The Proposed Transaction
It is intended that the Proposed Transaction will constitute the "Qualifying Transaction" of New Media as such term is defined in the policies of the TSXV. New Media currently has 7,800,000 common shares outstanding (each, a " New Media Common Share "), stock options to acquire 625,000 New Media Common Shares at a price of $0.10 per share expiring ten years from the date of issuance (the " New Media Stock Options ") and share purchase warrants issued to the agent on the Company's initial public offering to acquire 500,000 New Media Common Shares at a price of $0.10 per share expiring on the earlier of (i) December 21, 2026, and ii) 12 months from the date common shares of the Resulting Issuer (as defined below) commence trading on the TSXV or other recognized stock exchange following completion of the Qualifying Transaction (the " Agent's Warrants "). It is expected that all New Media Stock Options will be exercised in accordance with their terms shortly after completion of the Proposed Transaction.
As a result of the Proposed Transaction, it is expected that Hypersonix will become a wholly-owned subsidiary of New Media (the " Resulting Issuer " following completion of the Proposed Transaction). While the final structure of the Proposed Transaction will be subject to the receipt of tax, corporate and securities law advice for both New Media and Hypersonix, it is currently anticipated that the Proposed Transaction will be effected by way of a court-supervised scheme of arrangement under the laws of Australia (the " Arrangement ") in accordance with the terms of an arrangement agreement or scheme implementation agreement to be entered into by Hypersonix and New Media (the " Arrangement Agreement ").
The Company and Hypersonix anticipate that upon on closing of the Proposed Transaction, the Resulting Issuer will meet the TSXV's initial listing requirements for a Tier 1 or Tier 2 Industrial, Technology or Life Sciences issuer.
Name Change and Consolidation
On or immediately prior to the completion of the Proposed Transaction, it is anticipated that: (i) New Media will effect a name change to "Hypersonix Launch Systems Inc." or such other name as is acceptable to Hypersonix (the " Name Change "); and (ii) New Media will consolidate its issued and outstanding shares (which will also affect the New Media Stock Options and the Agent's Warrants) on the basis of one (1) post-consolidated share for six (6) pre-consolidated shares on or immediately prior to closing of the Proposed Transaction (the " Consolidation "), or such other consolidation ratio as may be required under the policies of the TSXV and as may be acceptable to the parties, with all issuances of New Media Common Shares in connection with the Proposed Transaction being commensurately adjusted. New Media will seek the approval of its shareholders for the Name Change and Consolidation at a meeting of shareholders (the " Meeting ") to be held prior to completion of the Proposed Transaction. Notice of the Meeting will be posted on www.SEDAR.com under the Company's profile.
In connection with the Proposed Transaction, it is anticipated that New Media shall issue an aggregate of approximately 39,333,333 post-Consolidation New Media Common Shares at a deemed price of $1.20 per share to the shareholders of Hypersonix, on a pro-rata basis, on closing of the Proposed Transaction in exchange for all of the issued and outstanding securities of Hypersonix. The number of post-Consolidation New Media Common Shares to be issued may be adjusted depending on the final Consolidation Ratio determined by the parties to be appropriate in connection with the Proposed Transaction.
At this time, the parties to the Proposed Transaction do not believe that approval of the New Media (referred to herein as the " Resulting Issuer " following completion of the Proposed Transaction) shareholders for the Proposed Transaction is required under applicable TSXV policies due, in part, to the fact that the transaction is arms-length.
Hypersonix Launch Systems Ltd.
Hypersonix is a private company incorporated under the laws of New South Wales, Australia on December 11 th , 2019. Hypersonix is an Australian aerospace engineering, design and build company specializing in scramjet engines and hypersonic vehicles to provide sustainable affordable access to space and high-speed aviation. Hypersonix is to date the only private company offering hypersonic technology that is fueled by green hydrogen. "Green hydrogen" refers to the process of using renewable resources to power the electrolysis of water in order to produce hydrogen.
SPARTAN
Hypersonix has developed a re-usable, accelerating, fixed geometry (i.e., no moving parts) hydrogen powered scramjet engine, referred to as "SPARTAN", that can power hypersonic vehicles from speeds of Mach 5 (five times the speed of sound) to Mach 12 (twelve times the speed of sound).
Hypersonix has been awarded two Australian Innovation Patents and has a US patent pending for this technology. Hypersonix is now applying this technology to a number of commercial applications.
DART AE
DART AE (Additive Engineering) is a 3D printed multi-mission hypersonic drone technology demonstrator. DART AE is entirely 3D printed using high temperature alloys. It is powered by a single SPARTAN scramjet engine, uses hydrogen fuel, has a speed of Mach 7 and a range of 500km. The vehicle is boosted to Mach 7 by an unguided sounding rocket. Subject to securing adequate funding, the first DART AE launch is scheduled for 2023.
Delta-Velos Orbiter
Hypersonix's Delta-Velos Orbiter is a reusable small satellite launch platform delivering satellites into low earth orbit (" LEO "). Unlike rockets, the scramjet engines fitted to the Delta-Velos Orbiter are air breathing so the Orbiter does not have to carry oxygen, resulting in savings in weight, complexity and cost. It has wings and flies like a plane, so can launch from a single launch site to deliver satellites to multiple orbits. The Delta-Velos Orbiter is fully re-usable, has a high cadence and as it is powered by hydrogen, has no CO 2 emissions (the only emission being water vapor).
The Delta-Velos Orbiter is considered "plug and play" in the sense that it can use a number of different stage one boosters to reach Mach 5 and can also work with different kick stage providers, depending on mission launch profiles.
Hypersonix Hyperliner
The Hypersonix Hyperliner project is a long-term program looking at the use of SPARTAN scramjets with passenger airliners. The intention is to work with an established airframe manufacturer and special purpose jet engine provider and utilize the Hyperonix scramjet for achieving the cruising speeds of Mach 7. The hyperliner will take off like a normal airplane using special purpose jet engines and then switches to the more efficient scramjet engines once in cruising mode. The Hypersonix Hyperliner is projected to travel at speeds of Mach 7, greatly reducing travel time and pollution. For example, a trip from Sydney to New York City could be completed in 2.5 hours.
Strategic Partners
Hypersonix has attracted a number of global strategic partners. Hypersonix and Boeing have signed an agreement to investigate the design of a sustainable hypersonic vehicle powered by the Hypersonix SPARTAN scramjet engines. The joint study is on the design of a reusable Hypersonic vehicle to be used for the sustainable launch of satellites to LEO. BOC Ltd. (part of Linde plc) is providing expert advice and sourcing of green hydrogen and hydrogen infrastructure for launch purposes. Hypersonic has also signed a Teaming agreement with Kratos, Defense & Security Solutions, Inc. to launch the DART AE multi-mission hypersonic drone technology demonstrator. Hypersonic and Kratos are planning for a launch and initial demonstration flight of the DART AE Hypersonic Drone System in 2023.
Grants
Hypersonix was awarded an Australian Commercialisation Acceleration Grant by the Australian Department of Industry, Science, Energy and Resources. The grant was provided to Hypersonix to permit it to build a "proof of concept" flight-ready SPARTAN scramjet engine and hydrogen fuel system. The project has already successfully demonstrated scramjet engine hypersonic performance in the hypersonic shock tunnel.
The principal equity shareholders of Hypersonix are the Runic-Smart Family Trust which holds approximately 39.4% of the issued and outstanding equity of Hypersonix and View Enterprise Pty Ltd which holds approximately 39.4%.
Selected Financial Information
The following table sets out selected financial information with respect to Hypersonix as at the dates noted. The selected financial information is derived from Hypersonix's unaudited financial statements for the periods described, which have been prepared in accordance with International Financial Reporting Standards, issued by the International Accounting Standards Board, and denominated in Australian dollars.
| AUD | As at and for the annual period ended June 30, 2020
(unaudited) | As at and for the annual period ended June 30, 2021
(unaudited) |
| Total income | - | | 1,034,437 | |
| Net Earnings | (281,520 | ) | (342,993 | ) |
| Total assets | 14,607 | | 1,071,560 | |
| Total liabilities | 294,958 | | 359,178 | |
| Shareholders' equity | (280,350 | ) | 712,382 | |
Disclosure of additional financial information concerning Hypersonix and the Resulting Issuer will be available in the disclosure document prepared by New Media and Hypersonix in connection with the Proposed Transaction.
The Concurrent Financing
In conjunction with the Proposed Transaction, Hypersonix is expected to use its best efforts to complete, on or prior to the completion of the Proposed Transaction, a brokered private placement (the " Concurrent Financing ") of 8,333,333 subscription receipts (the " Subscription Receipts ") for aggregate gross proceeds of up to approximately Cdn$10,000,000, at a price of Cdn$1.20 per Subscription Receipt. At this time no firm commitment has been entered into with any broker. Further information in this regard will be made available once determined. The gross proceeds raised in connection with the Concurrent Financing, less expenses (the " Escrowed Funds "), will be delivered to and held in escrow on behalf of the subscribers by New Media's transfer agent or such other licenced escrow agent as determined by Hypersonix (the " Escrow Agent ") and invested in an interest-bearing account, or short-term obligations of, or obligations guaranteed by, the Government of Canada or any other investments that may be approved by Hypersonix, pending the satisfaction or waiver (to the extent such waiver is permitted) of certain escrow release conditions (the " Escrow Release Conditions ") on or before the 120 th day after the closing of the Concurrent Financing (the " Termination Date "), in accordance with the provisions of a subscription agreement to be entered into with the subscribers in the Concurrent Financing and a subscription receipt agreement to be entered into with the Escrow Agent. Finder's fees or commissions may be payable in connection with sourcing investors to participate in the Concurrent Financing.
Each Subscription Receipt shall entitle the holder thereof to receive, upon automatic exchange in accordance with the terms of the Subscription Receipt Agreement (as defined below), without payment of additional consideration or further act or formality on the part of the holder thereof, one common share in the capital of Hypersonix (each, an " Underlying Share ") and one-half of one common share purchase warrant of Hypersonix (each whole such warrant, an " Underlying Warrant ") upon the satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Conditions on or before the Termination Date. Each whole Underlying Warrant will entitle the holder to acquire one share of the Resulting Issuer at an exercise price of $2.50 per share for a period of two years from the closing of the Qualifying Transaction (the " Warrant Expiry Date "); however, the number of Resulting Issuer shares issuable, and the price per share payable, on exercise of the Underlying Warrants may be adjusted if the Consolidation Ratio is adjusted. The Company will be entitled to accelerate the Warrant Expiry Date upon notice to the Underlying Warrant holders should the closing price of the shares of the Resulting Issuer on the TSXV be greater than $4.00 for twenty consecutive trading days.
Each Underlying Share will then be exchanged for one common share of the Resulting Issuer upon closing of the Proposed Transaction and each whole Underlying Warrant will, upon exercise in accordance with its terms, entitle the holder thereof to one common share of the Resulting Issuer.
The Escrow Release Conditions shall include:
(a) raising minimum proceeds of $5.0M under the Concurrent Financing;
(b) the completion, satisfaction or waiver of all conditions precedent to the Qualifying Transaction other than the release of the Escrowed Funds;
(c) the receipt of all shareholder and regulatory approvals required for the Qualifying Transaction;
(d) written confirmation from each of Hypersonix and New Media that all conditions of the Qualifying Transaction have been satisfied or waived, other than release of the Escrowed Funds, and that the Qualifying Transaction shall be completed forthwith upon release of the Escrowed Funds (the " Release Notice ");
(e) the distribution of (i) the Underlying Shares and Underlying Warrants and (ii) the Resulting Issuer common shares to be issued in exchange for the Underlying Shares pursuant to the Qualifying Transaction following the satisfaction of the Escrow Release Conditions being exempt from applicable prospectus and registration requirements of applicable securities laws and not subject to any hold or restricted period;
(f) the Resulting Issuer common shares being conditionally approved for listing on the TSXV, and the completion, satisfaction or waiver of all conditions precedent to such listing, other than the release of the Escrowed Funds; and
(g) Hypersonix shall have delivered the Release Notice to the Escrow Agent in accordance with the terms of the Subscription Receipt agreements entered into with subscribers of the Concurrent Financing.
In the event that: (i) the Escrow Agent does not receive the Release Notice at or prior to 11:59 p.m. (Toronto time) on the Termination Date, or (ii) if prior to the Termination Date, the Company advises the subscribers or announces to the public that it does not intend to satisfy the Escrow Release Conditions, the Subscription Receipts will be null and void and of no further effect, and the Escrow Agent will return to each holder of Subscription Receipts an amount equal to the aggregate subscription price of the Subscription Receipts held by such holder plus a pro rata portion of any interest and other income earned on the Escrowed Funds, less applicable withholding taxes, if any. Hypersonix will be responsible and liable to the holders of Subscription Receipts for any shortfall between the aggregate Subscription Price and the Escrowed Funds.
In the event the Escrow Release Conditions are satisfied, and the Proposed Transaction is completed, the Escrowed Funds will be released to the Company. The Company intends to use the Escrowed Funds to build the Dart AE, the world's first entire 3D printed hypersonic launch platform including engineering and project development expenses, investor communications and financing costs and for general working capital purposes as follows:
| DART AE Technology Demonstrator build |
| - Engineering, labour, contractors: | | $1.7M |
| - Materials and prototype: | | $2.5M |
| General and Administrative | | |
| - Human resources: | | $1.3M |
| - Finance, administration and IT: | | $1.0M |
| Engineering / Project Development | | $2.2M |
| Marketing and IR | | |
| - Marketing communications/IR: | | $0.6M |
| - Financing costs: | | $0.7M |
| Total | | $10.0M |
| | |
Notwithstanding the proposed uses of available funds discussed above, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary or prudent. It is difficult, at this time, to definitively project or allocate the funds necessary to effect the planned activities of the Resulting Issuer. For these reasons, management of Hypersonix and New Media considers it to be in the best interests of the Resulting Issuer and its shareholders to afford management a reasonable degree of flexibility as to how the funds are employed among the uses identified above, or for other purposes, as the need arises.
Closing Conditions
It is proposed that completion of the Proposed Transaction will be subject to a number of conditions, including but not limited to, completion of the Concurrent Financing, the satisfaction of the Company and Hypersonix in respect of the due diligence investigations to be undertaken by each party, the entering into by the parties of a definitive agreement with respect to the Proposed Transaction (such agreement to include representations, warranties, conditions and covenants typical for a transaction of this nature), the receipt of approval of the directors of each of New Media and Hypersonix, the approval of the Arrangement by the Australian courts and the shareholders of Hypersonix, the receipt of all necessary approvals of the shareholders of New Media at the Meeting, and the receipt of all necessary approvals of all regulatory bodies having jurisdiction in connection with the Proposed Transaction, including the Australian Securities and Investment Commission and the TSXV, and the determination of a new board of directors of the Resulting Issuer (which is presently contemplated to include David Waterhouse, Michael Smart, Robert Drolet and Gary Lewis, as well as the appointment of new officers of the Resulting Issuer, (which are presently contemplated to include David Waterhouse as CEO, Michael Smart as CTO/Head of R&D and Natasha Tsai as CFO/Corporate Secretary). Please see below for the biographies for these people. Hypersonix continues to evaluate individuals to serve in those capacities to ensure the board possesses appropriate capital markets and operational experience. As such, the composition of the directors, officers and insiders of the Resulting Issuer may be amended prior to completion of the Qualifying Transaction. Any amendments will be set out in a further press release of the Company. The Proposed Transaction cannot close until the required conditions are satisfied or waived, and there can be no assurance that the Proposed Transaction will be completed as proposed or at all and there can be no assurances that the Proposed Transaction will be completed on the terms outlined herein, or at all.
Proposed Director and Officer Qualifications
Biographies of Hypersonix Principals
David Waterhouse, President & CEO, Director/Co-Founder
David has over 30 years' experience working in the Space and TMT (Technology, Media, Telecom) sector, more than 20 of which has been in leadership roles, including roles with PCCW, Cable and Wireless, Telikom and Telstra businesses in Australia, Asia, the Pacific, Europe and the Middle East. David is a Satellite engineer and a fellow of Engineers Australia. His degrees include an MBA, a Masters in Research and an Engineering degree. David is passionate about commercializing new innovative technology that solves some of the world's biggest problems. (Deep tech)
Michael Smart, Director, CTO/Head of R&D/ Co-Founder
Michael has over 25 years' experience in working with scramjet engines and is a world leader in hypersonic technology. He is passionate about designing and building re-usable engines and hypersonic launch vehicles to disrupt the aerospace and aviation market with a green, low-cost but at the same time highly reliable technology. After completing his PhD in Aerospace Engineering, Michael worked at NASA Langley Research Centre in the US for over 10 years. He then held the position of Chair of Hypersonic Propulsion within the Centre for Hypersonics at University of Queensland (UQ) for over 15 years and his department mentored 150 PhD students in this period of time. He is well known for his genius and smart ideas and is a strong believer in a future of launching small satellites into LEO with leaving no CO 2 emissions behind and offering a faster and greener engine solution to the aviation industry.
Gary Lewis, Non-Executive Director
Gary is a senior executive and experienced company director with +30 years in capital markets, business and strategy development. He has founded and held senior management positions in the mining, pharmaceutical, medical devices and food industries. Mr. Lewis has sat on the board of publicly listed companies in Australia, Canada and the United Kingdom. He holds Bachelor of Commerce and Masters of Business & Technology degrees from the University of NSW, Australia.
Robert Drolet, Non-Executive Director
Robert has over 35 years' experience in major holding and operating groups, including Kuwait Projects Company (Holding), Cable and Wireless, Bell Canada International, and the Canam Manac Group, after starting his career at Stikeman, Elliott, one of Canada's premier law firms. He has designed and implemented strategic investments and joint ventures, led business transformations and advised on complex transactions, both as business and legal leader. He has been involved to varying degrees in a variety of industries, including telecoms, internet, media, manufacturing, utilities, finance, aviation and hydroponics, in greenfield startups through acquisitive groups and mature companies. Robert is dedicated to creating the right structures to turn technology into service. He was General Counsel and Company Secretary of various public (LSE, MSE/TSE and Nasdaq) and private companies, and served on executive committee and management boards and as alternate director. He is an advocate (Quebec) and a Solicitor (England and Wales). He holds a B.Ll (Laval) and two Masters in Law (Osgoode Hall and Oxford), and has attended the Advanced Executive Program at the Kellogg School of Business.
Natasha Tsai, Chief Financial Officer and Corporate Secretary
Ms. Tsai is a Chartered Professional Accountant with Malaspina Consultants Inc. Prior thereto, she was a senior accountant with Grant Thornton LLP. She has acted as Chief Financial Officer and/or controller for a number of listed companies and has corporate finance and listed-company experience in an array of sectors. Currently, Ms. Tsai also serves as Chief Financial Officer of NameSilo Technologies Corp. (CSE: URL), Getchell Gold Corp. (CSE: GTCH), PPX Mining Corp. (TSXV: PPX), EMP Metals Corp. (CSE: EMPS), and Shoal Point Energy Ltd. (CSE: SHP).
Sponsorship
New Media and Hypersonix intend to comply with the TSXV requirements regarding sponsorship of the Proposed Transaction, but may seek an exemption or waiver from the sponsorship requirements. If the parties seek such an exemption or waiver, there can be no assurances that the TSXV will grant such an exemption or waiver, either at all or on the terms sought by the parties.
If and when a definitive agreement between New Media and Hypersonix is executed, New Media will issue a subsequent press release in accordance with the policies of the TSXV containing the details of the definitive agreement and the additional terms of the Proposed Transaction.
New Incentive Stock Option Plan
Following completion of the Proposed Transaction, the Resulting Issuer is expected to implement a new incentive stock option plan, the terms and conditions of which will be determined by the board of directors of the Resulting Issuer. All existing New Media option holders are expected to exercise their options shortly after closing of the Proposed Transaction.
Cautionary Statements
Disclosure Regarding Forward-Looking Statements : This press release contains certain "Forward-Looking Statements" within the meaning of applicable securities legislation relating to the proposal to complete the Proposed Transaction and associated transactions, including statements regarding the terms and conditions of the Proposed Transaction, the Concurrent Financing, the use of proceeds of the Concurrent Financing, and the business of the Resulting Issuer. The information about Hypersonix contained in the press release has not been independently verified by the Company. We use words such as "might", "will", "should", "anticipate", "plan", "expect", "believe", "estimate", "forecast" and similar terminology to identify forward looking statements and forward-looking information. Such statements and information are based on assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments as well as other factors which it believes to be reasonable and relevant. Forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied in the forward-looking statements and information and accordingly, readers should not place undue reliance on such statements and information. Although the Company believes, in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. In evaluating forward-looking statements and information, readers should carefully consider the various factors which could cause actual results or events to differ materially from those expressed or implied in the forward looking statements and forward-looking information depending on, among other things, the risks that the parties will not proceed with the Proposed Transaction, the Concurrent Financing and/or other associated transactions, that the ultimate terms of the Proposed Transaction, the Concurrent Financing and/or other associated transactions will differ from those currently contemplated, and that the Proposed Transaction, the Concurrent Financing and/or other associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this press release are made as of the date of this release. The Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, Hypersonix, their respective securities, or their respective financial or operating results (as applicable).
Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to Exchange 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 filing 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 a capital pool company should be considered highly speculative.
The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
This press release is intended for distribution in Canada only and is not intended for distribution to United States newswire services or dissemination in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.
All information contained in this press release relating to Hypersonix was provided by Hypersonix to New Media for inclusion herein. New Media has not independently verified such information and shall bear no liability for any misrepresentation contained therein.
About New Media Capital 2.0 Inc.
The only business of New Media is the identification and evaluation of assets or businesses with a view to completing a "Qualifying Transaction" in accordance with the policies of the TSXV.
Investors are cautioned that trading in the securities of a capital pool company should be considered highly speculative. For further information, contact: New Media Capital 2.0 Inc., John A. Putters, CEO and Director. Tel.: 587-985-2601.
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