Charles Shin reports
GULFSTREAM ACQUISITION 1 CORP.
ANNOUNCES PROPOSED QUALIFYING TRANSACTION WITH LIBERTY DEFENSE HOLDINGS, INC.
Gulfstream Acquisition 1 Corp. has entered into a letter of intent dated Nov. 29, 2018, with Liberty Defense Holdings Inc., a private company existing under the laws of the Province of Ontario. The letter of intent outlines the general terms and conditions pursuant to which Gulfstream and Liberty will effect a business combination and reverse takeover transaction that will result in Gulfstream acquiring all of the issued and outstanding securities of Liberty in exchange for equity in Gulfstream. The transaction will constitute Gulfstream's qualifying transaction under the policies of the TSX Venture Exchange.
Terms of the proposed transaction
Pursuant to the terms of the letter of intent, Gulfstream and Liberty will negotiate and enter into a definitive agreement incorporating the principal terms of the letter of intent.
Prior to the completion of the proposed transaction, Gulfstream will consolidate all of its issued and outstanding common shares on the basis of one postconsolidation common share for every 2.5 preconsolidation common shares. Pursuant to the proposed transaction, the current shareholders of Liberty will receive 46,686,525 postconsolidation common shares at a deemed issue price of 80 cents. In addition, a finders' fee of 2.5 per cent of the aggregate value of the proposed transaction, not inclusive of the QT financing (as defined herein), is payable in common shares in the capital of Gulfstream to one or more finders in connection with the proposed transaction. Further, participants in the concurrent private placement, as described in further detail herein, will on closing of the proposed transaction become securityholders of the resulting issuer. Gulfstream will further effect, among other items, a change of its name to Liberty Defense Holdings Inc. or such other name as is mutually agreed upon and will also apply to change its stock symbol.
The final structure for the proposed transaction is subject to satisfactory tax, corporate and securities law advice on the part of both Gulfstream and Liberty.
Completion of the proposed transaction is subject to a number of conditions, including completion of the QT financing, receipt of applicable regulatory approvals, including the approval of the exchange for the proposed transaction, completion of satisfactory due diligence and the execution of a definitive agreement and related transaction documents.
Gulfstream currently has 8,055,159 common shares and 805,500 incentive stock options issued and outstanding.
Under the terms of the letter of intent, the issued and outstanding shares of Gulfstream will be consolidated in accordance with the consolidation ratio, which will result in approximately 3,544,263 common shares outstanding on a fully diluted basis.
Liberty currently has, following the completion of its most recent private placement financing, 46,686,525 common shares issued and outstanding. Each Liberty common share will be exchanged on the amalgamation for one postconsolidation common share such that, following the amalgamation, but before giving effect to the QT financing, the shareholders of Liberty are expected to hold, in the aggregate, 46,686,525 postconsolidation common shares.
Assuming completion of the proposed transaction and before giving effect to the QT financing and the finders' fees, the resulting issuer is expected to have approximately 50,230,788 common shares outstanding.
Proposed private placement
It is a condition of the letter of intent that Liberty will complete a brokered private placement of subscription receipts to raise gross proceeds of up to $6-million at an issue price of 80 cents per subscription receipt. Each subscription receipt will be convertible into units of Liberty upon satisfaction of customary conditions, including the satisfaction of all conditions necessary for the completion of the transaction. Each Liberty unit shall comprise one Liberty common share and one Liberty common share purchase warrant exercisable into one Liberty common share at a price of $1.10 per Liberty warrant for a period of 24 months from the date the escrow release conditions are satisfied. The Liberty common shares and warrants comprising the Liberty units will be ultimately exchanged into common shares and warrants of the resulting issuer pursuant to completion of the proposed transaction. Following the listing of the resulting issuer's common shares on the exchange, the resulting issuer will have the option to accelerate the expiry date of the warrants if the daily volume-weighted average price of the resulting issuer's common shares is greater than $2 per share for the preceding 10 consecutive trading days. Liberty has engaged Canaccord Genuity Corp. and GMP Securities LP as co-lead managers and co-bookrunners to assist in the QT financing.
The net proceeds raised from the QT financing will be used to develop and deploy Liberty's security technology, to explore various venue applications, as well as for general working capital purposes.
Gulfstream has requested a halt in the trading of its common shares until the proposed transaction is completed. While halted, the common shares may only trade upon exchange approval and the filing of required materials with the exchange, as contemplated by the policies of the exchange.
About Gulfstream Acquisition 1 Corp.
Gulfstream was incorporated under the Business Corporations Act (Ontario) on June 8, 2012. Gulfstream's business objective is to identify and evaluate assets or businesses with a view to a potential acquisition by completing a qualifying transaction (like the proposed transaction).
About Liberty Defense Holdings Inc.
Liberty was incorporated on April 30, 2018, pursuant to the Business Corporations Act (Ontario). Liberty provides security solutions for concealed weapon detection in high-volume foot traffic areas and has secured an exclusive licence from MIT Lincoln Laboratory as well as a technology transfer agreement for patents related to active 3-D imaging technology that are packaged into the Hexwave product. The system is designed to provide discrete, modular and scalable protection to provide layered, stand-off detection capability.
About the resulting issuer
The resulting issuer's business objective will be to commercialize the Hexwave product for clients, including, but not limited to, public venues, corporate or secured buildings, ground transportation, schools, hotels, casinos, places of worship, malls, and other urban infrastructure.
Upon completion of the proposed transaction, the current directors and officers of Gulfstream will resign and the following individuals are expected to be appointed to the board of directors and senior management of the resulting issuer:
John McCoach (director);
Corby Marshall (director);
Sam Parrotta (director);
David Sidoo (executive chairman and director);
Bill Riker (chief executive officer and director);
Damian Towns (chief financial officer, corporate secretary and director);
Aman Bhardwaj (president and chief operating officer);
Bart Smudde (chief technology officer).
A comprehensive press release relating to the proposed transaction, in accordance with the policies of the exchange, will follow at a later date.
All information contained in this news release with respect to Gulfstream and Liberty was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.
A filing statement in respect of the proposed transaction will be prepared and filed on SEDAR in accordance with Policy 2.4 of the exchange no less than seven business days prior to the closing of the proposed transaction. A press release will be issued once the filing statement has been filed.
We seek Safe Harbor.
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