Regina, Saskatchewan–HTC Extraction Systems (also the “Company” and/or “HTC”) (TSXV:HTC) (OTC:HTPRF) announces that, conditional upon TSX Venture Exchange Inc. (“TSXV”) approval, it intends to acquire up to a twenty percent equity interest in a US-based company, Hydrogen Fueling Corp. (“Equity Interest”).
HTC will pay an aggregate consideration of up to C$6,500,000, for the Equity Interest, which will comprise of up to 1,216,443 common shares of Hydrogen Fueling Corp. HTC will provide up to C$5,000,000 in cash and the additional consideration of approximately C$1,500,000 through the provision of an IP licensing agreement, with particular details as set out below (“Proposed Transaction”). This is an arm’s length transaction.
HTC is moving forward with its active participation in the accelerating hydrogen fueling infrastructure industry, as a result of established vehicle manufacturers (Toyota, Hyundai, Daimler, and Volvo) ramping up their delivery schedules of hydrogen-powered long haul trucks and cars that will be needing efficient, safe fueling infrastructure. Nikola Motors (NKLA: Nasdaq) has announced it will be manufacturing Hydrogen Electric long-haul vehicles and has received billions of dollars of pre-orders. There are currently under 100 hydrogen fueling stations in the USA versus 150,000 gas stations and 20,000 battery electric vehicle (BEV) recharging stations.
Hydrogen Fueling Corp. is leading the charge in building this infrastructure by buying an advanced, established, cost-effective, hydrogen fueling infrastructure IP and product design technology. Hydrogen Fueling Corp.’s advantage over other hydrogen production systems is that it has a small physical footprint and can produce hydrogen fuel, onsite, cost-effectively at the individual station level, versus existing more expensive infrastructure that buys hydrogen from large industrial providers and trucks it to individual stations.
Hydrogen Fueling Corp.’s launch strategy includes securing the USA Department of Energy infrastructure loans and building out its hydrogen refueling network initially in California, which will allow it to receive upon completion and opening of hydrogen fueling stations attractive hydrogen fueling infrastructure credits under the California Low Carbon Fuel Standard credit program.
As part of the consideration under the Proposed Transaction, HTC and Hydrogen Fueling Corp. will enter into a royalty-bearing, intellectual property licensing agreement, whereby HTC will license its hydrogen reformation and process design IP, as well as its CO2 capture and related solvent IP, to Hydrogen Fueling Corp.
Upon completion of the Proposed Transaction, HTC’s Chief Technology Officer of 15 years, Dr. Ahmed Aboudheir, and its Senior Process Design Engineer, Dr. Walid El Moudir will be appointed to Hydrogen Fueling Corp.’s Technical Advisory Committee and HTC’s Executive Chairman, Lionel Kambeitz, will be appointed to the Hydrogen Fueling Corp.’s board of directors.
In order to fund the Proposed Transaction, HTC will issue a maximum of 909,090 units (“Units”) at a price of C$5.50 per Unit, for the gross proceeds of up to $5,000,000 (“Private Placement”). Each Unit will consist of four common shares (“Common Share”) and one Common Share purchase warrant (“Warrant”). Each Warrant will entitle the holder, at the holder’s option, within 60 days of issuance of the Warrants, to elect to obtain one Hydrogen Fueling Corp. voting common share from HTC’s Equity Interest (“Hydrogen Share”), failing which, the holder will receive thirty-two Common Shares of HTC. Each Hydrogen Share will be equal to the value of the shares purchased by HTC for its Equity Interest.
The Common Shares are priced at a discounted market price of C$0.08 and the Common Shares under the Warrant are priced at C$0.16. The Common Shares and Warrants issuable under the Units, will be subject to hold periods under applicable securities law and TSXV regulations, for four months and one day, after issuance.
Hydrogen Fueling Corp. is a US private company, and the issuance and or trading of its common shares are subject to US securities laws.
The Private Placement is a non-brokered Private Placement.
Proceeds of the Private Placement will be allocated to acquire the Equity Interest in Hydrogen Fueling Corp.