Continental Signs Definitive Agreement with Metamaterial Technologies Inc. in Connection with Reverse Takeover Transaction

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NEX-CZQ.H

TORONTO, Aug. 16, 2019 /CNW/ - Continental Precious Minerals Inc. ("Continental" or the "Company") is pleased to announce that, pursuant to a previously announced letter of intent, it has entered into an amalgamation agreement (the "Amalgamation Agreement") with Metamaterial Technologies Inc. ("Metamaterial"), a Nova Scotia-based developer of smart materials and photonics, and Continental Precious Minerals Subco Inc. ("Subco"), a wholly-owned subsidiary of the Company, to complete a going-public transaction for Metamaterial (the "Transaction"). Subject to the conditions set forth in the Amalgamation Agreement, the Transaction will take the form of a three-cornered amalgamation, which will result in Metamaterial becoming a wholly-owned subsidiary of the Company by amalgamating with Subco and the security-holders of Metamaterial becoming security-holders of the Company. For convenience, the Company, as it will exist after the completion of the Transaction, is referred to herein as the "Resulting Issuer".

About Metamaterial

Metamaterial specializes in designing and producing nanocomposite transparent materials with properties not found in nature that can manipulate light, either by enhancing, absorbing or blocking it. The company is best known for its partnership with Airbus on the development of metaAIR®, which is a holographic optical filter that provides pilots with vision protection against laser attacks. The five key markets that Metamaterial  serves  include:  Energy,  Consumer  Electronics;  Medical  Devices;  Automotive;  and Aerospace & Defense. Metamaterial has a growing patent portfolio and is pioneering holographic and lithographic nanofabrication tools, designed for high volume applications. Metamaterial is headquartered in Dartmouth, Nova Scotia with offices in London, England and Pleasanton, California.

Metamaterial has accounted development revenue of $1,585,191 and a net loss of $5,106,648 for the twelve-month period ended December 31, 2018. As at December 31, 2018, Metamaterial had total assets of $13,172,716, total liabilities of $13,349,227 and total shareholders' equity of ($176,511). These numbers are taken from Metamaterial's audited consolidated financial statements for 2018.

Metamaterial was incorporated in New Brunswick on August 15, 2011 as Lamda Guard Canada Inc. It amended its articles on March 27, 2013 to take on its current name and, on April 30, 2013, continued as a corporation organized under the Canada Business Corporations Act.

Transaction Summary

The Transaction will be completed by way of three-cornered amalgamation, whereby Metamaterial will amalgamate with Subco and holders of Metamaterial shares will receive common shares of the Resulting Issuer  ("Resulting  Issuer  Common  Shares")  as  consideration.  Pursuant  to  the  Amalgamation Agreement, the holders of common shares of Metamaterial ("Metamaterial Common Shares") and holders of Class A-1 preferred shares of Metamaterial will receive Resulting Issuer Common Shares in exchange for their Metamaterial Common Shares at a ratio of 2.75 Resulting Issuer Common Shares for each Metamaterial Common Share or Class A-1 preferred shares of Metamaterial held. The terms of the Amalgamation Agreement also provide for the exchange of Class A-2 preferred shares of Metamaterial, whereby holders will receive 4.125 Resulting Issuer Common Shares for each Class A-2 preferred share of Metamaterial held. Following the completion of the Transaction, all of Metamaterial's outstanding options, deferred share units and other securities exercisable or exchangeable for, or convertible into, and any other rights to acquire Metamaterial Common Shares will be exchanged for securities exercisable or exchangeable for, or convertible into, or other rights to acquire Resulting Issuer Common Shares on economically equivalent terms.

It is expected that approximately 67,004,266 Resulting Issuer Common Shares will be issued to the shareholders of Metamaterial as consideration for 100% of the then issued and outstanding shares of Metamaterial. Upon completion of the Transaction, the security holders of Metamaterial are expected to own approximately 86% of the Resulting Issuer Common Shares, on a fully diluted basis.

Pursuant to the Amalgamation Agreement, Metamaterial may issue convertible promissory notes for aggregate gross proceeds of up to $600,000 per month, equity under a private placement for aggregate gross proceeds of up to $6,000,000 and a senior secured convertible debenture from a leading Canadian bank for aggregate gross proceeds of up to $5,000,000.

In  connection  with  the  Transaction,  the  Company  entered  into  voting  support  agreements  with shareholders of Metamaterial that hold an aggregate of approximately [66⅔%] of the issued and outstanding Metamaterial Common Shares.

Upon the closing of the Transaction, and subject to receipt of all required approvals, the Company intends to change its name to "Metamaterial Inc."

It  is  expected  that  Lamda  Guard  Technologies  Ltd.,  a  company  owned  by  certain  founders  of Metamaterial, and Innovacorp will each own more than 10% of the Resulting Issuer Common Shares upon completion of the Transaction.

The Transaction is an arm's length transaction.

In connection with the Transaction, and subject to the receipt of all necessary shareholder and regulatory approvals,  the  Company  intends  to  voluntarily  de-list  the  common  shares  of  Continental  from  the facilities of the NEX board of the TSX Venture Exchange ("TSXV") prior to the completion of the Transaction. It is a condition of closing that the Resulting Issuer obtain a listing of Resulting Issuer Common Shares on the facilities of the Canadian Securities Exchange ("CSE"). As a result, it is anticipated that the Transaction will be governed by the policies of the CSE.

Completion of the Transaction will be subject to the closing conditions set forth in the Amalgamation Agreement, which include the approval of the listing of Resulting Issuer Common Shares on the facilities of  the  CSE,  the  approval  of  the Transaction by shareholders  of  Metamaterial,  approval  of  matters ancillary to the Transaction by shareholders of the Company, Metamaterial raising gross proceeds of not less than $1,000,000 in connection with a private placement and certain standard closing conditions, including there being no material adverse change in the business of Continental or Metamaterial prior to completion of the Transaction. The Transaction itself is not subject to shareholder approval of the Company.  The proposed de-listing of the common shares of Continental from the facilities of the TSXV is subject to the approval of a majority of the minority shareholders of Continental.

Upon the completion of the Transaction, it is anticipated that the executive officers of the Resulting Issuer will be Dr. George Palikaras, whom will act as Chief Executive Officer, and Mayank Mahakan, whom will act as Chief Financial Officer and Secretary., and the persons identified below will serve as directors of the Resulting Issuer.

Allison Christilaw, MBA, ICD.D

Mrs. Christilaw is a seasoned consultant and business leader who holds both an Honours in Business Administration and a Master of Business Administration from the Ivey Business School at the University of Western Ontario. She is a graduate of the Directors Education Program through the Institute of Corporate Directors  and her  board work includes  Secretary and Governance Chair  on the Appleby College Board of Governors, HR and Nominations Chair on the Oakville Galleries Board of Directors, Director of the Haltech Board and Director of the Bayshore Foundation.

Mrs. Christilaw brings a wealth of knowledge and experience in strategy and organization effectiveness. She has led organizations, ran and sold a successful consulting business to Deloitte, and has developed a deep understanding of the intricacies of acquisition and integration. She has worked with organizations throughout  North  America  and  Europe  in  all  industries,  from  small  businesses  to  large  public corporations.

Maurice Guitton

Mr. Guitton is the former chairman of the board for Metamaterial, a current director of Metamaterial, and is the chairman of Lamda Guard Technologies Ltd. He is one of Canada's most experienced CEOs with over 40 years of experience. He holds more than 16 patents and has won several business awards, including the Nova  Scotia  Export  Achievement  Award.  He is  the  former  President  of  the  Atlantic Network of the French Chamber of Commerce in Canada, and is listed among Atlantic Canada's Top 50 CEOs. Mr. Guitton began his career at Rossignol Skis in France. While working with Rossignol Skis, he built  five  manufacturing  plants  in  North  America. He  was  recruited  by  Cellpack  Aerospace  in Switzerland to open their first aerospace company in Canada, located in Lunenburg, Nova Scotia. From 1993 to 2003, he was Executive Vice President and President of Composites Atlantic Limited and, in 2004, he became Chief Executive Officer of the company. Mr. Guitton belongs to many industry associations, has years of board experience and mentors others by sharing his experience and knowledge. He received the French Legion of Honor, the French Order of Merit, and the James Floyd Aeronautic Award of Canada.

George Palikaras, PhD, President & CEO, Founder

George is the founding President and Chief Executive Officer of Metamaterial. Under his leadership, Metamaterial has completed two acquisitions and has developed partnerships with global companies like Airbus and Lockheed Martin Canada. Prior to Metamaterial, George founded Medical Wireless Sensing Ltd. (MediWise) a research and development med-tech company based in London, the United Kingdom, which was acquired in 2019. Prior to becoming an entrepreneur, he worked in industry at Wireless Technology Laboratories (formerly Nortel Networks) leading a team of engineers and managers through contract bidding and technology development for large telecommunication OEMs in multi-million dollar programs. He has worked at Queen Mary University in London in wearable and implantable sensors projects for global medical device companies. As a tech entrepreneur, he has led award-winning start-ups to the development of strong intellectual property portfolios with over 100 patents and has successfully raised in excess of $40M in institutional, angel and non-dilutive capital. Mr. Palikaras holds 22 issued patents, a BEng. in Computer Engineering, an MSc. in Digital Communication Systems, and a PhD in metamaterial  science.  Mr.  Palikaras  has  received  Executive  Business  education  from Stanford and University College London.

Ram Ramkumar

Mr. Ramkumar is currently a director of Continental and past Chairman of the board of Snipp Interactive Inc., a public company offering promotional and loyalty platform and services to consumer product companies. Mr. Ramkumar has also served on the boards of numerous other public companies listed on the TSX and NASDAQ, including Inscape Corporation where he was CEO until 2004. His background includes extensive experience as President and CEO with public companies in the manufacture of office furniture. Mr. Ramkumar was part of a team that lead the growth of these companies in the North American market with facilities in Canada and the US. Over the last 10 years, Mr. Ramkumar has been an investor in a number of business ventures ranging from flexographic printing to technology development in  the  area  of  extracting  metals  from  minerals.  Mr.  Ramkumar  has  a  Bachelor  of  Technology (Metallurgical Engineering) and Master of Business Administration from the University of Toronto and was a chartered accountant.

Eric Leslie

Mr. Leslie has extensive experience in the areas of management consulting, venture capital advisory services, corporate governance, operations and go forward structuring plans for early stage companies. Since 1991, Mr. Leslie through his firm, Merchant Equities Capital Corp., has been leveraging his experience and contacts into securing and fulfilling contracts with multiple clients over a broad spectrum of industries. Over the past 28 years, Mr. Leslie has served as an officer and or director of numerous public and private companies.

Steen Karsbo

Mr. Karsbo has close to 40 years of experience in the aviation industry and has held various senior management positions for Satair, an Airbus company. He brings a wealth of knowledge in business development, sales, product management, marketing and communications. His most recent role was as Vice President and Head of Business Development at Satair. As an aviation consultant, he focuses on providing independent consulting and advisory services to a wide range of OEMs, investors, private equity and venture capital companies and start-ups. Areas of expertise include sales strategies, merger and acquisition support and assessment, supplier management, new business strategies, systems and power- plant supply chain, and board advisory roles.

Forward-Looking Statements

This release includes forward-looking information within the meaning of Canadian securities laws regarding Continental and Metamaterial and their respective businesses, which may include, but are not limited to, statements with respect to the completion of the Transaction, the terms on which the Transaction is intended to be completed, the ability to obtain regulatory and shareholder approvals, the proposed name change and board composition of the Resulting Issuer, and other factors. Often but not always, forward-looking information can be identified by the use of words such as "expect", "intends", "anticipated", "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would" or "will" be taken, occur or be achieved. Such statements are based on the current expectations and views of future events of the management of each  entity,  and  are  based  on  assumptions  and  subject  to  risks  and  uncertainties.  Although  the management of each entity believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances  discussed in this release, including completion of the Transaction (and the terms upon which the Transaction is proposed to be completed), may not occur and could differ materially as a result of known and unknown risk factors and uncertainties  affecting  the  companies,  including  risks  regarding  the  technology  industry,  market conditions,  economic  factors,  management's  ability  to  manage  and  to  operate  the  business  of  the Resulting  Issuer  and  the  equity  markets  generally.  Although  Continental  and  Metamaterial  have attempted  to  identify  important  factors  that  could  cause  actual  actions,  events  or  results  to  differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Accordingly, readers should not place undue reliance on any forward-looking statements or information. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and neither Continental nor Metamaterial undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Cautionary Statement

Completion of the transaction is subject to a number of conditions, including, if applicable, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or listing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Continental should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this news release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Continental Precious Minerals Inc.

Continental Precious Minerals Inc., 82 Richmond Street East, Suite 200, Toronto, Ontario M5C 1P1, Norman Brewster, Chief Executive Officer