SQI Diagnostics closes $4.65M private placement

News Release


SQI Diagnostics Inc. Closes Private Placement with Insider Participation

Toronto, Ontario, December 20, 2017 – SQI Diagnostics Inc. (“SQI” or the “Company”) (TSX-V: SQD; OTCQX: SQIDF), a life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics, today announced that it has completed an upsized non-brokered private placement (the “Private Placement”) of 31,061,300 units (“Units”) of the Company at a price of $0.15 per Unit for gross proceeds of approximately $4.65 million. Each Unit consists of one common share and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.20 for a period of five years from the date of issuance, subject to accelerated expiry in certain circumstances.

Insiders of the Company subscribed for an aggregate of 20,116,667 Units for gross proceeds of $3,017,500 under the Private Placement. The issuances of Units to insiders pursuant to the Private Placement are considered related party transactions within the meaning of TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company relied on exemptions from the formal valuation and minority approval requirements in sections 5.5(g) and 5.7(1)(e) of MI 61-101 in respect of insider participation on the basis of financial hardship. Further details will be provided in the Company’s material change report to be filed on SEDAR.

As previously announced, it was anticipated that three insiders of the Company may each become a “control person” pursuant to the policies of the TSX Venture Exchange (the “TSXV”) as a result of the Private Placement. To comply with the minority approval requirements of the TSXV and MI 61-101, the issuances of Units to the three insiders and the creation of new control persons was subject to the approval of the disinterested shareholders of SQI by ordinary resolution (the “Control Person Resolution”) at a meeting of shareholders held on December 18, 2017 (the “Meeting”). The Control Person Resolution was approved by 99.93% of the votes cast by the shareholders who voted in respect of the resolution present or represented by proxy at the Meeting, excluding the votes attaching to the common shares held by the three insiders and any of their related parties. However, due to the size of the Private Placement, none of the three insiders became control persons on closing.

In connection with the Private Placement, the Company paid aggregate cash commissions of $74,739 to Industrial Alliance Securities Inc. and Leede Jones Gable Inc. and issued 463,260 compensation warrants to Leede Jones Gable Inc. on certain proceeds raised from non-insiders. The compensation warrants will be exercisable at a price of $0.20 for a period of three years from the date of issuance.

The Private Placement is subject to all necessary regulatory and stock exchange approvals. The securities issued pursuant to the Private Placement are subject to a four month and one day hold period expiring April 21, 2018, in accordance with applicable Canadian securities law.

SQI intends to use the net proceeds of the Private Placement to fund the Company’s product commercialization and manufacturing programs, sales and marketing and for general working capital purposes.

The Company did not file a material change report in respect of the related party transactions less than 21 days prior to the closing of the Private Placement, which the Company deemed reasonable in the circumstances so as to be able to avail itself of the proceeds of the Private Placement in an expeditious manner.
The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and accordingly may not be offered or sold within the United States or to “U.S. persons”, as such term is defined in Regulation S promulgated under the U.S. Securities Act (“U.S. Persons”), except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company’s securities to, or for the account of benefit of, persons in the United States or U.S. Persons.

About SQI Diagnostics

SQI Diagnostics is a life sciences and diagnostics company that develops and commercializes proprietary technologies and products for advanced microarray diagnostics. The Company’s proprietary microarray tests and fully-automated systems are designed to simplify protein and antibody testing workflow, increase throughput, reduce costs and provide excellent data quality. For more information, please visit www.sqidiagnostics.com.

Chief Executive Officer Andrew Morris 416.674.9500 ext. 229 amorris@sqidiagnostics.com
Vice President of Finance Patricia Lie 416.674.9500 ext. 277 plie@sqidiagnostics.com

Neither 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.