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Small Pharma Completes Reverse Take-Over Transaction

Ryan Allway

May 3rd, 2021

Psychedelics

Small Pharma Inc. (TSXV: DMT) (formerly Unilock Capital Corp.), announces that it has completed its previously announced acquisition of all of the outstanding shares of Small Pharma Ltd (“Small Pharma”), a neuropharmaceutical company specialised in IP led development of novel treatments for mental health conditions (the “Reverse Takeover”). The Reverse Takeover constitutes the Company’s Qualifying Transaction (as defined by Policy 2.4 of the TSX Venture Exchange (the “TSXV”)) and was completed according to the terms of an offer agreement dated March 25, 2021 (the “Offer Agreement”), pursuant to which the Company made an offer to the Small Pharma securityholders to purchase all of the ordinary shares in the capital of Small Pharma (the “Small Pharma Shares”) currently held or to be held prior to the closing of the Reverse Takeover at an exchange ratio as set out in the Offer Agreement.

Unless otherwise indicated, all currency references are to Canadian dollars.

Peter Rands, CEO of the Company, said: “The closing of this reverse takeover is a major step for Small Pharma to becoming a fully listed company on the TSX Venture Exchange. Together with the $58 million raised, Small Pharma is now well positioned to advance its strategy to deliver a portfolio of psychedelic-assisted treatments for people suffering from mental health conditions.”

Prior to the Reverse Takeover taking effect:

  1. the Company: (a) changed its name to “Small Pharma Inc.”; (b) approved a new stock option plan (the “New
    Option Plan”); and (c) consolidated the common shares in the capital of the Company (the “Common Shares”) on the basis of 4.6 old Common Shares into one (1) new Common Share; and
  2. Small Pharma effected a share-split whereby each existing Small Pharma Share was exchanged for 100 Small Pharma Shares.

On March 9, 2021, Small Pharma Financing Inc. (“Finco”), a special purpose financing vehicle incorporated solely for the purposes of completing a brokered private placement, issued 60,416,667 subscription receipts (the “Subscription Receipts”) at a price of $0.96 per Subscription Receipt for aggregate gross proceeds of $58,000,000. Canaccord Genuity Corp. and Eight Capital, as co-lead agents together with Haywood Securities Inc. (collectively, the “Agents”), acted as agents in relation to the brokered private placement. Immediately prior to closing the Reverse Takeover, each Subscription Receipt was converted into one common share in the capital of Finco (each, a “Finco Share”).

In conjunction with the Reverse Takeover, Finco completed a “three-cornered” amalgamation pursuant to the provisions of the Business Corporations Act (British Columbia) (the “Amalgamation”) with the Company and a wholly-owned subsidiary of the Company. Pursuant to the Amalgamation, all Finco Shares were exchanged for Common Shares on a one-for-one basis and Finco and the Company’s subsidiary amalgamated, with the resulting entity (“Amalco”) to become a wholly-owned subsidiary of the Company. Immediately prior to the closing of the Reverse Takeover, the escrow release conditions with respect to the Subscription Receipts were satisfied and the net proceeds from the sale of the Subscription Receipts, as detailed in the Company’s March 10, 2021 press release available on the Company’s SEDAR profile at www.sedar.com, were released from escrow.   It is anticipated that Amalco will be wound-up and dissolved, pursuant to which all of the assets of Amalco will then be distributed to the Company.

Among other matters, the New Option Plan was unanimously approved at the special meeting of the shareholders of the Company held on March 29, 2021 (the “ASM”).

The Common Shares are expected to commence trading on the TSXV under the symbol “DMT”, on or about May 6, 2021, upon satisfaction of standard TSXV conditions to listing. A further press release will be issued in advance of the commencement of trading.

In connection with the Reverse Takeover, the Company issued a total of 315,496,144 Common Shares, including 255,079,477 in exchange for Small Pharma Shares and 60,416,667 in exchange for Finco Shares. Upon completion of the Reverse Takeover, the Company has a total of 316,800,488 Common Shares issued and outstanding as well as compensation warrants exercisable for up to 3,947,547 Common Shares at a price of $0.96 per share and options to purchase up to 18,731,835 Common Shares.

Following the Reverse Takeover, the leadership team of the Company is as follows:

  • Peter Rands — Chief Executive Officer and Director
  • David Steel — Chief Financial Officer
  • Marie Layzell — Chief Operating Officer and Director
  • Carol Routledge — Chief Medical and Scientific Officer
  • George Tziras — Chief Business Officer and Director
  • Lyne Fortin — Director
  • Michael Wolfe — Director
  • Richard Kimel — Corporate Secretary

Each of the directors other than Lyne Fortin and Michael Wolfe were elected to the board of the Company at the ASM, subject to completion of the Reverse Takeover. Upon closing of the Reverse Takeover, the board filled a vacancy and increased its size by one and appointed each of Lyne Fortin and Michael Wolfe as directors, pursuant to its authority under the Business Corporations Act (British Columbia).

As described in the Company’s filing statement dated April 23, 2021 available under the Company’s profile on SEDAR at www.sedar.com (the “Filing Statement”), certain of the Common Shares are subject to escrow requirements or seed share resale restrictions in accordance with TSXV Policy 5.4 – Escrow, Vendor Considerations and Resale Restrictions. Additional information related to the Company’s business and the Reverse Takeover (including the members of the management team and board of directors listed above) is available in the Filing Statement.

Aird & Berlis LLP acted as Canadian legal counsel to Small Pharma with Memery Crystal LLP acting as UK legal counsel to Small Pharma. Borden Ladner Gervais LLP acted as legal counsel to the Agents, Harper Grey LLP acted as legal counsel to the Company and Farris LLP acted as legal counsel to Finco.

Early Warning

As a result of the Reverse Takeover, Peter Rands has beneficial ownership of, or control or direction over, an aggregate of 91,117,974 Common Shares representing approximately 28.76% of the issued and outstanding Common Shares on a non-diluted basis, and representing approximately 26.84% of the issued and outstanding Common Shares on a fully-diluted basis.

The Common Shares were acquired for investment purposes and Mr. Rands has no current intention to acquire control or direction over additional securities of the Company as of the date of this news release, either alone or together with any joint actors. A copy of the early warning report providing further details of Mr. Rands’ holdings will be available on the Company’s SEDAR profile at www.sedar.com. A copy of this report can be obtained by contacting Peter Rands, Chief Executive Officer, at +44 (0)2071 129118.

About Small Pharma Inc.

The Company is a neuropharmaceutical company specialised in IP led development of novel treatments for mental health conditions, in particular depression. The Company initiated a clinical program into N,N-dimethyltryptamine (“DMT”) assisted therapy in February 2021. This program includes a Phase I/IIa trial on their lead candidate alongside development of a robust pipeline of proprietary preclinical assets.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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