Elephant Hill Announces Letter of Intent and Intention to Complete Its Qualifying Transaction

Elephant Hill Capital Inc. (TSXV:EH.P) (the “Company” or “Elephant Hill”), a capital pool company, is pleased to announce that it has entered into a non-binding letter of intent (the “Letter of Intent”) dated January 8, 2020 with Artos Pharma Inc. (“Artos”) and Tassili Life Sciences Corp. (“Tassili”) which outlines the general terms and conditions of a proposed transaction (the “Proposed Transaction”) that will result in Elephant Hill acquiring all of the issued and outstanding common shares of Artos (the “Artos Shares”) and Tassili (the “Tassili Shares”).

The Proposed Transaction is currently expected to be completed by way of an exempt take-over bid, amalgamation, arrangement or other similar business combination as Elephant Hill, Artos and Tassili shall agree to.

Overview of Elephant Hill Capital Inc.

Elephant Hill is a capital pool company. The Company’s principal business activity is to identify and evaluate opportunities for acquisition of assets or business. The Company was incorporated on January 15, 2018 and has its registered office in Calgary, Alberta.

Overview of Artos

Artos is a private company incorporated under the law of the Province of British Columbia with offices in Vancouver, British Columbia. Artos is a clinical-stage, biopharma company founded by a group of physicians. The company is focused on treating advanced sarcomas, which are rare tumors of connective tissue. Because there are well over 50 histologic sarcoma subtypes, including malignant and non-malignant pathologies, clinical courses and therapeutic management are widely divergent. Sarcomas can occur anywhere in the body and have clinical courses ranging from indolent to highly aggressive. Surgery is still the most common treatment as it remains the only means of curing the disease. In most cases, it is not clear what causes sarcoma. Family history and radiation exposure may increase risk. In 2018, there were an estimated 13,040 new cases of soft tissue sarcoma in the U.S. No first-line therapies for soft tissue sarcoma have been approved in more than 40 years since Adriamycin, a chemotherapy medication used to treat cancer.

The active pharmaceutical ingredient in Artos’ lead oral drug candidate, ART-2020 (razoxane), has already completed multiple phase 2 clinical trials in Europe indicating safety and therapeutic activity. The company is collaborating with Professor Walter Rhomberg, an investigator who has led two of these clinical studies. In addition, Professor Rhomberg is co-editor of the publication, “Razoxane and Dexrazoxane – Two Multifunctional Agents”. Artos plans to conduct a pivotal clinical trial in sarcoma in the United Kingdom and European Union and globally pursue regulatory approval. Each of the following individuals hold a controlling interest in or controls/directs Artos: James Kuo, CEO and Director (San Diego, California) and William Garner, Chairman (San Juan, Puerto Rico).

Overview of Tassili

Tassili is focused on the psychedelic drug industry. Tassili, with the planned collaboration of a top tier university research facility, will engage in pre-clinical studies of its combination compounds to establish efficacy based on objective outcomes. Tassili is a private company incorporated under the law of the Province of Ontario with offices in Toronto, Ontario.

Tassili in collaboration with university research institutes intends to demonstrate that the clinical and physiological effectiveness in post concussion post traumatic stress disorder (PTSD) and obsessive compulsive disorder (OCD) are enhanced by timely measured dosages of Psilocybin (a naturally occurring psychodelic producing compound) + CBD (cannabidiol) with superior clinical results as measured by objective outcomes. Tassili expects this combination to elicit clinical outcomes that are superior to Psilocybin or CBD alone. Tassili’s vision is to administer the combination of Psilocybin and CBD in certified drug and talk therapy clinics when human clinical trials are completed and the combination is approved by the regulatory agencies throughout the world.

Tassili’s management believes that Tassili’s proprietary novel approach addresses short term memory (STMs) and long term memory (LTMs) disorders by selectively erasing or suppressing pathological memories as in PTSD, suicidal thoughts and depression. It is also expected to elicit positive clinical outcomes in altering destructive behavior patterns such as drug and alcohol addiction, unconstrained mental and physical activity as OCD, and/or Tourette’s syndrome and the wide spectrum of memory recall/forgetfulness disorders ranging from the ubiquitous age related memory breach, up to Alzheimer disease. Tassili may potentially engage with other organizations to pursue research on this additional proprietary approach.

Each of the following individuals hold a controlling interest in or control/direct Tassili: George Scorsis, Director (Toronto, Ontario), Jonathan Gilbert, CEO and Director (Roslyn Heights, New York), Jonathan Held, CFO and Director (Toronto, Ontario) and Maghsoud Dariani, Chief Science Officer (Fanwood, New Jersey).

Website: https://tassililifesciences.com/

The Proposed Transaction

The Letter of Intent is to be superseded by a definitive agreement (the “Definitive Agreement”) between Elephant Hill, Artos and Tassili with such agreement to include representations, warranties, covenants and conditions typical for a transaction of this nature. The Proposed Transaction is subject to, among other things, receipt of all applicable shareholder and regulatory approvals, the final approval of the TSX Venture Exchange (the “Exchange”) and the satisfaction of customary closing conditions, including the conditions described below.

Prior to completion of the Proposed Transaction, the Corporation intends to hold a meeting of its shareholders for purposes of approving, among other matters, certain matters ancillary to the Proposed Transaction, including a change of the name of Elephant Hill to a name that the Corporation, Artos and Tassili may determine and which shall be acceptable to the Exchange.

Jonathan Gilbert is a Director of Elephant Hill and the Chief Executive Officer and Director of Tassili. As a result, the Proposed Transaction is a Non-Arm’s Length Qualifying Transaction (as defined by the policies of the Exchange). The Proposed Transaction must be approved by not less than 66 2/3% of the votes cast at a meeting of Elephant Hill shareholders (the “Elephant Hill Meeting”). In addition “Majority of the Minority” approval will be required from disinterested Elephant Hill shareholders. It is expected that management information circular will be provided to Elephant Hill shareholders and the Elephant Hill Meeting will be held in due course.

Following the Closing, Elephant Hill will continue on with the business of each of Artos and Tassili and it is expected that Artos and Tassili will become wholly owned subsidiaries of the Corporation, and will change their names to something applicable as they may determine and which shall be acceptable to the Exchange (Elephant Hill after the Proposed Transaction being referred to herein as the “Resulting Issuer”). Following completion of the Proposed Transaction, Elephant Hill intends to list as a Tier 2 Life Sciences Issuer on the Exchange.

It is currently anticipated that under the Proposed Transaction, each shareholder of Artos (excluding those receiving Artos Shares as a result of the Proposed Financing) will receive 1.0 “new” Elephant Hill common share (“Elephant Hill Share”) in exchange for each one (1) Artos Share and each Artos stock option and warrant (if applicable) held by such holder shall be exchanged for a stock option and warrant of Elephant Hill on the same terms. The former shareholders of Artos shall receive 20,000,000 Elephant Hill shares at a price of $0.20 per share.

It is currently anticipated that under the Proposed Transaction, each shareholder of Tassili (excluding those receiving Tassili Shares as a result of the Proposed Financing) will receive 1.0 “new” Elephant Hill Share in exchange for each one (1) Tassili Share and each Tassili stock option and warrant (if applicable) held by such holder shall be exchanged for a stock option and warrant of Elephant Hill on the same terms. The former shareholders of Tassili shall receive a minimum of 13,750,000 Elephant Hill shares and up to a maximum of 22,500,000 Elephant Hill shares at a price of $0.20 per share, depending on Tassili’s contribution to the Proposed Financing and on meeting certain requirements pursuant to the Letter of Intent.

It is expected that all Elephant Hill Shares (including Elephant Hill Shares issued upon exercise of Elephant Hill warrants) and Elephant Hill warrants (collectively “Elephant Hill Securities”) issued pursuant to the Proposed Transaction, except those certain Elephant Hill Securities issued to U.S. persons, will be freely tradable under applicable Canadian securities legislation, but may be subject to Exchange imposed restrictions on resale. Elephant Hill Securities issued to U.S. persons will not be freely tradable and will be subject to restrictions upon trading under applicable U.S. securities laws. None of the securities to be issued pursuant to the Proposed Transaction have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and any securities issued pursuant to the Proposed Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 4(a)(2) and/or Regulation D of the U.S. Securities Act and applicable exemptions under state securities laws. The Elephant Hill Securities issued to U.S. persons may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under applicable U.S. securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Further details about Elephant Hill, the Proposed Transaction and the Resulting Issuer, including financial information, will be included in a subsequent press release in connection with the Transaction.

Proposed Financing

In connection with the Proposed Transaction, Artos, Tassili and Elephant Hill are proposing to complete a private placement of subscription receipts (the “Subscription Receipts”) for gross proceeds of between $4,000,000 and $7,000,000 (the “Proposed Financing”).

Each Subscription Receipt will be deemed to be converted into one Elephant Hill common share or one Elephant Hill unit, as will be later determined and dictated by market conditions, immediately without further payment from or action on the part of the holder and concurrently with the satisfaction of certain escrow release conditions, including, among other things, confirmation that there is no impediment to the completion of the Proposed Transaction. Further details of the Subscription Receipt offering will be disclosed in subsequent press releases. Upon completion of the Proposed Transaction, holders of Elephant Hill Shares referred to above will receive “new” Elephant Hill shares and Elephant Hill warrants in exchange for their “old” Elephant Hill shares and Elephant Hill warrants.

Elephant Hill intends to use the net proceeds of the Proposed Financing and existing cash on hand for general corporate purposes.

Conditions to the Proposed Transaction

Completion of the Proposed Transaction is subject to certain conditions precedent including, among other things:

• the satisfactory completion of due diligence investigations by each of Elephant Hill, Artos and Tassili;
• the receipt of all required approvals by the respective boards of directors of Elephant Hill, Artos and Tassili;
• closing of the Proposed Financing;
• the receipt of any requisite approvals of the shareholders of Elephant Hill required by applicable law or Exchange requirements;
• the receipt of approval of the Proposed Transaction by the shareholders of Artos and Tassili;
• the receipt of all required consents, approvals and authorizations of any regulatory authorities, including, without limitation, the Exchange, as applicable; and
• the receipt of all required consents and approvals of third parties.

Proposed Management and Board of Directors of the Resulting Issuer

It is currently anticipated that all of the current officers and all of the current directors of Elephant Hill will resign from their respective positions with Elephant Hill. Subject to applicable regulatory, shareholder and Exchange approval, on completion of the Proposed Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will be fixed at five (5), nominated upon agreement between Elephant Hill, Artos and Tassili, and will consist of two (2) of whom are to be nominees of Artos, two (2) of whom are to be nominees of Tassili, and one (1) of whom is to be a joint nominee of Artos, Tassili and Elephant Hill.

Details with respect to the proposed officers, directors and insiders (as defined by Exchange Policies) of the Resulting Issuer, including the background of each such proposed individual, will be announced in subsequent disclosure.

Halt of Trading of Common Shares of the Corporation

In accordance with the policies of the Exchange, the common shares of the Corporation are currently halted from trading and will remain halted until further notice.

Sponsorship

Sponsorship may be required by the TSXV unless exempt in accordance with TSXV policies. The Corporation is currently reviewing the requirements for sponsorship and intends to apply for a waiver from the sponsorship requirements. There is no assurance that a waiver from this requirement will be obtained. The Corporation intends to include any additional information regarding sponsorship in a subsequent press release.

All information contained in this press release with respect to the Corporation, Artos and Tassili was supplied by the parties, respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Further Information

In accordance with the policies of the Exchange, further details about the Proposed Transaction and the Resulting Issuer will be provided in a comprehensive press release when the parties enter into a Definitive Agreement, including details related to the business and assets of Artos and Tassili, proposed consideration, description of financing arrangements and loans. Further details will also be provided and in the disclosure document to be prepared and filed in respect of the Proposed Transaction.

Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

For further information, please contact:

Elephant Hill Capital Inc.
Mohammad Fazil, President, Chief Executive Officer, Director
Email: mofazil@gmail.com
Phone: (403) 613-7310

Artos Pharma Inc.
James Kuo, Chief Executive Officer
Email: jkuo@artospharma.com
Phone: (858) 220-5703

Tassili Life Sciences Corp.
Jonathan Gilbert, Chief Executive Officer and Director
Email: j.gilbert@tassililifesciences.com
Phone: (917) 693-0215

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

All information contained in this press release with respect to Elephant Hill, Artos and Tassili was supplied by the parties, respectively, for inclusion herein, and Elephant Hill and its directors and officers have relied on Artos and Tassili for any information concerning such party.

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

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

This press release is not an offer of securities for sale in the United States. The securities described in this press release have not been registered under the U.S. 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 (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) absent registration or an exemption from registration. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction where such offer, solicitation, or sale would be unlawful.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the Proposed Transaction; the terms and conditions of the proposed Financing; future developments and the business and operations of the “Resulting Issuer” after the Proposed Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the 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, competitive, political and social uncertainties; and delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that the Proposed Transaction will proceed and that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Corporation, Artos and Tassili disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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