Toronto, Ontario – (Newsfile Corp. – May 27, 2021) – Canbud Distribution Corp. (CSE: CBDX) (FSE: CD0) (the “society“) is pleased to announce that on May 25, 2021, it signed a non-binding letter of intent (the”Letter of Intent“) with Molecular Science Corp. (“MSC“) in respect of a proposed transaction (the”Proposed transaction“), under which the company would acquire all of the issued and outstanding common shares of MSC through a three-tier merger. MSC is a privately-held analytical science and services company operating in analysis cannabis and related pharmaceutical products.

The proposed transaction

The proposed transaction is expected to be structured as a three-pronged merger, whereby a wholly owned subsidiary will be incorporated by the company under the laws of Ontario (“Subco“) would merge with MSC, with the merged entity becoming a wholly owned subsidiary of the Company, and holders of MSC common shares immediately prior to the merger would receive a total of 70,600,000 common shares of the Company in exchange for their common shares of MSC. All outstanding options and warrants of MSC would be replaced or exchanged for options and warrants of the Company or otherwise treated in such a way as to maintain economically equivalent terms, taking into account of the MSC Common Shares Exchange Ratio under the Proposed Transaction Upon closing of the Proposed Transaction, the Company may also issue up to 1,765,000 Common Shares of the Company as finder’s fees (the “Sharing of researcher costs“). The proposed transaction is subject to obtaining all necessary regulatory approvals, including, where applicable, approval from the Canadian Securities Exchange (“CSE“) and certain other conditions described below.

Upon closing of the proposed transaction, the outstanding capitalization of the Company is expected to consist of approximately 160,839,597 common shares and options and warrants for the purchase of 11,600,000 and 49,630,600 shares. ordinary shares of the company, respectively, excluding shares issued as an intermediary. Current MSC shareholders are expected to own approximately 43.9% of the Company’s common stock on an undiluted basis and 35.7% on a fully diluted basis, before giving effect to the issuance of any finder’s fee shares. .

The story continues

The Company and MSC have agreed to negotiate in good faith the terms of a definitive agreement with respect to the proposed transaction within 30 days of the date of the letter of intent. Following and subject to the signing of a definitive agreement, the Company would make a bridging loan available to MSC (the “Bridge loan“) up to $ 500,000, to be used by MSC for the repayment of certain debts and for working capital purposes. The bridging loan would bear interest at the rate of 5% per annum, would mature sixty days from the date of the bridge loan and would be secured against the shares and assets of each of the MSCs and its operating subsidiaries, as further described in the letter of intent. , in whole or in part, and the final agreement ends (other than as a result of a breach of its conditions by the company), the amount of the principal advanced under the bridging loan and all accrued interest owed thereon would become immediately due and payable. In addition, MSC would be required to pay the Company a termination fee of $ 150,000 if MSC violates the binding provisions of the Letter of Intent, or terminates the binding provisions of the Letter of Intent. letter of intent and concl thereafter an alternative transaction with a third party within 12 months of such violation or termination.

The company’s common stock issued in exchange for MSC common stock would be subject to resale restrictions, so that holders would be allowed to trade 20% of those shares just three months after closing and an additional 20% of those shares. shares after each successive three-month period thereafter until the date that falls 15 months from the closing date.

All current directors and officers of the Company are expected to remain after the completion of the proposed transaction. At closing, all directors and officers of MSC are expected to resign except Mauro Aiello and Sherry Farsami, who would remain Interim CEOs and Director, Quality Assurance of the merged entity operating MSC’s business.

Completion of the proposed transaction would be subject to a number of conditions, including, without limitation, the following:

• receipt of the required approval for the proposed transaction by MSC shareholders within 30 days of the signing of the definitive agreement between the parties;

• obtaining all regulatory approvals (including applicable CST approvals for the listing of the Company’s common shares issuable to securityholders of MSC);

• there have been no acquisitions or disposals (except in the normal course of business), no increase in debt or share capital (with the exception of the company), no significant new contracts (except for the company) nor any related party transaction and no loss of material license;

• no shareholder of MSC has exercised his right of dissent with respect to the merger of MSC and Subco;

• no material adverse changes affecting MSC or the Company; and

• any other terms that the parties decide are reasonable in the context of the proposed transaction.

Steve Singh, CEO of the company, said: “We are very pleased to announce the Letter of Intent to acquire MSC, a leader in the Canadian analytical services industry. Analytical testing is a critical part of the seed-to-sale supply chain, and MSC’s ability to attract and retain branded customers in a highly competitive field is testament to its technical capabilities. The proposed transaction aims to allow the company to broaden its current scope and become more closely connected within the supply chain of the cannabis and hemp sector as licensed producers refine and expand their supply chain. offering cannabis-like 2.0 products, which require additional testing to comply with health. Regulations of Canada. Company management believes that there is an opportunity for MSC to expand its current service offerings in emerging markets such as psychedelic drug testing, which makes this acquisition an exciting avenue for MSC and able to for the Company to drive revenue growth. “

The proposed transaction would be an arm’s length transaction for the Company and would not constitute a fundamental change or result in a change of control of the Company, within the meaning of CSE policies.

About Molecular Science Corp.

Formed in January 2017, MSC is a GMP accredited science and analytical services company by Health Canada. MSC’s main asset is a purpose-built facility in the Greater Toronto Area (GTA), which operates under GMP pharmaceutical standards. The MSC tests cannabis and related pharmaceuticals for a variety of purposes:

• Commercial release of cannabis products, as required by Health Canada or other authorities, including for export to international markets;

• Testing of new formulations for product development and registration, including chemical analysis of products beyond regulatory requirements for clinical purposes; and

• In-process testing and testing of manufacturing inputs (eg biomass, oils, etc.) for value-added products and process development.

About Canbud Distribution Corp.

Canbud Distribution Corp. is a science and technology company focused on the global hemp space, including hemp cannabinoids (CBD). Currently, the company, through its subsidiaries, holds three industrial hemp licenses with the aim of supplying the world market with medicinal and wellness cannabidiol and other cannabinoid products on leased land located in McKellar, Ontario, Kettleby, Ontario and Lakefield, Ontario. Each hemp license allows the cultivation and harvest of CBD hemp flowers for processing into CBD and other cannabinoid extracts.

For more information, please contact:

Robert Tjandra, president
Phone: 416-847-7312
Email: ir@canbudcorp.com

Notice regarding forward-looking information

The information contained in this press release includes certain information and statements about the views of management on future events, expectations, plans and prospects that constitute forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties, including assumptions that all conditions upon closing of the proposed transaction will be met and that the proposed transaction will be completed under the conditions set out in letter d. ‘intention. Although the Company considers these assumptions to be reasonable on the basis of the information currently available to it, they may prove to be incorrect, and the forward-looking statements contained in this press release are subject to numerous risks, uncertainties and other factors that may cause results. future. differ materially from those expressed or implied in these forward-looking statements. These risk factors may include, among others, the risk that the required approvals and the satisfaction of material conditions will not be obtained in connection with the proposed transaction, the risk that the proposed transaction will not be approved or completed on the terms stated. in the Letter of Intent or that a definitive agreement will be reached in this regard. Although the management of the company believes that the expectations reflected in the forward-looking statements are reasonable, the company can give no assurance that the expectations of the forward-looking statements will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting these forecasts. -prove statements or otherwise.

NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES

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