Investor Presentation | Fall 2020
Disclaimer
This presentation contains forward-looking statements; including forward-looking statements
regarding expected growth in the global single serve hot beverage market and global coffee
pod market value. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results or growth to be materially
different from many future results or growth expressed or implied by the forward-looking
statements. Actual results are likely to differ, and may differ materially, from those expressed
or implied by the forward- looking statements contained in the presentation materials. Such
forward-looking statements are based on a number of assumptions which may prove to be
incorrect. There may be factors that cause actual results not to be as expressed or implied by
the forward-looking statements. 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, you should not place undue reliance on
forward-looking statements. The forward- looking statements should not be relied upon as
representing the Company’s views as to any date subsequent to the date the presentation
materials were prepared.
The Company disclaims any responsibility to update the forward-looking statements or any
risks, uncertainties or factors that may affect the forward-looking statements to reflect
events or developments, including any revised forward-looking statements that might be
published by the sources of the forward-looking information contained in the presentation
materials. In addition, the presentation materials are not intended to express or simply any
forward-looking statements regarding expected or anticipated results of operations, financial
condition, performance or achievements of NEXE Innovations Inc. (“NEXE” or the
“Company”) and the Company disclaims any such forward-looking statements. The results
of operations, financial condition, performance, achievements or prospects of the Company
involve known and unknown risks, uncertainties and other factors, including risks relating to
the ability of the Company to obtain necessary financing, the impact of debt financing
transactions, the Canadian and global economy generally and the Canadian, North American
and Global market for the Company’s products, consumer interest in the Company’s
products, competition, the regulatory environment, governmental legislative or regulatory
actions or activities, potential litigation, and anticipated and unanticipated costs. The
forward-looking statements contained in the presentation are expressly qualified in their
entirety by this cautionary statement.
3
A History of Commitment
In 2015 when NEXE was originally
conceptualized by founder and coffee
veteran Darren Footz, the single-serve
coffee pod business was already booming
yet consumers continued to choose
convenience over the environment.
After discovering that plant-based materials fall apart
under heat and pressure, the road ahead remained
challenging but the NEXE team persevered.
As pilot equipment was tested, considerable new
challenges emerged. It would take a whole new
production team and over 1.5 years to successfully
advance to commercialization.
Today the NEXE POD (for K-Cup) is being
commercialized with plans to rapidly scale
(220M pods). NEXE is aiming to develop other
plant based innovations in other verticals using
the many lessons learned over five years.
G
However, it was only the emergence of new
plant-based materials and forming technologies
(like 3D printing) that propelled Footz to pursue a
100% plant based coffee pod.
Pilot -> Automation
Plant-Based Challenges
Big Idea
Fully Compostable
Commercialization
4
Global Coffee Consumption Market
US at-home coffee market
is set to grow by 4.9% in
2020 to reach $15.6bn
compared to a total of
3.9% growth experienced
between 2015-2019
Mintel, September 2020
44% of the US coffee
demand comes from
the millennials
National Coffee
Association in NY
$15.6B
$155B
Zion Market Research, August 2020
Global coffee market was
valued at ~ USD $102.15bn
in 2019 and is expected to
reach revenue worth USD
$155.64bn by 2026 and is
growing at a CAGR of
6.2% between 2020-2026
2026
5
Global Coffee Pod and
Capsule Market is
Expected to Reach
USD $29.2bn by 2025
Fior Markets
March 2020
$29.2B
44%
6
Advancements in Sustainable Materials Technology has created a
Generational Opportunity for Product Innovators.
Consumer Demand Driving Innovation
for Sustainable Alternatives
NEXE is at the forefront of the convergence of advanced materials science with
manufacturing technologies to develop sustainable consumer products
Advanced Materials
Manufacturing Technology
Global Plastic Crisis
9%
79%
MILLION TONS OF
PLASTIC PRODUCED
YOY
RECYCLED
LESS THAN
ENDS UP IN THE
ENVIRONMENT
(LAND AND OCEANS)
500+
FOR PLASTIC PODS
TO BREAK DOWN
365+
* https://www.nationalgeographic.com/news/2017/07/plastic-produced-recycling-waste-ocean-trash-debris-environment/
* https://www.nationalgeographic.com/news/2018/05/plastics-facts-infographics-ocean-pollution/
** https://www.wwf.org.au/news/blogs/the-lifecycle-of-plastics#gs.7wxvt5
**
*
*
*
YEARS
500-10,000 YEARS
7
PLASTIC WASTE
IN LOCAL LANDFILLS
IS OVERFLOWING!
A global R&D initiative for alternative materials to
replace plastic
Increased need for new industrial facilities to
provide quick digestion solutions for waste
•
Circular Economy
Industrial compost facilities struggle with material acceptance
Compost certification agencies (BPI) are at odds with the
industrial compost facilities on what is compostable
Many promising new materials technology to replace plastic,
however many not yet fully functional and compromise the
product (ie. taste)
NEW MATERIALS
INNOVATION LOOKS
PROMISING BUT...
•
•
•
•
8
8.5%+
OF ALL COFFEE
CONSUMED
Single-Serve Coffee Pods
COMPOUNDED
GROWTH PER YEAR
PROBLEM: Why hasn’t there been a
smart, non-plastic coffee pod that has
emerged as the category killer?
50%+
Engineering new plant-based materials to
achieve the needed barrier properties for
the K-Cup is challenging.
New eco based single serve pods have
fared poorly in ‘pour-over’ tests. In other
words, taste was compromised.
Other pods that claim compostability
(because of certification) might fail toxicity
studies due to fossil inputs.
CHALLENGING
ENGINEERING
COMPROMISED
TASTE
TOXICITY
Coffee maintains high ethical
requirements and consumers are
demanding a solution.
9
THE SOLUTION
Plant-based, fully
compostable, no
compromise!
Our ecotoxicity and
compostability results are
backed by scientific and
industrial studies.
After 5 Years of R&D,
NEXE mastered ‘barrier’
without compromise and
proved compostability in
as little as 35 days.
Plant-based
Science-Backed
5 Years R&D
1
2
3
The lessons learned
from the creation of the
pod will propel NEXE to
new innovations.
Lessons Learned
10
Our 100% owned facility allows NEXE to begin to address the
rapidly growing demand for plant-based alternatives to plastic.
State-of-the-Art
Commercial Facility
11
Scientific & Commercial Validation
“Soil containing NEXE POD compost had no
negative influence on the growth of carrots and
onions over a period of six weeks, with no
evidence of toxicity to the plants.”
Dr. Zachary Hudson
Canada Research Chair in
Sustainable Chemistry, University of British Columbia
and Chief Scientific Officer, NEXE.
“In optimum conditions the pods can be fully
degraded within a 35 day process. At an average
organic waste facility it would take approximately 70
days to fully degrade. We are working towards BPI
certification.”
Terravis Ltd.
Private Sector Compost Study
Carrots (left) and onions (right) after 3 weeks of growth in soil containing
10 wt% NEXE POD compost.
Post-shredded coffee pods.
Fine/compost pod particles after
“composting cycle 3”.
Home Composting Study
Scanning Electron Microscope images of the NEXE Kup surface: indicating various degrees of ongoing decomposition
NEXE’ Compostability test that took place at the UBC Chemical and Biological Engineering Lab in Vancouver.
Involved two 120-liter backyard-style composters were used for the compostability test.
Two layers of fibreglass insulation were wrapped around the composter. Forced aeration was provided by
an aquarium pump having a maximum capacity of 5 L/min and air flow distribution plenum.
Dr. Anthony Lau
Canada Research Chair in
Associate Professor, Advisor: MSc, MASC, MEng
University of British Columbia
“The pods have demonstrated complete degradation
meeting applicable compost quality standards after 12 weeks”
13
Competitors
The single-use capsule industry is
expected to reach annual consumption of
50+ billion units in 2020!
NEXE POD
14
15
Soft Bottom
Rigid Cup
Conventional
NEXE POD
SOY BASED INK
HOT TO
THE TOUCH
LIMITED
VOLUME
OF COFFEE
Pod Comparison
EXTREMELY
HOT TO
THE TOUCH
COOL TO
THE TOUCH
FULLY
COMPOSTABLE
SUPERIOR
TASTE
NO ADHESIVES
MULTI-STEP
RECYCLING PROCESS
PLANT-BASED
MORE
VOLUME
NO BARRIER
BARRIER
500
COFFEE POD
PLASTIC DECOMPOSITION
YEARS
35
DAYS
COMPOSTABILITY
*
* https://www.wwf.org.au/news/blogs/the-lifecycle-of-plastics#gs.7wxvt5
COMPOSTABILITY
(6 months to 2 years)
2
YEARS
MONTHS
6
-16
Funded Capacity (Annual)
250
200
150
100
80
60
40
20
10
0
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Millions
50
M
Nespresso
170M
220
M
TOTAL
KCup
Total
BIORESOURCES
17
Leveraging IP to
Create New Innovations
NEXE has a two-pronged
approach to IP with a
leading IP consulting firm
to focus on our
proprietary automation
and materials technology
within our pods
This process will
strengthen our competitive
advantage and barriers to
entry, protect our brand,
generate potential licensing
revenue, increase
transaction leverage and
shareholder value
Firm has identified at least 20
patent applications giving
NEXE global utility patent
protection
FINDINGS IN LAB
TO DATE SUGGEST
WE CAN CREATE
NEW PRODUCTS IN
MULTIPLE
VERTICALS
1
2
3
20+ PATENT
APPLICATIONS
PROCESS
IP FIRST
An Existing Platform for
New Innovations
Gather
Customer
Requirements
Rapid
Prototyping
Lab
Operational
Testing
Customer
Validation
Sales
Selection, modification, and utilization of sustainable polymers
Process
18
Collaborations & Partnerships
Government / Academic Partnerships
Government of
Canada
Gouvernement du
Canada
ORGANIKA
Commercial Partnerships
Government of
Canada
Gouvernement du
Canada
Awards
IRAP Innovation Assistance Program (IAP)
WINN - Western Innovation Initiative
Government of
Canada
Gouvernement du
Canada
Wall Solutions Award
19
20
Value Creation
LAB SCALE
BUSINESS MODEL/
EARNINGS
STRATEGIC CHOICES
INDUSTRIAL SCALE
FLAGSHIP PLANT
SALES OF PRODUCTS
LICENSING
LICENSING
STRATEGIC
CHOICES
STAND-ALONE
PARTNERING
SELL TECHNOLOGY
220,000,000+
1,000,000,000+
PLATFORM PROCESS/
METHODOLOGY
Use of Proceeds
Total Shares Issued
Fully Diluted Share Capital
63,276,033
47,387,337
Automation
R&D
$3.0M
$0.5M
Marketing
$0.5M
Working Capital
$1.0M
Total
$5.0M
$13.5M
Number of Common Shares
Fully Diluted Share Capital
89,621,457
64,456,583
$3.0M
$0.5M
$0.5M
$1.0M
December 4 2020
Warrants
Performance Warrants
Stock Options
16,954,874
3,250,000
4,960,000
21
Capital Table
16% of Shares owned by management and directors
Current Cash
Available Cash
(Nov 2020)
$3.0M
CPC Vehicle
$0.7M
Financing
(Nov 2020)
$13.65M
22
Darren Footz
CEO
Ash Guglani
President, Co-Founder
Steve Lockhart
VP Business Development
Don Chisholm
New Product
Development
Leadership Team
A serial entrepreneur, Darren is the past President
of Granville Island Coffee, a company he built in 5
years from a small artisan roaster to a national
brand. He is the innovative mind behind the 100%
plant-based and fully compostable G-POD. His
expertise, dedication and pioneering ideas are the
backbone of our organization.
Ash spent 12 years in capital markets with a
national investment bank in Vancouver. As an
original founder of G-PAK, he plays an integral
role in helping G-PAK in all capacities across
financing (public, private and government),
operations, and marketing.
Steve has over 20 years of experience in
management positions with Choices Markets, a
$100 million revenue local chain grocer. He
played a key role in building the business from
start-up to stability and profitability through the
opening of 10 large retail stores.
For over 30 years, Don Chisholm has been working at
the intersection of business and design. With a
unique skillset that balances creativity with
innovation and strategy with operations, Don is
passionate about working closely with entrepreneurs,
executives and marketers to transform businesses
and generate results.
Raj Kang
CFO
Rajwant S. Kang is the founder & president of RSK
Management Consulting Inc. a private company
that provides management services and has over
25 years of accounting and finance experience. He
has proficient knowledge of capital markets, raising
capital, M&A and corporate regulation of publicly
listed companies.
Paul Bhogal
Automation
Paul has over 20 years of manufacturing and
automation experience. He grew a small family
Hamilton-based machine shop into a Tier 1 & 2
automotive production
machining/assembly/-testing facility with two locations in Ontario and
one in Saltillo, Mexico
Dr. Zac Hudson
Chief Science Officer
Dr. Zac Hudson is the Canada Research Chair in
Sustainable Chemistry at the University of British
Columbia. Dr. Hudson holds a B.Sc. and Ph.D in
chemistry from Queen's University, and has held
research fellowships at top universities in Japan,
China, the US and UK. His Ph.D. thesis was
named the top chemistry Ph.D. in all of Canada,
as well as the top Ph.D. at Queen's in any field.
Anthony holds 20 years of experience in marketing,
strategy and business development. In 2007,
pur-suing his passion for natural health and
sustainabil-ity, he joined Vega in its infancy as Vice President
of Marketing. There he built a strong 50- member
team that developed a leading marketing program
overseeing consumer, trade, PR, creative and
digi-tal marketing. He played a key role in building an
internationally recognized premium brand while
seeing revenue grow from $3.5M in 2007 to $200M
in 2015.
Anthony Rosenfeld
23
Summary
Explosive Growth in the sustainable and global anti-plastic movement
NEXE POD Commercialization in Q4 2020 (K-Cup format)
New Innovation Product Testing to be completed by mid 2021 (NEXE POD - Nespresso format) includes
additional capacity of 50 million units
Award Winner and Recognized Thought Leader have received multiple nationally recognized
sustainability awards & have a growing IP portfolio
This process will
strengthen our competitive
advantage and barriers to
entry, protect our brand,
generate potential licensing
revenue, increase
transaction leverage and
shareholder value
24
Statutory Rights of Action
Securities legislation in certain of the provinces of Canada may deem this presentation to be an offering memorandum and accordingly provide purchasers with statutory rights of rescission or damages, or both, in the event this memorandum contains a misrepresentation. A "misrepresentation" is an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make any statement not misleading or false in the light of the circumstances in which it was made. These remedies must be commenced by the purchaser within the time limits prescribed and are subject to the defences contained in the applicable securities legislation. Purchasers should refer to the applicable provisions of the securities legislation of their province for the particulars of these rights or consult with a legal adviser. The following is a summary of the statutory rights of rescission or damages, or both, under securities legislation in certain of the provinces of Canada where that is required to be disclosed under the relevant securities legislation, and as such, is subject to the express provisions of the legislation and the related regulations and rules. The rights described below are in addition to, and without derogation from, any other right or remedy available at law to purchasers of the securities.
Ontario Purchasers
Ontario securities legislation provides that where an offering memorandum is delivered to a purchaser and contains a misrepresentation, the purchaser will be deemed to have relied upon the misrepresentation and will, except as provided below, have a statutory right of action for damages or for rescission against the issuer and a selling security holder on whose behalf the distribution is made; if the purchaser elects to exercise the right of rescission, the purchaser will have no right of action for damages against the issuer or any selling security holder. No such action shall be commenced more than, in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action, or, in the case of any action other than an action for rescission, the earlier of: (i) 180 days after the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of the transaction that gave rise to the cause of action. The Ontario legislation provides a number of limitations and defences to such actions, including: (a) the issuer or any selling security holder is not liable if it proves that the purchaser purchased the securities with knowledge of the misrepresentation; (b) in an action for damages, the issuer shall not be liable for all or any portion of the damages that the issuer or any selling security holder proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied upon; and (c) in no case shall the amount recoverable exceed the price at which the securities were offered.
These rights are not available for a purchaser that is: (a) a Canadian financial institution, meaning either: (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act; or (ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a province or territory of Canada to carry on business in Canada or a province or territory of Canada; (b) a Schedule Ill bank, meaning an authorized foreign bank named in Schedule Ill of the Bank Act (Canada); (c) the Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada); or (d) a subsidiary of any person referred to in clauses (a), (b) or (c), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary.
New Brunswick Purchasers
New Brunswick securities legislation provides that where any information relating to an offering that is provided to a purchaser of the securities contains a misrepresentation, a purchaser who purchases the securities shall be deemed to have relied on the misrepresentation if it was a misrepresentation at the time of purchase. Such purchaser has a right of action for damages against the issuer or may elect to exercise a right of rescission against the issuer, in which case the purchaser shall have no right of action for damages. No such action shall be commenced more than, in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action or, in the case of any action, other than an action for rescission, the earlier of (i) one year after the plaintiff first had knowledge of the facts giving rise to the cause of action, and (ii) six years after the date of the transaction that gave rise to the cause of action. The New Brunswick legislation provides a number of limitations and defences to such actions, including: (a) the issuer is not liable if it proves that the
purchaser purchased the securities with knowledge of the mis-representation; (b) in an action for damages, the issuer shall not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied upon; and (c) in no case shall the amount recoverable exceed the price at which the securities were offered.
Nova Scotia Purchasers
Nova Scotia securities legislation provides that in the event that an offering memorandum or a record incorporated by reference in an offering memorandum, together with any amendments thereto, or any advertising or sales literature (as defined in the Nova Scotia securities legislation) contains a misrepresentation, a purchaser who purchases the securities referred to in it is deemed to have relied upon such misrepresentation if it was a misrepresentation at the time of purchase. Such purchaser has a statutory right of action for damages against the seller (which includes the issuer) and, subject to certain additional defences, the directors of the seller. Alternatively, the purchaser while still an owner of the securities, may elect instead to exercise a statutory right of rescission against the issuer, in which case the purchaser shall have no right of action for damages against the seller or the directors. No such action shall be commenced to enforce the right of action for rescission or damages more than 120 days after the date payment was made for the securities (or after the date on which initial payment was made for the securities where payments subsequent to the initial payment are made pursuant to a contractual commitment assumed prior to, or concurrently with, the initial payment). The Nova Scotia legislation provides a number of limitations and defences, including: (a) no person or company is liable if the person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation; (b) in the case of an action for damages, no person or company is liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentation; and (c) in no case will the amount recoverable in any action exceed the price at which the securities were offered to the purchaser.
A person or company, other than the issuer, is not liable with respect to any part of the offering memorandum or any amendment to the offering memorandum not purporting (a) to be made on the authority of an expert or (b) to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company (i) failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation or (ii) believed that there had been a misrepresentation.
Statutory Rights of Action
Saskatchewan Purchasers
Saskatchewan securities legislation provides that in the event that an offering memorandum, together with any amendments thereto, or advertising and sales literature disseminated in connection with an offering of securities contains a misrepresentation, a purchaser who purchases such securities has, without regard to whether the purchaser relied on the misrepresentation, a right of action for damages against: (a) the issuer and the selling security holder on whose behalf the distribution is made; (b) every promoter and director of the issuer or the selling security holder, as the case may be, at the time the offering memorandum or any amendment to it was sent or delivered; (c) every person or company whose consent has been filed respecting the offering, but only with respect to reports, opinions or statements that have been made by them; (d) every person who or company that, in addition to the persons or companies mentioned in clauses (a) to (c), signed the offering memorandum or the amendment to the offering memorandum; and (e) every person who or company that sells securities on behalf of the issuer and the selling security holder under the offering memorandum or amendment to the offering memorandum. If such purchaser elects to exercise a statutory right of rescission against the issuer or selling security holder, it shall have no right of action for damages against that person or company. No such action for rescission or damages shall be commenced more than, in the case of a right of rescission, 180 days after the date of the transaction that gave rise to the cause of action or, in the case of any action, other than an action for rescission, before the earlier of (i) one year after the plaintiff first had knowledge of the facts giving rise to the cause of action, and (ii) six years after the date of the transaction that gave rise to the cause of action.
The Saskatchewan legislation provides a number of limitations and defences, including: (a) no person or company will be liable if the person or company proves that the purchaser purchased the securities with knowledge of the mis-representation; (b) in the case of an action for damages, no person or company will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresen-tation; and (c) in no case will the amount recoverable in any action exceed the price at which the securities were offered to the purchaser.
No person or company, other than the issuer, will be liable if the person or company proves that: (a) the offering memorandum or any amendment to it was sent or delivered without the person's or company's knowledge or consent and that, on becoming aware of it being sent or delivered, that person or company gave reasonable general notice that it was so sent or delivered; (b) after the filing of the offering memorandum or any amendment to it and before the purchase of securities by the purchaser, on becoming aware of any misrepresentation in the offering memorandum or any amendment to it, the person or company withdrew the person's or company's consent to it and gave reasonable general notice of the person's or company's withdrawal and the reason for it; (c) with respect to any part of the offering memorandum or any amendment to it purporting to be made on the authority of an expert, or purporting to be a copy of, or an extract from, a report, an opinion or a statement of an expert, that person or company had no reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the part of the offering memorandum or any amendment to it did not fairly represent the report, opinion or statement of the expert or was not a fair copy of, or an extract from, the report, opinion or statement of the expert; (d) with respect to any part of the offering memorandum or any amendment to it purporting to be made on the person's or company's own authority as an expert or purporting to be a copy of or an extract from the person's or company's own report, opinion or statement as an expert that contains a misrepresentation attributable to failure to represent fairly his, her or its report, opinion or statement as an expert, (i) the person or company had, after reasonable investigation, reasonable grounds to believe, and did believe, that the part of the offering memorandum or any
amendment to it fairly represented the person's or company's report, opinion or statement, or (ii) on becoming aware that the part of the offering memorandum or of any amendment to it did not fairly represent the person's or company's report, opinion or statement as an expert, the person or company immediately advised the Saskatchewan Securities Commission and gave reasonable general notice that such use had been made of it and that the person or company would not be responsible for that part of the offering memorandum or of the
amendment to it; or (e) with respect to a false statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, the statement was a correct and fair representation of the statement or copy of or extract from the document and the person or company had reasonable grounds to believe, and did believe, that the statement was true.
The Saskatchewan legislation also provides that where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to the security purchased and the verbal statement is made either before or contemporaneously with the purchase of the security, the purchaser is deemed to have relied on the misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action for damages against the individual who made the verbal statement.
The Saskatchewan legislation provides a purchaser with the right to void the purchase agreement and to recover all money and other consideration paid by the purchaser for the securities if the securities are sold in contravention of Saskatchewan securities legislation, regulations or a decision of the Saskatchewan Financial Services Commission.
The Saskatchewan legislation also provides a right of action for rescission or damages to a purchaser of securities to whom an offering memorandum or any amendment to it was not sent or delivered prior to or at the same time as the purchaser enters into an agreement to purchase the securities, as required by the Saskatchewan legislation.
The Saskatchewan legislation also provides that a purchaser who has received an amended offering memorandum that was amended and delivered in accordance with such legislation has a right to withdraw from the agreement to purchase the securities by delivering a notice to the person who or company that is selling the securities, indicating the purchaser's intention not to be bound by the purchase agreement, provided such notice is delivered by the purchaser within two business days of receiving the amended offering memorandum.
Statutory Rights of Action
Manitoba Purchasers
If this presentation, together with any amendment to it, is delivered to a purchaser resident in Manitoba and contains a misrepresentation that was a misrepresentation at the time of purchase, the purchaser will be deemed to have relied upon the misrepresentation and will have a statutory right of action for damages against the issuer and every director of the issuer and every person or company who signed the presentation or, alternatively, may elect instead to exercise a statutory right of rescission against the issuer. If the purchaser elects to exercise the right of rescission, the purchaser will have no right of action for damages. This right of action is subject to the following limitations:
no such action may be commenced to enforce the right of action for rescission or damages more than (a) 180 days after the day of the transaction that gave rise to the cause of action, in the case of an action for rescission, or (b) the earlier of (i) 180 days after the day that the plaintiff first had knowledge of the facts giving rise to the cause of action, or (ii) two years after the day of the transaction that gave rise to the cause of action, in any other case;
no person or company will be liable if it proves that the purchaser had knowledge of the misrepresentation;
in the case of an action for damages, the defendant will not be liable for all or any part of the damages that it proves do not represent the depreciation in value of the securities as a result of the misrepresentation relied upon; and in no case will the amount recoverable in any action exceed the price at which the securities of TNC were offered under this presentation.
All or any one of the persons or companies referred to above that are found to be liable or accept liability are jointly and severally liable. A defendant who is found liable to pay a sum in damages may recover a contribution, in whole or in part, from a person who is jointly and severally liable to make the same payment in the same cause of action unless, in all the circumstances of the case, the court is satisfied that it would not be just and equitable. In addition, a person or company, other than the issuer, will not be liable if that person or company proves that:
this presentation was sent to the purchaser without the person's or company's knowledge or consent, and that, after becoming aware that it was sent, the person or company promptly gave reasonable notice to the issuer that it was sent without the person's or company's knowledge and consent;
after becoming aware of the misrepresentation, the person or company withdrew the person's or company's consent to this presentation and gave reasonable notice to the issuer of the withdrawal and the reason for it;
with respect to any part of this presentation purporting to be made on the authority of an expert or to be a copy of, or an extract from, an expert's report, opinion or statement, the person or company proves that the person or company did not have any reasonable grounds to believe and did not believe that (i) there had been a misrepresentation, or (ii) the relevant part of this presentation (A) did not fairly represent the expert's report, opinion or statement, or (B) was not a fair copy of, or an extract from, the expert's report, opinion or statement; or with respect to any part of this presentation not purporting to be made on an expert's authority and not purporting to be a copy of, or an extract from, an expert's report, opinion or statement, unless the person or company (i) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or (ii) believed there had been a misrepresentation.
If a misrepresentation is contained in a record incorporated by reference in, or is deemed to be incorporated into, this presentation, the misrepresentation is deemed to be contained in this presentation. The foregoing is a summary only and is subject to the express provisions of the Securities Act (Manitoba) and the regulations and rules made under it, and prospective investors should refer to the complete text of those provisions.
