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TORONTO, Feb. 14,
2022 /CNW/ - SQI Diagnostics Inc. ("SQI" or
the "Company") (TSXV: SQD) (OTCQB: SQIDF), a leader in the
science of lung health that develops and manufactures respiratory
health and precision medicine tests, is pleased to announce that it
has completed its previously announced asset acquisition (the
"Transaction") of Precision Biomonitoring Inc.'s
("PBI") human diagnostic COVID-19 PCR testing business and
its TripleLock™ molecular diagnostic testing technology (together,
the "Business").
"Based on recent data from Health Canada, current
hospitalizations and ICU bed numbers in Canada are more than double the highest point
since April 2020, so it remains vitally important to bring
innovative, mobile and accessible COVID-19 PCR testing capabilities
to market," said Andrew Morris, CEO
of SQI. "From our acquisition date on January 10 to January 31, 2022, PBI recorded net
revenue in its human testing Business of approximately $3.5 million (unaudited) — which is more than
double the entire month of December
2021 at approximately $1.3
million (unaudited), and with an effective operating margin
over the period of over 40% (unaudited). This — combined with high
COVID positivity numbers — tells us that demand for testing remains
high, because the need remains great."
Pursuant to the terms of the definitive agreement, the Company
acquired the Business through its wholly owned subsidiary, SQI
Diagnostic Systems Inc. ("SQI Systems"), for aggregate
consideration of $6,825,000
consisting of $6,145,000 in cash and
4,171,779 common shares in the capital of the Company (the
"Consideration Shares") at a deemed price of $0.163 per share with an aggregate
deemed value of $680,000. The
Consideration Shares are subject to a statutory four-month hold
period from the dated hereof. In addition, on closing of the
transaction, the Company acquired certain Business inventory for a
total cash purchase price of $616,243.37.
To assist the Company with the funding of the Transaction, the
Company entered into a credit agreement (the "Agreement")
with Pivot Financial ("Pivot"), an arm's length third party,
with respect to the extension of a short-term senior secured demand
credit facility in the aggregate amount of $7,500,000 (the "Credit Facility").
Certain insiders of the Company (the "Insider Lenders", and
together with Pivot, the "Lenders") also participated in
funding the Credit Facility pursuant to the terms of a
participation agreements entered into between Pivot and the Insider
Lenders. The balance of the Credit Facility is being applied
to general corporate and working capital purposes.
The Credit Facility matures two (2) months from the date hereof
and bears interest at a rate of 15% per annum. No commission or
bonus was paid in connection with extension of the Credit Facility,
and the Credit Facility is not convertible into any
securities of the Company. The Credit Facility has been
secured by a first charge general security interest over the
Company, as borrower, and the Company's wholly-owned
subsidiary SQI Systems, as guarantor. The Credit Facility includes
customary representations, warranties, events of default, and
positive and negative interim covenants – including covenants that
restrict the Company's ability to incur additional indebtedness,
grant liens, make investments and acquisitions, pay dividends,
repurchase equity interests in the Company, make distributions
(other than certain permitted distributions) and enter into related
party transactions and asset sales. In connection with the
extension of the Credit Facility, the Lenders were paid a facility
fee in the amount of $320,000.
The participation in the funding of the Credit Facility by the
Insider Lenders is considered a related party transaction within
the meaning of Multilateral
Instrument 61-101 Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). The
Company relied on exemptions from the formal valuation and minority
approval requirements in sections 5.5(b) and 5.7(1)(f) of MI 61-101
in respect of such insider participation. The Company was not
positioned to be able to file a material change report in respect
of the related party transaction between the Company and the
Insider Lenders less than 21 days prior to extension of the Credit
Facility. Given the application of funds and the timing thereof,
the Company deemed it reasonable to be able to expedite the Credit
Facility and affect the closing of the Transaction.
The Transaction and the Credit Facility remain subject to final
approval of the TSX Venture Exchange Inc. ("TSXV").
About Precision Biomonitoring
Precision Biomonitoring Inc. was founded in 2016 by a team of
scientists from the Biodiversity Institute of Ontario at The University
of Guelph. By 2017 PBI had begun providing an innovative,
portable and proprietary TripleLock™ environmental DNA (eDNA)
surveillance solution to the environmental consulting market,
enabling early and rapid detection of organisms on site. In 2020,
responding to the emerging global COVID pandemic, PBI established a
human diagnostics division and applied their expertise in genetic
testing to develop the TripleLock™ SARS-CoV-2 (COVID) qPCR testing
platform, approved by Health Canada and the EU and commercially
available for laboratory testing in Canada. To complement this highly specific and
sensitive lab-based test, PBI partnered with an eDNA collaborator
becoming the exclusive Canadian distributor of their mobile
SARS-CoV-2 Real-Time PCR test and rapid mobile detection platform.
The SARS-CoV-2 portfolio was further expanded with distributorship
of the Quidel SARS-CoV-2 Antigen Fluorescent Immunoassay (FIA) and
Sofia analyzer. Today PBI is at
the forefront of technological innovations in the genomics
industry, with a vision of a world where we can identify any
organism instantaneously anywhere on the planet.
About SQI Diagnostics
SQI Diagnostics are leaders in the science of lung health. We
develop and manufacture respiratory health and precision medicine
tests that run on SQI's fully automated systems. Our tests simplify
and improve COVID-19 mobile PCR, Point of Care antigen testing and
antibody monitoring, Rapid Acute Lung Injury testing, donor organ
transplant informatics, and immunological protein and antibody
testing. We're driven to create and market life-saving testing
technologies that help more people in more places live longer,
healthier lives. For more information, please visit
www.sqidiagnostics.com.
Contact:
Morlan Reddock
Chief Financial Officer
437-235-6563
mreddock@sqidiagnostics.com
CAUTIONARY NOTES
This news release contains certain "forward-looking
statements", including, without limitation, statements containing
the words "will", "may", "expects", "intends", "anticipates" and
other similar expressions which constitute "forward-looking
information" within the meaning of applicable securities laws.
Forward-looking statements reflect the Company's current
expectation, assumptions and beliefs, and are subject to a number
of risks and uncertainties that could cause actual results to
differ materially from those anticipated. The forward-looking
statements in this news release include without limitation,
statements with respect to the terms of the Transaction and the
Credit Facility, the anticipated benefits of the Transaction to the
Company, and the final approval of the TSXV, among others. These
forward-looking statements are qualified in their entirety by the
inherent risks and uncertainties surrounding future expectations.
Important factors that could cause actual results to differ
materially from expectations include, but are not limited to, risks
related to the failure to obtain necessary regulator and final TSXV
approvals for the Transaction and the Credit Facility, general
economic and market factors, competition, the ability of the
Company to integrate the Business into its existing operations, the
effect of the global pandemic and consequent economic disruption,
and the factors detailed in the Company's ongoing filings with the
securities regulatory authorities, available at www.sedar.com.
Although forward-looking statements contained herein are based on
what management considers to be reasonable assumptions based on
currently available information, there can be no assurance that
actual events, performance or results will be consistent with these
forward-looking statements, and our assumptions may prove to be
incorrect. Readers are cautioned not to place undue reliance on
these forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements either as a result of new information, future events or
otherwise, except as required by applicable laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any securities in the United States. The securities of the
Company 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 except
pursuant to an available exemption from the registration
requirements of the U.S. Securities Act and applicable state
securities laws.
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
release.
SOURCE SQI Diagnostics Inc.