Home / Mining Company News Releases (Unreviewed) / Agau Resources Announces Letter of Intent for Reverse Takeover Transaction with Gen X Biosciences Corp.

Agau Resources Announces Letter of Intent for Reverse Takeover Transaction with Gen X Biosciences Corp.

Toronto, Ontario–(Newsfile Corp. – March 22, 2019) – Agau Resources, Inc. (“Agau” or the “Company“) is pleased to announce that it has entered into a letter of intent (the “LOI“) dated March 18, 2019 with Gen X BioSciences Corp. (“Gen X“), a leading cannabis extraction company, whereby the parties will complete a business combination by way of a transaction that will constitute a reverse takeover of the Company by Gen X (the “Transaction“). In connection with the Transaction, the Resulting Issuer (as defined below) will apply to list the common shares of the Resulting Issuer on the Canadian Securities Exchange (the “CSE“). In advance of the Transaction, Agau will also complete an offering of convertible debentures for minimum gross proceeds of $1,500,000 (the “Debenture Offering“). The debentures may be converted following the Consolidation (as defined below), into post-Consolidation shares of the Company at a price of $0.25 per share. On closing, each investor will also receive warrants exercisable for that number of post-Consolidation shares that is equal to the number of post-Consolidation shares issuable upon conversion of the debentures, with each such warrant exercisable at a price of $0.35 per post-Consolidation share of the Company. The conversion of the debentures can be forced by the Company, at any time after the expiry of any applicable statutory hold period, if the daily weighted average closing price of the shares is $0.50 or greater for 20 consecutive trading days following completion of the Transaction.

The resulting issuer that will exist upon completion of the Transaction (the “Resulting Issuer“) will change its business to the cannabis industry and is expected to change its name to “Gen X Biosciences Corp.” The final structure of the Transaction will be determined by the parties following receipt of tax, corporate and securities law advice.

In connection with the Transaction, Gen X intends to complete a private placement of subscription receipts (the “Subscription Receipts“) to raise aggregate gross proceeds of a minimum of $1,500,000 (the “Offering“). The shareholders of Gen X will receive 122,048,000 common shares of the Resulting Issuer pursuant to the Transaction. Certain finders fees will also be payable on closing.

Co-Founder, Chief Executive Officer, and Chief Scientific Officer of Gen X Biosciences, Shea Alderete, has commented “This transaction with Agau Resources will allow Gen X to not only build its infrastructure but also allow us to have future expansion into market places that we have actively been engaging in. Our team has decades of knowledge and resource in the cannabis industry, and now with the combination of this financial support Gen X will be unstoppable.”

Gen X and its Business

Gen X Biosciences is a cannatech firm focused on using innovative technology and scalable extraction methodologies to deliver premium cannabis products, specifically best-in-class distillate to the world.

Gen X was built on its scientific approach to extracting cannabis products and uses its proprietary ‘Molecular Perfection’ system to distil cannabis oil several times until the final product has THC potency of over 90%. The scalability of Gen X’s technology allows it to sustain adaptable production capacity. Gen X leverages a team with extensive experience in cannabis. Shea Alderete, the Chief Executive Officer, Chief Scientific Officer, and Co-Founder of Gen X, has over 15 years of experience in creating high-quality products, and learned his trade with some of the first premium cannabis brands such as Moxie – the first company in California to receive a temporary license in the now-legal cannabis market. Shea has won several awards for the quality of his products, including the Chalice Cup of California and the Karma Cup of Canada.

GenX’s mission is to create premium cannabis products where consistency, price, accountability and consumer experience are paramount for every patient/consumer purchasing a GenX product. GenX produces the cleanest form of distillate on the market all without solvents and pesticides.

Since GenX’s inception in 2016, the Company has developed key cultivation and manufacturing relationships that allows for scale and expansion of its business model. The black and grey markets are the Company’s number-one competitor as it allows for entities which are not fully legal to operate within the space. As regulations in mature markets like California tighten in 2019, GenX’s deep structure and compliance background will allow the Company to thrive in the “Green Market” and competitively gain market share by transitioning patients/consumers from the black and grey markets to the legal cannabis market.

Agau Shareholder Meeting

Prior to, and as a condition of, the closing of the Transaction (the “Closing“), Agau will call a meeting of its shareholders (the “Agau Meeting“) for the purpose of approving, among other matters:

  • a change of name of the Company to “Gen X Biosciences Corp.” or such other name as is directed by Gen X and acceptable to applicable regulatory authorities effective upon Closing;
  • the approval of a new stock option plan to be effective upon Closing;
  • the election of a new slate of nominee directors appointed by Gen X to form the new board of directors, which slate will be effective upon Closing;
  • the appointment of a new auditor; and
  • if required by governing regulatory bodies and applicable securities and corporate laws, the approval of the Transaction.

The Transaction is an arm’s length transaction. Agau will prepare and file a CSE Form 2A listing statement or other principal disclosure document (the “Listing Statement“) with the CSE providing comprehensive disclosure on Gen X and the Transaction in connection with the proposed CSE listing.

Management of the Resulting Issuer

Upon closing of the Transaction, all of Agau’s current directors and executive officers will resign and be replaced by nominees of Gen X approved at the Agau Meeting, all in a manner that complies with the requirements of governing regulatory bodies and applicable securities and corporate laws.

Details of insiders and proposed directors and officers of the Resulting Issuer will be disclosed in a further news release.

Closing Conditions

The completion of the Transaction is subject to a number of conditions, including but not limited to the following:

  • the execution of a definitive agreement;
  • completion of satisfactory due diligence;
  • completion by Agau of a consolidation of its shares on a 40 to 1 basis (the “Consolidation“);
  • completion of the Offering;
  • the conditional approval to the listing of the shares of the Resulting Issuer on the CSE; and
  • receipt of all required regulatory, corporate and third party approvals, including approvals by the CSE, applicable governmental authorities, and the fulfilment of all applicable regulatory requirements and conditions necessary to complete the Transaction.

MI 61-101 Disclosure

KW Capital Partners Ltd., an anticipated participant in the Debenture Offering, is considered a “related party” within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”) and the Debenture Offering is therefore considered to be a “related party transaction” within the meaning of MI 61-101. The Debenture Offering, however, is exempt from the valuation requirement of MI 61-101 by virtue of the exemption contained in section 5.5(b) as the Company’s shares are not listed on a specified market. The Debenture Offering is also exempt from the minority shareholder approval requirements of MI 61-101 by virtue of the exemption contained in section 5.7(e) of MI 61-101, in that (i) the Company is insolvent and in serious financial difficulty, (ii) the Debenture Offering is designed to improve the financial position of the Company, (iii) section 5.5(f) of MI 61-101 does not apply, (iv) the Company has one or more independent directors in respect of the Debenture Offering, (v) the Company’s board of directors, acting in good faith, has determined, and the Company’s independent director, acting in good faith, determined that (A) items (i) and (ii) in this paragraph apply, and (B) the terms of the Debenture Offering are reasonable in the circumstances of the Company, and (vi) there is no other requirement, corporate or otherwise, to hold a meeting to obtain any approval of the holders of any class of affected securities.

The material change report with respect to the Debenture Offering will be filed less than 21 days before the expected date of closing of the Debenture Offering. In the view of the Company, such shorter period is reasonable and necessary to improve the Company’s financial position in a timely manner in the circumstances. Further, KW Capital Partners Ltd. has indicated a desire to fund on an expedited basis.

Further Information

Further details about the Transaction and the Resulting Issuer will be provided in a comprehensive news release when the parties enter into the definitive agreement.

Investors are cautioned that any information released or received with respect to the Transaction in this press release may not be complete and should not be relied upon. Trading in the common shares of the Company should be considered highly speculative.

The securities to be issued in connection with the Transaction 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 U.S. Persons (as defined in Regulation S promulgated under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Completion of the Transaction is subject to a number of conditions, including but not limited to, CSE acceptance, requisite shareholder approvals, and if applicable, disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or Listing Statement, as applicable, of the Company to be prepared in connection with the Transaction, 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 Agau should be considered highly speculative.

Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

About Agau Resources, Inc.

Agau Resources, Inc. is a mineral exploration company with no current activities or operations.

Cautionary Statements Regarding Forward-Looking Information

This news release contains “forward-looking information” within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions. Any such forward-looking statements may be identified by words such as “expects”, “anticipates”, “believes”, “projects”, “plans” and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Statements about, among other things, the expected timing and terms of the Transaction, the Debenture Offering, and the Offering, the number of securities of Agau or the Resulting Issuer that may be issued in connection with the Transaction, the ownership ratio of the Resulting Issuer post-closing, the required shareholder approvals or the ability to obtain such approvals, Gen X’s strategic plans and the parties’ ability to satisfy closing conditions and receive necessary approvals are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management’s reasonable assumptions, there can be no assurance that the Transaction will occur or that, if the Transaction does occur, it will be completed on the terms described above. Agau and Gen X assume no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by applicable law.

For more information, please contact:

Agau Resources, Inc. 

Binyomin Posen CEO and Director
Telephone: (416) 481.2222 x 246
Email: [email protected] 

Gen X BioSciences Corp.

Shea Alderet, CEO and Director

Telephone: (250) 487.8229


To view the source version of this press release, please visit https://www.newsfilecorp.com/release/43629


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