Mr. Mark Brown reports
GERMINATE CAPITAL LTD. ENTERS INTO DEFINITIVE AGREEMENT WITH BEACON HILL INNOVATIONS LTD.
Further to its news release of July 6, 2021, Germinate Capital Ltd. has entered into a definitive share exchange agreement dated Sept. 14, 2021, with Beacon Hill Innovations Ltd. and the shareholders of Beacon, pursuant to which Germinate will acquire all of the issued and outstanding securities of Beacon. Beacon was incorporated under the
Business Corporations Act
(British Columbia) on Feb. 7, 2020, and is a streaming and gaming technology products company based in Victoria, B.C.
Transaction summary
In connection with the transaction, Germinate
will acquire all of the issued and outstanding common shares of Beacon through the issuance of 32,151,003 common shares in the capital of the company, pursuant to which Beacon will become a wholly owned subsidiary of Germinate. Germinate will be renamed as Beacon Hill Technology Ltd. upon completion of the transaction and a new trading symbol will be assigned. No finder's fees are payable in connection with the transaction.
In connection with the transaction, Germinate
proposes to raise $2-million through a concurrent offering (as defined herein). Upon completion of the transaction and the closing of the concurrent offering, the resulting issuer will have approximately 41,951,003 shares issued and outstanding. Germinate does not anticipate making any advances to Beacon prior to closing of the transaction.
The management team of the resulting issuer will be led by Craig Fraser as chief executive officer, Daniel Davies as president and chief technology officer, and Robert J. Doyle, CPA, CA, as chief financial officer and corporate secretary. Alexandre Heath will resign from the board of the resulting issuer upon completion of the transaction, and is graciously thanked for assisting with founding Germinate and carrying the company to its present position.
It is anticipated that the board of directors of the resulting issuer will comprise Mr. Fraser, Mr. Davies, Mark T. Brown and Sarah
Weber.
It is anticipated that, following completion of the transaction, the resulting issuer will be a Tier 2 issuer in the technology sector.
Beacon Hill Innovations
The founders and team at Beacon have spent much of their careers developing vocal effects products for the music industry. In 2020, the team got together to design and build a new line of modern products that take advantage of its personal technical and sound knowledge targeted at the rapidly growing on-line gaming and streaming market. Since that time, the team has raised approximately $3-million for the development of
three key products and designed several others for the future. The initial
products include
two audio mixers and a high-tech microphone with certain features that are more advanced than other products found on the market today. Beacon builds world-class equipment for creators, from podcasters to live streamers and more. Beacon has assembled an exceptional team of technology enthusiasts to design and manufacture products that help the users of their products get to making better content quickly and effectively.
Beacon's mission is to help an average user produce like a pro, without spending needless time tinkering with dozens of settings. Beacon has approximately $1-million in cash and is ready to begin the commercialization phase of the initial products with plans to begin sales through on-line channels they have used in the past by the fourth quarter of 2021. The funds raised in conjunction with the transaction, along with cash on hand, will help finance inventory purchases for the initial three products and allow Beacon to begin working on the development of its next big idea. The gaming and on-line streaming markets have exploded during the pandemic. While the sales of similar products in this industry are already hitting record levels, they continue to grow rapidly. Having the coolest and best tech is key for the success of any streamer, and many follow their lead in buying tech products. The Beacon team has contact with these leaders, including direct access to the market, and has established on-line sales channels for its products, as well as the manufacturing to allow for just-in-time, direct-delivery sales.
Financial information about Beacon
The attached tables set out selected financial information with respect to Beacon as at the dates noted. The selected financial information is derived from Beacon's unaudited financial statements for the periods noted which have been prepared in accordance with international financial reporting standards, issued by the International Accounting Standards Board.
The definitive agreement
Completion of the transaction is subject to the satisfaction of certain conditions set forth in the definitive agreement, including but not limited to: (i) receipt of all requisite regulatory approvals, orders, notices and consents to implement the transaction including those of the exchange; (ii) no material change occurring to the business of any of the parties; (iii) completion of the concurrent offering (as defined herein); (iv) completion of the aforementioned director and management changes; (v) the satisfaction of obligations under the definitive agreement relating to each of the parties; (vi) the delivery by each of the parties of customary closing documents; and (vii) completion of the transaction on or before the date that is 90 days following closing of the private placement.
Concurrent offering
Germinate will complete a best efforts non-brokered private placement of subscription receipts of the company at a price of 30 cents per subscription receipt for gross proceeds of $1.5-million, with each subscription receipt automatically convertible for no additional consideration into one unit of the company upon satisfaction of the escrow release conditions (as defined herein). Each unit will comprise one share and one-half of one share purchase warrant. Each warrant will be exercisable to acquire one share at a price of 60 cents per share for a period of two years from the date of issuance.
The subscription receipts will convert automatically for no additional consideration into units upon the occurrence of the following events: (i) all conditions to the TSX Venture Exchange's conditional approval of the transaction having been satisfied or waived; (ii) all conditions to the exchange's conditional approval for the listing of the shares to be issued pursuant to the concurrent offering and the shares underlying the warrants having been satisfied or waived; and (iii) the closing of the transactions contemplated by the share exchange agreement.
Germinate expects to pay to certain arm's-length finders an aggregate cash finder's fee in connection with the private placement of $23,242.52 and 77,475 non-transferrable warrants. Each finder warrant will entitle the holder to acquire one share at a price of 30 cents for a period of two years from closing of the transaction.
In addition to the private placement of subscription receipts, Germinate has arranged a $500,000 convertible note which will be issued by Beacon so that the funds are available to Beacon immediately. Upon closing of the transaction, these notes will be convertible into the units of Germinate under the same terms as the private placement for a term of 18 months. Should the transaction not close for any reason before the maturity date, the notes will be convertible into Beacon shares at a price equal to Beacon's most recent financing at the time of such conversion, or be repaid in full. The share price of Beacon's most recent financing as at the date of this news release was 20 cents per Beacon share.
The company anticipates closing of the private placement will occur shortly, subject to receipt of approval of the exchange.
Sponsorship
The company has made an application to the exchange for a waiver from the sponsorship requirements in connection with the transaction. There is no assurance that such waiver will be granted.
Trading halt
The shares are currently halted from trading, and the trading of the shares is expected to remain halted pending completion of the transaction.
We seek Safe Harbor.
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