buzbuz has not commenced commercial operations and has no assets other than cash. If completed, the transaction will constitute Buzbuz’s qualifying transaction pursuant to the policies of the exchange.

Buzbuz currently has 9.5 million common shares issued and outstanding, of which 6.3 million Buzbuz shares are currently held in escrow pursuant to the policies of the exchange. In addition, Buzbuz has granted stock options to acquire up to an aggregate of 900,000 Buzbuz shares at a price of 10 cents per share to directors and officers, and broker warrants to acquire an aggregate of 250,000 Buzbuz shares at a price of 10 cents per share to a certain investment dealer. Other than these Buzbuz shares, Buzbuz options and Buzbuz warrants, no other securities of Buzbuz are outstanding.

Further information concerning Buzbuz can be found in the prospectus of Buzbuz dated April 30, 2019, which is available under Buzbuz’s profile on SEDAR.

Information concerning Inolife

Inolife is a private company with its head office and principal place of business located in Toronto, Ont., and existing under the laws of Canada, which was incorporated in September, 2017. Inolife is an emerging specialty medical device company focused on developing and commercializing novel drug delivery technologies. Inolife commercializes needle-free injection systems that have regulatory approvals to be sold in over 40 countries globally. The company was founded to take advantage of novel techniques of liquid jet and ballistics-based epidermal drug injection that improve patients’ quality of life by making medicines easier to administer, work better, and remove the anxiety and inconvenience associated with hypodermic needle injections.

The significant shareholders of Inolife are Care4Pharma BV, a company incorporated pursuant to the laws of the Netherlands (12.09 per cent), Dr. John Leombruno (9.6 per cent) of Toronto, Ont., and Michael Wright (9.4 per cent), of Montreal, Que. Upon conclusion of the transaction, a board of directors of five individuals is to be established and further details will be announced. At this time, the following three individuals will be insiders:

  • Care4Pharma — a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, having its registered office at De Weegschaal 14, 5215 MN’s-Hertogenbosch, the Netherlands.
  • Dr. Leombruno — graduate of the University of Toronto pharmacy program and practised several years as both a hospital and retail pharmacist. Dr. Leombruno then moved into the pharmaceutical industry and held various roles of increasing responsibility, culminating in the position of vice-president, medical affairs. In 2007, Dr. Leombruno co-founded one of the first specialty pharmacies in Canada. The specialty pharmacy business grew to include a patient support program division and a pharmaceutical importing and distribution business, and was acquired by a multinational corporation. Dr. Leombruno has an excellent understanding of the regulations, marketing, distribution and sales of pharmaceuticals and medical devices.
  • Mr. Wright — entrepreneur with over 20 years of experience as an executive. Educated at Concordia University in Montreal, along with certificate in launching new ventures in the progressive executive MBA program at Harvard University, contributes to Mr. Wright’s managerial and intellectual force. With over 25 years of experience in the financial industry, he has served many commercial industry leaders, both private and publicly listed companies, as well as traditional financial and institutional lenders. Awarded the Queen Elizabeth II Diamond Jubilee Medal for his commitment to philanthropic activities demonstrate the passion and social responsibility he conveys has strongly contributed to the explosive growth of The Children’s Wish Foundation of Canada where he has served as a volunteer for over 20 years and seven years as president and chairman of the board of directors.

As at the most recent year-end of Dec. 31, 2019, on an unaudited basis, Inolife had total assets of $466,789 (Q1 2020 — $618,080), total liabilities of $817,292 (Q1 2020 — $1,016,715) and total shareholder deficit of $350,503 (Q1 2020 — ($398,635)). For the 12-month period ended Dec. 31, 2019, Inolife had, on an unaudited basis, total revenue of nil (Q1 2020 — nil) and a total loss of $1,608,930 (Q1 2020 — ($298,132)).

Information concerning the proposed transaction

Buzbuz and Inolife have entered into the letter of intent setting out certain terms and conditions pursuant to which the proposed transaction will be completed. The transaction terms set out in the letter of intent are non-binding, and the transaction is subject to the parties successfully negotiating and entering into a definitive business combination agreement in respect of the transaction on or before Sept. 30, 2020, or such other date as Buzbuz and Inolife may agree.

It is anticipated that the completion of the transaction will involve the following steps:

  1. Buzbuz will complete a consolidation of its common shares on a one-for-two basis and Inolife will complete a consolidation of its common shares on a one-for-three basis.
  2. Buzbuz will issue post-Buzbuz consolidation common shares to the holders of post-Inolife consolidation common shares in exchange for the Inolife shares on the basis of one Buzbuz share for each Inolife share held, resulting in the issuance of a maximum 77 million Buzbuz shares to Inolife’s current shareholders (including Buzbuz shares to be issued or issuable to: (a) settle certain debts outstanding, (b) Inolife debenture holders following the potential conversion of such debentures into Inolife shares and (c) convertible securities of Inolife, but does not include Buzbuz shares issuable to investors in the Inolife financing (as defined herein)).
  3. Subject to shareholder approval, Buzbuz will change its name to Inolife Corp. or such other similar name as the parties may agree to.

It is expected that the share exchange will be structured as a three-cornered amalgamation in which Inolife will amalgamate with a newly incorporated, wholly owned subsidiary of Buzbuz to be formed solely for the purpose of facilitating the transaction. Following the amalgamation, the amalgamated company will be a wholly owned subsidiary of Buzbuz. The final legal structure for the transaction, however, will be determined after the parties have considered all applicable tax, securities law and accounting efficiencies.

As a result of the amalgamation, the current holders of Inolife shares (not including future shareholders as a result of the Inolife financing referred to herein) will hold approximately 94 per cent of the resulting issuer and the current holders of the Buzbuz shares will hold approximately 6 per cent of the resulting issuer.

The transaction will not constitute a non-arm’s-length transaction (as such term is defined in the policies of the exchange). No insider, promoter or control person (as such terms are defined in the policies of the exchange) of Buzbuz has any interest in Inolife prior to giving effect to the transaction.

The Buzbuz securities issuable under the transaction will be subject to the escrow requirements of the exchange and hold periods as required by applicable securities laws.

The transaction is not subject to approval by the shareholders of Buzbuz. However, at a meeting of the shareholders of Buzbuz to be called in connection with the transaction, the shareholders of Buzbuz will be asked to: (i) approve the change of name to Inolife Corp. or such other similar name as the parties may agree to on closing of the transaction, (ii) approve the Buzbuz consolidation and (ii) approve the appointment of new directors of Buzbuz. The transaction is subject to approval by the shareholders of Inolife, which will be sought at a meeting of the shareholders of Inolife to be held as soon as practicable.

In connection with the transaction, Inolife has agreed to pay a 1-per-cent introductory fee to each of Canaccord Genuity Corp. and Christopher James Brown in connection with certain services provided to Inolife in connection with the transaction, such fee based on the premoney valuation of Inolife prior to signing the letter of intent.

Financings

Prior to the completion of the transaction, Inolife intends to complete a private placement financing to raise up to $4.4-million through the issuance of subscription receipts at a price of 40 cents per subscription receipt, convertible into up to 11 million Inolife shares per subscription receipt for no additional consideration and exchangeable into Buzbuz shares subject to the satisfaction of certain release conditions at the exchange ratio. Further details of the Inolife financing will be provided in a subsequent press release once available.

Under the transaction, the Inolife security holders resulting from the Inolife financing will receive Buzbuz shares or securities convertible into Buzbuz shares in exchange for their Inolife securities, as applicable, on the basis of the exchange ratio.

Loan

Buzbuz has agreed to make a loan of up to $225,000 to Inolife prior to completion of the transaction upon approval of the TSX-V. In connection with the loan, Inolife has agreed to grant a security interest in all of its assets and undertaking to Buzbuz as evidenced by a general security agreement, a share pledge of the shares of any material subsidiary and a conditional assignment of Inolife’s intellectual property, including its patents. Inolife intends to use the proceeds from the loan for continuing operational costs, additional staffing, marketing and inventory. Further details of the loan will be provided when available in a subsequent press release.

Conditions to transaction

The completion of the transaction is subject to the approval of the exchange and all other necessary regulatory approvals. It is also subject to additional conditions precedent, including:

  • Execution of the definitive agreement on or before Sept. 30, 2020, or such other date as Buzbuz and Inolife may agree;
  • Satisfactory completion of due diligence reviews by both parties;
  • Approvals of the boards of directors of Buzbuz and Inolife;
  • Completion of the Inolife financing;
  • Completion of the Buzbuz consolidation and Inolife consolidation;
  • Preparation and filing of a filing statement outlining the definitive terms of the transaction in accordance with the policies of the exchange;
  • Receipt of all director, shareholder and requisite regulatory approvals relating to the transaction, including, without limitation, the approval of the exchange;
  • Any person who will be a postclosing shareholder of Buzbuz, which is required by the exchange to sign an escrow agreement in accordance with the policies of the exchange, shall have signed and delivered such agreement;
  • Each of Buzbuz and Inolife shall have executed, delivered and performed all covenants on its part to be performed under the definitive agreement, and all representations and warranties of each party contained in the definitive agreement shall be true and correct at the time of closing.
Sponsor

The proposed transaction is subject to the sponsorship requirements of the exchange. The parties intend to apply for a waiver from the sponsorship requirements of the exchange. In the event that the waiver is not granted, a sponsor will be identified at a later date and will be announced in a subsequent press release of Buzbuz. An agreement to sponsor should not be construed as an assurance with respect to the merits of the transaction or the likelihood of completion of the proposed transaction.

Filing statement and caution

Further details about the transaction and the resulting issuer will be provided in the filing statement of Buzbuz to be prepared and filed in respect of the transaction. Investors are cautioned that, except as disclosed in the filing statement, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

Trading in the Buzbuz shares

Trading in the Buzbuz shares will be halted as a result of this announcement. Trading in the Buzbuz shares will remain halted pending the review of the proposed transaction by the exchange. There can be no assurance that trading in the Buzbuz shares will resume prior to the completion of the transaction.

We seek Safe Harbor.

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Chris Brown

Global Capital Markets