IN THE MATTER OF

Molecule Holdings Inc.

PARTIAL REVOCATION ORDER

Under the securities legislation of Ontario (the Legislation)

Background

1. Molecule Holdings Inc. (the Issuer) is subject to a failure-to-file cease trade order (the FFCTO) issued by the Ontario Securities Commission (the Principal Regulator) on March 5, 2024.

2. The Issuer applied to the Principal Regulator for a partial revocation order of the FFCTO, which was granted on May 3, 2024 (the First Partial Revocation Order). The First Partial Revocation Order permitted the Issuer to complete the Completed Amendment Transaction and the Proposed Financing (each as defined below).

3. The First Partial Revocation Order was deemed to be terminated on August 1, 2024, 90 days from the date of the First Partial Revocation Order (the First Order Term), prior to the Issuer being able to complete the Completed Amendment Transaction and the Proposed Financing.

4. The Issuer applied to the Principal Regulator for a second partial revocation order of the FFCTO, which was granted on August 30, 2024 (the Second Partial Revocation Order). The Second Partial Revocation Order permitted the Issuer to complete the Completed Amendment Transaction and the Proposed Financing.

5. The Second Partial Revocation Order was deemed to be terminated on November 28, 2024, 90 days from the date of the Second Partial Revocation Order (the Second Order Term), prior to the Issuer being able to complete the Proposed Financing.

6. During the Second Order Term, the Issuer entered into amending and settlement agreements (the Amending Agreements) with certain holders (the Amending Holders) of unsecured convertible debentures (Unsecured Debentures) in the aggregate principal amount (the Principal) of $2,360,000 under the Unsecured Debentures, representing greater than 75% of the outstanding Principal under the Unsecured Debentures (the Completed Amendment Transaction). The Completed Amendment Transaction resulted in the settlement and conversion of amounts greater than $3,000,000 under the Unsecured Debentures (including accrued but unpaid interest (Interest) and a 10% premium on the Principal (Premium)) and the issuance by the Issuer of 152,670,000 common shares in the capital of the Issuer (Common Shares) and 61,068,000 Common Share purchase warrants (Warrants).

7. The Issuer has applied to the Principal Regulator for another partial revocation order of the FFCTO to permit the Issuer to complete the Proposed Financing, and the Additional Amendment Transaction (the Third Partial Revocation Order).

Interpretation

Terms defined in National Instrument 14-101 Definitions or in National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions have the same meaning if used in this order, unless otherwise defined.

Representations

8. This decision is based on the following facts represented by the Issuer:

(a) The Issuer is a corporation existing under the federal laws of Canada and listed for trading on the Canadian Securities Exchange (the CSE) under the trading symbol “MLCL”.

(b) The Issuer’s head office is located at 591 Reynolds Rd., Lansdowne, Ontario K03 1L0.

(c) The Issuer is a reporting issuer in each of the provinces of Ontario, Alberta, British Columbia and Québec. The Issuer is not a reporting issuer in any other jurisdiction in Canada.

(d) The authorized share capital of the Issuer currently consists of:

(i) an unlimited number of common shares without par value (Common Shares), of which 250,451,903 are issued and outstanding.

(ii) an unlimited number of preferred shares, of which 9,313,447 are issued and outstanding;

(iii) 61,068,000 warrants exercisable into Common Shares at an exercise price of $0.05 until November 28, 2029;

(iv) 1,600,000 options exercisable into Common Shares at an exercise price of $0.15 until February 8, 2026;

(v) 3,000,000 restricted share units (RSUs), all of which have vested and, upon settlement, entitle the holder to acquire one Common Share underlying each such RSU, a cash payment in lieu thereof, or a combination of both;

(vi) 750 secured debentures (Secured Debentures) issued on March 18, 2021, as amended (as applicable) on September 18, 2022, February 23, 2023 and April 11, 2023, in the aggregate Principal of $944,996.78 (including accrued Interest and a one-time penalty payment accrued to the face of the Secured Debentures, as applicable, as at April 11, 2023), bearing Interest at 8-12% per annum, convertible into Common Shares at $0.10 per Common Share, which matured on September 16, 2023;

(vii) 359 Secured Debentures originally issued as Unsecured Debentures on July 30, 2021, as amended on April 11, 2023, in the aggregate Principal of $428,614.54 (including accrued Interest and a one-time penalty payment accrued to the face of the Secured Debentures, as applicable, as at April 11, 2023), bearing Interest at 8% per annum, convertible into Common Shares at a price of $0.10 per Common Share, which matured on March 31, 2024;

(viii) 600 Secured Debentures issued on May 30, 2022, as amended on April 11, 2023, in the aggregate Principal of $844,234.52 (including accrued Interest and a one-time penalty payment accrued to the face of the Secured Debentures, as applicable, as at April 11, 2023), bearing interest at 8-12% per annum, convertible into Common Shares at $0.10 per Common Share, which matured on September 18, 2024;

(ix) 425 Unsecured Debentures issued on September 16, 2020 in the aggregate Principal of $425,000, bearing Interest at 8% per annum, convertible into Common Shares at a price of $0.20 per Common Share, which matured on September 16, 2023 (the September 2020 Debentures);¹

(x) 20 Unsecured Debentures issued on July 30, 2021 in the aggregate Principal of $20,000, bearing Interest at 8% per annum, convertible into Common Shares at a price of $0.10 per Common Share, which matured on July 30, 2023 (the July 2021 Debentures); and

(xi) 335 Unsecured Debentures issued on August 11, 2021 in the aggregate Principal of $335,000, bearing Interest at 8% per annum, convertible into Common Shares at a price of $0.10 per Common Share, which matured on August 11, 2023 (the August 2021 Debentures).

(e) The FFCTO was issued due to the Issuer’s failure to file its audited annual financial statements, annual management’s discussion and analysis, and the certifications of the annual filings for the year ended October 31, 2023 (collectively, the Annual Filings).

(f) Other than the failure to file the Annual Filings, as well as the Issuer's Statement of Executive Compensation, and its interim financial report, interim management’s discussion and analysis, and certifications of the interim filings for the three months ended January 31, 2024, the three and six months ended April 30, 2024, and three and nine months ended July 31, 2024 (collectively, the Interim Filings), the Issuer is not in default of any of the requirements of the Legislation. The Issuer's SEDAR+ and SEDI profiles are up to date.

(g) The Issuer is seeking the Third Partial Revocation Order in order to complete the Proposed Financing, and the Additional Amendment Transaction.

Proposed Additional Amendment Transaction

(h) Prior to completion of the Completed Amendment Transaction, the Issuer had 3,140 Unsecured Debentures outstanding in the principal amount of $3,140,000 (the Outstanding Principal Amount), with each Unsecured Debenture consisting of $1,000 in Principal, plus Interest.

(i) During the Second Order Term, the Issuer completed the Completed Amendment Transaction.

(j) In connection with the closing of the Completed Amendment Transaction, the Issuer entered into Amending Agreements with the Amending Holders in the aggregate Principal of $2,360,000 under the Unsecured Debentures, representing greater than 75% of the Outstanding Principal Amount, to complete the following amendments to the Amending Holders’ Unsecured Debentures (collectively, the Amendments):

(i) The extension of the original maturity dates of the Unsecured Debentures to November 28, 2024 (the Closing Date);

(ii) The reduction of the original conversion prices of the Unsecured Debentures to $0.02 per Common Share;

(iii) Providing each Amending Holder with the Premium on their respective portion of the outstanding Principal as of the Closing Date;and

(iv) The issuance to each Amending Holder of 0.4 of a Warrant for each $0.02 outstanding in respect of their respective portion of the outstanding Principal, Premium and Interest as at the Closing Date (collectively, the Outstanding Amounts). Each whole Warrant entitles the holder thereof to purchase one Common Share at a price of $0.05 per Common Share for a period of five years from the Closing Date.

(k) Immediately following completion of the Amendments, each Amending Holder was deemed to have converted their Unsecured Debentures, including all Outstanding Amounts. Pursuant to the terms of the Amending Agreements, the settlement of the Outstanding Amounts resulted in the issuance of 152,670,000 Common Shares and 61,068,000 Warrants. As a result of the completion of the Completed Amendment Transaction, total Outstanding Amounts (including Interest and Premium) of greater than $3,000,000 were settled and extinguished.

(l) The CSE approved the completion of the Completed Amendment Transaction and granted the Issuer an exemption from the CSE requirement to obtain securityholder approval to complete the Completed Amendment Transaction.

(m) Following completion of the Completed Amendment Transaction, and as of the date hereof, there are an aggregate of 780 Unsecured Debentures outstanding in the aggregate Principal of $780,000 (the “Default Principal Amount”), with each Unsecured Debenture consisting of $1,000 in Principal, plus Interest, as follows:

(i) 425 September 2020 Debentures in the aggregate Principal of $425,000;

(ii) 20 July 2021 Debentures in the aggregate Principal of $20,000; and

(iii) 335 August 2021 Debentures in the aggregate Principal of $335,000.

(n) For various reasons, the holders of the Default Principal Amount did not execute the Amending Agreements and were not party to the Completed Amendment Transaction (the Default Holders). During the Second Order Term, Unsecured Debentures beneficially held by twelve (12) Default Holders and registered in the name of the same broker, representing $435,000 of the Default Principal Amount, being greater than 55% of the Default Principal Amount (the Delayed Default Holders) indicated that they intended to participate in the Completed Amendment Transaction. The Delayed Default Holders were unable to participate as a result of broker-related administrative issues with respect to the Unsecured Debentures. The administrative issues were expected to be resolved shortly following the Closing Date.

(o) As a result, the Issuer reasonably expects that the Delayed Default Holders, and potentially additional Default Holders who were unable to be contacted prior to completion of the Completed Amendment Transaction, would enter Amending Agreements, as revised pursuant to any requirements of the Third Partial Revocation Order, if granted, to complete the Amendments on the same terms as the Amending Holders in the Completed Amendment Transaction (the Additional Amendment Transaction).

(p) Completion of the Additional Amendment Transaction would assist the Issuer with further reorganizing its capital structure. The Issuer believes further reorganization will attract investment required to manage the growth of its business and settle amounts owing to creditors.

Proposed Financing

(q) Prior to the issuance of the FFCTO, the Issuer initiated exploratory conversations with potential investors (the Potential Investors) regarding a proposed private placement financing (the Proposed Financing).

(r) Prior to the FFCTO and during the First Order Term and Second Order Term, the Potential Investors had preliminarily shown potential interest in a Proposed Financing, provided that the Issuer reorganized its capital structure in advance via the Completed Amendment Transaction. The Potential Investors included certain members of the Amending Holders and the Delayed Default Holders.

(s) The Completed Amendment Transaction allowed the Issuer to reorganize its corporate structure and the Issuer believes that it will be more attractive to investment from Potential Investors.

(t) Although discussions regarding the Proposed Financing were preliminary, the Issuer reasonably expects to raise up to $300,000 in the Proposed Financing through an offering of units at a price of $0.015 per unit, with each unit consisting of one (1) Common Share and one-half of one (1/2) Warrant, with each whole Warrant entitling the holder thereof to purchase one Common Share at a price of $0.05 per Common Share for a period of five years from the closing date of the Proposed Financing, subject to ongoing internal conversations, negotiations with Potential Investors, approval of the CSE, and market influences.

(u) The Issuer intends to use the proceeds of the Proposed Financing as follows:

Description	Expected Cost
Accounting, audit and legal fees (for preparation and filing of the Annual Filings and the financial statements, management’s discussion and analysis and related officer certifications for the year ended October 31, 2024 (the 2024 Filings))	$150,000
Regulatory, stock exchange, and late filing fees	$50,000
Professional fees (for completion of the Proposed Financing and the Additional Amendment Transaction)	$40,000
Other expenses (including legacy accounts payable for professional fees and operational and contractual commitments, other operating expenses, and general corporate purposes)	Up to $60,000
Total	Up to $300,000

(v) The Issuer reasonably believes that the proceeds from the Proposed Financing, together with cash expected to be on hand as a result of a newly-developed business relationship with industry participants, will be sufficient to complete the Annual Filings, the 2024 Filings, the Statement of Executive Compensation and the Interim Filings and pay the related fees, and provide it with sufficient working capital to meet its obligations and continue its business during such period.

(w) The Issuer currently expects to file its Annual Filings, 2024 Filings, and Interim Filings prior to the first half of 2025, subject to completion of the Proposed Financing.

General

(x) It is expected that the proposed trades pursuant to the Additional Amendment Transaction and Proposed Financing would occur solely within Canada, with the vast majority of the Default Holders and Potential Investors being located in the Provinces of Ontario, British Columbia, and Québec.

(y) The completion of the Additional Amendment Transaction and Proposed Financing would be conditional on receipt of the Third Partial Revocation Order, or a full revocation of the FFCTO.

(z) In completing the Additional Amendment Transaction and Proposed Financing, the Issuer intends to rely on, as applicable:

(i) the ‘securities for debt’ exemption under subsection 2.14 of National Instrument 45-106 Prospectus Exemptions (NI 45-106) for the issuance of the Common Shares in settlement of the Principal held by the Delayed Default Holders in connection with the Additional Amendment Transaction;

(ii) the ‘accredited investor’ exemption under subsection 73.3(2) of the Securities Act (Ontario) (the Accredited Investor Exemption) for the (i) issuance of the Common Shares in settlement of the Interest and Premium; and (ii) the issuance of the Warrants in connection with the Additional Amendment Transaction; and

(iii) the Accredited Investor Exemption for the issuance of all securities in connection with the Proposed Financing.

(aa) Upon issuance of this order, the Issuer will issue a press release announcing the order and the intention to complete the Proposed Financing and the Additional Amendment Transaction. Upon completion of the Proposed Financing and/or the Additional Amendment Transaction, the Issuer will issue a press release and file a material change report. As other material events transpire, the Issuer will issue appropriate press releases and file material change reports as applicable.

(bb) Since the issuance of the FFCTO, there have not been any material changes in the business, operations or affairs of the Issuer that have not been disclosed to the public.

(cc) The Proposed Financing and/or Additional Amendment Transaction will be completed in accordance with all applicable laws.

Order

9. The Principal Regulator is satisfied that a partial revocation order of the FFCTO meets the test set out in the Legislation for the Principal Regulator to make the decision.

10. The decision of the Principal Regulator under the Legislation is that the FFCTO is partially revoked solely to permit the Additional Amendment Transaction and/or Proposed Financing. For greater certainty, the Issuer may complete one or both of the Additional Amendment Transaction and Proposed Financing under the terms of this order.

11. This partial revocation order of the FFCTO is conditional upon the Issuer:

(a) obtaining, and providing upon request to the Principal Regulator, signed and dated acknowledgements from all participants in the Additional Amendment Transaction and/or Proposed Financing, which clearly state that the securities of the Issuer acquired by the participant will remain subject to the FFCTO until a full revocation order is granted, the issuance of which is not certain; and

(b) providing a copy of the FFCTO and this order to all participants in the Additional Amendment Transaction and/or Proposed Financing, as applicable

which, if applicable, such conditions shall be satisfied together with (A) the execution of the subscription agreements in connection with the Proposed Financing; and (B) the execution of Amending Agreements in connection with the Additional Amendment Transaction.

12. This order will terminate on the earlier of the closing of (a) both the Completed Amendment Transaction and Proposed Financing, and (b) 90 days from the date hereof.

DATED this 27th day of February 2025.

“Lina Creta”

Lina Creta Manager, Division of Corporate Finance

Ontario Securities Commission

OSC File #: 2024/0743

Footnotes

1. 1The September 2020 Debentures were initially convertible into units consisting of one Common Share and one-half of one Warrant. However, the expiry date for any Warrants issued upon conversion of the September 2020 Debentures occurred on September 16, 2023 and therefore the conversion of the September 2020 Debentures will only result in the issuance of Common Shares.