High Mountain 2 Capital Corporation Announces Proposed Qualifying Transaction

September 28, 2022 12:19 PM EDT | Source: High Mountain 2 Capital Corporation

Calgary, Alberta--(Newsfile Corp. - September 28, 2022) - High Mountain 2 Capital Corporation (TSXV: HMCC.P) (the "Corporation" or "HM2") is pleased to announce details concerning its proposed arm's length qualifying transaction (the "Transaction") involving a business combination with Interactive Health, Inc. ("IHI"), a private company incorporated under the laws of British Columbia.

IHI is a digital technology development company, focused on the medical and health education sector. IHI produces and sells digitally enhanced, interactive, competency-based, learning tools for medical schools and healthcare learning centers to address the gap that exists between the theory and practice of medicine. This gap is recognized by medical educators worldwide. IHI's products and sales support competency-based health education with a virtual clinical environment for students to practice and gain clinical experience at a significantly reduced cost and with no legal and ethical consequences. IHI's first commercialized flagship product, CyberPatient 2.5, is a digital simulated hospital with 130 digitally enhanced simulated patients accessible by all students and educators at any time from anywhere. IHI has five other products in the production pipeline, which are expected to be released in the near future. IHI's objective is to revolutionize medical education by moving the initial stages of learning clinical competencies into a virtual environment, for the purpose of preparing students for real clinical practice.

The Corporation has entered into a non-binding letter of intent with IHI dated September 27, 2022 (the "LOI") pursuant to which the Corporation and IHI intend to complete the Transaction by way of a share purchase, plan of arrangement, amalgamation, three-cornered amalgamation or alternate structure to be determined, having regard to relevant tax, securities and other factors and potentially including a pre-closing reorganization of IHI, to form the resulting issuer being called "Interactive Health International Inc." ("New IHI"), or such other name as may be determined by IHI.

Pursuant to the proposed Transaction, each issued and outstanding common share of IHI ("IHI Share") will be exchanged into one (1) common share of New IHI ("New IHI Share") on a one-for-one basis (the "Exchange Ratio") after giving effect to the Consolidation (as defined below) so that all of the currently issued and outstanding IHI Shares will be exchanged for approximately 44,488,900 New IHI Shares. In addition, each additional IHI Share issued pursuant to the IHI Working Capital Financing (as defined below) and the IHI Concurrent Financing (as defined below) will be exchanged for New IHI Shares based on the Exchange Ratio. Each unexercised warrant of IHI shall be exchanged on a one-for-one basis for a replacement warrant issued by New IHI with the same terms as the respective warrant, and each unexercised stock option of IHI shall be exchanged on a one-for-one basis for a replacement option issued by New IHI with the same terms as the respective option.

In connection with the Transaction, the Corporation anticipates that the common shares in the capital of HM2 (the "HM2 Shares") currently issued and outstanding, will be consolidated (the "Consolidation") on a one (1) for 1.75 basis immediately prior to the closing of the Transaction, and will be exchanged into New IHI Shares post the Consolidation. Each outstanding stock option and agents' option of the Corporation will be exchanged for stock options or agents' options of New IHI on an equivalent economic basis.

IHI will use its commercially reasonable efforts to complete a private placement financing (the "IHI Working Capital Financing") on or before the date of the formal agreement for gross proceeds of not less than $700,000, which shall be in the form of IHI Shares at a price of $0.25 where the proceeds of such financing shall be immediately available to IHI upon the closing(s) of such financing and the closing(s) shall not be contingent upon the closing of the Transaction.

As a condition of consummating the Transaction, IHI must complete a private placement financing (the "IHI Concurrent Financing "), on or before completion of the Proposed Transaction for gross proceeds of not less than $2,200,000, which shall be in the form of IHI subscription receipts at a price of $0.35 where such securities will be convertible into IHI Shares concurrently with the closing of the Transaction so that investors that participate in the IHI Concurrent Financing will receive New IHI Shares upon the closing of the Transaction. The proceeds of the IHI Concurrent Financing shall be held in trust and shall not be available to IHI until the closing of the Transaction.

It is intended that the Transaction, when completed, will constitute the Corporation's "Qualifying Transaction" in accordance with Policy 2.4 of the TSX Venture Exchange ("Exchange"). A more comprehensive news release will be issued by the Corporation disclosing details of the Transaction, including financial information respecting IHI, further details regarding the IHI Working Capital Financing, IHI Concurrent Financing, the names and backgrounds of all persons who will constitute insiders of New IHI, and information respecting sponsorship, once certain conditions have been met, including:

i) approval of the Transaction by the boards of directors of the Corporation and IHI;
ii) satisfactory completion of due diligence; and
iii) execution of the formal agreement.

The LOI expires on November 30, 2022 if the formal agreement has not been executed, and the Corporation and IHI have agreed not to solicit or enter into any agreements that would reasonably be expected to interfere with or prevent the Transaction, from the time of entering into the LOI until November 30, 2022.

Shareholder approval is not required with respect to the Transaction under the rules of the Exchange. However, the structure of the Transaction has not yet been finalized so shareholder approval under corporate law may be required and it is expected that a meeting of shareholders of the Corporation will be held prior to the closing of the Transaction to approve the continuance of the Corporation into British Columbia, the name change, a new stock option plan and electing the board of directors. Trading in the common shares of the Corporation will remain halted and is not expected to resume trading until the Transaction is completed or until the Exchange receives the requisite documentation to resume trading.

For further information, please contact:

High Mountain 2 Capital Corporation
William Kanters - President, Chief Executive Officer, and Director
Phone: (403) 619-7118

Interactive Health, Inc.
Abdul Karim Qayumi - President, Chief Executive Officer, and Director
Phone: (604) 250-7013

Forward-Looking Information Cautionary Statement

Certain statements contained in this press release constitute forward-looking information. These statements include approval of the Transaction by the board of directors of the Corporation and IHI, completion of due diligence, execution of the formal agreement, approval of the Exchange, shareholder approval of certain matters and certain forward-statements relating to the development of IHI's products and IHI's business generally. The use of any of the words "will", "expected", "view" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, statements pertaining to the terms and completion of the Transaction constitute forward-looking information. Actual results and developments may differ materially from those contemplated by forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information. The statement made in this press release are made as of the date hereof. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Completion of the Transaction is subject to a number of conditions, including but not limited to, execution of a formal agreement relating to the Transaction, completion of satisfactory due diligence, Exchange acceptance, receipt of requisite regulatory approvals, and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals, and any ancillary matters thereto, are 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 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.

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

NOT FOR DISTRIBUTION TO THE U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/138692

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