The company has engaged a syndicate of agents led by Canaccord Genuity Corp. (collectively, the “Agents“) on a commercially reasonable best-efforts basis in connection with a proposed brokered private placement (“Offering“). The Offering will consist of units (the “Units“) of the Company to raise gross proceeds of up to $3,000,000 and the Agents have an option to increase the size of the Offering by up to 15% at any time prior to the closing of the Offering. The issue price per Unit will be determined in the context of the market.
Each Unit will consist of one common share in the capital of the Company (“Common Share“) and one-half of one common share purchase warrant (each whole warrant, a “Warrant“). Each Warrant which will entitle the holder of the Warrant to purchase one Common Share at a price to be determined in the context of the market (“Exercise Price“) for up to 24 months from the date of closing (“Expiry Date“), provided that if at any time between the date that is four months and one day from the closing of the Offering and the Expiry Date, the daily volume weighted average closing price of the Common Shares on the TSX Venture Exchange is greater than an amount to be determined in the context of the market for ten consecutive days, the Company shall have the option to accelerate the expiry of the Warrants by delivering notice to holders of the Warrants (the “Acceleration Notice“). In such instances, the Warrants will be exercisable only until the 30th day following delivery of the Acceleration Notice.
The net proceeds of the Offering will be used for working capital and general corporate purposes.
PenderFund Capital Management Ltd., an insider and control person of the Company (“PenderFund“), will subscribe for 20% of the Units under the Offering. PenderFund and its affiliates currently own Common Shares, representing 36.3% of the issued and outstanding Common Shares (not including the Warrants acquired as part of the private placement which closed on December 23, 2020).
In Connection with the Offering, the Agents are to receive as compensation: (i) a cash commission of 7% of the gross proceeds raised pursuant to the Offering; and (ii) a non-transferable broker warrants entitling the Agents to acquire in aggregate that number of Common Shares which is equal to 7% of the number of Units issued under the Offering, which broker warrants will have an exercise price at which the Units are priced under the Offering and a term of eighteen months from the closing of the Offering, subject to reduction to 3% in each case for certain agreed subscribers (collectively, the “Agents’ Fee“).
Closing of the Offering is expected to occur on March 31, 2021, or such other date as agreed upon by the Company and Agents, and is subject to receipt of all necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange (“TSXV“). The Units and the securities issued thereunder will be subject to a statutory hold period of four months plus a day from the closing date in accordance with applicable securities legislation.
