MPX International ANNOUNCES NEW BRIDGE LOAN FINANCING

NOT FOR DISTRIBUTION TO NEWSWIRE SERVICES IN THE UNITED STATES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAWS.

TORONTO, ONTARIO, January 7, 2022 – MPX International Corporation (“MPX International”, “MPXI” or the “Corporation”) (CSE:MPXI; OTC:MPXOF), a multinational diversified cannabis company, is pleased to announce that it is expanding and revising the terms of its short-term loan financing announced on October 5, 2021 (the “2nd Bridge Loan”). To date, the Corporation raised C$2,485,173 (US$1,827,333) under the terms of the previously announced terms. Pursuant to the revised terms, MPXI has arranged for a further short-term loan financing (the “Revised Bridge Loan”) of up to approximately C$3,800,000 (US$3,000,000) from a group of current investors to be drawn down in several tranches. Initially, the Corporation will draw down on approximately C$1,193,626 (US$877,666) of loan proceeds immediately. 

The Corporation will use the proceeds from the loan to fund product and facility development and for general corporate and working capital purposes.

The Revised Bridge Loan will mature 6 months from the date of issuance (the “Maturity Date”) and bear interest at a rate of 12% per annum calculated in arrears and payable in cash on the earlier of the Maturity Date or concurrently with the conversion of the Revised Bridge Loan at a 10% premium into the non-brokered private placement offering of units (the “Units”) whereby the Corporation raised C$15,355,760 (US$11,291,000) between June 30, 2020 and August 31, 2021 (the “Offering”) pursuant to the debenture indenture dated June 30, 2020 entered into between the Corporation and AST Trust Company (Canada) (the “Debenture Trustee”) as amended by the supplemental debenture indenture dated September 16, 2020, the second supplemental debenture indenture dated December 18, 2020 and the third supplemental debenture indenture dated June 24, 2021 (as amended, supplemented or otherwise modified from time to time) providing for the issuance of 12% secured convertible dentures of the Corporation (each, an “SCD”) in the aggregate principal amount of up to C$12,000,000 (US$7,500,000) (the “Debenture Indenture”) and the warrant indenture dated June 30, 2020 entered into between the Corporation and AST Trust Company (Canada) (the “Warrant Agent”) as amended by the supplemental warrant indenture dated September 16, 2020, the second supplemental warrant indenture dated December 18, 2020 and the third supplemental warrant indenture dated June 24, 2021 (as amended, supplemented or otherwise modified from time to time) providing for the issuance of up to 84,000,000 common share purchase warrants (each, an “SCD Warrant”) (the “Warrant Indenture”). 

In addition, and subject to approval from holders of SCDs, the Corporation may roll up the interest payable in respect of the September 30, 2021 and December 31, 2021 coupon dates into the Revised Bridge Loan as well as an amount that allows for the optional participation of deferred salaries into the Revised Bridge Loan. Further, the Corporation may increase the aggregate principal amount of the Revised Bridge Loan by up to 20% with the written approval of holders representing at least 60% of the aggregate principal amount of the Revised Bridge Loan then outstanding.

The Corporation shall also issue common share purchase warrants (the “Bonus Warrants”) to Revised Bridge Loan lenders on the basis of 10 Bonus Warrants for each C$1.36 (US$1.00) of principal. Each Bonus Warrant shall be exercisable for a period of sixty (60) months from the date of issuance and enable the holder thereof to purchase one Common Share at an exercise price equal to C$0.065 per common share. 

In further consideration for advancing their Revised Bridge Loan funds, the Corporation shall grant to the holder an option (the “SIM Options”) to acquire one (1) unit (a “SIM Unit”) of Salus International Management Ltd. (“SIM”) from the Corporation for each US$2.00 of Revised Bridge Loan funds advanced by the holder. Such option shall be exercisable at a price of US$1.00 per SIM Unit for a period of sixty (60) months from the Closing Date. Each SIM Unit will be comprised of one (1) common share (the “SIM Shares”) in the capital of SIM and one-half (0.5) common share purchase warrant to acquire an additional SIM Share at an exercise price of US$1.50 per SIM Share until May 8, 2023. To date, the Corporation has issued 2,413,667 SIM Options. 

Pursuant to the terms of the Revised Bridge Loan, the Corporation will immediately seek the approval from SCD holders to amend the Debenture Indenture by way of a 4th supplementary debenture indenture substantially as follow:

  1. increase the maximum principal amount by up to US$10,000,000; 
  2. amend the definition of “Conversion Price” such that: (i) the conversion price of the SCDs issued: (A) prior to March 1, 2021 shall be equal to C$0.12; (B) on or after March 1, 2021 shall be equal to C$0.05; and (C) subject to the approval and policies of the Canadian Securities Exchange (the “CSE”), if the Corporation sells any capital stock to any other investor (other than with respect to the Offering) for cash at a price per share lower than C$0.05 or convertible securities at a conversion price or exercise price less than C$0.05, the Conversion Price for the SCD’s issued on or after March 1, 2021 shall be reduced to such lower price;
  3. provide that the payment of interest payable in respect of the September 30, 2021 Coupon Date shall be rolled into the Revised Bridge Loan;
  4. provide that the payment of interest payable in respect of the December 31, 2021 Coupon Date shall be rolled into the Revised Bridge Loan;
  5. provide that the interest payable in respect of the March 31, 2022 Coupon Date be satisfied by the issuance of Units, subject to the minimum subscription price of US$1,000; and
  6. all such other revisions or amendments to the Debenture Indenture as the Corporation may deem necessary or advisable to give full effect to or to carry out the intent of the foregoing amendments.

The Corporation will also immediately seek the approval from SCD Warrant holders to amend the Warrant Indenture by way of a 4th supplementary warrant indenture substantially as follows:

  1. amend the second preamble such that each Unit consists of one 12% SCD and, prior to September 1, 2021, 7,000 Warrants and on or after September 1, 2021, 10,000 Warrants;
  2. amend the definition of “Exercise Price” such that at any time the price at which a Common Share may be purchased by exercise of a Warrant is $0.20 per Common Share for Warrants issued prior to September 1, 2021 and $0.065 per Common Share for Warrants issued on or after September 1, 2021, payable in immediately available Canadian funds, subject to certain provisions of the Warrant Indenture; and
  3. increase the maximum number of SCD Warrants by up to 100,000,000 Warrants; and 
  4. all such other revisions or amendments to the Warrant Indenture as the Corporation may deem necessary or advisable to give full effect to or to carry out the intent of the foregoing amendments.

The Corporation shall pay in cash to the Revised Bridge Loan lenders a non-refundable cash origination fee in the amount equal to 2% of Revised Bridge Loan funds advanced. 

Following the entering into of the 4th supplementary debenture indenture to the Debenture Indenture and the 4th supplementary warrant indenture to the Warrant Indenture, the principal amount of the Revised Bridge Loan shall automatically convert in the Offering at a conversion premium equal to ten percent (10%) of their principal amount. 

Each of the following events constitutes an event of default: (a) the Corporation fails to pay when due, after any applicable grace periods, any outstanding principal amount hereunder or any accrued and unpaid interest on such principal amount; (b) the Corporation shall not have complied with its covenants; and                   (c) if any representation or warranty made by the Corporation pursuant to which the loan was issued was false or inaccurate in any material respect when made.

In connection with the closing of the Revised Bridge Loan, the Corporation will pay an aggregate finder's fees of approximately C$37,944 (US$27,944) and issue an aggregate of 279,000 compensation warrants (the “Compensation Warrants”) to eligible finders. Each Compensation Warrant entitles the holder to purchase one Common Share at a price of C$0.05 for a period of 24 months from the applicable closing date of the Revised Bridge Loan.

Insider Participation

The Revised Bridge Loan can be considered a Related Party Transaction for certain regulatory purposes. The participation by certain insiders in the Revised Bridge Loan was for a total of C$566,666 (US$416,666), 4,166,667 Bonus Warrants and 208,333 SIM Options. 

It is important to note that the Revised Bridge Loan is exempt from valuation and minority approval requirements which might otherwise result from the participation by insiders due to: (1) the Corporation, as a CSE issuer, not being listed on a designated market; and (2) the fair market value of the Revised Bridge Loan, insofar as the Revised Bridge Loan involves such interested parties, is less than C$2,500,000. 

To the knowledge of the Corporation, after reasonable inquiry, none of the related parties have knowledge of any material information concerning the Corporation or its securities that has not been generally disclosed.

The sole independent director to the transactions (the “Special Committee”) reviewed the Revised Bridge Loan and determined that as a CSE issuer MPXI is not listed on a specified market and the fair market value of the Revised Bridge Loan, in so far as it involves related parties, is not more than $2,500,000. The Special Committee recommended that the board of directors of the Corporation (the “Board”) approve the Revised Bridge Loan. Accordingly, the Revised Bridge Loan is exempt from minority shareholder approval and formal valuation requirements of MI 61-101. 

The Revised Bridge Loan is closing in less than 21 days due to the limited number of investors to the Revised Bridge Loan, all investment agreements being properly completed and received, and all loan proceeds having been forwarded, which shorter period is reasonable in the circumstances. MI 61-101 requires if a material change report is filed less than 21 days before the expected date of the closing of the transaction, an explanation is to be provided why the shorter period is reasonable or necessary in the circumstances. 

Appointment of New Director

The Corporation is also pleased to announce that it has appointed Timothy E. Childs to its board of directors. 

Mr. Childs is an experienced investor and entrepreneur across a range of sectors. He was a founder, Chairman and Chief Executive of Gatehouse Leasing Limited (“Gatehouse”), a Dublin based lease finance company, which was subsequently sold to an investment group and, in turn, acquired by the Bank of Scotland. Tim served as Managing Director of Private Equity Investor plc, an investment trust fund of technology funds from 2000 to 2004. He also served as C.E.O of St Peter Port Capital, a closed ended investment company between 2007 and 2014. Since disposing of Gatehouse leasing in 1990, he has invested in hundreds of private companies in multiple sectors, including biotechnology, information technology, material science, mining, oil & gas and cannabis. Many of these companies have progressed to become publicly listed or have been acquired yielding substantial returns for shareholders. Mr. Childs has provided many of his portfolio companies with advice and guidance as they have developed and progressed through their stages to deliver exciting returns for investors. 

The securities issued pursuant to the Offering and the Revised Bridge Loan have not been, and will not be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This news release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About MPX International Corporation

MPX International Corporation is a multinational diversified cannabis company focused on developing and operating assets across the international cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient. With current operations spanning four continents in Canada, Switzerland, South Africa, Malta, Australia and Thailand as well as evolving partnership and distribution opportunities in other jurisdictions, MPXI continues to position itself as an emergent global participant in the cannabis industry.

Cautionary Statement Regarding Forward-Looking Information

This news release includes certain “forward-looking statements” under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, MPX International’s objectives and intentions.  Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; the Corporation’s ability to effectively deal with the restrictions, limitations and health issues presented by the COVID-19 pandemic; future cannabis pricing; cannabis cultivation yields; costs of inputs; its ability to market products successfully to its anticipated clients; reliance on key personnel and contracted relationships with third parties; the regulatory environment in Australia, Canada, Malta, South Africa, Switzerland and other international jurisdictions; the ability to complete any future potential transactions and the terms and conditions thereof; the application of federal, state, provincial, county and municipal laws; and the impact of increasing competition; those additional risks set out in MPX International’s public documents filed on SEDAR at www.sedar.com, including its audited annual consolidated financial statements for the financial years ended September 30, 2020 and 2019, and the corresponding management’s discussion and analysis; and other matters discussed in this news release. Although MPX International believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, MPX International disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

For further information about MPXI, please contact:

MPX International Corporation 

W. Scott Boyes, Chairman, President and CEO

T: +1-416-840-4703
info@mpxinternationalcorp.com

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