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Edge Total closes private placement, changes name

2021-12-24 14:46 ET - News Release

Mr. Jim Barrett reports

EDGE TOTAL INTELLIGENCE INC. (FORMERLY APHELION CAPITAL CORP.) ANNOUNCES COMPLETION OF PRIVATE PLACEMENT FINANCING AND QUALIFYING TRANSACTION

Edge Total Intelligence Inc. (formerly Aphelion Capital Corp.) has completed (i) its previously announced brokered private placement financing of postsplit (as defined below) common shares in the capital of the company; (ii) the name change of the company from Aphelion Capital Corp. to Edge Total Intelligence, reclassification of the shares as subordinate voting shares of the company (SVS), creation of preferred multiple voting shares in the capital of the company (MVS) and assignment of special rights and restrictions attached to the SVS and the MVS; (iii) the conversion of the subscription receipts of Aphelion FundCo Inc.; and (iv) the completion of its qualifying transaction resulting in the reverse takeover of the company by Edge Technologies Inc.

The financing

Further to the press releases of the company dated Nov. 15, 2021, and Nov. 29, 2021, has completed a brokered private placement of 7,181,774 shares at a price per share equal to 62 cents for aggregate gross proceeds of approximately $4,453,000. Canaccord Genuity Corp. acted as sole agent and sole bookrunner for the company in connection with the financing, which was conducted pursuant to an agency agreement dated Dec. 23, 2021, among Aphelion, Edge and the agent. Each share represents a post-2:1 stock split common share of the company, which such split was completed on Dec. 15, 2021, further to the press release of the company dated Dec. 14, 2021.

Pursuant to the agency agreement, the agent was paid a cash commission of approximately $270,000 issued 434,982 agent's warrants each exercisable to acquire one share for a period of 24 months at the financing price. In connection with the completion of the qualifying transaction, each agent's warrant was exchanged for one SVS purchase warrant entitling the holder to acquire one SVS at the financing price for a period of 24 months following the date of issuance thereof.

The shares and the agent's warrants issued under the financing are subject to a hold period of four months and one day expiring on April 24, 2022.

The amendments

Further to the filing statement of the company dated Nov. 12, 2021, the management's information circular of the company dated Nov. 5, 2021, and the news release of the company dated Dec. 14, 2021, the company has effected the amendments as approved by the shareholders of the company shortly following completion of the financing. Summaries of the special rights and restrictions attached to the MVS and the SVS are included in the filing statement, a copy of which is available on the company's SEDAR profile.

Conversion of the FundCo subscription receipts

Further to the press release of the company dated Dec. 16, 2021, the escrow release conditions attached to the FundCo subscription receipts pursuant to the subscription receipt agreement dated Dec. 16, 2021, among the company, Edge, FundCo and the agent, in its capacity as sole agent and bookrunner for FundCo in the brokered private placement of FundCo subscription receipts, dated Dec. 16, 2021, have been satisfied.

In connection with the escrow release, each FundCo subscription receipt was converted into one common share in the capital of FundCo.

Pursuant to the agency agreement dated Dec. 16, 2021, among FundCo, the company, Edge and the agent, in its capacity as sole agent and bookrunner for FundCo in the brokered private placement of FundCo subscription receipts, the agent was further issued 112,903 agent's warrants each exercisable to acquire one FundCo share for a period of 24 months at the financing price. In connection with the completion of the qualifying transaction, each FundCo agent's warrant was exchanged for one SVS purchase warrant entitling the holder to acquire one SVS at the financing price for a period of 24 months following the date of issuance thereof.

The qualifying transaction

Further to the filing statement, pursuant to the merger agreement dated March 3, 2021, among the company, FundCo, Edge, Electric Acquisition Corp., a wholly owned Virginia subsidiary of the company (U.S. subco), and 1289571 B.C. Ltd., a wholly owned British Columbia subsidiary of the company (B.C. subco), as amended, and in connection with the qualifying transaction, (i) B.C. subco merged with FundCo by way of a three-cornered amalgamation pursuant to the merger agreement and the laws of the Province of British Columbia, and (ii) U.S. subco merged with Edge by way of a three-cornered amalgamation pursuant to the merger agreement and the laws of the State of Virginia.

Pursuant to the B.C. merger, all outstanding securities of FundCo were exchanged for securities of the company on a one FundCo share for one SVS basis resulting in approximately 1,733,934 SVS being issued to former shareholders of FundCo, and the issuance of 112,903 SVS purchase warrant entitling the holder to acquire one SVS at the financing price for a period of 24 months following the date of issuance thereof. Pursuant to the U.S. merger, all outstanding securities of Edge were exchanged for securities of the company resulting in approximately 26,600 MVS being issued to former shareholders of Edge. The company also acquired certain convertible debt securities of Edge as set out in the filing statement. Further details regarding the qualifying transaction can be found in the filing statement, a copy of which is available under the company's profile on SEDAR.

The parties to the qualifying transaction are working toward receipt of final approval of the qualifying transaction from the TSX Venture Exchange and it is anticipated that the SVS will commence trading on the exchange under the trading symbol CTRL in January, 2022.

Escrowed shares

On completion of the qualifying transaction, all 26,600 MVS issued to the former shareholders of Edge are subject to escrow in accordance with the merger agreement and the requirements of the exchange. Pursuant to the MVS escrow, 10 per cent of the escrowed shares will be released on the eight-month anniversary of the date of completion of the qualifying transaction, and an additional 15 per cent of the escrowed shares will be released on each six-month anniversary thereafter such that all escrowed shares will be released from MVS escrow on the 44-month anniversary of the date of completion of the qualifying transaction. Any amendment to the MVS escrow will require the prior approval of the exchange.

In addition, certain current and/or former shareholders of the company have entered into a CPC escrow agreement with the exchange and TSX Trust Company, as escrow agent, in respect of four million SVS. Under the terms of the CPC escrow agreement, 25 per cent of the escrowed shares will be released at the time of the final exchange bulletin, with an additional 25 per cent released on each six-month anniversary thereafter.

In addition, on completion of the qualifying transaction, if so required by the exchange, certain directors and officers of the company will enter into an escrow agreement pursuant to which such directors and officers will deposit their securities with TSX Trust Company, as escrow agent until released in accordance with the escrow agreement, exchange policies and applicable laws. It is presently expected that, if so required by the exchange, approximately 13,677 MVS will be deposited in escrow. Under the terms of the escrow, 25 per cent of the escrowed shares will be released on the date of completion of the qualifying transaction, with an additional 25 per cent released on each six-month anniversary thereafter.

Where securities held by shareholders subject to the contractual lock-up period are also subject to escrow in accordance with exchange policies and applicable securities laws, the more restrictive escrow/lock-up regime shall govern.

Incentive stock options

Additionally, on completion of the qualifying transaction, as disclosed in the filing statement, an additional 400,000 incentive stock options of the company were issued to certain prior directors of Aphelion. All options vest immediately and are exercisable at 62 cents to acquire one SVS for a period of five years from the date of grant.

Board of directors and executive management

Following the completion of the qualifying transaction, the following individuals will comprise the directors and officers of the company:

  • Jim Barrett -- chief executive officer, director;
  • Christian Mack -- director;
  • David Roman -- director;
  • Jason James -- chief financial officer, director;
  • Edward Mede -- director;
  • Steven Owings -- director;
  • Seth Kay -- director;
  • Joshua Armstrong -- secretary auditors.

Concurrent with the closing of the qualifying transaction, it is expected that MNP LLP will be appointed auditors of the company. The transfer agent for the company is expected to continue to be TSX Trust Company.

Year-end

Following completion of the qualifying transaction, the fiscal year-end of the company shall be Dec. 31.

Additional information for shareholders

The company's transfer agent, TSX Trust Company, will send direct registration system statements to all former Edge and FundCo shareholders who held physical securities (other than for those that are required to be in certificated form) setting out each holder's shareholdings. The Cusip number for SVS is 279874101. For further information, please refer to the filing statement posted to the company's issuer profile on SEDA.

Additional information

The qualifying transaction is not a non-arm's-length transaction (as defined in the policies of the TSX-V), and as such shareholder approval is not required for the qualifying transaction under the policies of the TSX-V.

Trading in the SVS is presently halted and will remain halted until receipt of final approval for the qualifying transaction.

Receipt of final approval for the qualifying transaction is subject to a number of conditions and there can be no assurance that the qualifying transaction will be completed as proposed or at all.

About Edge Technologies Inc.

Edge Technologies is a software company based in Arlington, Va., United States, which delivers increased operational resilience, agility and efficiency through its rapid development edgeCore (low-code) platform that securely unifies the control and data of existing technologies in real time without creating new data stores. Its configurable pipelines and visualizations transform siloed systems into composable operations that meet the unique needs of users and evolving business situations. Beyond limited single-pane-of-glass and business intelligence approaches, edgeCore features building-block modules like intelligent automation and interface adapters to deliver true digital transformation that accelerates time to value.

About the company

The company was incorporated under the Business Corporations Act (British Columbia) on Jan. 10, 2019, and is a capital pool company (as defined in the policies of the TSX Venture Exchange) listed on the TSX-V. Prior to completion of the qualifying transaction, the company had no commercial operations and no assets other than cash. Following completion of the qualifying transaction, the company operates the business of Edge through the resulting entity from the U.S. merger.

We seek Safe Harbor.

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