UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 40-F

 

 

 

Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934

or

Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended                     

Commission File Number                     

 

 

Cybin Inc.

(Exact name of Registrant as specified in its charter)

 

 

 

Ontario   2834   N/A

(Province or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

100 King Street West, Suite 5600

Toronto, Ontario, Canada M5X 1C9

(908) 764-8385

(Address and telephone number of Registrant’s principal executive offices)

 

 

CT Corporation System

1015 15th Street N.W., Suite 1000

Washington, DC 20005

(202) 572-3133

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

 

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Shares, no par value   CYBN   NYSE American LLC

Securities registered pursuant to Section 12(g) of the Act: None.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this Form:

 

Annual information form   Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: N/A

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    ☐   Yes    ☒   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     ☐   Yes     ☐  No

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.   ☐

 

 

 


EXPLANATORY NOTE

Cybin Inc. (the “Company”, the “Registrant”) is a Canadian issuer eligible to file its registration statement pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form 40-F pursuant to the multi-jurisdictional disclosure system of the Exchange Act. The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3.

FORWARD LOOKING STATEMENTS

The Exhibits incorporated by reference into this Registration Statement of the Registrant may contain “forward-looking information” or “forward-looking statements” within the meaning of applicable securities laws (collectively referred to herein as “forward-looking statements”). All statements other than statements of historical fact, including, without limitation, those regarding the future financial position and results of operations, strategy, plans, objectives, goals, targets and future developments of the Registrant in the markets where the Registrant participates or is seeking to participate, and any statements preceded by, followed by or that include the words “considers”, “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative of these terms or comparable terminology, are forward-looking statements. These statements reflect management’s beliefs with respect to future events and are based on information available to management as of the respective dates set forth in the Exhibits incorporated by reference into this Registration Statement, including reasonable assumptions, estimates, internal and external analysis and opinions of management considering its experience, perception of trends, current conditions and expected developments as well as other factors that management believed to be relevant as at the date such statements were made. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated or implied in such forward-looking statements, including, without limitation, those described in the Registrant’s Annual Information Form for the year ended March 31, 2021, attached hereto as Exhibit 99.99.

The Registrant and management caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Although the Registrant believes that the expectations reflected in the forward-looking statements were reasonable as of the time such forward-looking statements were made, it can give no assurance that such expectations will prove to have been correct. The Registrant and management assume no obligation to update or revise them to reflect new events or circumstances except as required by applicable securities laws.

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Registrant prepares its consolidated financial statements, which are filed with this report on Form 40-F in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and the audit is subject to Canadian auditing and auditor independence standards.

PRINCIPAL DOCUMENTS

In accordance with General Instruction B.(1) of Form 40-F, the Registrant hereby incorporates by reference Exhibits 99.1 through 99.106 inclusive, as set forth in the Exhibit Index attached hereto.

In accordance with General Instruction D.(9) of Form 40-F, the Registrant has filed the written consent of certain experts named in the foregoing Exhibits as Exhibits 99.109 through 99.110 as set forth in the Exhibit Index attached hereto.

TAX MATTERS

Purchasing, holding, or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this Registration Statement on Form 40-F.

DESCRIPTION OF COMMON SHARES

The required disclosure is included under the heading “Description of Capital Structure” in the Registrant’s Annual Information Form for the year ended March 31, 2021, attached hereto as Exhibit 99.99.

OFF-BALANCE SHEET ARRANGEMENTS

The Registrant has no off-balance sheet arrangements.


CURRENCY

Unless otherwise indicated, all dollar amounts in this Registration Statement on Form 40-F are in Canadian dollars. The exchange rate of Canadian dollars into United States dollars, on March 31, 2021, based upon the daily exchange rate as quoted by the Bank of Canada was U.S.$1.00 = Cdn.$1.2575.

CONTRACTUAL OBLIGATIONS

The following table lists, as of March 31, 2021, information with respect to the Registrant’s known contractual obligations (in thousands):

 

     Payments due by period  

Contractual Obligations

   Total      Less than
1 year
    1-3 years     3-5 years      More than
5 years
 

Feasibility Studies

   $  178,000      $  178,000 1      —        
—  
 
    
—  
 

Pre-Clinical Studies

   $ 6,461,000       
—  
 
  $ 6,461,000 2     
—  
 
    
—  
 
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $  6,639,000      $  178,000     $ 6,461,000      
—  
 
    
—  
 
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

(1) 

On July 3, 2020, Cybin Corp. entered into a feasibility agreement (the “IntelGenx Agreement”) with IntelGenx Corp. (“IntelGenx”). IntelGenx is a Toronto Stock Exchange listed drug delivery company that owns patented and trade secret proprietary technology related to film-based drug delivery systems, including orally soluble film strips containing active pharmaceutical ingredients. The Company is committed to fund an additional $178,000 for research and development, of which $60,000 was paid by March 31, 2021.

(2) 

As at March 31, 2021, the Company had also entered into agreements for preclinical studies which may require the Company to spend up to $6,461. The Company expects to pay this amount within the next 18 months, however the timing and certainty of the payments are contingent on availability of materials and successful completion of certain milestones.

UNDERTAKING

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form 40-F or transactions in said securities.

CONSENT TO SERVICE OF PROCESS

The Registrant has concurrently filed a Form F-X in connection with the class of securities to which this Registration Statement relates.

Any change to the name or address of the Registrant’s agent for service shall be communicated promptly to the Commission by amendment to the Form F-X referencing the file number of the Registrant.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

      Cybin Inc.
    By:  

/s/ Greg Cavers

      Name: Greg Cavers
Date: July 26, 2021       Title: Chief Financial Officer


EXHIBIT INDEX

The following documents are being filed with the Commission as Exhibits to this Registration Statement:

 

Exhibit   

Description

99.1    Management’s Discussion and Analysis of Clarmin Explorations Inc. for the three months ended April 30, 2020
99.2    Condensed Interim Financial Statements of Clarmin Explorations Inc. for the three and nine months ended April 30, 2020 and 2019 (Unaudited)
99.3    Certification of Interim Filings Venture Issuer Basic Certificate of Clarmin Explorations Inc. in connection with filing of interim financial statements and interim MD&A by CFO dated June  25, 2020
99.4    Certification of Interim Filings Venture Issuer Basic Certificate of Clarmin Explorations Inc. in connection with filing of interim financial statements and interim MD&A by CEO dated June  25, 2020
99.5    News Release dated June 29, 2020
99.6    Voting Instruction Form of Clarmin Explorations Inc. for Annual and Special Meeting to be held on August 13, 2020
99.7    Form of Proxy of Clarmin Explorations Inc. for Annual and Special Meeting to be held on August 13, 2020
99.8    Clarmin Explorations Inc. Notice of Annual and Special Meeting of Shareholders and Management Information Circular to be held on August 13, 2020
99.9    Certificate regarding meeting of the shareholders of Clarmin Explorations Inc. to be held on August 13, 2020
99.10    Amalgamation Agreement dated June 26, 2020
99.11    Agency Agreement dated October 19, 2020
99.12    Material Change Report dated October 29, 2020
99.13    News Release dated October 19, 2020
99.14    Management’s Discussion and Analysis of Clarmin Explorations Inc. for the year ended July 31, 2020
99.15    Consolidated Financial Statements of Clarmin Explorations Inc. for the years ended July 31, 2020 and 2019 (Audited)
99.16    Certification of Annual Filings Venture Issuer Basic Certificate of Clarmin Explorations Inc. in connection with filing of annual financial statements and annual MD&A by CFO dated November  4, 2020
99.17    Certification of Annual Filings Venture Issuer Basic Certificate of Clarmin Explorations Inc. in connection with filing of annual financial statements and annual MD&A by CEO dated November  4, 2020
99.18    News Release dated November 5, 2020
99.19    Articles of Continuance of Cybin Inc. dated November 4, 2020
99.20    By-law No. 1 of Cybin Inc. dated November 5, 2020
99.21    Equity Incentive Plan of Cybin Inc. dated November 5, 2020
99.22    Escrow Agreement dated November 5, 2020
99.23    Listing Statement of Cybin Inc. dated November 9, 2020
99.24    Feasibility Study Agreement dated July 3, 2020


Exhibit   

Description

99.25    Memorandum of Understanding dated July 16, 2020
99.26    Material Change Report dated November 11, 2020
99.27    Notice of Change in Corporate Structure dated November 11, 2020
99.28    Notice of Change of Status dated November 11, 2020
99.29    Cybin Corp. Condensed Interim Consolidated Financial Statements for the three and six months ended September 30, 2020 (Unaudited)
99.30    Material Change Report dated December 8, 2020
99.31    News Release dated December 7, 2020
99.32    News Release dated December 14, 2020
99.33    Notice Declaring Intention to be Qualified Under National Instrument 44-101 Short Form Prospectus Distributions dated December 14, 2020
99.34    Contribution Agreement dated December 4, 2020
99.35    Support Agreement dated December 14, 2020
99.36    Material Change Report dated December 22, 2020
99.37    Management’s Discussion and Analysis of Cybin Inc. for the three months ended October 31, 2020
99.38    Condensed Interim Consolidated Financial Statements of Cybin Inc. for the three months ended October 31, 2020 and 2019 (Unaudited)
99.39    Certification of Interim Filings Venture Issuer Basic Certificate of Cybin Inc. in connection with filing of interim financial statements and interim MD&A by CFO dated December 29, 2020
99.40    Certification of Interim Filings Venture Issuer Basic Certificate of Cybin Inc. in connection with filing of interim financial statements and interim MD&A by CEO dated December 29, 2020
99.41    News Release dated December 29, 2020
99.42    News Release dated January 6, 2021
99.43    News Release dated January 11, 2021
99.44    News Release dated January 11, 2021
99.45    News Release dated January 18, 2021
99.46    News Release dated January 19, 2021
99.47    Material Change Report dated January 19, 2021
99.48    Cybin Corp. Management’s Discussion and Analysis of Financial Condition and Operating Performance for the three and six months ended September 30, 2020
99.49    Business Acquisition Report dated January 22, 2021
99.50    Annual Information Form of Cybin Inc. for the year ended March 31, 2020
99.51    Certification of Annual Filings in Connection with Voluntarily Filed AIF of Cybin Inc. by CFO dated January 22, 2021
99.52    Certification of Annual Filings in Connection with Voluntarily Filed AIF of Cybin Inc. by CEO dated January 22, 2021
99.53    Underwriting Agreement dated January 22, 2021
99.54    News Release dated January 27, 2021


Exhibit   

Description

99.55    News Release dated February 4, 2021
99.56    Warrant Indenture dated February 4, 2021
99.57    News Release dated February 11, 2021
99.58    Management’s Discussion and Analysis of Cybin Inc. for the three and nine months ended December 31, 2020
99.59    Interim Condensed Consolidated Financial Statements of Cybin Inc. for the three months ended December 31, 2020 (Unaudited)
99.60    Certification of Interim Filings Following an Initial Public Offering, Reverse Takeover or becoming a Non-Venture Issuer of Cybin Inc. in connection with filing of interim financial statements and interim MD&A by CFO dated February 16, 2021
99.61    Certification of Interim Filings Following an Initial Public Offering, Reverse Takeover or becoming a Non-Venture Issuer of Cybin Inc. in connection with filing of interim financial statements and interim MD&A by CEO dated February 16, 2021
99.62    News Release dated February 16, 2021
99.63    News Release dated March 3, 2021
99.64    News Release dated March 8, 2021
99.65    News Release dated March 9, 2021
99.66    News Release dated March 10, 2021
99.67    News Release dated March 15, 2021
99.68    News Release dated March 16, 2021
99.69    News Release dated March 17, 2021
99.70    News Release dated March 22, 2021
99.71    News Release dated March 30, 2021
99.72    Notice of Meeting and Record Date to be held on May 21, 2021
99.73    News Release dated April 13, 2021
99.74    News Release dated April 19, 2021
99.75    News Release dated April 19, 2021
99.76    News Release dated April 21, 2021
99.77    News Release dated April 26, 2021
99.78    Cybin Inc. Notice of Special Meeting of Shareholders to be held on May 21, 2021
99.79    Cybin Inc. Notice of Special Meeting of Shareholders and Management Information Circular to be held on May 21, 2021
99.80    Form of Proxy of Cybin Inc. for Special Meeting to be held on May 21, 2021
99.81    News Release dated May 6, 2021
99.82    News Release dated May 18, 2021
99.83    News Release dated May 20, 2021
99.84    Report of Voting Results
99.85    News Release dated May 26, 2021


Exhibit   

Description

99.86    News Release dated May 28, 2021
99.87    News Release dated June 1, 2021
99.88    News Release dated June 2, 2021
99.89    News Release dated June 8, 2021
99.90    Notice of Meeting and Record Date to be held on August 16, 2021
99.91    News Release dated June 11, 2021
99.92    News Release dated June 16, 2021
99.93    News Release dated June 18, 2021
99.94    News Release dated June 22, 2021
99.95    News Release dated June 24, 2021
99.96    News Release dated June 25, 2021
99.97    Consolidated Financial Statements of Cybin Inc. for the year ended March 31, 2021 (audited)
99.98    Management’s Discussion and Analysis of Cybin Inc. for the year ended March 31, 2021
99.99    Annual Information Form of Cybin Inc. for the year ended March 31, 2021
99.100    Certification of Annual Filings Full Certificate of Cybin Inc. in connection with filing of annual financial statements and annual MD&A by CFO dated June 28, 2021
99.101    Certification of Annual Filings Full Certificate of Cybin Inc. in connection with filing of annual financial statements and annual MD&A by CEO dated June 28, 2021
99.102    News Release dated June 28, 2021
99.103    News Release dated June 28, 2021
99.104    News Release dated July 6, 2021
99.105    News Release dated July 8, 2021
99.106    News Release dated July 9, 2021
99.107    News Release dated July 13, 2021
99.108    News Release dated July 21, 2021
99.109    Consent of Zeifmans LLP
99.110    Consent of Baker Tilly WM LLP

Exhibit 99.1

CLARMIN EXPLORATIONS INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following information, prepared as of June 25, 2020 should be read in conjunction with the unaudited condensed interim financial statements of Clarmin Explorations Inc. (“the Company” or “Clarmin”) for the nine months ended April 30, 2020, together with the audited financial statements of the Company for the year ended July 31, 2019 and the accompanying Management’s Discussion and Analysis (MD&A) for that fiscal period. The referenced financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. All amounts are expressed in Canadian dollars unless otherwise indicated.

Additional information relating to the Company and its operations is available under the Company’s profile on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

The Company’s condensed interim financial statements for the nine months ended April 30, 2020 and 2019, and this accompanying MD&A contain statements that constitute “forward-looking statements” within the meaning of National Instrument 51-102, Continuous Disclosure Obligations of the Canadian Securities Administrators.

It is important to note that, unless otherwise indicated, forward-looking statements in this MD&A describe the Company’s expectations as of June 25, 2020.

Forward-looking statements often, but not always, are identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”, “targeting” and “intend” and statements that an event or result “may”, “will”, “should”, “could”, or “might” occur or be achieved and other similar expressions.

Forward-looking statements in this MD&A include statements regarding the Company’s future plans and expenditures, the satisfaction of rights and performance of obligations under agreements to which the Company is a part, the ability of the Company to hire and retain employees and consultants and estimated administrative assessment and other expenses. The forward-looking statements that are contained in this MD&A involve a number of risks and uncertainties. As a consequence, actual results might differ materially from results forecast or suggested in these forward-looking statements. Some of these risks and uncertainties are identified under the heading “RISKS AND UNCERTAINTIES” in this MD&A.

Forward-looking statements contained herein are made as of the date of this MD&A and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking 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.

COMPANY DESCRIPTION

Clarmin Explorations Inc. was incorporated under the Business Corporations Act of British Columbia on October 13, 2016. The Company is engaged in the exploration and development of mineral properties in Canada. The Company’s head office is located at 880—580 Hornby Street, Vancouver, BC V6C 3B6.

The Company is a junior exploration company engaged in the exploration and development of the Benton Property. The Company’s future performance depends on, among other things, its ability to discover and develop ore reserves at commercially recoverable quantities, the prevailing market price of commodities it produces, the Company’s ability to secure required financing, and in the event ore reserves are found in economically recoverable quantities, the Company’s ability to secure operating and environmental permits to commence and maintain its mining operations. On January 8, 2018 the Company completed its Initial Public Offering (the “Offering”) of the Company’s common shares. The Company issued 3,500,000 common shares at a price of $0.10 per share for gross


Clarmin Explorations Inc.

MD&A

April 30, 2020

 

proceeds of $350,000. The Company’s common shares were listed on the TSX Venture Exchange (“TSX-V”) on January 8, 2018 under the symbol “CX”.

BENTON PROPERTY

On March 7, 2019, the Company entered into a purchase agreement (the “Purchase Agreement”) to acquire a 100% interest in three tenures totaling 1,285 hectares (the “Benton Property”) located in New Brunswick, Canada. As per the Purchase Agreement the Company issued 500,000 common shares, fair valued at $55,000, and made a cash payment of $35,000 and now holds a 100% interest in the Benton Property.

There is a 2% Net Smelter Return Royalty on the Benton Property, of which 50% may be repurchased by the Company for proceeds of $1,000,000. The Company will also be required to pay advance royalty payments of $5,000 per annum commencing on January 15, 2020 (paid).

During the nine months ended April 30, 2020 the Company incurred $840 (2019 - $nil) of exploration expenses consisting of license renewal costs.

ARLINGTON PROPERTY

On April 27, 2017 the Company entered into a mineral property option agreement (the “Agreement”) to acquire a 100% interest in the Arlington Property located in British Colombia. As per terms of the Agreement the Company made cash payments of $20,000 and was due to make cash payments of $85,000 and issue 500,000 common shares by April 27, 2020. On March 28, 2019 the Company elected to terminate the Agreement and wrote off $20,000 of acquisition costs related to the Arlington Property. The Company has no further commitments related to the Arlington Property.

RESULTS OF OPERATIONS

Nine months ended April 30, 2020

The Company recorded a loss of $54,500 ($0.00 per share) for the nine months ended April 30, 2020 compared to a loss of $79,854 ($0.00 per share) for the nine months April 30, 2019. Filing and listing fees decreased to $13,324 (2019 - $31,937) as the Company incurred additional costs in 2019 related to listing its common shares on the OTC Markets Platform in the US. The Company incurred exploration expenses of $840 (2019 - $nil) and made an advance royalty payment of $5,000 on the Benton Property. During the nine months ended April 30, 2020 the Company received $14,277 (2019 - $nil) in BC Mining and Exploration Tax Credits related to past exploration activities.

Three months ended April 30, 2020

The Company recorded a loss of $31,417 ($0.00 per share) for the three months ended April 30, 2020 as compared to a loss of $42,453 ($0.00 per share) for the three months ended April 30, 2019. During the three months ended April 30, 2020 the Company received $14,277 (2019 - $nil) in BC Mining and Exploration Tax Credits related to past exploration activities.


Clarmin Explorations Inc.

MD&A

April 30, 2020

 

SUMMARY OF QUARTERLY RESULTS

A summary of the Company’s quarterly results are as follows:

 

     Three Months Ended ($)  
     April 30,
2020
     January 31,
2020
     October 31,
2019
     July 31,
2019
 

Loss and comprehensive loss

     (31,417      (23,083      (15,457      (20,670

Basic and diluted loss per share*

     (0.00      (0.00      (0.00      (0.01

Working capital

     250,226        266,186        289,269        304,726  
           

 

     Three Months Ended ($)  
     April 30,
2019
     January 31,
2019
     October 31,
2018
     July 31,
2018
 

Loss and comprehensive loss

     (42,453      (10,361      (27,040      (61,762

Basic and diluted loss per share*

     (0.00      (0.00      (0.00      (0.00

Working capital (deficit)

     325,396        382,849        393,210        420,250  
           

LIQUIDITY AND CAPITAL RESOURCES

The Company’s operations consumed $66,501 (2019 - $62,498) of cash for the nine months ended April 30, 2020. The Company’s aggregate operating, investing, and financing activities during the nine months ended April 30, 2020 resulted in a decrease in its cash balance from $314,323 at July 31, 2019 to $247,822 at April 30, 2020. The Company’s working capital at April 30, 2020 was $250,226 compared to working capital of $304,726 at July 31, 2019.

The Company’s future capital requirements will depend upon many factors including, without limitation, the results of its exploration programs and commodity prices for precious metals. The Company has limited capital resources and has to rely upon the sale of equity securities for cash required for exploration and development purposes, for acquisitions and to fund the administration of the Company. Since the Company does not expect to generate any revenues from operations in the near future, it must continue to rely upon the sales of its equity and debt securities to raise capital, which would result in further dilution to the shareholders. There is no assurance that financing, whether debt or equity, will be available to the Company in the amount required by the Company at any particular time or for any period and that such financing can be obtained on terms satisfactory to the Company or at all.

The Company has no long-term debt.

FINANCING ACTIVITIES AND CAPITAL EXPENDITURES

The Company did not have any financing activities during the nine months ended April 30, 2020 and 2019.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

RELATED PARTY TRANSACTIONS

As at April 30, 2020, the Company had $nil (July 31, 2019 - $nil) in accounts payable and accrued liabilities owing to a Director of the Company. Compensation to key management being the CEO and directors, during the three and nine months ended April 30, 2020 was $nil. (2019 - $nil)


Clarmin Explorations Inc.

MD&A

April 30, 2020

 

CHANGES IN ACCOUNTING POLICIES

IFRS 16 Leases

IFRS - 16 Leases is a new standard that became effective for the Company on August 1, 2019.

IFRS 16 specifies how an issuer will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less, or the underlying asset has an insignificant value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. The adoption of IFRS 16 did not have a significant impact on the financial statements as the Company does not have any leases.

FINANCIAL INSTRUMENTS

Fair Value Hierarchy

The Company has classified fair value measurements of its financial instruments using a fair value hierarchy that reflects the significance of inputs used in making the measurements as follows:

 

   

Level 1: Valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

   

Level 2: Valuations based on directly or indirectly observable inputs, other than Level 1 prices, in active markets for similar assets or liabilities, such as quoted interest or currency exchange rates; and

 

   

Level 3: Valuations based on significant inputs that are not derived from observable market data, such as discounted cash flow methodologies based on internal cash flow forecasts.

The Company’s financial instruments consist of cash, accounts payable and accrued liabilities. The Company classifies its cash and accounts payable and accrued liabilities as amortized cost. The fair value of these instruments approximate their carrying amounts due to their short-term to maturity.

The risks associated with financial assets and liabilities are detailed/discussed below:

Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises from cash held with banks and financial institutions. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The Company’s cash is held with the Bank of Montreal. Accordingly, the Company believes it is not exposed to significant credit risk.

Interest Rate Risk

Interest rate risk is the risk that the future cash flows or fair value of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to interest rate risk is limited at present as the Company’s assets and liabilities are earning or incurring interest at market rates or where they are non-interest bearing or have fixed interest rates they have short terms to maturity.

Liquidity Risk

Liquidity risk is the risk that the Company is not able to meet its financial obligations as they become due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows, as well as anticipated investing and financing activities. As at April 30, 2020, all of the Company’s liabilities are due on demand. At April 30, 2020 the Company had working capital of $250,226 (July 31, 2019 - $304,726).


Clarmin Explorations Inc.

MD&A

April 30, 2020

 

Foreign currency exchange rate risk

The Company’s functional and reporting currency is the Canadian dollar and major purchases are transacted in Canadian dollars. As a result, the Company’s exposure to foreign currency risk is minimal.

OUTSTANDING SHARE DATA

 

Authorized:

 Unlimited common shares without par value.

                         Unlimited preferred shares issuable in series.

All share information is reported as of June 25, 2020 in the following table:

 

Type of Security

   Number      Exercise Price ($)      Expiry Date  

Issued and outstanding common shares

     14,200,001        N/A        N/A  

Stock options

     1,350,000        0.10        January 8, 2023  
  

 

 

       

Total

     15,550,001        
  

 

 

       

RISKS AND UNCERTAINTIES

The Company has incurred significant losses since inception. The continued operations of the Company are dependent on its ability to generate future cash flow and obtain additional financing. The Company has traditionally financed its cash requirements through the issuance of common shares. If the Company is unable to generate cash from operations or obtain additional financing its ability to continue as a going concern could be impaired.

DISCLOSURE CONTROLS AND PROCEDURES

In connection with National Instrument 52-109 (Certification of Disclosure in Issuer’s Annual and Interim Filings) (“NI 52-109”), the Chief Executive Officer and Chief Financial Officer of the Company have filed a Venture Issuer Basic Certificate with respect to the financial information contained in the condensed interim financial statements for the nine months ended April 30, 2020 and this accompanying MD&A (together the “Interim Filings”).

In contrast to the full certificate under NI 52-109, the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109. For further information the reader should refer to the Venture Issuer Basic Certificates filed by the Company with the Interim Filings on SEDAR at www.sedar.com.

Exhibit 99.2

CLARMIN EXPLORATIONS INC.

CONDENSED INTERIM FINANCIAL STATEMENTS

(Unaudited - expressed in Canadian Dollars)

For the Three and Nine Months Ended April 30, 2020 and 2019


CLARMIN EXPLORATIONS INC.

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited condensed interim financial statements of the Company and all information contained in the report have been prepared by and are the responsibility of the Company’s management.

The Audit Committee of the Board of Directors has reviewed the condensed interim financial statements and related financial reporting matters.

The Company’s independent auditor has not performed a review of these condensed interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of condensed interim financial statements by an entity’s auditor.


CLARMIN EXPLORATIONS INC.

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited - expressed in Canadian Dollars)

 

 

 

     Notes      April 30,
2020

$
    July 31,
2019

$
 

ASSETS

       

Current assets

       

Cash

        247,822       314,323  

Prepaids and other

        6,014       4,056  
     

 

 

   

 

 

 
        253,836       318,379  

Exploration and evaluation assets

     5        90,000       90,000  
     

 

 

   

 

 

 

Total assets

        343,836       408,379  
     

 

 

   

 

 

 

LIABILITIES

       

Current liabilities

       

Accounts payable and accrued liabilities

        3,610       13,653  
     

 

 

   

 

 

 

EQUITY

       

Share capital

     6        721,375       721,375  

Contributed surplus

     6        122,102       122,102  

Deficit

        (503,251     (448,751
     

 

 

   

 

 

 

Total

        340,226       394,726  
     

 

 

   

 

 

 

Total liabilities and equity

        343,836       408,379  
     

 

 

   

 

 

 

Organization and nature of operations and going concern (Note 1)

Approved by the Board of Directors on June 25, 2020

 

“Nico Civelli”

   Director      

“Mark Lawson”

   Director

The accompanying notes are an integral part of these condensed interim financial statements

 

3


CLARMIN EXPLORATIONS INC.

CONDENSED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

 

          

Three months ended

April 30,

   

Nine months ended

April 30,

 
    Notes      2020
$
    2019
$
    2020
$
    2019
$
 

Advance royalty

    5        —         —         5,000       —    

Exploration costs

       —         —         840       —    
    

 

 

   

 

 

   

 

 

   

 

 

 
       —         —         5,840       —    

Expenses

          

Professional fees

       23,430       5,757       33,225       16,242  

Filing and listing fees

       6,176       9,372       13,324       31,937  

Office expenses

       16,088       7,324       16,388       11,675  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

       (45,694     (22,453     (62,937     (59,854

Loss before other items

       (45,694     (22,453     (68,777     (59,854
    

 

 

   

 

 

   

 

 

   

 

 

 

Other Items:

          

Other income

       14,277       —         14,277       —    

Write-down of mineral property

       —         (20,000     —         (20,000
    

 

 

   

 

 

   

 

 

   

 

 

 

Net and comprehensive loss for the period

       (31,417     (42,453     (54,500     (79,854
    

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted loss per share

       (0.00     (0.00     (0.00     (0.00
    

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding

       14,200,001       14,008,990       14,200,001       13,800,734  
    

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these condensed interim financial statements

 

4


CLARMIN EXPLORATIONS INC.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

 

     Number of
shares
     Amount
$
     Contributed
Surplus
$
     Deficit
$
    Total
$
 

Balance, July 31, 2018

     13,700,001        666,375        122,102        (348,227     440,250  

Shares issued during the period

     500,000        55,000             55,000  

Net and comprehensive loss for the period

     —          —          —          (79,854     (79,854
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance, April 30, 2019

     14,200,001        721,375        122,102        (428,081     415,396  

Shares issued for exploration and evaluation asset

     —          —          —          —         —    

Net and comprehensive loss for the period

     —          —          —          (20,670     (20,670
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance, July 31, 2019

     14,200,001        721,375        122,102        (448,751     394,726  

Net and comprehensive loss for the period

     —          —          —          (54,500     (54,500
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance, April 30, 2020

     14,200,001        721,375        122,102        (503,251     340,226  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

The accompanying notes are an integral part of these condensed interim financial statements

 

5


CLARMIN EXPLORATIONS INC.

CONDENSED INTERIM STATEMENTS OF CASH FLOWS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

 

     April 30,
2020

$
    April 30,
2019

$
 

Cash flow provided by (used in)

    

Operating activities

    

Loss for the period

     (54,500     (79,854

Non-cash items:

    

Write-off of mineral property

     —         20,000  

Changes in non-cash working capital items

    

Prepaids and other

     (1,958     (2,012

Accounts payable and accrued liabilities

     (10,043     (632
  

 

 

   

 

 

 
     (66,501     (62,498

Investing activities

    

Exploration and evaluation assets acquisition cost

     —         (35,000
  

 

 

   

 

 

 

Change in cash during the period

     (66,501     (97,498

Cash - beginning of the period

     314,323       433,108  
  

 

 

   

 

 

 

Cash - end of the period

     247,822       335,610  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these condensed interim financial statements

 

6


CLARMIN EXPLORATIONS INC.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

1.

ORGANIZATION AND NATURE OF OPERATIONS AND GOING CONCERN

Clarmin Explorations Inc. (“Clarmin” or the “Company”) was incorporated under the Business Corporations Act of British Columbia on October 13, 2016. The Company is engaged in the exploration and evaluation of mineral properties in Canada. The Company’s head office is located at 880 - 580 Hornby Street, Vancouver, BC V6C 3B6.

On January 8, 2018 the Company completed its Initial Public Offering (the “Offering”) of common shares. The Company issued 3,500,000 common shares at a price of $0.10 per share for gross proceeds of $350,000. In connection with the Offering the Company entered into an Agency Agreement with Haywood Securities Inc. (the “Agent”). The Company paid the Agent a cash commission of 8% of the gross proceeds of the Offering and corporate finance costs of $20,000. In addition, the Company granted 280,000 non-transferable options to the Agent entitling the Agent to purchase common shares at a price of $0.10 for a period of 24 months from the date of closing the Offering. The Company’s common shares were listed on the TSX Venture Exchange (“TSX-V”) on January 8, 2018 under the symbol “CX”.

These condensed interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At April 30, 2020, the Company had accumulated losses of $503,251 (July 31, 2019 - $448,751) since its inception and expects to incur further losses in the development of its business. The continuation of the Company is dependent upon obtaining necessary financing to meet its ongoing operational levels of exploration and corporate overhead. These factors indicate material uncertainties that may cast significant doubt upon the Company’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business.

The World Health Organization has declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company is not currently determinable but management continues to monitor the situation.

While management has been successful in securing financing in the past, there can be no assurance it will be able to do so in the future or that financing will be available on terms which are acceptable to the Company. These condensed interim financial statements do not give effect to any adjustments to the amounts and classifications of assets and liabilities which might be necessary should the Company be unable to continue its operations as a going concern.

 

2.

BASIS OF PRESENTATION

Statement of Compliance

These condensed interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended July 31, 2019, which have been prepared in accordance with IFRS as issued by the IASB.

 

7


CLARMIN EXPLORATIONS INC.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

The Company uses the same accounting policies and methods of computation as in the annual financial statements for the period ended July 31, 2019 except as stated in Note 3.

 

3.

ADOPTION OF NEW ACCOUNTING STANDARDS

IFRS 16 Leases

IFRS - 16 Leases is a new standard that became effective for the Company on August 1, 2019.

IFRS 16 specifies how an issuer will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less, or the underlying asset has an insignificant value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. The adoption of IFRS 16 did not have a significant impact on the financial statements as the Company does not have any leases.

 

4.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements requires management to make judgments, estimates and assumptions based on currently available information that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Estimates and judgments are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual results could differ. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of future periods could be material. In the process of applying the Company’s accounting policies, management has made the following estimates, assumptions and judgments which have a significant effect on the amounts recognized in the financial statements:

Critical accounting judgments

 

  (i)

Exploration and Evaluation Assets - The application of the Company’s accounting policy for E&E acquisition expenditures requires judgment in determining whether it is likely that future economic benefits will follow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If, after acquisition expenditures are capitalized, information becomes available suggesting that the recovery of the acquisition expenditures is unlikely, the amounts capitalized are written off in the Company’s profit or loss in the period the new information becomes available.

 

  (ii)

Going concern - The assessment of the Company’s ability to execute its strategy by funding future working capital requirements involves judgment. Factors considered by management are disclosed in Note 1.

 

  (iii)

Income taxes - In assessing the probability of realizing income tax assets, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.

 

8


CLARMIN EXPLORATIONS INC.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

5.

EXPLORATION AND EVALUATION ASSETS

Benton Property

On March 7, 2019, the Company entered into a purchase agreement (the “Purchase Agreement”) to acquire a 100% interest in three tenures totaling 1,285 hectares (the “Benton Property”) located in New Brunswick, Canada. As per the Purchase Agreement the Company issued 500,000 common shares, fair valued at $55,000, and made a cash payment of $35,000 and now holds a 100% interest in the Benton Property.

There is a 2% Net Smelter Return Royalty on the Benton Property, of which 50% may be repurchased by the Company for $1,000,000. The Company will also be required to pay advance royalty payments of $5,000 per annum commencing on January 15, 2020 (paid).

During the nine months ended April 30, 2020 the Company incurred $840 (2019 - $nil) of exploration expenses consisting of license renewal costs.

During the nine months ended April 30, 2020 the Company received $14,277 in BC Mining and Explorations Tax Credits related to past exploration work. It is the Company’s accounting policy to expense exploration costs so the Company has recorded the receipt as other income.

Arlington Property

On April 27, 2017 the Company entered into a mineral property option agreement (the “Agreement”) to acquire a 100% interest in the Arlington Property located in British Colombia. The Company incurred $20,000 of cash acquisition costs.

On March 28, 2019 the Company elected to terminate the Agreement and wrote off $20,000 of acquisition costs related to the Arlington Property. The Company has no further commitments related to the Arlington Property.

The Company’s exploration and evaluation assets at April 30, 2020 and July 31, 2019 were as follows:

 

     Benton
Property

$
     Arlington
Property
$
     Total
$
 

Balance, July 31, 2018

     —          20,000        20,000  

Acquisition cost

     90,000        —          90,000  

Write-down of exploration and evaluation assets

     —          (20,000      (20,000
  

 

 

    

 

 

    

 

 

 

Balance, July 31, 2019 and April 30, 2020

     90,000        —          90,000  
  

 

 

    

 

 

    

 

 

 

 

9


CLARMIN EXPLORATIONS INC.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

6.

SHARE CAPITAL

a) Authorized:   Unlimited common shares without par value.

                                       Unlimited preferred shares issuable in series.

The Company did not have any financing activities during the nine months ended April 30, 2020.

b) Escrow shares

On October 31, 2017 the Company entered into an escrow agreement with certain shareholders of the Company and 2,700,001 common shares of the Company were placed into escrow. These escrow shares will be released as follows:

 

Date of Automatic Timed Release

   Amount of
escrow shares
released
 

On the date the Company’s shares were listed on the TSX-V, January 8, 2018

     270,000  

July 8, 2018

     405,000  

January 8, 2019

     405,000  

July 8, 2019

     405,000  

January 8, 2020

     405,000  

July 8, 2020

     405,000  

January 8, 2021

     405,001  

As at April 30, 2020, 810,001 (July 31, 2019 - 1,215,001) shares were held in escrow.

c) Stock options

On August 31, 2017 the Company adopted a stock option plan (the “Stock Option Plan”). As per the Stock Option Plan the Company reserves for issuance up to 10% of the number of the Company’s Common shares issued and outstanding at the time such options are granted and the maximum number of common shares reserved for issue to any one individual upon exercise of all stock options held by such individual may not exceed 5% of the issued common shares, if the individual is a director, officer, employee or consultant, or 2% of the issued common shares, if the individual is engaged in providing investor relations services, on a yearly basis. All options granted under the Stock Option plan will expire not later than the date that is ten years from the date that such options are granted. Options terminate as follows: (i) immediately in the event of dismissal with cause; (ii) 90 days from the date of termination other for cause; (iii) one year from the date of death or disability. Options granted under the Stock Option Plan are not transferable or assignable other than by will or other testamentary instrument pursuant to the laws of succession.

 

10


CLARMIN EXPLORATIONS INC.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

The balance of stock options outstanding and exercisable as at April 30, 2020 and July 31, 2019 and the changes for the periods then ended is as follows:

 

     Number of
Options
#
     Weighted
Average
Exercise
Price

$
     Weighted
Average
Life
Remaining
(years)
 

Balance, July 31, 2018

     1,350,000        0.10        4.19  

Granted

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Balance, July 31, 2019 and April 30, 2020

     1,350,000        0.10        2.69  
  

 

 

    

 

 

    

 

 

 

As at April 30, 2020, the Company’s stock options outstanding were as follows:

 

Expiry Date

   Exercise price
$
     Remaining life
(years)
     Options outstanding
and exercisable
 

January 8, 2023

     0.10        2.69        1,350,000  

 

  d)

Warrants

The balance of warrants outstanding as at April 30, 2020 and July 31, 2019 and the changes for the periods then ended is as follows:

 

     Number of
Warrants

#
     Weighted
Average
Exercise
Price

$
     Weighted
Average Life
Remaining
(years)
 

Balance, July 31, 2018 and 2019

     280,000        0.10        1.19  

Expired

     (280,000      0.10        —    
  

 

 

    

 

 

    

 

 

 

Balance, April 30, 2020

     —          —          —    
  

 

 

    

 

 

    

 

 

 

During the nine months ended April 30, 2020, 280,000 warrants expired unexercised.

 

7.

RELATED PARTY TRANSACTIONS

As at April 30, 2020, the Company had $nil (July 31, 2019 - $nil) in accounts payable and accrued liabilities owing to a Director of the Company. Compensation to key management being the CEO and directors, during the three and nine months ended April 30, 2020 was $nil. (2019 - $nil)

 

11


CLARMIN EXPLORATIONS INC.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

For the Three and Nine Months Ended April 30, 2020 and 2019

(Unaudited - expressed in Canadian Dollars)

 

 

8.

SEGMENT INFORMATION

The Company operations in a single reportable operating segment, being the acquisition and exploration of mineral property assets in Canada. As at April 30, 2020 and July 31, 2019, all operations and assets were in Canada.

 

12

Exhibit 99.3

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Harry Nijjar, the Chief Financial Officer of Clarmin Explorations Inc., certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Clarmin Explorations Inc. (the “issuer”) for the interim period ended April 30, 2020.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: June 25, 2020

 

“Harry Nijjar ”

Harry Nijjar

Chief Financial Officer

NOTE TO READER

 

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

 

  i)

controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

 

  ii)

a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Exhibit 99.4

Form 52-109FV2

Certification of Interim Filings

Venture Issuer Basic Certificate

I, Nico Civelli, the Chief Executive Officer of Clarmin Explorations Inc., certify the following:

 

1.

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Clarmin Explorations Inc. (the “issuer”) for the interim period ended April 30, 2020.

 

2.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: June 25, 2020

 

“Nico Civelli ”

 

Nico Civelli
Chief Executive Officer

 

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

 

  i)

controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

 

  ii)

a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Exhibit 99.5

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

CLARMIN EXPLORATIONS INC. ENTERS INTO AMALGAMATION AGREEMENT FOR

REVERSE TAKEOVER WITH CYBIN CORP.

Stifel GMP and Eight Capital Engaged to Co-Lead Concurrent Private Placement of up to $21M

June 29, 2020, Vancouver, British Columbia: Clarmin Explorations Inc. (TSX.V: CX) (the “Company” or “Clarmin”), a Tier 2 mining issuer listed on the TSX Venture Exchange (the “TSXV”), is pleased to announce that it has entered into an amalgamation agreement dated June 26, 2020 (the “Amalgamation Agreement”) with Cybin Corp. (“Cybin”), a private psilocybin and nutraceutical company, and 2762898 Ontario Inc., a wholly-owned subsidiary of Clarmin. Completion of the transactions contemplated in the Amalgamation Agreement will result in the reverse takeover of Clarmin by Cybin (the “Proposed Transaction”).

Cybin is a mushroom life sciences company focused on psychedelic medicines and nutraceutical products led by an experienced team. The Journey nutraceutical line includes non-psychedelic medical mushroom extracts to optimize overall health while the Serenity Life Sciences line of psychedelic medicines target multiple indications such as depression, eating disorders and addiction. Cybin’s IP strategy revolves around psychedelic delivery mechanisms, synthetic compounds, extraction methods, isolation of chemical compounds, new drug formulations and protocol regimens.

Summary of the Proposed Transaction

Pursuant to the Amalgamation Agreement, Clarmin and Cybin will complete an arm’s length business combination by way of a three-cornered amalgamation pursuant to the provisions of the Business Corporations Act (Ontario). The shareholders of Cybin (the “Cybin Shareholders”), other than the Cybin Shareholders who exercise their dissent rights, will receive, subject to adjustment, one common share in the capital of Clarmin (a “Clarmin Share”) (on a post-Clarmin consolidation basis) for each Cybin Share (as defined below) held. In addition, all outstanding warrants and incentive stock options of Cybin will be exchanged for warrants and incentive stock options of the Resulting Issuer (as defined below), respectively, on equivalent terms after having given effect to all of the transactions contemplated by the Proposed Transaction. As contemplated by the Amalgamation Agreement, Clarmin and Cybin intend to apply to delist the common shares in the capital of Clarmin from the TSXV and apply to the Canadian Securities Exchange (the “CSE”) for the listing of the common shares in the capital of the Resulting Issuer (as defined below) upon the completion of the Proposed Transaction and to close the Proposed Transaction on the CSE.

As a condition precedent of the Proposed Transaction, Clarmin’s board of directors will approve a consolidation of Clarmin’s issued and outstanding share capital. For illustrative purposes, this press release assumes the Clarmin Shares will be consolidated on a 8.875:1 basis (the “Consolidation”). Upon completion of the Proposed Transaction, assuming completion of the Consolidation and the Minimum Offering (as defined below), former Cybin Shareholders will hold, in the aggregate, approximately 85,950,236 common shares (the “Resulting Issuer Shares”) in the capital of the issuer resulting from the Proposed Transaction (the “Resulting Issuer”) representing approximately 98% of the outstanding Resulting Issuer Shares and existing holders of Clarmin Shares (the “Clarmin Shareholders”) will hold, in the aggregate, approximately 1,600,000 Resulting Issuer Shares, representing approximately 2% of the outstanding Resulting Issuer Shares.


The completion of the Proposed Transaction is subject to the satisfaction of various conditions, including but not limited to: (i) the approval of the delisting of the Clarmin Shares from the TSXV; (ii) the approval of the listing of the Clarmin Shares on the CSE; (iii) the disposition by Clarmin of its mining assets (the “Clarmin Disposition”); (iv) the approval of the Proposed Transaction by the requisite majority of Cybin Shareholders; (v) the approval of various matters related to the Proposed Transaction by the requisite majority of Clarmin Shareholders; and (vi) other conditions customary for a transaction of this nature. As part of the Proposed Transaction, the directors, officers, and major shareholders of Clarmin have entered into voting support agreements whereby they have agreed to vote their Clarmin Shares in favour of the Proposed Transaction and matters ancillary thereto.

In connection with the Proposed Transaction, Clarmin intends to change its name to “Cybin Corp.” and to replace all directors and officers of Clarmin on the effective date of the Proposed Transaction with nominees of Cybin.

The common shares of the Company have been halted and may remain halted until the completion of the Proposed Transaction. There can be no assurance that the Proposed Transaction will be completed on the terms proposed or at all.

Summary of the Concurrent Financing

In connection with the Proposed Transaction, Cybin plans to complete a “best-efforts” brokered private placement of subscription receipts of Cybin (the “Subscription Receipts”), with a syndicate of agents coled by Stifel Nicolaus Canada Inc. (“Stifel GMP”) and Eight Capital (together, with Stifel GMP, the “Co-Lead Agents”), to raise a minimum of $14 million (US$10 million) (the “Minimum Offering”) and a maximum of $21 million (US$15 million), with a 15% agents’ option (the “Concurrent Financing”).

The gross proceeds of the Concurrent Financing, less 50% of the agents’ cash commission (as described below) and certain expenses of the agents, will be deposited in escrow on the closing date of the Concurrent Financing until the satisfaction of certain release conditions, including that all conditions precedent to the Proposed Transaction have been met (the “Release Conditions”).

Upon the satisfaction of the Release Conditions, each Subscription Receipt will be converted into one common share in the capital of Cybin (a “Cybin Share”) without payment of any additional consideration or further action on the part of the holder thereof. At the effective time of the Proposed Transaction, each Cybin Share will be exchanged for one Resulting Issuer Share (on a post-Clarmin consolidation basis).

In the event that the Release Conditions have not been satisfied prior to 120 days following the closing of the Concurrent Financing, or Cybin advises the Co-Lead Agents or announces to the public that it does not intend to satisfy the Release Conditions or that the Proposed Transaction has been terminated, the aggregate issue price of the Subscription Receipts (plus any interest earned thereon) shall be returned to the applicable holders of the Subscription Receipts (net of any applicable withholding taxes), and such Subscription Receipts shall be automatically cancelled and be of no further force and effect.

In connection with the Concurrent Financing, the agents will be entitled to receive a cash fee equal to 6% of the aggregate gross proceeds of the Concurrent Financing (provided that the cash commission for president’s list subscribers will be 3%) and such number of compensation options (the “Compensation Options”) equal to 6% of the number of Subscription Receipts issued by Cybin (including any Subscription Receipts issued pursuant to the agents’ option), provided that no Compensation Options will be issued in respect of sales to president’s list subscribers. Each Compensation Option will be exercisable for one Cybin Share for a period of two years from the date of closing of the Concurrent Financing. In connection with

 

2


the completion of the Proposed Transaction, each Compensation Option will be exchanged into one compensation option of the Resulting Issuer, which will be exercisable for one Resulting Issuer Share at the issue price of the Subscription Receipts.

The Subscription Receipts will be offered in all provinces of Canada and such other jurisdictions as Cybin and the Co-Lead Agents may agree, where the Concurrent Financing can be offered and sold without the requirement to file a prospectus or similar document. It is expected that the net proceeds from the Concurrent Financing will be used for working capital and general corporate purposes.

To date, Cybin has raised approximately $10,400,000 through both Cybin’s initial financing round and its series A financing round.

“We are delighted by the varying strategic biotech and investment funds, merchant bankers, pharmaceutical and CPG executives, and strategic individual investors who have invested in Cybin to date,” said Paul Glavine, Chief Executive Officer of Cybin. “This is the beginning of a transformational moment in Cybin’s history and we expect to be well positioned to accelerate our strategic growth initiatives.” Mr. Glavine added, “We’re thrilled to receive the support of Stifel GMP and Eight Capital, a strong show of confidence in the long-term potential of the psychedelic sector.”

Proposed Management Team and Board of Directors of the Resulting Issuer

On completion of the Proposed Transaction, the current directors, and officers of Clarmin will resign and it is currently expected that the proposed executive officers of the Resulting Issuer will include Paul Glavine (Chief Executive Officer), Eric So (President), John Kanakis (SVP Business Development), Greg Cavers (Chief Financial Officer) and Jukka Karjalainen (Chief Medical Officer). The Resulting Issuer’s board of directors will be nominated by Cybin. Further information concerning the proposed executive officers and directors of the Resulting Issuer will be contained in a subsequent news release and in Clarmin’s management information circular to be prepared in connection with the Proposed Transaction.

Further Information

Further details about the Proposed Transaction and the Resulting Issuer will be provided in a CSE listing statement prepared and filed by Clarmin in respect of the Proposed Transaction.

Investors are cautioned that, except as disclosed in the listing statement (or other disclosure document prepared by Clarmin) in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

About Cybin

Cybin is a mushroom life sciences company advancing psychedelic and nutraceutical-based products. Cybin is launching psilocybin-based products in jurisdictions where the substance is not banned. Simultaneously, Cybin is structuring and supporting clinical studies across North America and other regions, through strategic academic and institutional partnerships.

Cautionary Note Regarding Forward-Looking Statements:

This news release contains statements that constitute “forward-looking statements.” Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause Clarmin’s actual results, performance or achievements, or developments to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward

 

3


looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “potential” and similar expressions, or that events or conditions “will,” “would,” “may,” “could” or “should” occur.

Forward-looking statements in this document include, among others, statements relating to expectations regarding the completion of the Proposed Transaction (including all required approvals), the listing on the CSE, the Concurrent Financing, the Clarmin Disposition, the business plans of the Resulting Issuer and other statements that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors and risks include, among others: (a) that there is no assurance that the parties hereto will obtain the requisite director, shareholder and regulatory approvals for the Proposed Transaction; (b) there is no assurance that the Concurrent Financing will be completed or as to the actual offering price or gross proceeds to be raised in connection with the Concurrent Financing; (c) there is no assurance that the Clarmin Disposition will be completed or as to the terms and conditions of such dispositions or the consideration to be received by the Company in respect thereof; (d) following completion of the Proposed Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations which may not be available when needed or on acceptable terms and conditions acceptable; (e) compliance with extensive government regulation; (f) domestic and foreign laws and regulations could adversely affect the Resulting Issuer’s business and results of operations; (g) the stock markets have experienced volatility that often has been unrelated to the performance of companies and these fluctuations may adversely affect the price of the Resulting Issuer’s securities, regardless of its operating performance; (h) adverse changes in the public perception of psilocybin and nutraceutical products; (i) decreases in the prevailing prices for psilocybin and nutraceutical products in the markets that the Resulting Issuer will operate in; and (j) the impact of COVID-19.

The forward-looking information contained in this news release represents the expectations of Clarmin as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Clarmin undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.

This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The Company’s 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 U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Neither the TSXV nor the CSE has in any way passed upon the merits of the Proposed Transaction and neither has approved nor disapproved the contents of this news release.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.

Information contact:

 

Investors:

  

Mark Lawson, Director

Clarmin Explorations Inc.

mark@lawson.net

T: 647 302 0393

 

4

Exhibit 99.6

 

Exhibit 99.7

 

Exhibit 99.8

CLARMIN EXPLORATIONS INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

AND

MANAGEMENT INFORMATION CIRCULAR

TO BE HELD ON

August 13, 2020

9:00 A.M. VANCOUVER TIME

Northwest Law Group

704 – 595 Howe Street

Vancouver, BC V6C 2T5

July 15, 2020

 

TABLE OF CONTENTS

 

Page

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS....................................

1

SOLICITATION OF PROXIES ....................................................................................................

3

APPOINTMENT OF PROXYHOLDER ........................................................................................

3

REVOCATION OF PROXIES......................................................................................................

4

VOTING OF PROXIES ...............................................................................................................

4

INFORMATION FOR NON-REGISTERED SHAREHOLDERS ...................................................

4

BUSINESS COMBINATION........................................................................................................

6

The Business Combination..............................................................................................

6

Benefits of the Business Combination .............................................................................

6

Recommendation of the Board of Directors .....................................................................

7

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON ...

7

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES .......................

7

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS ............................................

7

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS ..................................

8

EXECUTIVE COMPENSATION..................................................................................................

8

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS ...

11

CORPORATE GOVERNANCE DISCLOSURE .........................................................................

11

Corporate Governance ..................................................................................................

11

Board of Directors .........................................................................................................

11

Orientation and Continuing Education ...........................................................................

13

Ethical Business Conduct..............................................................................................

13

Nomination of Directors .................................................................................................

13

Compensation ...............................................................................................................

13

Assessments.................................................................................................................

14

AUDIT COMMITTEE.................................................................................................................

14

Relevant Education and Experience..............................................................................

14

Audit Committee Oversight............................................................................................

15

Reliance on Certain Exemptions....................................................................................

15

External Auditor Service Fees (By Category).................................................................

15

 

PARTICULARS OF MATTERS TO BE ACTED UPON .............................................................

15

1.

Board of Directors Resolution ............................................................................

16

2.

Election of Directors...........................................................................................

16

3.

Auditor Resolution..............................................................................................

23

4.

Equity Incentive Plan Resolution........................................................................

24

ADDITIONAL INFORMATION...................................................................................................

36

DIRECTOR APPROVAL ...........................................................................................................

37

APPENDIX "A" THE BOARD RESOLUTION...............................................................................

I

APPENDIX "B" DIRECTOR ELECTION RESOLUTION .............................................................

II

APPENDIX "C" AUDITOR RESOLUTION .................................................................................

III

APPENDIX "D" EQUITY INCENTIVE PLAN RESOLUTION.....................................................

IV

APPENDIX "E" DELISTING RESOLUTION ..............................................................................

V

APPENDIX "F" DISPOSITION RESOLUTION..........................................................................

VI

APPENDIX "G" CONTINUATION RESOLUTION....................................................................

VII

APPENDIX "H" RESULTING ISSUER AUDIT COMMITTEE CHARTER................................

VIII

APPENDIX "I" NEW ARTICLES.............................................................................................

XIV

APPENDIX "J" NEW BY-LAWS ..............................................................................................

XV

APPENDIX "K" RIGHTS OF DISSENT ..................................................................................

XVI

APPENDIX "L" EQUITY INCENTIVE PLAN ..........................................................................

XVII

 

CLARMIN EXPLORATIONS INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

TAKE NOTICE THAT an Annual and Special Meeting (the "Meeting") of the holders ("Shareholders") of common shares (the "Common Shares") in the capital of Clarmin Explorations Inc. (the "Corporation") will be held at Suite 704, 595 Howe Street, Vancouver, British Columbia on August 13, 2020 at 9:00 a.m. (Vancouver time) for the following purposes:

1.to consider and, if thought advisable, approve with or without variation, an ordinary resolution, the full text of which is set forth in Appendix "A" to the Circular, to fix the number of directors on the board of directors of the Corporation (the "Board of Directors") at five (5), to take effect only in the event that the Business Combination (as defined in the Circular) is completed; and to fix the number of directors on the Board of Directors to three

(3)until the earlier of: (i) the next annual meeting of Shareholders; and (ii) 12:01 a.m. on the day following the effective date of the Business Combination (the "Effective Time of the Business Combination") (the "Board of Directors Resolution");

2.to elect, conditional on and effective following the closing of the Business Combination, Paul Glavine, Eric So, John Kanakis, Eric Hoskins and Grant Froese as the new directors of the Corporation, to take effect only in the event that the Business Combination is completed, the full text of which is set forth in Appendix "B" to the Circular; and to elect the current directors of the Corporation, Nico Civelli, Mark Lawson and Matthew Sutcliffe, to serve as directors of the Corporation until the earlier of: (i) the next annual meeting of Shareholders or until their successors are elected or appointed; and (ii) the Effective Time of the Business Combination (the "Director Election Resolution");

3.to appoint Zeifmans LLP as the auditor of the Corporation to hold office conditional on and effective following the closing of the Business Combination and to authorize the directors of the Corporation to fix the remuneration of the auditor so appointed, the full text of which is set forth in Appendix "C" to the Circular, to take effect on the Effective Time of the Business Combination; and to appoint Wolrige Mahon LLP as the auditor of the Corporation, to serve as auditors of the Corporation for the ensuing year if the Business Combination is not completed (the "Auditor Resolution");

4.to consider and, if thought advisable, approve with or without variation, an ordinary resolution, the full text of which is set forth in Appendix "D" to the Circular, to authorize and approve the adoption of a new equity incentive plan of the Corporation, to be implemented only in the event that the Business Combination is completed (the "Equity Incentive Plan Resolution");

5.to consider and, if thought advisable, approve with or without variation, an ordinary resolution, the full text of which is set forth in Appendix "E" to the Circular, to authorize and approve the delisting of the Common Shares from the TSX Venture Exchange (the "Delisting Resolution");

6.to consider and, if thought advisable, approve with or without variation, a special resolution, the full text of which is set forth in Appendix "F" to the Circular, to authorize and approve the disposition of all assets and liabilities of the Corporation, including but not limited to the disposition of the Benton Property (the "Disposition Resolution");

7.to consider and, if thought advisable, approve with or without variation, a special resolution, the full text of which is set forth in Appendix "G" to the Circular, to authorize

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and approve the continuation from a company incorporated under the laws of British Columbia to a corporation continued under the laws of Ontario (the "Continuation Resolution"); and

8.to transact such other business as may be properly brought before the Meeting or any postponement or adjournment thereof.

The Continuation Resolution and the Disposition Resolution must be approved by not less than two-thirds of the votes cast by Shareholders present in person or represented by proxy at the Meeting. The Board of Directors Resolution, the Director Election Resolution, the Auditor Resolution, the Equity Incentive Plan Resolution and the Delisting Resolution must be approved by a majority of the votes cast by Shareholders present in person or represented by proxy at the Meeting.

This notice of Meeting is accompanied by: (a) the Circular; and (b) either a form of proxy for registered Shareholders or a voting instruction form for beneficial Shareholders. The Circular accompanying this notice of Meeting is incorporated into and shall be deemed to form part of this notice of Meeting.

The record date for the determination of Shareholders entitled to receive notice of, and to vote at, the Meeting or any adjournments or postponements thereof is July 10, 2020 (the "Record Date"). Shareholders whose names have been entered in the register of Shareholders at the close of business on the Record Date will be entitled to receive notice of, and to vote, at the Meeting or any adjournments or postponements thereof.

A Shareholder may attend the Meeting in person or may be represented by proxy. Shareholders who are unable to attend the Meeting or any adjournments or postponements thereof in person are requested to complete, date, sign and return the accompanying form of proxy for use at the Meeting or any adjournments or postponements thereof. To be effective, the enclosed form of proxy must be received by Computershare Investor Services Inc. by no later than 9:00 a.m. on August 11, 2020 or, in the case of any adjournment or postponement of the Meeting, by no later than 48 hours (excluding Saturdays, Sundays and holidays) before the time for the adjourned or postponed Meeting.

The above time limit for deposit of proxies may be waived or extended by the chair of the Meeting at his or her discretion without notice.

DATED this 15th day of July, 2020.

BY ORDER OF THE BOARD OF DIRECTORS

"Nico Civelli"

Nico Civelli

Chief Executive Officer

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CLARMIN EXPLORATIONS INC.

MANAGEMENT INFORMATION CIRCULAR

(Containing information as at July 15, 2020 unless indicated otherwise)

The resulting issuer from the proposed business combination (the "Resulting Issuer") will control an entity that is expected to continue as a mushroom life sciences company, focused on psychedelic medicines and nutraceutical products. Cybin Corp. ("Cybin") is focused on furthering research and development of psilocybin-based medications through its wholly owned division, Serenity Life Sciences Inc. Psilocybin is found in certain species of mushrooms and is a non-habit forming naturally occurring psychedelic compound. Cybin's wholly owned division, Natures Journey Inc., operates the Journey brand and is focused on developing proprietary medicinal mushroom products that target mental wellness, immune boosting, detoxification and overall general health and wellness.

SOLICITATION OF PROXIES

This Management Information Circular (the "Circular") is furnished in connection with the solicitation of proxies by the management of Clarmin Explorations Inc. ("Clarmin" or the "Corporation") for use at the Annual General and Special Meeting of holders (the "Shareholders") of common shares in the capital of the Corporation (the "Common Shares") and any adjournment thereof to be held at Suite 704, 595 Howe Street, Vancouver, BC on the 13th day of August, 2020, at the hour of 9:00 A.M. (Vancouver time) (the "Meeting"). The enclosed proxy is being solicited by the management of the Corporation. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally, by facsimile or by telephone by the regular employees of the Corporation at nominal cost. All costs of solicitation by management will be borne by the Corporation. The Corporation may also retain, and pay a fee to, one or more professional proxy solicitation firms to solicit proxies from Shareholders.

The contents and the sending of this Circular have been approved by the directors of the Corporation. All dollar amounts referenced, unless otherwise indicated, are expressed in Canadian dollars. All references to the Corporation shall include its subsidiaries as the context may require.

No person is authorized to give any information or to make any representation other than those contained in this Circular and, if given or made, such information or representation should not be relied upon as having been authorized by the Corporation. The delivery of this Circular shall not, under any circumstances, create an implication that there has not been any change in the information set forth herein since the date hereof.

APPOINTMENT OF PROXYHOLDER

The individuals named as proxyholders in the accompanying form of proxy are directors and/or officers of the Corporation. A REGISTERED SHAREHOLDER WISHING TO APPOINT SOME

OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM OR HER AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STRIKING OUT THE NAMES OF THOSE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY AND SIGNING AND DATING THE PROXY, OR BY COMPLETING ANOTHER FORM OF PROXY. A proxy will not be valid unless the completed form of proxy is received by Computershare Investor Services Inc. ("Computershare"), at 100 University Avenue, 8th Floor, Toronto, Ontario, Canada, M5J 2Y1 no later than 9:00 a.m. on August 11, 2020 or, with respect

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to any matters to be dealt with at any adjournment of the Meeting, before the time of the re- commencement of the adjourned Meeting. Proxies delivered after such time(s) will not be accepted.

REVOCATION OF PROXIES

A Shareholder who has given a proxy may revoke it prior to its use by an instrument in writing executed by the Shareholder or by his attorney duly authorized in writing or, where the Shareholder is a corporation, by a duly authorized officer or attorney of such corporation, and delivered to the registered office of the Corporation, Suite 704, 595 Howe Street, Vancouver, BC at any time up to and including the last business day preceding the day of the Meeting, or if adjourned, preceding any reconvening thereof, or to the Chairman of the Meeting on the day of the Meeting or, if adjourned, any reconvening thereof, or in any other manner provided by law. A revocation of a proxy does not affect any matter on which a vote has been taken prior to the revocation.

VOTING OF PROXIES

The Common Shares represented by a properly executed proxy in favour of persons designated as proxyholders in the enclosed form of proxy will:

(a)be voted or withheld from voting in accordance with the instructions of the person appointing the proxyholder on any ballot that may be called for; and

(b)where a choice with respect to any matter to be acted upon has been specified in the form of proxy, be voted in accordance with the specifications made on such proxy.

SUCH COMMON SHARES WILL BE VOTED FOR EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED.

The enclosed form of proxy, when properly completed and delivered and not revoked, confers discretionary authority upon the person appointed proxyholder thereunder to vote with respect to amendments or variations of matters identified in the notice of Meeting, and with respect to any other matters which may properly come before the Meeting. In the event that amendments or variations to matters identified in the notice of Meeting are properly brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated by management as proxyholders in the enclosed form of proxy to vote in accordance with their best judgment on such matters or business. At the time of the printing of this Circular, the management of the Corporation knows of no such amendment, variation or other matter that may be presented to the Meeting.

INFORMATION FOR NON-REGISTERED SHAREHOLDERS

Only registered Shareholders or proxyholders duly appointed by registered Shareholders are permitted to vote at the Meeting. Most shareholders of the Corporation are "non- registered" shareholders because the Common Shares they own are not registered in their names but are instead registered in the name of a brokerage firm, bank or other intermediary or in the name of a clearing agency. Shareholders who do not hold their Common Shares in their own name (referred to herein as "Beneficial Shareholders") should note that only registered Shareholders are entitled to vote at the Meeting. If Common Shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those Common Shares will not be registered in such shareholder's name on the records of the Corporation. Such Common Shares will more likely be registered under the

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name of the shareholder's broker or an agent of that broker. In Canada, the vast majority of such Common Shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Limited, which company acts as nominee for many Canadian brokerage firms). Common Shares held by brokers (or their agents or nominees) on behalf of a broker's client can only be voted (for or against resolutions) at the direction of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting Common Shares for the brokers' clients. Therefore, each Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate person well in advance of the Meeting.

Existing regulatory policy requires brokers and other intermediaries to forward all proxy-related materials to and to seek voting instructions from Beneficial Shareholders in advance of shareholders' meetings. The various brokers and other intermediaries have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their Common Shares are voted at the Meeting. Often the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided by the Corporation to the registered Shareholders. However, its purpose is limited to instructing the registered Shareholder (i.e. the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate the responsibility for obtaining instructions from clients to Broadridge Financial Solutions Inc. ("Broadridge"). Broadridge typically prepares a machine-readable voting instruction form, mails those forms to the Beneficial Shareholders and asks Beneficial Shareholders to return the forms to Broadridge, or otherwise communicate voting instructions to Broadridge (by way of the internet or telephone, for example). Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of the Common Shares to be represented at the Meeting. A Beneficial Shareholder who receives a Broadridge voting instruction form cannot use that form to vote the Common Shares directly at the Meeting. The voting instruction form must be returned to Broadridge (or instructions respecting the voting of Common Shares must be communicated to Broadridge well in advance of the Meeting) in order to have the Common Shares voted.

This Circular and accompanying materials are being sent to both registered Shareholders and Beneficial Shareholders. Beneficial Shareholders fall into two categories – those who object to their identity being known to the issuers of securities which they own ("Objecting Beneficial Owners", or "OBO's") and those who do not object to their identity being made known to the issuers of the securities they own ("Non-Objecting Beneficial Owners", or "NOBO's"). Subject to the provision of National Instrument 54-101 – Communication with Beneficial Owners of Securities of Reporting Issuers, issuers may request and obtain a list of their NOBO's from intermediaries via their transfer agents. If you are a Beneficial Shareholder, and the Corporation or its agent has sent these materials directly to you, your name, address and information about your holdings of Common Shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding the Common Shares on your behalf.

The OBO's can expect to be contacted by Broadridge or their broker or their broker's agents as set out above.

Although Beneficial Shareholders may not be recognized directly at the Meeting for the purposes of voting Common Shares registered in the name of their broker, a Beneficial Shareholder may attend the Meeting as proxyholder for the registered Shareholder and vote the Common Shares in that capacity. Beneficial Shareholders who wish to attend the Meeting and indirectly vote their Common Shares as proxyholder for the registered Shareholder should enter their

- 5 -

 

own names in the blank space on the proxy or voting instruction card provided to them and return the same to their broker (or the broker's agent) in accordance with the instructions provided by such broker.

All references to Shareholders in this Circular and the accompanying form of proxy and notice of Meeting are to Shareholders of record unless specifically stated otherwise.

BUSINESS COMBINATION

The Business Combination

On June 26, 2020, the Corporation, 2762898 Ontario Inc., a subsidiary of the Corporation ("ON Subco") and Cybin Corp. ("Cybin") entered into an amalgamation agreement (the "Definitive Agreement") whereby the Corporation, Cybin, and ON Subco will combine their respective businesses (the "Business Combination"). Pursuant to the Definitive Agreement, the Corporation has agreed to, among other things, call the Meeting to seek approval of Shareholders for the Board of Directors Resolution, the Director Election Resolution, the Auditor Resolution, the Equity Incentive Plan Resolution, the Delisting Resolution, the Disposition Resolution and the Continuation Resolution (collectively, the "Business Combination Resolutions"). Upon the satisfaction or waiver of the conditions to the completion of the Business Combination, including without limitation the completion of a consolidation of shares of the Corporation, the parties will complete the Business Combination.

As part of the completion of the Business Combination, the Corporation intends to change its name to "Cybin Corporation", or such other name as may be determined by Cybin, subject to applicable regulatory approval.

Benefits of the Business Combination

The Board of Directors believes that the Business Combination will have the following benefits for the Shareholders:

(a)the Corporation will acquire an economic interest in the business of Cybin and the funds raised by Cybin pursuant to a financing of subscription receipts to be undertaken by Cybin;

(b)Shareholders will be in a position to participate in future value creation and growth opportunities in the business of Cybin;

(c)the proposed management team and nominees to the Board of Directors have extensive experience in the psychedelic medicines and nutraceutical products industry and have been responsible for substantial stakeholder value creation and have demonstrated capabilities in financing, acquiring, and developing assets;

(d)the Cybin management team and nominees to the Board of Directors have high visibility in the psychedelic medicines and nutraceutical products industry and investment community, and significant relationships with key sector investors and analysts that should help to attract strong retail and institutional support; and

(e)the Corporation is expected to have increased share trading liquidity and will have a greater market capitalization that is attractive to a wider range of investors than that offered by Cybin prior to the Business Combination.

-6 -

 

Recommendation of the Board of Directors

SHAREHOLDERS ARE NOT REQUIRED TO APPROVE THE BUSINESS COMBINATION AT THIS MEETING. Full details regarding Cybin and the Business Combination will be disclosed by the Corporation in a Form 2A Listing Statement (the "Listing Statement") to be prepared and filed with the Canadian Securities Exchange (the "CSE"), the posting thereof is not expected to occur until after the date of the Meeting. Subject to receipt of all requisite approvals, including from the CSE, the Business Combination is anticipated to close in the third quarter of 2020. The Board of Directors has unanimously approved the Definitive Agreement and unanimously recommends that the Shareholders vote IN FAVOUR of the Business Combination Resolutions at the Meeting.

There are a number of risks associated with the Business Combination. The principal risk factors will be set out in the Listing Statement.

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

Except as disclosed in this Circular, no Director or executive officer of the Corporation, nor any proposed nominee for election as a Director of the Corporation, nor any of the persons who have been Directors or executive officers of the Corporation since the beginning of the financial year ended July 31, 2019 and no associate or affiliate of any of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting (other than the election of Director).

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

Shareholders of record as of July 10, 2020 (the "Record Date") are entitled to receive notice and attend and vote at the Meeting, either in person or by proxy. The Corporation is authorized to issue an unlimited number of Common Shares without par value. As at the date of this Circular, the Corporation had 14,200,001 Common Shares issued and outstanding. Each Common Share entitles the holder to one vote in respect of any matter that may come before the Meeting.

As at the date of this Circular, to the knowledge of the directors and senior officers of the Corporation, and based on the Corporation's review of the records maintained by Computershare, electronic filings with System for Electronic Document Analysis and Retrieval (SEDAR) and insider reports filed with System for Electronic Disclosure by Insiders (SEDI), no person owns, directly or indirectly, or exercises control or direction over, shares carrying more than 10% of the voting rights attached to all outstanding shares of the Corporation except as set forth below:

Name

No. of Common Shares

Percentage of Outstanding

 

Owned or Controlled

Common Shares

 

 

 

Nico Civelli

2,400,000

16.9%

 

 

 

As at the date of this Circular, the current Directors and senior officers of the Corporation as a group beneficially owned, directly or indirectly 2,400,000 Common Shares constituting approximately 16.9% of the issued and outstanding Common Shares.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No person who is or at any time during the most recently completed financial year was a director, executive officer or senior officer of the Corporation, no proposed nominee for election as a director of the Corporation, and no associate of any of the foregoing persons has been indebted

- 7 -

 

to the Corporation at any time since the commencement of the Corporation's last completed financial year. No guarantee, support agreement, letter of credit or other similar arrangement or understanding has been provided by the Corporation at any time since the beginning of the financial year ended July 31, 2019 with respect to any indebtedness of any such person.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Except as disclosed in this Circular, no Director or executive officer of the Corporation, nor any proposed nominee for election as a Director of the Corporation, nor any other insider of the Corporation, nor any associate or affiliate of any one of them, has or has had, at any time since the beginning of the financial year ended July 31, 2019, any material interest, direct or indirect, in any transaction or proposed transaction that has materially affected or would materially affect the Corporation.

EXECUTIVE COMPENSATION

The Compensation Discussion and Analysis section explains the compensation program for the fiscal year ended July 31, 2019 for the Corporation's Named Executive Officers (as that term is defined under applicable securities legislation).

Compensation Discussion and Analysis

The compensation of the executive officers is determined by the Board of Directors of Directors, based in part on recommendations from the Chief Executive Officer. The Board of Directors evaluates individual executive performance with the goal of setting compensation at levels that they believe are comparable with executives in other companies of similar size and stage of development operating in the same industry. In connection with setting appropriate levels of compensation, the Board of Directors base their decisions on their general business and industry knowledge and experience and publicly available information of comparable companies while also taking into account our relative performance and strategic goals.

The executive officer compensation consists of two basic elements: (i) base salary; and (ii) incentive stock options. The details are set out in the Summary Compensation Table.

The base salary established for each executive officer is intended to reflect each individual's responsibilities, experience, prior performance and other discretionary factors deemed relevant by the Board of Directors. In deciding on the salary portion of the compensation of the executive officers, major consideration is given to the fact that the Corporation is an early stage exploration company and does not generate any material revenue and must rely exclusively on funds raised from equity financing. Therefore, greater emphasis may be put on incentive stock option compensation.

The incentive stock option portion of the compensation is designed to provide the executive officers of the Corporation with a long-term incentive in developing the Corporation's business. Options granted under the Corporation's stock option plan are approved by the Board of Directors, and if applicable, its subcommittees, after consideration of the Corporation's overall performance and whether the Corporation has met targets set out by the executive officers in their strategic plan.

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Summary Compensation tables

The following tables set forth the compensation paid, awarded, or to be paid or awarded to the Named Executive Officers (NEO): Chief Executive Officer; Chief Financial Officer; three most highly compensated individuals of the Corporation whose total compensation was more than $150,000; and/or individuals who would be an NEO but for the fact that they are neither an executive officer, nor acting in a similar capacity, at the end of that financial year:

 

 

 

 

 

Non-Equity Incentive

 

 

 

 

 

 

 

 

Plan Compensation

 

 

 

 

 

 

 

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year

 

Share-

Option-

Annual

Long-

Pension

All other

Total

Name and

Ended

Salary

Based

based

Term

Incentive

Value

compen-

compensation

Position

July

($)

Awards

Awards

Incentive

Plans

($)

sation

($)

 

31

 

($)

($)

Plans

 

 

 

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nico Civelli

2019

-

-

-

-

-

-

-

-

CEO and

2018

-

-

-

-

-

-

-

-

President

 

 

-

-

 

 

 

-

 

Harry

2019

11,439

-

-

-

11,439

Nijjar(1)

-

-

-

-

-

-

2018

8,881

8,881

CFO

 

 

 

 

 

 

 

-

-

-

-

-

-

-

-

Matthew

2019

Sutcliffe

-

-

-

-

-

-

-

-

2018

Director

 

 

 

 

 

 

 

 

 

-

-

-

-

-

-

-

-

Mark

2019

Lawson

-

-

-

-

-

-

-

-

2018

Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

 

 

 

 

 

 

 

 

 

(1)Mr. Harry Nijjar was appointed Chief Financial Officer of the Corporation on April 24, 2017. Mr. Nijjar is an employee of Malaspina Consultants Inc., which provides accounting services to the Corporation. The Corporation paid to Malaspina Consultants Inc. for the accounting and administrative services provided to the Corporation the following: $11,439 for the year ended July 31, 2019 and $8,881 for the year ended July 31, 2018. Malaspina Consultants Inc. is a private company that provides out sourced accounting services to junior public companies.

Stock Options and Other Compensation Securities and Instruments

The following table of compensation securities provides a summary of all compensation securities granted, or issued by the Corporation to each NEO and directors of the Corporation for the fiscal year ended July 31, 2019, for services provided, directly or indirectly, to the Corporation.

- 9 -

 

 

Option-Based Awards

Share-Based Awards

No. of

securities Name and underlying Position unexercised

Options

(#)

 

 

Value of

No. of Shares

Option

Option

Unexercised

or Units of

Exercise

Expiration

In-The-

Shares That

Price

Date

Money

Have Not

(#)

 

Options

Vested

 

 

($)

(#)

 

 

 

 

Market or

Market or

Payout Value

Payout

of Vested

Value of

Share-

Shares-

Based

Based

Awards

Awards that

Not Paid or

Have Not

Distributed

Vested

($)

 

 

 

Nico Civelli

Nil

N/A

 

 

N/A

N/A

N/A

CEO and

N/A

N/A

President

 

 

 

 

 

 

 

 

 

 

 

 

Harry Nijjar

Nil

N/A

 

N/A

N/A

N/A

N/A

 

CFO

N/A

Matthew

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sutcliffe

Nil

N/A

N/A

N/A

N/A

N/A

N/A

Director

 

 

 

 

 

 

 

Mark

Nil

 

 

 

 

 

 

 

 

 

 

 

 

Lawson

N/A

N/A

N/A

N/A

N/A

N/A

Director

 

 

 

 

 

 

 

During the fiscal year ended July 31, 2019, there was none of the NEOs or directors exercised any compensation securities of the Corporation.

Employment, Consulting and Management Agreements

There are no management functions of the Corporation which are to any substantial degree performed by a person or company other than the directors or senior officers of the Corporation.

Oversight and Description of Director and Named Executive Officer Compensation

The Corporation has not adopted any specific policies or practices to determine the compensation for the Corporation's directors and officers, other than disclosed above. Given the Corporation's current stage of development, the Corporation does not currently have an active compensation committee in place.

Executive compensation awarded to the named executive officers consists of two components:

(i)management fees and (ii) stock options. The Corporation does not presently have a long-term incentive plan for its named executive officers. There is no policy or target regarding allocation between cash and noncash elements of the Corporation's compensation program.

Pension

The Corporation does not provide any pension benefits for directors or executive officers.

- 10 -

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets out those securities of the Corporation which have been authorized for issuance under equity compensation plans, for the financial year ended July 31, 2019:

 

 

 

Number of securities

 

 

 

remaining available for

 

Number of securities

Weighted-average

future issuance under

 

to be issued upon

exercise price of

equity compensation

 

exercise of

outstanding

plans (excluding

 

outstanding options,

options, warrants

securities reflected in

Plan Category

warrants and rights

and rights

column (a))

 

 

 

 

Equity compensation

1,350,000

$0.10

70,000

plans approved by

 

 

 

security holders

 

 

 

 

 

 

 

Equity compensation

Nil

Nil

Nil

plans not approved by

 

 

 

security holders

 

 

 

 

 

 

 

Total

1,350,000

$0.10

70,000

 

 

 

 

CORPORATE GOVERNANCE DISCLOSURE

Corporate Governance

Corporate governance relates to the activities of the Board of Directors, the members of which are elected by and are accountable to the shareholders, and takes into account the role of the individual members of management who are appointed by the Board of Directors and who are charged with the day to day management of the Corporation. The Board of Directors is committed to sound corporate governance practices, which are both in the interest of its shareholders and contribute to effective and efficient decision making.

National Policy 58-201 Corporate Governance Guidelines establishes corporate governance guidelines which apply to all public companies. The Corporation has reviewed its own corporate governance practices in light of these guidelines. In certain cases, the Corporation's practices comply with the guidelines, however, the Board of Directors considers that some of the guidelines are not suitable for the Corporation at its current stage of development and therefore these guidelines have not been adopted. The Corporation will continue to review and implement corporate governance guidelines as the business of the Corporation progresses and becomes more active in operations. National Instrument 58-101 Disclosure of Corporate Governance Practices mandates disclosure of corporate governance practices in Form 58-101F2, which disclosure is set out below.

Board of Directors

The mandate of the Board of Directors is to supervise the management of the Corporation and to act in the best interests of the Corporation. The Board of Directors acts in accordance with:

(a)the Business Corporations Act (British Columbia);

-11 -

 

(b)the Corporation's articles of incorporation;

(c)the charters of the Board of Directors and the Board of Directors committees; and

(d)other applicable laws and Corporation policies.

The Board of Directors approves all significant decisions that affect the Corporation before they are implemented. The Board of Directors supervises their implementation and reviews the results.

The Board of Directors has determined that all three of the proposed nominees for the Board of Directors would be considered "independent" following their election. The definition of independence used by the Board of Directors is that used by the TSX Venture Exchange ("TSX- V"). A director is independent if he has no "material relationship" with the Corporation. A "material relationship" is a relationship which could, in view of the Board of Directors, be reasonably expected to interfere with the exercise of a director's independent judgement. Certain types of relationships are by their nature considered to be material relationships. The Board of Directors is responsible for determining whether or not each director is an independent director.

The Board of Directors is actively involved in the Corporation's strategic planning process. The Board of Directors discusses and reviews all materials relating to the strategic plan with management. The Board of Directors is responsible for reviewing and approving the strategic plan. At least one Board of Directors meeting each year is devoted to discussing and considering the strategic plan, which takes into account the risks and opportunities of the business. Management must seek the Board of Directors' approval for any transaction that would have a significant impact on the strategic plan.

The Board of Directors periodically reviews the Corporation's business and implementation of appropriate systems to manage any associated risks, communications with investors and the financial community and the integrity of the Corporation's internal control and management information systems. The Board of Directors also monitors the Corporation's compliance with its timely disclosure obligations and reviews material disclosure documents prior to distribution. The Board of Directors periodically discusses the systems of internal control with the Corporation's external auditor.

The Board of Directors is responsible for choosing the President and Chief Executive Officer and appointing senior management and for monitoring their performance and developing descriptions of the positions for the Board of Directors, including the limits on management's responsibilities and the corporate objectives to be met by the management.

The Board of Directors approves all the Corporation's major communications, including annual and quarterly reports, financing documents and press releases. The Corporation communicates with its stakeholders through a number of channels including its website. The Board of Directors approved the Corporation's communication policy that covers the accurate and timely communication of all important information. It is reviewed annually. This policy includes procedures for communicating with analysts by conference calls.

The Board of Directors, through its audit committee ("Audit Committee"), examines the effectiveness of the Corporation's internal control processes and management information systems. The Board of Directors consults with the external auditor and management of the Corporation to ensure the integrity of these systems. The external auditor submits a report to the Audit Committee each year on the quality of the Corporation's internal control processes and management information systems.

- 12 -

 

Orientation and Continuing Education

The Board of Directors briefs all new directors with the policies of the Board of Directors, and other relevant corporate and business information.

Ethical Business Conduct

The Board of Directors has found that the fiduciary duties placed on individual directors by the Corporation's governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual director's participation in decisions of the Board of Directors in which the director has an interest have been sufficient to ensure that the Board of Directors operates independently of management and in the best interests of the Corporation.

Under the corporate legislation, a director is required to act honestly and in good faith with a view to the best interests of the Corporation and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, and disclose to the board the nature and extent of any interest of the director in any material contract or material transaction, whether made or proposed, if the director is a party to the contract or transaction, is a director or officer (or an individual acting in a similar capacity) of a party to the contract or transaction or has a material interest in a party to the contract or transaction. The director must then abstain from voting on the contract or transaction unless the contract or transaction (i) relates primarily to their remuneration as a director, officer, employee or agent of the Corporation or an affiliate of the Corporation, (ii) is for indemnity or insurance for the benefit of the director in connection with the Corporation, or (iii) is with an affiliate of the Corporation. If the director abstains from voting after disclosure of their interest, the directors approve the contract or transaction and the contract or transaction was reasonable and fair to the Corporation at the time it was entered into, the contract or transaction is not invalid and the director is not accountable to the Corporation for any profit realized from the contract or transaction. Otherwise, the director must have acted honestly and in good faith, the contract or transaction must have been reasonable and fair to the Corporation and the contract or transaction be approved by the shareholders by a special resolution after receiving full disclosure of its terms in order for the director to avoid such liability or the contract or transaction being invalid.

Nomination of Directors

The Board of Directors is responsible for identifying individuals qualified to become new Board of Directors members and recommending to the Board of Directors new director nominees for the next annual meeting of shareholders.

New nominees must have a track record in general business management, special expertise in an area of strategic interest to the Corporation, the ability to devote the time required, show support for the Corporation's mission and strategic objectives, and a willingness to serve.

Compensation

The Board of Directors conducts reviews with regard to directors' compensation once a year. To make its recommendation on directors' compensation, the Board of Directors takes into account the types of compensation and the amounts paid to directors of comparable publicly traded Canadian companies and aligns the interests of Directors with the return to shareholders. The Board of Directors decides the compensation of the Corporation's officers, based on industry standards and the Corporation's financial situation.

- 13 -

 

Other Board of Directors Committees

The Corporation and the Board of Directors has no committees other than the Audit Committee.

Assessments

The Board of Directors monitors the adequacy of information given to directors, communication between the board and management and the strategic direction and processes of the board and committees.

AUDIT COMMITTEE

The Audit Committee assists the Corporation's Board of Directors in fulfilling its responsibilities for oversight of financial and accounting matters. The Audit Committee of the Resulting Issuer will review the financial reports and other financial information provided by the Resulting Issuer to regulatory authorities and its shareholder and will review the Resulting Issuer's system of internal controls regarding finance and accounting including auditing, accounting and financial reporting processes. The Resulting Issuer Audit Committee Charter is attached to this Information Circular as Appendix "H".

The expected members of the Audit Committee after completion of the Business Combination will include the following three directors. Also indicated is whether they are "independent" and "financially literate" within the meaning of National Instrument 52-110 – Audit Committees ("NI 52- 110").

Name of Member

Independent(1)

Financially Literate(2)

 

 

 

Paul Glavine

No

Yes

Eric Hoskins

Yes

Yes

Grant Froese

Yes

Yes

Notes:

(1)A member of the Audit Committee is independent if he or she has no direct or indirect 'material relationship' with the Resulting Issuer. A material relationship is a relationship which could, in the view of the Resulting Issuer's Board of Directors of Directors, reasonably interfere with the exercise of a member's independent judgment. An executive officer of the Resulting Issuer, such as the President or Secretary, is deemed to have a material relationship with the Resulting Issuer.

(2)A member of the Audit Committee is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Resulting Issuer's financial statements

Relevant Education and Experience

Paul Glavine – Mr. Glavine is a Co-founder of Cybin and expected to be the Chief Executive Officer of the Resulting Issuer. He is a serial entrepreneur and investor with vast experience in the biotech and cannabis sectors. He is the Co-founder of Global Canna Brands, which was granted the first ever tier 3 cultivation licence in Jamaica. His previous background is in the technology industry and he has advised on M&A and other financings.

Eric Hoskins - Mr. Hoskins is the former Ontario Health Minister (2014-2018) responsible for one of the largest health care systems in North America. He is a former elected Member of Ontario Provincial Parliament holding Cabinet positions in Health, Economic Development and Trade, Children and Youth Services, and Immigration. Dr. Hoskins is a physician and public health specialist with more than thirty years' experience in health care and public policy.

- 14 -

 

Grant Froese – Mr. Froese is a retail industry veteran with 38 years of experience at Loblaw Companies Limited, Canada's largest food retailer, with his most recent position being Chief Operating Officer. Mr. Froese also served as the Chief Executive Officer of Marquee Health Group, a late stage applicant under the Access to Cannabis for Medical Purposes Regulation and as Chief Executive Officer of Harvest One, a global cannabis company that develops and provides innovative lifestyle and wellness products to consumers and patients in regulated markets around the world where he gained valuable industry experience and insight. Mr. Froese has extensive experience in supply chain management, digital/ecommerce businesses, marketing, brand management, and merchandising and operations management.

Audit Committee Oversight

At no time since the commencement of the Corporation's most recently completed financial year was a recommendation of the Committee to nominate or compensate an external auditor not adopted by the Board of Directors.

Reliance on Certain Exemptions

At no time since the commencement of the Corporation's most recently completed financial year has the Corporation relied on the exemption in Section 2.4 of NI 52-110 (De Minimis Non-audit Services), or an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110.

External Auditor Service Fees (By Category)

Aggregate fees paid to the Auditor during the financial years ended July 31, 2019 and 2018 were as follows:

Financial

Year

Audit Fees(1)

Audit

Related

Tax Fees(3)

All Other Fees(4)

Ended

 

 

Fees(2)

 

 

 

 

 

 

 

 

 

 

2019

 

$9,500

$Nil

 

$Nil

$Nil

 

 

 

 

 

 

 

2018

 

$10,000

$Nil

 

$Nil

$Nil

 

 

 

 

 

 

 

Notes:

(1)"Audit fees" include aggregate fees billed by the Corporation's external auditor in each of the last two fiscal years for audit fees.

(2)"Audited related fees" include the aggregate fees billed in each of the last two fiscal years for assurance and related services by the Corporation's external auditor that are reasonably related to the performance of the audit or review of the Corporation's financial statements and are not reported under "Audit fees" above.

(3)"Tax fees" include the aggregate fees billed in each of the last two fiscal years for professional services rendered by the Corporation's external auditor for tax compliance, tax advice and tax planning.

(4)"All other fees" include the aggregate fees billed in each of the last two fiscal years for products and services provided by the Corporation's external auditor, other than "Audit fees", "Audit related fees" and "Tax fees" above.

PARTICULARS OF MATTERS TO BE ACTED UPON

To the knowledge of the Board of Directors, the only matters to be brought before the Meeting are set forth in the accompanying Notice. These matters are described in more detail under the headings below.

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1.Board of Directors Resolution

Shareholders will be asked to consider and, if thought appropriate, to approve, with or without variation, an ordinary resolution to fix the number of Directors at five to take effect only in the event that the Business Combination is completed; and to fix the number of directors on the Board of Directors to three until the earlier of: (i) the next annual meeting of Shareholders; and (ii) 12:01 a.m. on the day following the effective date of the Business Combination (the "Effective Time of the Business Combination"). In order for the following resolution to be passed, it must be approved by a simple majority of the votes cast by Shareholders who vote at the Meeting, either in person or by Proxy.

Unless otherwise indicated, the persons designated as proxyholders in the accompanying form of Proxy will vote the Common Shares represented by such form of Proxy FOR the Board of Directors Resolution. If you do not specify how you want your Common Shares voted at the Meeting, the persons designated as proxyholders in the accompanying form of Proxy will cast the votes represented by your proxy at the Meeting FOR the Board of Directors Resolution.

The Board of Directors unanimously recommends that Shareholders vote FOR the Board of Directors Resolution at the Meeting.

2.Election of Directors

At the Meeting, Shareholders are required to elect the Directors of the Corporation to hold office until the close of the next annual meeting of Shareholders or until their successors are elected or appointed. It is desirable, in connection with the Business Combination, (A) to elect Directors to serve from the close of the Meeting until the earlier of: (i) the close of the next annual meeting of Shareholders or until their successors are elected or appointed; and (ii) the Effective Time of the Business Combination (the "Current Slate"); and (B) to elect Directors to serve from the Effective Time of the Business Combination until the close of the next annual meeting of Shareholders or until their successors are elected or appointed (the "New Slate").

Management of the Corporation does not contemplate that any of the Director nominees under the New Slate will be unable to serve as a director upon the completion of the Business Combination. It is a condition precedent to the completion of the Business Combination that the New Slate, comprised of five individuals, all of whom are nominees of Cybin, be elected on the Effective Time of the Business Combination, as Directors of the Resulting Issuer. If the New Slate does not receive the requisite approval, the Business Combination will not proceed, unless such condition precedent is waived by Cybin.

At the time of the Meeting, the Business Combination will not yet have been completed and there can be no assurance at that time that it will be completed.

As the number of directors will have been set at seven directors, and only five directors will be elected pursuant to the election of the New Slate, the members of the Board of Directors propose to appoint up to seven directors to fill the two vacancies in accordance with the provisions of the Articles of the Corporation.

Unless otherwise indicated, the persons designated as proxyholders in the accompanying form of Proxy will vote the Common Shares represented by such form of Proxy FOR the Director Election Resolution. If you do not specify how you want your Common Shares voted at the Meeting, the persons designated as proxyholders in the accompanying form

- 16 -

 

of Proxy will cast the votes represented by your proxy at the Meeting FOR the Director Election Resolution.

The Board of Directors unanimously recommends that Shareholders vote FOR the Director Election Resolution at the Meeting.

See below for detailed information concerning the Current Slate and the New Slate.

Current Slate

The following sets forth the name of each of the persons proposed to be nominated for election as a Director as part of the Current Slate, all positions and offices in the Corporation presently held by such nominees, the nominees' municipality and country of residence, principal occupation at the present time and during the preceding five years, the period during which the respective nominees have served as Directors, and the number and percentage of Common Shares beneficially owned by the nominees, directly or indirectly, or over which control or direction is exercised, as of the date of this Circular.

The following sets forth the name of each of the persons proposed to be nominated for election as a Director as part of the Current Slate, all positions and offices in the Corporation presently held by such nominees, the nominees' municipality and country of residence, principal occupation at the present time and during the preceding five years, the period during which the respective nominees have served as Directors, and the number and percentage of Common Shares beneficially owned by the nominees, directly or indirectly, or over which control or direction is exercised, as of the date of this Circular.

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Name, Province or

 

 

 

 

 

 

 

 

Shares

 

 

 

 

Present Principal Occupation, and

 

 

Director

 

 

Beneficially

 

 

State and Country

 

 

Business or Employment Over the Past

 

 

 

 

Owned or

 

 

 

 

 

 

Since

 

 

 

 

of Residence

 

 

Five Years

 

 

 

 

Controlled

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

or Directed

 

 

 

 

 

 

 

 

 

 

 

(Indirectly or

 

 

 

 

 

 

 

 

 

 

 

Directly)(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Nico Civelli (2)

 

CEO, President of the Corporation;

 

 

 

 

 

 

CEO & Director

 

Principal of Niconsult GmbH.; Director

 

 

 

 

 

 

Singapore,

 

of Claren Energy Corp. since August

 

 

 

 

 

 

Singapore

 

2012; VP Finance of Pacific LNG OPS

 

 

 

 

 

 

 

 

 

 

Pte Ltd. since 2011; director of Callinex

 

March 2017

2,400,000

 

 

 

 

 

Mines Inc. since 2013; Director of Terra

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nova Resources Inc. since January

 

 

 

 

 

 

 

 

 

2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark Lawson(2)

 

Managing Partner of Clermont Capital

 

 

 

 

 

 

Director

 

Partners Inc. since 2009. President and

 

 

 

 

 

 

Ontario, Canada

 

Director of Afrique Energie Corp. from

 

 

 

 

 

 

 

 

 

 

September 2012 to December 2015.

 

October 2016

150,000

 

 

 

 

 

Director of Claren Energy Corp. since

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 2016; Director and CEO of Terra

 

 

 

 

 

 

 

 

 

 

Nova Resources Inc. since August 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 17 -

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Name, Province or

 

 

 

 

 

 

 

 

Shares

 

 

 

 

Present Principal Occupation, and

 

 

Director

 

 

Beneficially

 

 

State and Country

 

 

Business or Employment Over the Past

 

 

 

 

Owned or

 

 

 

 

 

 

Since

 

 

 

 

of Residence

 

 

Five Years

 

 

 

 

Controlled

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

or Directed

 

 

 

 

 

 

 

 

 

 

 

(Indirectly or

 

 

 

 

 

 

 

 

 

 

 

Directly)(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Matthew Sutcliffe(2)

Chairman of Alexander Mining plc since April

 

 

 

 

 

 

Director

2005 to August 29, 2017. Director of Hunter

 

 

 

 

 

 

Northland, New

Bay Minerals PLC from May 2014 to

 

October 2016

100,001

 

Zealand

November 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1)The information as to common shares beneficially owned or controlled has been provided by the nominees themselves.

(2)A member of the Audit Committee.

Messrs. Sutcliffe and Lawson are currently, and would be if elected as a director of the Corporation, "independent" in respect of the Corporation (within the meaning of Sections 1.4 and

1.5of National Instrument 52-110) and financially literate (within the meaning of Section 1.6 of National Instrument 52-110). Mr. Civelli is not deemed "independent" in respect of the Corporation (within the meaning of Sections 1.4 and 1.5 of National Instrument 52-110) and is financially literate (within the meaning of Section 1.6 of National Instrument 52- 110).

Nico Civelli - 43

Mr. Civelli serves as director of Claren Energy Corp. a junior oil and gas issued listed on the TSX- V, a director and member of the audit committee of Callinex Mines Inc., a junior exploration company listed on the TSX-V, Terra Nova Resources Inc., a junior oil and gas company listed on the CSE. Mr. Civelli completed a Master's Degree in Applied Finance at the University of Southern Queensland in Australia.

Mark Lawson - 48

Mr. Lawson has serves as a director or officer on a number of public companies listed on the TSX-V and the CSE. Mr. Lawson holds a Bachelor of Arts in Statistical Sciences from The University of Western Ontario and an MBA from The Richard Ivey School of Business, The University of Western Ontario which he obtained in 2005.

Matthew Sutcliffe - 53

Dr. Sutcliffe was the founder and served as Chairman of Alexander Mining Plc from April 2005 to August 2017 and has served as a director and officer on a number of public companies listed on the TSX-V. Dr. Sutcliffe is a Chartered Engineer and graduated from University of Nottingham in 1990 with a Ph.D. in Mining Engineering.

- 18 -

 

Other Reporting Issuer Experience

Certain of the director nominees for the Current Slate are presently on the boards or executive officers of other public companies as follows:

Name

Issuer (Exchange)

 

 

 

Claren Energy Corp. (TSX-V)

Nico Civelli

Callinex Mines Inc. (TSX-V)

 

Terra Nova Resources Inc. (CSE)

 

 

Mark Lawson

Claren Energy Corp. (TSX-V)

Terra Nova Resources Inc. (CSE)

 

 

 

Matthew Sutcliffe

None.

 

 

Cease Trade Orders, Bankruptcies and Penalties

No proposed Director of the Corporation is, as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, a director, chief executive officer or chief financial officer of any company (including the Corporation) that:

(a)was the subject of a cease trade or similar order, or an order that denied the Corporation access to any exemption under applicable securities legislation for a period of more than 30 consecutive days that was issued while the proposed Director was acting as director, chief executive officer or chief financial officer; or

(b)was the subject of a cease trade or similar order, or an order that denied the Corporation access to any exemption under applicable securities legislation for a period of more than 30 consecutive days that was issued after the proposed Director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

Except as described herein, no proposed Director of the Corporation is, as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, a director or executive officer of any issuer (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that issuer.

No proposed Director of the Corporation is, as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person.

No proposed Director of the Corporation is, as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, subject to any penalties or sanctions imposed by a court relating to securities legislation or by any securities regulatory authority or has entered into a

- 19 -

 

settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable securityholder in deciding whether to vote for the proposed Director.

New Slate

The following table sets forth the name of each of the persons proposed to be nominated for each of the Board of Directors Nominees, all positions and offices in the Corporation presently held by such nominees, the nominees' municipality and country of residence, principal occupation, the period during which the nominees have served as Directors, and the number and percentage of Common Shares beneficially owned by the nominees, directly or indirectly, or over which control or direction is exercised:

 

Present Principal

Name, Province or

Occupation, and

Business or

State and Country of

Employment Over

Residence

the Past Five

 

 

Years

 

 

Paul Glavine

Managing director of

Director, Chief Executive

Global Canna Labs

Officer

Limited and Truverra

Toronto, ON

 

Eric So,

Managing Director,

Director, President

Trinity Venture

Toronto, ON

Partners, President,

 

Growpacker, Special

 

Advisor and General

 

Counsel, Mundo Inc.

John Kanakis,

Managing Director,

Director, SVP Business

Trinity Venture

Development,

Partners, Co-founder

Toronto, ON

and director

 

Growpacker

Eric Hoskins,

Ontario Health

Director,

Minister

Toronto, ON

 

 

 

Grant Froese

Director, CEO

Toronto, ON

Harvest One

Cannabis Inc.; Chief

 

 

Operating Officer at

 

Loblaws

 

 

Number of

Common

Shares

Beneficially

Director SinceOwned or Controlled or

Directed

(Indirectly or

Directly)

N/AN/A

N/AN/A

N/AN/A

N/AN/A

N/AN/A

Information concerning shares of the Corporation to be beneficially owned or controlled, directly or indirectly, by the New Slate on completion of the Business Combination, will be set out in the Listing Statement. Each of the nominees is an officer and direct or indirect holder of common shares in Cybin.

- 20 -

 

Paul Glavine - 31

Paul Glavine is a Co-founder and the Chief Executive Officer of Cybin. He is a serial entrepreneur and investor with vast experience in the biotech and cannabis sectors. He is the Co-founder of Global Canna Brands, which was granted the first ever tier 3 cultivation licence in Jamaica. His previous background is in the technology industry and he has advised on M&A and other financings.

Eric So - 44

Eric So is a Co-founder and President of Cybin. He is a veteran owner and operator of various public and private companies over the last 15 years and has led C-level corporate strategy, development and finance at all stages of the business life cycle from start-up to high growth and multinational. He began his career practicing in the areas of corporate commercial, securities, finance and mergers and acquisitions at Torys LLP.

John Kanakis - 40

John Kanakis is a Co-founder and SVP of Business Development of Cybin. He is a serial entrepreneur and financier and has financed and advised over 15 private and public companies throughout his career. He began his career in the technology and medical device manufacturing sectors before starting a merchant bank in Toronto.

Eric Hoskins - 59

Eric Hoskins is the former Ontario Health Minister (2014-2018) responsible for one of the largest health care systems in North America. He is a former elected Member of Ontario Provincial Parliament holding Cabinet positions in Health, Economic Development and Trade, Children and Youth Services, and Immigration. Dr. Hoskins is a physician and public health specialist with more than thirty years' experience in health care and public policy.

Grant Froese - 58

Grant Froese is a retail industry veteran with 38 years of experience at Loblaw Companies Limited, Canada's largest food retailer, with his most recent position being Chief Operating Officer. Mr. Froese also served as the Chief Executive Officer of Marquee Health Group, a late stage applicant under the Access to Cannabis for Medical Purposes Regulation and as Chief Executive Officer of Harvest One, a global cannabis company that develops and provides innovative lifestyle and wellness products to consumers and patients in regulated markets around the world where he gained valuable industry experience and insight. Mr. Froese has extensive experience in supply chain management, digital/ecommerce businesses, marketing, brand management, and merchandising and operations management.

Other Reporting Issuer Experience

As of the date of this Circular, other than as set out below, none of the Board of Directors nominees for the New Slate are directors of other issuers that are reporting issuers (or the equivalent) in Canada or a foreign jurisdiction.

 

 

 

 

Name of

 

 

Name

of

 

 

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

Exchange or

 

 

Position

 

 

From

 

 

To

 

 

 

 

Reporting Issuer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eric So

 

Therapix

Nasdaq

 

 

Board

of

June 2017

December

 

 

 

 

Biosciences Ltd.

 

 

 

 

Directors

 

 

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 21 -

 

 

 

 

 

Name of

 

 

Name

of

 

 

 

 

 

 

 

 

 

 

 

Name

 

 

 

 

Exchange or

 

 

Position

 

 

From

 

 

To

 

 

 

 

Reporting Issuer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hyperblock Inc.

CSE

 

 

Board of

 

July 2018

April 2019

 

 

 

 

 

 

 

 

 

 

Directors

 

 

 

 

 

 

 

 

 

 

 

Globalive

TSX Venture

Managing

 

December

December

 

 

 

 

Technology

 

 

 

 

Director, Chief

2017

 

2018

 

 

 

 

 

Partners

 

 

 

 

Strategy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Officer

 

 

 

 

 

 

 

 

 

 

 

Riot Blockchain

Nasdaq

 

 

Board

of

October

February

 

 

 

 

Inc.

 

 

 

 

Directors

 

2017

 

2018

 

 

 

 

 

Synergex

TSX

 

 

Vice-President,

April 2006

November

 

 

 

 

Corporation

 

 

 

 

Corporate

 

 

 

 

2010

 

 

 

 

 

 

 

 

 

 

 

Strategy and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Counsel

 

 

 

 

 

 

 

Grant Froese

 

Harvest One

TSX Venture

Director, Chief

July 2018

March 2020

 

 

 

 

Cannabis Inc.

 

 

 

 

Executive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Officer

 

 

 

 

 

 

 

 

 

 

 

Loblaw Companies

TSX

 

 

Officer, Chief

 

May 2009

April 2017

 

 

 

 

Ltd.

 

 

 

 

Operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Officer, Chief

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Officer,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

President

 

 

 

 

 

 

 

Cease Trade Orders, Bankruptcies and Penalties

Except as disclosed below, no individual who will be a Director of the Corporation upon completion of the Business Combination is as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, a director, chief executive officer or chief financial officer of any company (including the Corporation) that:

(a)was the subject of a cease trade or similar order, or an order that denied the other company access to any exemptions under applicable securities legislation for a period of more than 30 consecutive days that was issued while the proposed Director was acting as director, chief executive officer or chief financial officer; or

(b)was the subject of a cease trade or similar order, or an order that denied the other company access to any exemptions under applicable securities legislation for a period of more than 30 consecutive days that was issued after the proposed Director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

Eric So was the Vice-President, Corporate Strategy and General Counsel to Synergex Corporation ("Synergex"), a TSX-listed company, until November 2010. Synergex has been subject to a cease trade order since June 12, 2010 for failing to file, financial statements, management's discussion and analysis, annual information form, interim financial statements and related management's discussion and analysis, and the certification of filings pursuant to National Instrument 52-109 – Certification of Disclosure in Issuers' Annual and Interim Filings.

- 22 -

 

No individual who will be a Director of the Corporation upon completion of the Business Combination is as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, a director or executive officer of any issuer (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that issuer.

No individual who will be a Director of the Corporation upon completion of the Business Combination is as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person.

No individual who will be a Director of the Corporation upon completion of the Business Combination is as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, subject to any penalties or sanctions imposed by a court relating to securities legislation or by any securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable securityholder in deciding whether to vote for the proposed Director.

3.Auditor Resolution

At the Meeting, Shareholders are required to appoint the auditor of the Corporation. Ordinarily, that would involve re-appointing Wolrige Mahon, LLP Chartered Accountants of Vancouver, British Columbia, the Corporation's current auditor, to hold office until the next annual meeting of Shareholders. However, if the Business Combination is completed, it will be desirable to change the auditor of the Corporation. In such circumstance, the Shareholders would be asked to consider appointing Zeifmans LLP as auditor of the Corporation. At the time of the Meeting, the Business Combination will not yet have been completed and there can be no assurance at that time that it will be completed.

In order to avoid changing the auditor of the Corporation should it prove unnecessary to do so, and in order to dispense with the need to call an additional meeting of Shareholders to approve the appointment of Zeifmans LLP as auditor of the Corporation conditional and effective only upon the completion of the Business Combination, and to authorize the directors of the Corporation to fix their remuneration.

Wolrige Mahon LLP has agreed to resign as the auditor of the Corporation as of the effective date of the Business Combination. The determination to replace the auditor of the Corporation at the effective date of the Business Combination has been made in the context of the Business Combination and not because of any reportable event (as that term is defined in NI 51-102).

It is anticipated that on the effective date of the Business Combination, Wolrige Mahon LLP will resign as the Corporation's auditor and Zeifmans LLP will fill the vacancy.

Unless otherwise indicated, the persons designated as proxyholders in the accompanying form of Proxy will vote the Common Shares represented by such form of Proxy FOR the Auditor Resolution. If you do not specify how you want your Common Shares voted at the

- 23 -

 

Meeting, the persons designated as proxyholders in the accompanying form of Proxy will cast the votes represented by your proxy at the Meeting FOR the Auditor Resolution.

The Board of Directors unanimously recommends that Shareholders vote FOR the Auditor Resolution at the Meeting.

4.Equity Incentive Plan Resolution

The purpose of the equity incentive plan of the Resulting Issuer (the "Resulting Issuer Equity Incentive Plan") is to attract and motivate directors, senior officers, employees, consultants and others providing services to the Corporation and its subsidiaries, and thereby advance the Corporation's interests, by affording such persons with an opportunity to acquire an equity interest in the Corporation through the issuance of stock options.

The shareholders are being asked to approve the Resulting Issuer Equity Incentive Plan at the Meeting, substantially in the form attached to this Circular as Appendix "L".

THE NEW EQUITY INCENTIVE PLAN WILL ONLY BE ADOPTED BY THE CORPORATION IN THE EVENT THAT THE BUSINESS COMBINATION IS SUCCESSFULLY COMPLETED.

Unless otherwise indicated, the persons designated as proxyholders in the accompanying form of Proxy will vote the Shares represented by such form of Proxy FOR the Equity Incentive Plan Resolution. If you do not specify how you want your Shares voted at the Meeting, the persons designated as proxyholders in the accompanying form of Proxy will cast the votes represented by your proxy at the Meeting FOR the Equity Incentive Plan Resolution.

The Board of Directors unanimously recommends that Shareholders vote FOR the Equity Incentive Plan Resolution at the Meeting.

Summary of Resulting Issuer Equity Incentive Plan

The principal features of the Resulting Issuer Equity Incentive Plan are summarized below.

Summary of the Resulting Issuer Equity Incentive Plan

The following information is intended as a brief description of the Resulting Issuer Equity Incentive Plan and is qualified in its entirety by the full text of the Resulting Issuer Equity Incentive Plan, substantially in the form attached to this Circular as Appendix "L". Capitalized terms are as defined in the Resulting Issuer Equity Incentive Plan.

Purpose

The purpose of the Resulting Issuer Equity Incentive Plan will be to enable the Resulting Issuer and its affiliated companies to: (i) attract and retain employees, officers, consultants, advisors and directors capable of assuring the future success of the Resulting Issuer; (ii) to offer such persons incentives to put forth maximum efforts; and (iii) to compensate such persons through various share and cash-based arrangements and provide them with opportunities for share ownership, thereby aligning the interests of such persons and the Resulting Issuer's shareholders.

The Resulting Issuer Equity Incentive Plan permits the granting of (i) share options (the "Options"), (ii) restricted share awards ("Restricted Shares"), (iii) restricted share units ("RSUs"),

(iv)share appreciation rights ("SARs"), (v) performance compensation awards ("Performance

-24 -

 

Awards"), (vi) dividend equivalents ("Dividend Equivalents") and (vii) other share based awards (collectively, the "Awards"), as more fully described below.

All rights and obligations noted below of the compensation and nominating committee (the "Compensation and Nominating Committee") in respect of the Resulting Issuer Equity Incentive Plan may, at any time and from time to time, be exercised by the Resulting Issuer's Board of Directors.

Eligibility

Any of the Resulting Issuer's employees, officers, directors, consultants or any affiliate or person to whom an offer of employment or engagement with the Resulting Issuer is extended, are eligible to participate in the Resulting Issuer Equity Incentive Plan if selected by the Compensation and Nominating Committee (the "Participants"). The basis of participation of an individual under the Resulting Issuer Equity Incentive Plan, and the type and amount of any Award that an individual will be entitled to receive under the Resulting Issuer Equity Incentive Plan, will be determined by the Compensation and Nominating Committee based on its judgment as to the best interests of the Resulting Issuer and its shareholders, and therefore cannot be determined in advance.

Any shares subject to an Award under the Resulting Issuer Equity Incentive Plan that are purchased, forfeited, reacquired by the Resulting Issuer (including any withheld to satisfy tax withholding obligations on Awards or securities that are settled in cash), or cancelled, shall again be available to be awarded under the Resulting Issuer Equity Incentive Plan.

In the event of any dividend, recapitalization, forward or reverse share split, reorganization, merger, amalgamation, consolidation, split-up, split-off, combination, repurchase or exchange of securities or other securities of the Resulting Issuer, issuance of warrants or other rights to acquire securities or other securities of the Resulting Issuer, or other similar corporate transaction or event, which affects the securities, or unusual or nonrecurring events affecting the Resulting Issuer, or the financial statements of the Resulting Issuer, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, the Compensation and Nominating Committee may make such adjustment, which is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Resulting Issuer Equity Incentive Plan, to (i) the number and kind of securities which may thereafter be issued in connection with Awards, (ii) the number and kind of securities issuable in respect of outstanding Awards, (iii) the purchase price or exercise price relating to any Award or, if deemed appropriate, make provision for a cash payment with respect to any outstanding Award, and (iv) any securities limit set forth in the Resulting Issuer Equity Incentive Plan.

If a Participant ceases to be an Eligible Person for any reason, whether for cause or otherwise, the Participant may, within 90 days following the date on which it ceased to be an Eligible Person, or within 30 days if such Participant is an investor relations person or holder of "incentive stock options", exercise any Option that was exercisable on the date the Participant ceased to be an Eligible Person. The Compensation and Nominating Committee may extend such 90 or 30 day period, as applicable, subject to obtaining any approval required by the CSE and subject to a maximum extension to the original expiry date of such Options. Any Option that was not exercisable on the date the Participant ceased to be an Eligible Person will be deemed to expire on such date, unless extended pursuant to the Resulting Issuer Equity Incentive Plan. Any Option that was exercisable on the date the Participant ceased to be an Eligible Person will be deemed

- 25 -

 

to expire immediately following the 90 or 30 day period, as applicable, unless extended pursuant to the Resulting Issuer Equity Incentive Plan.

Awards

Shares Available

Subject to adjustment as provided in the Resulting Issuer Equity Incentive Plan, the aggregate number of common shares in the capital of the Resulting Issuer (the "Resulting Issuer Shares") that may be issued under all Awards under the Resulting Issuer Equity Incentive Plan shall be determined by the board of the Resulting Issuer from time to time, which is expected to be equal to 20% of the issued and outstanding Resulting Issuer Shares at the time of the grant. Notwithstanding the foregoing, the aggregate number of Resulting Issuer Shares that may be issued pursuant to awards of Incentive Share Options shall not exceed that number of Resulting Issuer Shares which is equal to 10% of all issued and outstanding Resulting Issuer Shares on the closing of the Business Combination.

Options

Under the terms of the Resulting Issuer Equity Incentive Plan, unless the Compensation and Nominating Committee determines otherwise in the case of an Option substituted for another Option in connection with a corporate transaction, the exercise price of the Options may not be lower than the greater of the closing market price of the Resulting Issuer Shares on (a) the trading day prior to the date of grant of the Options and (b) the date of grant of the Options. Options granted under the Resulting Issuer Equity Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation and Nominating Committee and specified in the applicable award agreement. The maximum term of an Option granted under the Resulting Issuer Equity Incentive Plan will be ten years from the date of grant. Payment in respect of the exercise of an Option may not be made, in whole or in part, with a promissory note.

Restricted Shares and RSUs

Awards of Restricted Shares and RSUs shall be subject to such restrictions as the Compensation and Nominating Committee may impose (including, without limitation, any limitation on the right to vote or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Compensation and Nominating Committee may deem appropriate. Upon a Participant's termination of employment or service or resignation or removal as a director (in either case, as determined under criteria established by the Compensation and Nominating Committee) during the applicable restriction period, all Restricted Shares and all RSUs held by such Participant at such time shall be forfeited and reacquired by the Resulting Issuer for cancellation at no cost to the Resulting Issuer; provided, however, that the Compensation and Nominating Committee may waive in whole or in part any or all remaining restrictions with respect to shares of Restricted Share or RSUs. Pursuant to the policies of the CSE, the value ascribed to the Resulting Issuer Shares covered by the Restricted Share or RSU may not be lower than the greater of the closing market price of the Resulting Issuer Shares on (a) the trading day prior to the date of grant of the Restricted Shares or RSUs, and (b) the date of grant of the Restricted Shares or RSUs. Any Restricted Share or RSU granted under the Resulting Issuer Equity Incentive Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Compensation and Nominating Committee may deem appropriate.

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Share Appreciation Rights

A SAR granted under the Resulting Issuer Equity Incentive Plan shall confer on the Participant a right to receive upon exercise, the excess of (i) the fair market value of one Resulting Issuer Share on the date of exercise over (ii) the grant price of the SAR as specified by the Compensation and Nominating Committee (which price shall not be less than 100% of the fair market value of one Resulting Issuer Share on the date of grant of the SAR); provided, however, that, subject to applicable law and stock exchange rules, the Compensation and Nominating Committee may designate a grant price below fair market value on the date of grant if the SAR is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Resulting Issuer or an affiliate. Notwithstanding the foregoing, pursuant to the rules of the CSE, Resulting Issuer Shares issued in connection with SARs may not be priced lower than the greater of the closing market prices of the Resulting Issuer Shares on (a) the trading day prior to the date of grant of the SAR, and (b) the date of grant of the SAR. Subject to the terms of the Resulting Issuer Equity Incentive Plan, the policies of the CSE and any applicable award agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement, equity compensation and any other terms and conditions of any SAR shall be as determined by the Compensation and Nominating Committee. The Committee may impose such conditions or restrictions on the exercise of any SAR as it may deem appropriate. No SAR may be exercised more than ten years from the grant date.

Performance Awards

A Performance Award granted under the Resulting Issuer Equity Incentive Plan (i) may be denominated or payable in cash, Resulting Issuer Shares (including without limitation, Restricted Share and RSUs), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of one or more objective performance goals during such performance periods as the Compensation and Nominating Committee shall establish. Notwithstanding the foregoing, pursuant to the rules of the CSE, Performance Awards may not be priced lower than the greater of the closing market prices of the Resulting Issuer Shares on (a) the trading day prior to the date of grant of the Performance Award, and (b) the date of grant of the Performance Award. Subject to the terms of the Resulting Issuer Equity Incentive Plan and the policies of the CSE, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Compensation and Nominating Committee.

Dividend Equivalents

A Dividend Equivalent granted under the Resulting Issuer Equity Incentive Plan allows Participants to receive payments (in cash, Resulting Issuer Shares, other securities, other Awards or other property as determined in the discretion of the Compensation and Nominating Committee) equivalent to the amount of cash dividends paid by the Resulting Issuer to holders of Resulting Issuer Shares with respect to a number of Resulting Issuer Shares as determined by the Compensation and Nominating Committee. Subject to the terms of the Resulting Issuer Equity Incentive Plan, the policies of the CSE and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Compensation and Nominating Committee shall determine. Notwithstanding the foregoing, (i) the Compensation and Nominating Committee may not grant Dividend Equivalents to eligible persons in connection with grants of Options, SARs or other Awards the value of which is based solely on an increase in the value of

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the Resulting Issuer Shares after the date of grant of such Award, and (ii) dividend and Dividend Equivalent amounts may be accrued but shall not be paid unless and until the date on which all conditions or restrictions relating to such Award have been satisfied, waived or lapsed. Subject to the terms of the Resulting Issuer Equity Incentive Plan, the policies of the CSE and any applicable award agreement, such Dividend Equivalents may have such terms and conditions as the Compensation and Nominating Committee shall determine, provided that pursuant to the rules of the CSE, Dividend Equivalents may not be priced lower than the greater of the closing market prices of the Resulting Issuer Shares on (a) the trading day prior to the date of grant of the Dividend Equivalent, and (b) the date of grant of the Dividend Equivalent.

Other

In addition, Awards may be granted under the Resulting Issuer Equity Incentive Plan that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Resulting Issuer Shares (including, without limitation, securities convertible into Resulting Issuer Shares), as are deemed by the Compensation and Nominating Committee to be consistent with the purpose of the Resulting Issuer Equity Incentive Plan in accordance with applicable regulations, provided that pursuant to the rules of the CSE, such Awards may not be priced lower than the greater of the closing market prices of the Resulting Issuer Shares on (a) the trading day prior to the date of grant of the Award, and (b) the date of grant of the Award.

General

The Compensation and Nominating Committee may impose restrictions on the grant, exercise or payment of an Award as it determines appropriate, subject to compliance with CSE policies. Generally, Awards granted under the Resulting Issuer Equity Incentive Plan shall be non- transferable.

The Compensation and Nominating Committee may amend, suspend, discontinue or terminate the Resulting Issuer Equity Incentive Plan; provided that (i) such amendment, alteration, suspension, discontinuation, or termination complies with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange and (ii) no such amendment or termination may adversely affect Awards then outstanding without the Award holder's permission.

Tax Withholding

The Resulting Issuer may take such action as it deems appropriate to ensure that all applicable federal, state, local and/or foreign payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant.

5.Delisting Resolution

At the Meeting, the Shareholders will be asked to approve, conditional and effective only upon the completion of the Business Combination, the Delisting Resolution which proposes to delist the Common Shares of the Corporation from the TSX-V and relist the Common Shares of the Corporation on the CSE on the completion of the Business Combination.

To be effective, the Delisting Resolution must be approved by a simple majority of the votes cast by Shareholders who vote at the Meeting, either in person or by Proxy.

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It is a condition precedent to the completion of the Business Combination that the Shareholders approve the Delisting Resolution. If the Delisting Resolution does not receive the requisite approval, the Business Combination will not proceed, unless such condition precedent is waived by Cybin.

THE DELISTING RESOLUTION WILL ONLY BE IMPLEMENTED IN THE EVENT THAT ALL CONDITIONS TO THE BUSINESS COMBINATION ARE SATISFIED OR WAIVED (OTHER THAN THE NAME CHANGE, CONSOLIDATION, CONTINUANCE, DISPOSITION, AMALGAMATION AND OTHER THAN CONDITIONS THAT MAY BE OR ARE INTENDED TO BE SATISFIED ONLY AFTER THE BUSINESS COMBINATION IS COMPLETED).

Unless otherwise indicated, the persons designated as proxyholders in the accompanying form of Proxy will vote the Common Shares represented by such form of Proxy FOR the Delisting Resolution. If you do not specify how you want your Common Shares voted at the Meeting, the persons designated as proxyholders in the accompanying form of Proxy will cast the votes represented by your proxy at the Meeting FOR the Delisting Resolution.

The Board of Directors unanimously recommends that Shareholders vote FOR the Delisting Resolution at the Meeting.

6.Disposition Resolution

The Corporation entered into a mineral property purchase agreement dated July 15, 2020 with 1257172 B.C. Ltd. (the "Purchaser") whereby the Corporation agreed to sell all assets and liabilities of the Corporation, including but not limited to a 100% interest in the Benton Property located in New Brunswick, Canada (the "Disposition"). In consideration, the Purchaser agreed to pay the Corporation $10. The Purchaser is arm's length with the Corporation.

In accordance with the BCBCA, the Corporation is required to receive shareholder approval as the Disposition constitutes a sale of substantially all of the undertaking of the Corporation. The Disposition must be approved by special resolution in order to become effective. To pass, a special resolution requires the affirmative vote of not less than 66 2/3% of the votes cast by the Corporation's shareholders present in person or by proxy at the Meeting.

Rights of Dissenting Shareholders

The Shareholders have the right to dissent to the Disposition pursuant to Part 8, Division 2 of the BCBCA, the text of which is set forth in Appendix "K" to this Circular. In the event that the actions approved by the Disposition Resolution become effective, any Shareholder who dissents in accordance with the provisions of Part 8, Division 2 of the BCBCA will be entitled to be paid the fair value of the Common Shares held by such shareholder determined as at the close of business on the last business day before the Continuance Resolution is adopted. See "Dissent Rights" below.

THE DISPOSITION RESOLUTION WILL ONLY BE IMPLEMENTED IMMEDIATELY PRIOR TO THE COMPLETION OF THE BUSINESS COMBINATION.

Unless otherwise indicated, the persons designated as proxyholders in the accompanying form of Proxy will vote the Common Shares represented by such form of Proxy FOR the Disposition Resolution. If you do not specify how you want your Common Shares voted at the Meeting, the persons designated as proxyholders in the accompanying form of Proxy will cast the votes represented by your proxy at the Meeting FOR the Disposition Resolution.

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The Board of Directors unanimously recommends that Shareholders vote FOR the Disposition Resolution at the Meeting.

7.Continuation Resolution

The Corporation is currently governed by the Business Corporations Act (British Columbia) (the "BCBCA"). The Corporation's shareholders will be asked to consider and, if thought appropriate, pass, with or without amendment, at the Meeting a special resolution approving the Continuance under the Business Corporations Act (Ontario) (the "OBCA"). See "Comparison of the BCBCA and the OBCA" below for a discussion of the principal differences and similarities between the BCBCA and OBCA.

If the Continuance is approved at the Meeting, it is proposed that the Corporation file the continuation application required for the Continuance into Ontario with the Ontario Ministry of Government Services, which will result in a new articles of incorporation (the "New Articles") replacing the existing notice articles as the charter document of the Corporation under the OBCA. The New Articles and new by-laws of the Corporation (the "New By-laws") are expected to be substantially in the form attached to this Circular as Appendix "I" and Appendix "J", respectively.

The Continuance must be approved by special resolution in order to become effective. To pass, a special resolution requires the affirmative vote of not less than 66 2/3% of the votes cast by the Corporation's shareholders present in person or by proxy at the Meeting.

The complete text of the Continuance Resolution which management intends to place before the Meeting authorizing the Continuance is set forth in Appendix "G".

Continuance into the Province of Ontario and Adoption of New Articles and By-laws

The corporate affairs of the Corporation are currently governed by the BCBCA. The British Columbia Registrar of Companies (the "Registrar") under the BCBCA is prepared to allow a continuance out of the Province of British Columbia and into the Province of Ontario upon receipt of an application for authorization to continue out, which confirms that the Corporation will continue to own its property and be subject to any obligations or liabilities prior to the Continuance.

The Continuance does not create a new legal entity, nor does it prejudice or affect the continuity of the Corporation. The Corporation's authorized capital will continue to consist of an unlimited number of common shares and an unlimited number of preferred shares. The Continuance and the adoption of the New Articles and the New By-laws is not expected to result in any substantive changes to the constitution, powers or management of the Corporation, except as otherwise described herein.

The Continuance will, however, affect certain rights of the shareholders as they currently exist under the OBCA as briefly discussed herein. Shareholders should consult their legal advisors regarding implications of the Continuance, which may be of particular importance to them.

The adoption of the New Articles and the New By-laws has been approved by the Board, subject to the completion of the Continuance. Upon the Continuance becoming effective, the former notice of articles and Articles of the Corporation will be replaced by the New Articles and the New By-laws, substantially in the forms attached as Appendix "I" and "J", respectively, of this Circular.

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Comparison of the BCBCA and the OBCA

The Corporation is currently governed by the BCBCA but following the Continuance will be governed by the OBCA. While the rights and privileges of shareholders of a BCBCA company are, in many instances, comparable to those rights and privileges of shareholders of a BCBCA company, there are certain differences. The following is a summary of some of the principal differences and similarities between the BCBCA and OBCA; however, such summary is not intended to be exhaustive and should not be considered as legal advice to any particular shareholder. Shareholders are advised to consult their own legal advisors respecting all of the implications of the Continuance.

Notwithstanding the foregoing, upon completion of the Continuance, the Corporation will to be bound by the rules and policies of applicable securities legislation.

Charter Documents

Under the BCBCA, the charter documents consist of: (i) the notice of articles, which sets forth certain prescribed information such as the name of the company, the company's registered and records office, the names and addresses of the directors of the company and the authorized share structure, and (ii) the articles, which govern the management of the company. The notice of articles is filed with the Registrar and the articles are filed only at the records office.

Under the OBCA, the charter documents consist of: (i) articles of incorporation which set forth, among other things, the name of the company, the amount and type of authorized capital, whether there are any restrictions on the transfer of shares of the company, the number of directors (or the minimum and maximum number of directors), any restrictions on the business that the company may carry on and other provisions such as the ability of the directors to appoint additional directors between annual meetings, and (ii) the by-laws which govern the management of the company. The articles are filed with the Ontario Ministry of Finance and the by-laws are filed only at the registered and records office.

Ability to Set Necessary Levels of Shareholder Consent

Under the BCBCA, a company, in its articles, can establish levels for various shareholder approvals (other than those prescribed by the BCBCA). The percentage of votes required for

a"special resolution" can be specified in the articles and may be no less than two-thirds (2/3) and no more than three-quarters (3/4) of the votes cast. The OBCA does not provide for flexibility on shareholder approvals, which are either ordinary resolutions passed by a majority of the votes cast or, where specified in the OBCA, special resolutions which must be passed by at least two- thirds (2/3) of the votes cast.

Choice of Resolutions for Corporate Actions

Under the BCBCA, substantive changes to the charter documents such as an alteration of the restrictions, if any, on the business carried on by a company, an increase or reduction of the authorized capital of a company or changes to the special rights and restrictions attached to shares issued by the company require the type of resolution specified by the BCBCA, or if the BCBCA does not specify the type of resolution, by the type of resolution specified by the articles or, if neither specify the type of resolution, a special resolution passed by the majority of votes that the articles of the company specify is required, if that specified majority is at least two-thirds

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(2/3) and not more than three- quarters (3/4) of the votes cast on the resolution or, if the articles do not contain such a provision, a special resolution passed by at least two-thirds (2/3) of the votes cast on the resolution. The BCBCA provides that special rights and restrictions can be created and attached to issued shares or varied by the type of shareholders' resolutions specified by the articles, or if the articles do not specify the type of resolution, by a special resolution. A proposed amalgamation requires a special resolution approved by the holders of all shares issued, whether voting or not. A continuance of a company out of the jurisdiction or a sale of all or substantially all of the undertaking of the company requires a special resolution passed by holders of shares of each class entitled to vote at a general meeting of the company. The BCBCA provides that a company may, by directors' resolution or ordinary resolution authorize an alteration of its notice of articles to adopt or change a translation of its name. Similarly, if the articles so provide, the name of the company may be changed by a directors' resolution, an ordinary resolution or a special resolution. In addition, certain changes to a company's capital structure including, but not limited to, the creation or cancellation of one or more classes or series of shares, changing the authorized capital, consolidating or subdividing all or any of a company's issued or unissued shares, and other alterations to the share capital and authorized capital may be effected by directors' resolution are permitted under the BCBCA.

Under the OBCA substantive alterations to the charter documents of a company require a resolution passed by not less than two-thirds (2/3) of the votes cast by the shareholders voting on the resolution authorizing the alteration and, where certain specified rights of the holders of a class of shares are affected differently by the alteration than the rights of the holders of other classes of shares, a resolution passed by not less than two-thirds (2/3) of the votes cast by the holders of all of the shares of a company, whether or not they carry the right to vote, and a special resolution of each class, or series, as the case may be, even if such class or series is not otherwise entitled to vote. A resolution to amalgamate an OBCA company requires a special resolution passed by the holders of each class of shares or series of shares, whether or not such shares otherwise carry the right to vote, if such class or series of shares are affected differently. Changes to a company's by-laws requires only an ordinary resolution passed by a simple majority of the votes cast on the resolution.

Change of Name

Under the Corporation's existing Articles, the Corporation may change its name by directors' resolution. The OBCA provides that a special resolution is required in order to change a company's name.

Directors

The OBCA requires that for distributing corporations (like the Corporation) there must be a minimum of three (3) directors at least two (2) of whom shall not be officers or employees of the corporation or its affiliates, and that at least one- quarter (1/4) of the directors be resident Canadians.

The BCBCA provides that a company must have at least one (1) director unless it is a public company, in which case, it must have at least three (3) directors. However, unlike the OBCA, the BCBCA does not impose any residency requirements on the directors.

Under the OBCA, directors may be removed by ordinary resolution whereas under the BCBCA, directors may be removed by a special resolution or, if the articles of a company provide, that a

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director may be removed by a resolution of the shareholders entitled to vote at general meetings passed by less than a special majority or may be removed by some other method, by the resolution or method specified.

Place of Meetings

Under the BCBCA and the Corporation's existing Articles, general meetings of shareholders may be held anywhere in the world.

The OBCA provides that meetings of shareholders may be held outside of Ontario if a company's articles so provide or if all the shareholders entitled to vote at the meeting so agree.

Quorum Requirement

The Corporation's existing Articles set the quorum requirement as any two shareholders, in person or by proxy, that attend the shareholder meeting.

Under the proposed New By-laws, two (2) or more shareholders holding at least 5 per cent or more of the outstanding shares of the Corporation entitled to vote at the Meeting must be present in person or by proxy at the Meeting before any action may validly be taken at the Meeting.

Requisition of Meetings

Both the OBCA and the BCBCA provide that one (1) or more shareholders of a company holding not less than five percent (5%) of the issued voting shares may give notice to the directors requiring them to call and hold a general meeting of the shareholders of the company.

Under the BCBCA, if the directors do not call a meeting within 21 days of receiving the requisition, the requisitioning shareholders, or any one of them holding in the aggregate, more than two and a half percent (2.5%) of the issued shares of the company that carry the right to vote at general meetings, may call the meeting.

Under the OBCA, if the directors do not call a meeting within 21 days of receiving the requisition, any shareholder who signed the requisition may call the meeting.

Form of Proxy and Information Circular

The BCBCA and OBCA both provide that the applicable form of proxy and information circular for reporting companies is that contained in the relevant parts of National Instrument 51-102 Continuous Disclosure Requirements such that the requirements are the same for public companies in both jurisdictions.

Sale of Undertaking

Under the BCBCA, a company may sell, lease or otherwise dispose of all or substantially all of the undertaking of the company if it does so in the ordinary course of its business or if it has been authorized to do so by a special resolution passed by the percentage of votes that the articles of the company specify is required. The current Articles provide that a special resolution must be passed by at least two-thirds (2/3) of the votes cast on the resolution.

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Under the OBCA, a company may sell, lease or exchange all or substantially all of the property of the company (other than in the ordinary course of business of the company) only if it has been authorized by a special resolution. Each share of the company carries the right to vote in respect of the sale, lease or exchange whether or not such share otherwise carries the right to vote and, where a class or series of shares is affected by the sale, lease or exchange in a manner different from another class or series, the holders of shares of that affected class or series are entitled to vote separately on the transaction.

Both statutes offer dissent rights in the case of such a transaction.

Rights of Dissent and Appraisal

Both the OBCA and the BCBCA contain similar dissent rights for shareholders who dissent to certain actions taken by a company, requiring the company to purchase shares held by such shareholder at the fair value of such shares upon the due exercise of such dissent rights.

In British Columbia, the dissent right is applicable where a company proposes to:

(a)alter its articles to alter restrictions on the powers of the company or on the business it is permitted to carry on;

(b)adopt an amalgamation agreement;

(c)approve an amalgamation into a foreign jurisdiction;

(d)approve an arrangement, the terms of which arrangement permit dissent;

(e)authorize or ratify the sale, lease or other disposition of all or substantially all of the company's undertaking; and

(f)authorize the continuation of the company into a jurisdiction other than British Columbia.

The dissent right is also applicable to any other resolution, if dissent is authorized by the resolution, or under any court order that permits dissent.

In Ontario, the dissent right is applicable where a company proposes to:

(a)amend its articles to add, change or remove any provision restricting the issue or transfer or ownership of shares of a class or series of shares of the company;

(b)to add, change or remove any restriction on the business that the company may carry on or upon the powers that the company may exercise,

(c)amalgamate with another company (unless such amalgamation is between (i) a holding company and one or more of its subsidiaries, or (ii) two or more wholly-owned subsidiaries of the same holding company);

(d)be continued under the laws of another jurisdiction; or

(e)sell, lease or exchange all or substantially all of its property.

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However, the procedures for exercise of the dissent remedies are different. See "Dissent Rights" below and Appendix "K" to this Circular for a description of the Dissent Rights under the BCBCA applicable to the Continuance Resolution.

Oppression Remedies

An oppression remedy allows a shareholder to apply to a court if a company is being run in

amanner which is oppressive or unfairly prejudicial to the interests of that shareholder. If the court finds that oppression exists, it can grant a variety of remedies, ranging from an order restraining the conduct complained of to an order requiring the company to repurchase the shareholder's shares or an order liquidating the company.

In British Columbia, an oppression remedy is available to a shareholder of a company (which term includes any person whom the court considers to be an appropriate person to make an application).

Under the OBCA a registered shareholder, beneficial shareholder, former registered shareholder or beneficial shareholder, director, former director, officer, former officer of a company or any of its affiliates, or any other person who, in the discretion of a court, is a proper person to seek an oppression remedy, and in the case of an offering corporation, the Ontario Securities Commission, may apply to a court for an order to rectify the matters complained of where, in respect of a company or any of its affiliates:

(a)any act or omission of such company or its affiliates effects or threatens to effect a result;

(b)the business or affairs of such company or its affiliates are or have been or are threatened to be carried on or conducted in a manner; or

(c)the powers of the directors of such company or any of its affiliates are, have been or are threatened to be exercised in a manner,

that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of any security holder, creditor, director or officer of such company.

Under the BCBCA the applicant must bring the application in a timely manner, which is not required under the OBCA, and the court may make an order in respect of the complaint if it is satisfied that the application was brought by the shareholder in a timely manner.

Shareholder Derivative Actions

Under the BCBCA, a shareholder or director of a company, or any other person whom the court considers to be an appropriate person to make an application may, with leave of the court, bring an action in the name and on behalf of the company to enforce a right, duty or obligation owed to the company that could be enforced by the company itself or to obtain damages for any breach of such a right, duty or obligation. No leave may be granted unless the court is satisfied that:

(a)the complainant has given at least 14 days' notice to the directors of the company or its subsidiary of the complainant's intention to apply to the court if the directors of the company or its subsidiary do not bring, diligently prosecute, defend or discontinue the action;

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(b)the complainant is acting in good faith; and

(c)it appears to be in the interests of the company or its subsidiary that the action be brought, prosecuted, defended or discontinued.

A broader right to bring a derivative action is contained in the OBCA than is found in the BCBCA, and this right extends to former shareholders, directors or officers of a company or its affiliates, and any person who, in the discretion of the court, is a proper person to make an application to court to bring a derivative action. In addition, the OBCA permits derivative actions to be commenced in the name and on behalf of a company or any of its subsidiaries. The complainant must provide the directors of such company or its subsidiary with fourteen days' notice of the complainant's intention to apply to the court to bring a derivative action, unless all of the directors of such company or its subsidiary are defendants in the action.

Dividends

Under the BCBCA, a company may pay dividends to its shareholders by shares or money, unless the company is insolvent or the payment of the dividends would render the company insolvent.

Under the OBCA, a company may not pay dividends if the board of directors of the company has reasonable grounds for believing that: (i) the company is or, after the payment, would be unable to pay its liabilities as they become due; or (ii) the realizable value of the company's assets would thereby be less than the aggregate of: (A) its liabilities; and (B) its stated capital of all classes.

Rights of Dissenting Shareholders

The Shareholders have the right to dissent to the Continuance pursuant to Part 8, Division 2 of the BCBCA, the text of which is set forth in Appendix "K" to this Circular. In the event that the actions approved by the Continuance Resolution become effective, any Shareholder who dissents in accordance with the provisions of Part 8, Division 2 of the BCBCA will be entitled to be paid the fair value of the Shares held by such shareholder determined as at the close of business on the last business day before the Continuance Resolution was adopted. See "Dissent Rights" below.

Unless otherwise indicated, the persons designated as proxyholders in the accompanying form of Proxy will vote the Common Shares represented by such form of Proxy FOR the Continuation Resolution. If you do not specify how you want your Common Shares voted at the Meeting, the persons designated as proxyholders in the accompanying form of Proxy will cast the votes represented by your proxy at the Meeting FOR the Continuation Resolution.

The Board of Directors unanimously recommends that Shareholders vote FOR the Continuation Resolution at the Meeting.

ADDITIONAL INFORMATION

Additional information regarding the Corporation and its business activities is available under the Corporation's profile on the SEDAR website located at www.sedar.com. The Corporation's financial information is provided in the Corporation's audited consolidated financial statements

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and related management discussion and analysis for its most recently completed financial year and may be viewed on the Corporation's profile on the SEDAR website at www.sedar.com. Copies of the Corporation's consolidated financial statements and related management discussion and analysis are available upon request, free of charge to Shareholders of the Corporation, by contacting by contacting the Chief Executive Officer, at the Corporation's registered office located at Suite 704, 595 Howe Street, Vancouver, BC V6C 2T5.

DIRECTOR APPROVAL

The contents of this Circular and the sending thereof to the Shareholders of the Corporation have been approved by the Board of Directors.

July 15, 2020

Signed:

"Nico Civelli"

Name:

Nico Civelli

Title:

Chief Executive Officer

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APPENDIX "A"

THE BOARD RESOLUTION

"BE IT HEREBY RESOLVED as an ordinary resolution of the Corporation that:

1.the number of Directors of the Corporation to be elected be and is hereby fixed at three until the earlier of:

(a)the close of the next annual meeting of the Shareholders of the Corporation; and

(b)12:01 a.m. on the day following the effective date of the Business Combination (the "Effective Time of the Business Combination");

is hereby approved; and

2.the number of Directors of the Corporation to be elected following the Effective Time of the Business Combination until the close of the next annual meeting of the Shareholders be and is hereby fixed at five."

i

 

APPENDIX "B"

DIRECTOR ELECTION RESOLUTION

BE IT HEREBY RESOLVED as an ordinary resolution of the Corporation that:

(1)the election of each of Nico Civelli, Mark Lawson and Matthew Sutcliffe as Directors of the Corporation to hold office until the earlier of:

(a)the close of the next annual meeting of Shareholders of the Corporation or until their successors are elected or appointed; and

(b)12:01 a.m. on the day following the effective date of the Business Combination (the "Effective Time of the Business Combination");

is hereby approved; and

(2)the election of each of Paul Glavine, Eric So, John Kankis, Eric Hoskins and Grant Froese as Directors of the Corporation, to hold office from the Effective Time of the Business Combination until the close of the next annual meeting of the Shareholders or until their successors are elected or appointed, is hereby approved."

- ii-

 

APPENDIX "C"

AUDITOR RESOLUTION

"BE IT HEREBY RESOLVED that:

(1)the appointment of Wolrige Mahon LLP as auditor of the Corporation to hold office until the earlier of:

(a)the close of the next annual meeting of the Shareholders, or

(b)12:01 a.m. on the day following the effective date of the Business Combination (the "Effective Time of the Business Combination")

is hereby approved;

(2)the appointment of Zeifmans LLP as auditor of the Corporation to hold office from the Effective Time of the Business Combination until the close of the next annual meeting of the Shareholders is hereby approved; and

(3)the Board of Directors is hereby authorized to fix the remuneration of the auditor so appointed."

- iii-

 

APPENDIX "D"

EQUITY INCENTIVE PLAN RESOLUTION

"BE IT HEREBY RESOLVED that:

(1)the equity incentive plan of the Resulting Issuer, substantially in the form attached as Appendix "L" to the management information circular of the Corporation dated July 15, 2020, with such amendments, modifications and alterations thereto as any director or officer may approve, is hereby authorized and approved; and

(2)any director or officer of the Corporation is hereby authorized and directed, acting for, in the name of, and on behalf of, the Corporation, to execute or cause to be executed, and to deliver or cause to be delivered, such other documents and instruments, and to do or cause to be done all such acts and things, as may in the opinion of such director or officer be necessary or desirable to carry out the intent of the foregoing resolution."

- iv-

 

APPENDIX "E"

DELISTING RESOLUTION

"BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:

1.the application to de-list from the TSX Venture Exchange (the "TSX-V Delisting") be approved;

2.any other actions taken or expected to be taken, in support of the TSX-V Delisting, are approved; and

3.any one director or officer of the Corporation is hereby authorized and directed to do such further acts as may be required to give effect to this resolution and deliver and file all such documents as any such director or officer may, in his sole discretion, determine are necessary, desirable or useful to implement the foregoing resolution."

- v-

 

APPENDIX "F"

DISPOSITION RESOLUTION

"BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:

1.the entry into the Purchase Agreement, including the disposition of all assets and liabilities of the Corporation, including but not limited to a 100% interest in the Benton Property, (the "Disposition") is hereby ratified, confirmed and approved;

2.the directors of the Corporation, in their sole discretion, may act upon this resolution authorizing the Disposition, or if deemed appropriate and without any further approval from the shareholders of the Corporation, may choose not to act upon this resolution notwithstanding shareholder approval of the Disposition and are authorized to revoke this resolution in their sole discretion at any time prior to effecting the Disposition; and

3.any director or officer of the Corporation is hereby authorized and directed, acting for, in the name of, and on behalf of, the Corporation, to execute or cause to be executed, and to deliver or cause to be delivered, such other documents and instruments, and to do or cause to be done all such acts and things, as may in the opinion of such director or officer be necessary or desirable to carry out the intent of the foregoing resolution."

- vi-

 

APPENDIX "G"

CONTINUATION RESOLUTION

"BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:

1.the continuance of the Corporation out of the jurisdiction of the Province of British Columbia and into the Province of Ontario under the Business Corporations Act (Ontario) (the "OBCA") be and is hereby authorized and approved;

2.the application to the British Columbia Register of Companies in accordance with section 308 under the Business Corporations Act (British Columbia) for authorization to continue out of the Province of British Columbia and into the Province of Ontario under the OBCA be and is hereby authorized and approved;

3.the application by the Corporation to the Ontario Ministry of Government Services under the OBCA for a certificate of continuance in order to continue out of the Province of British Columbia and into the Province of Ontario under the OBCA under the name "CYBIN CORPORATION", or such other name as the board of directors may approve, be and is hereby authorized and approved;

4.effective upon issuance of the certificate of continuance, the Corporation is hereby authorized and directed to adopt the New Articles and the New By-laws in substantially the forms attached as schedules to the Corporation's management information circular dated July 15, 2020, with such amendments, modifications and alterations thereto as the board of directors of the Corporation may approve in order to comply with the requirements of the OBCA, in substitution for the current notice of articles and Articles of the Corporation and all amendments to the current notice of articles and Articles of the Corporation reflected therein are adopted and confirmed;

5.the New By-laws, as adopted by the Corporation's board of directors, are hereby confirmed, ratified and approved;

6.any one director or officer of the Corporation is hereby authorized and directed for and on behalf of the Corporation to execute and deliver, under corporate seal of the Corporation or otherwise, all such documents and instruments and to do all such acts and things as in his or her opinion may be necessary or desirable to give full effect to this special resolution, the execution of any such documents and instruments or the doing of any such acts or things being conclusive evidence of such determination; and

7.notwithstanding any approval of the shareholders of the Corporation as provided herein, the board of directors may, in its sole discretion, revoke this special resolution and abandon the Continuance before it is acted upon without further approval of the shareholders."

- vii-

 

APPENDIX "H"

RESULTING ISSUER AUDIT COMMITTEE CHARTER

(Implemented pursuant to National Instrument 52-110 – Audit Committees)

National Instrument 52-110 – Audit Committees (the "Instrument") relating to the composition and function of audit committees was implemented for reporting issuers and, accordingly, applies to every Canadian Securities Exchange (the "Exchange") listed company, including Cybin Corporation (the "Corporation"). The Instrument requires all affected issuers to have a written audit committee charter which must be disclosed, as stipulated by Form 52-110F2, in the management information circular of the Corporation wherein management solicits proxies from the security holders of the Corporation for the purpose of electing directors to the board of directors. The Corporation, as an Exchange listed company is, however, exempt from certain requirements of the Instrument.

This Charter has been adopted by the board of directors of the Corporation (the "Board") in order to comply with the Instrument and to more properly define the role of the Committee in the oversight of the financial reporting process of the Corporation. Nothing in this Charter is intended to restrict the ability of the Board or the Committee to alter or vary procedures in order to comply more fully with the Instrument or any other such requirement of the Exchange, as applicable from time to time.

PART 1

Purpose:

The purpose of the Committee is to:

(a)improve the quality of the Corporation's financial reporting;

(b)assist the Board to properly and fully discharge its responsibilities;

(c)provide an avenue of enhanced communication between the directors and external auditors;

(d)enhance the external auditor's independence;

(e)ensure the credibility and objectivity of financial reports; and

(f)strengthen the role of the directors by facilitating in depth discussions between directors, management and external auditors.

1.1Definitions

"accounting principles" has the meaning ascribed to it in National Instrument 52-107 – Acceptable Accounting Principles, Auditing Standards and Reporting Currency;

"Affiliate" means a Corporation that is a subsidiary of another Corporation or companies that are controlled by the same entity;

- viii-

 

"audit services" means the professional services rendered by the Corporation's external auditor for the audit and review of the Corporation's financial statements or services that are normally provided by the external auditor in connection with statutory and regulatory filings or engagements;

"Charter" means this audit committee charter;

"Committee" means the Audit Committee established by and among certain members of the Board for the purpose of overseeing the accounting and financial reporting processes of the Corporation and audits of the financial statements of the Corporation;

"Control Person" means any individual or company that holds or is one of a combination of individuals or companies that holds a sufficient number of any of the securities of the Corporation so as to affect materially the control of the Corporation, or that holds more than 20% of the outstanding voting shares of the Corporation except where there is evidence showing that the holder of those securities does not materially affect the control of the Corporation;

"financially literate" has the meaning set forth in Section 1.2;

"immediate family member" means a person's spouse, parent, child, sibling, mother or father- in-law, son or daughter-in-law, brother or sister-in-law, and anyone (other than an employee of either the person or the person's immediate family member) who shares the individual's home;

"Instrument" means National Instrument 52-110 – Audit Committees;

"MD&A" has the meaning ascribed to it in National Instrument 51-102;

"Member" means a member of the Committee;

"National Instrument 51-102" means National Instrument 51-102 – Continuous Disclosure Obligations; and

"non-audit services" means services other than audit services.

1.2Meaning of Financially Literate

For the purposes of this Charter, an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporation's financial statements.

PART 2

2.1Audit Committee

The Board has hereby established the Committee for, among other purposes, compliance with the Instrument.

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2.2Relationship with External Auditors and Other Parties

The Corporation will require its external auditor to report directly to the Committee and its Members shall ensure that such is the case.

Each Member shall be entitled, to the fullest extent permitted by law, to rely on the integrity of those persons and organizations within and outside the Corporation from whom he or she receives information, and the accuracy of the information provided to the Corporation by such other persons or organizations.

2.3Committee Responsibilities

1.The Committee shall be responsible for making the following recommendations to the Board of directors:

(a)the external auditor to be nominated for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Corporation; and

(b)the compensation of the external auditor.

2.The Committee shall be directly responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Corporation, including the resolution of disagreements between management and the external auditor regarding financial reporting. This responsibility shall include:

(a)reviewing the audit plan with management and the external auditor;

(b)reviewing with management and the external auditor any proposed changes in major accounting policies, the presentation and impact of significant risks and uncertainties, and key estimates and judgements of management that may be material to financial reporting;

(c)questioning management and the external auditor regarding significant financial reporting issues discussed during the fiscal period and the method of resolution;

(d)reviewing any problems experienced by the external auditor in performing the audit, including any restrictions imposed by management or significant accounting issues on which there was a disagreement with management;

(e)reviewing audited annual financial statements, in conjunction with the report of the external auditor, and obtaining an explanation from management of all significant variances between comparative reporting periods;

(f)reviewing the post-audit or management letter, containing the recommendations of the external auditor, and management's response and subsequent follow up to any identified weakness;

(g)reviewing interim unaudited financial statements before release to the public;

-x-

 

(h)reviewing all public disclosure documents containing audited or unaudited financial information before release, including any prospectus, the annual report and management's discussion and analysis;

(i)reviewing the evaluation of internal controls by the external auditor, together with management's response;

(j)reviewing the terms of reference of the internal auditor, if any;

(k)reviewing the reports issued by the internal auditor, if any, and management's response and subsequent follow up to any identified weaknesses; and

(l)reviewing the appointments of the chief financial officer and any key financial executives involved in the financial reporting process, as applicable.

3.The Committee shall pre-approve all non-audit services to be provided to the Corporation or its subsidiary entities by the issuer's external auditor.

4.The Committee shall review the Corporation's financial statements, MD&A, and annual and interim earnings press releases before the Corporation publicly discloses this information.

5.The Committee shall ensure that adequate procedures are in place for the review of the Corporation's public disclosure of financial information extracted or derived from the Corporation's financial statements, and shall periodically assess the adequacy of those procedures.

6.When there is to be a change of auditor, the Committee shall review all issues related to the change, including the information to be included in the notice of change of auditor called for under National Instrument 51-102, and the planned steps for an orderly transition.

7.The Committee shall review all reportable events, including disagreements, unresolved issues and consultations, as defined in National Instrument 51-102, on a routine basis, whether or not there is to be a change of auditor.

8.The Committee shall, as applicable, establish procedures for:

(a)the receipt, retention and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and

(b)the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.

9.As applicable, the Committee shall establish, periodically review and approve the Corporation's hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the issuer, as applicable.

10.The responsibilities outlined in this Charter are not intended to be exhaustive. Members should consider any additional areas which may require oversight when discharging their responsibilities.

-xi-

 

11.While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Corporation's financial statements and disclosures are complete and accurate and in accordance with generally accepted accounting principles and applicable rules and regulations, each of which is the responsibility of management and the Corporation's external auditors.

2.4De Minimis Non-Audit Services

The Committee shall satisfy the pre-approval requirement in subsection 2.3(3) if:

(a)the aggregate amount of all the non-audit services that were not pre-approved is reasonably expected to constitute no more than five per cent (5%) of the total amount of fees paid by the issuer and its subsidiary entities to the issuer's external auditor during the financial year in which the services are provided;

(b)the Corporation or the subsidiary of the Corporation, as the case may be, did not recognize the services as non-audit services at the time of the engagement; and

(c)the services are promptly brought to the attention of the Committee and approved by the Committee or by one or more of its members to whom authority to grant such approvals has been delegated by the Committee, prior to the completion of the audit.

2.5Delegation of Pre-Approval Function

1.The Committee may delegate to one or more independent Members the authority to pre- approve non-audit services in satisfaction of the requirement in subsection 2.3(3).

2.The pre-approval of non-audit services by any Member to whom authority has been delegated pursuant to subsection 2.5(1) must be presented to the Committee at its first scheduled meeting following such pre-approval.

PART 3

3.1Composition

1.The Committee shall be composed of a minimum of three Members.

2.Every Member shall be a director of the issuer.

3.A majority of the Members shall not be employees, Control Persons or executive officers of the Corporation or any affiliate of the Corporation.

4.If practicable, given the composition of the Board, every Member shall be financially literate.

5.If practicable, given the composition of the Board, every Member shall be independent.

6.The Board shall appoint or re-appoint the Members after each annual meeting of shareholders of the Corporation.

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PART 4

4.1Authority

Until the replacement of this Charter, the Committee shall have the authority to:

(a)engage independent legal counsel and other advisors as it determines necessary to carry out its duties;

(b)set and pay the compensation for any advisors employed by the Committee;

(c)communicate directly with the internal and external auditors; and

(d)recommend the amendment or approval of audited and interim financial statements to the Board.

PART 5

5.1Disclosure in Information Circular

If management of the Corporation solicits proxies from the security holders of the Corporation for the purpose of electing directors to the Board, the Corporation shall include in its management information circular the disclosure required by Form 52-110F2 (Disclosure by Venture Issuers).

PART 6

6.1Meetings

1.Meetings of the Committee shall be scheduled to take place at regular intervals and, in any event, not less frequently than quarterly.

2.Opportunities shall be afforded periodically to the external auditor, the internal auditor and to members of senior management to meet separately with the Members.

3.Minutes shall be kept of all meetings of the Committee.

4.The quorum for meetings shall be a majority of the Members, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak to and to hear each other. No business may be transacted by the Committee except at a meeting of its members at which a quorum of the Committee is present.

6.2Currency of this Charter

This Charter was last approved by the Board on <*>, 2020.

- xiii-

 

APPENDIX "I"

NEW ARTICLES

- xiv-

 

For Ministry Use Only

Ontario Corporation Number

÷ l'usage exclusif du ministère

Numéro de la société en Ontario

 

 

Form 6

Business

Corporations

Act

Formule 6 Loi sur les sociétés par actions

ARTICLES OF CONTINUANCE

STATUTS DE MAINTIEN

1.The name of the corporation is: (Set out in BLOCK CAPITAL LETTERS)

Dénomination sociale de la société : (÷crire en LETTRES MAJUSCULES SEULEMENT) :

C Y B I N C O R P O R A T I O N

2.The corporation is to be continued under the name (if different from 1 ):

Nouvelle dénomination sociale de la société (si elle différente de celle inscrite ci-dessus) :

3.Name of jurisdiction the corporation is leaving: / Nom du territoire (province ou territoire, ÷tat ou pays) que quitte la société :

British Columbia

Name of jurisdiction / Nom du territoire

4.Date of incorporation/amalgamation: / Date de la constitution ou de la fusion :

2016, 10, 13

Year, Month, Day / année, mois, jour

5.The address of the registered offi ce is: / Adresse du siège social en :

100 King Street West, Suite 5600

Street & Number or R.R. Number & if Multi-Offi ce Building give Room No.

Rue et numéro ou numéro de la R.R. et, s'il s'agit d'un édifi ce à bureaux, numéro du bureau

Toronto

ONTARIO

 

M

5

X

1

C

9

 

 

 

 

 

 

 

 

 

 

Name of Municipality or Post Offi ce / Nom de la municipalité ou du bureau de poste

 

 

Postal Code/Code postal

07171 (2011/05) © Queen's Printer for Ontario, 2011 / © Imprimeur de la Reine pour l'Ontario, 2011

Page 1 of/de 7

 

 

 

 

 

 

 

 

 

APPENDIX "J"

NEW BY-LAWS

- xv-

 

 

CYBIN CORPORATION

 

 

(the "Corporation")

 

 

TABLE OF CONTENTS

 

ARTICLE 1 - DEFINITIONS AND INTERPRETATION ...............................................................

1

1.1

Definitions.............................................................................................................

1

1.2

Interpretation ........................................................................................................

3

1.3

Headings and Table of Contents ..........................................................................

3

ARTICLE 2 - GENERAL..............................................................................................................

3

2.1

Registered Office..................................................................................................

3

2.2

Corporate Seal .....................................................................................................

3

2.3

Financial Year ......................................................................................................

3

2.4

Execution of Documents ......................................................................................

3

2.5

Resolutions in Writing...........................................................................................

4

2.6

Divisions ...............................................................................................................

4

ARTICLE 3 - DIRECTORS ..........................................................................................................

5

3.1

General.................................................................................................................

5

3.2

Qualification..........................................................................................................

5

3.3

Election.................................................................................................................

5

3.4

Fixing Number of Directors...................................................................................

5

3.5

Term of Office.......................................................................................................

6

3.6

Ceasing to Hold Office .........................................................................................

6

3.7

Resignation of a Director......................................................................................

6

3.8

Removal ...............................................................................................................

6

3.9

Vacancies.............................................................................................................

6

3.10

Remuneration.......................................................................................................

7

3.11

Power to Borrow...................................................................................................

7

3.12

Delegation of Power to Borrow.............................................................................

7

ARTICLE 4 – NOMINATIONS OF DIRECTORS.........................................................................

7

4.1

Nomination Procedure..........................................................................................

7

4.2

Exclusive Means to Bring Nomination ..................................................................

8

4.3

Timely Notice........................................................................................................

8

4.4

Time Period for Giving Timely Notice ...................................................................

8

4.5

Form of Notice......................................................................................................

8

4.6

Currency of Information......................................................................................

10

4.7

Corporate Governance.......................................................................................

10

4.8

Additional Information.........................................................................................

10

4.9

Notice .................................................................................................................

11

4.10

Additional Matters...............................................................................................

11

ARTICLE 5 - ANNUAL OR SPECIAL MEETINGS OF SHAREHOLDERS ..............................

12

5.1

Business to be Transacted.................................................................................

12

5.2

Proposal .............................................................................................................

12

ARTICLE 6 - COMMITTEES .....................................................................................................

12

 

- i -

 

 

 

TABLE OF CONTENTS

 

 

(continued)

 

 

 

Page

6.1

Appointment .......................................................................................................

12

6.2

Provisions Applicable .........................................................................................

12

ARTICLE 7 - MEETINGS OF DIRECTORS ..............................................................................

13

7.1

Place of Meetings...............................................................................................

13

7.2

Calling of Meetings.............................................................................................

13

7.3

Notice of Meetings..............................................................................................

13

7.4

Regular Meetings ...............................................................................................