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Liberty Defense closes $6.9M initial public offering

2021-03-12 16:54 ET - News Release

Mr. Aman Bhardwaj reports

LIBERTY AND DRAWDOWN ANNOUNCE CLOSING OF OVERSUBSCRIBED PUBLIC OFFERING OF SUBSCRIPTION RECEIPTS FOR TOTAL GROSS PROCEEDS OF $6.9 MILLION

Liberty Defense Holdings Ltd. has closed its previously announced public offering of 17.25 million subscription receipts at a price of 40 cents per subscription receipt for gross proceeds of $6.9-million, including the exercise of the agent's overallotment option (as defined below) in full. Canaccord Genuity Corp. acted as agent in respect of the offering pursuant to the terms of an agency agreement.

Now that the offering is closed, subject to TSX Venture Exchange approval, all material conditions to the business combination of DrawDown Detection Inc. and the company have been satisfied. As a result, the company and DrawDown intend to close the transaction on or around March 17, 2021. Prior to the completion of the transaction, Liberty will complete a consolidation of the outstanding common shares of Liberty and all of the outstanding securities convertible in common shares of Liberty on a one-for-6.2 basis. Following completion of the transaction, the business of the resulting entity will be the combined businesses of Liberty and DrawDown.

Subscription receipt offering

Each subscription receipt will entitle the holder thereof to receive, without payment of additional consideration or further action on the part of the holder, one unit of the company, upon receipt by the escrow agent, on or before the date that is 60 days after the closing date, of a release notice from the company, and acknowledged by the agent, confirming that: (a) all of the conditions precedent to the closing of the transaction have been satisfied or waived to the satisfaction of the company and DrawDown, and as acknowledged by the agent; (b) except as consented to in writing by the agent, no material provision of the amalgamation agreement between Liberty and Drawdown has been amended by the parties thereto; (c) the agency agreement has not been terminated; and (d) neither the company, nor DrawDown is in material breach or default of the agency agreement.

Each unit will consist of one common share on a postconsolidation basis and one-half of one share purchase warrant. Each warrant shall entitle the holder thereof to purchase one common share on a postconsolidation basis at a price of 60 cents at any time up to 5 p.m. Toronto time on the date which is 24 months from the closing date of the offering. The company has agreed to: (i) pay the agent a cash commission equal to 7.0 per cent of the gross proceeds of the offering, subject to a reduced cash fee of 3.5 per cent for those subscribers identified on the first president's list and 0.0 per cent for those subscribers identified on the second president's list; (ii) issue to the agent such number of compensation warrants as is equal to 7.0 per cent of the number of subscription receipts sold under the offering, with each agent's warrant entitling the holder to acquire one postconsolidation common share at the offering price until the date that is 24 months from the date of the closing date, subject to a reduced number of agent warrants equal to 3.5 per cent of the subscription receipts sold to those subscribers identified on the first president's list and 0.0 per cent for those subscribers identified on the second president's list; and (iii) reimburse the agent for its reasonable expenses in connection with the offering.

If the closing of the transaction does not occur by the deadline, the subscription receipts will terminate, and holders of subscription receipts shall be entitled to receive an amount per subscription receipt equal to the offering price and a pro rata share of interest earned thereon. The company will use the net proceeds of the offering to further the combined businesses of the company and DrawDown, and will include general and administrative expenses, sales and marketing expenses, and research and development expenses, as more particularly set out in the final prospectus. A short-form prospectus containing important information relating to the securities being offered under the public offering has been filed with securities commissions or similar authorities in each of the provinces of Canada (except Quebec). The prospectus notes that an investment in the subscription receipts is speculative and involves a high degree of risk. An investment in the subscription receipts is suitable only for those investors who are willing to risk a loss of some or all of their investment. For more information, potential investors should read the prospectus, including, without limitation, the risk factors and the cautionary note regarding forward-looking statements.

Trading in Liberty

Trading in the common shares of Liberty is expected to remain halted pending the satisfaction of the conditions of the exchange for resumption of trading. It is unlikely that trading in the common shares of Liberty will resume prior to the completion of the transaction.

Additional information in connection with the transaction will be provided in subsequent press releases.

About DrawDown Detection Inc.

DrawDown is a privately held corporation incorporated on Oct. 26, 2018, under the Business Corporations Act (British Columbia), and is a weapon detection technology company that commercializes intellectual property for use in the public safety market. The company is in the development stage of a hand-held device to detect smokeless gunpowder. The company's business plan is to develop and sell its patented gunpowder detection sensor to law enforcement agencies and critical infrastructure providers, including, but not limited to: schools, sporting venues, hotels, places of worship and private business markets globally. The gunpowder detection sensor technology is being developed in the United States. DrawDown is widely held and does not have any controlling shareholders.

About Liberty Defense Holdings Ltd.

Liberty provides security solutions for concealed weapon detection in high-volume foot traffic areas and has secured an exclusive licence from Massachusetts Institute of Technology (MIT), as well as a technology transfer agreement, for patents related to active 3-D radar imaging technology that are packaged into the Hexwave product. The system is designed to provide discreet, modular and scalable protection to provide layered, standoff detection capability. This is intended to provide a means to pro-actively counter evolving urban threats. The sensors with active 3-D radar imaging and artificial intelligence (AI) enhanced automatic detection are designed to detect metal and non-metal firearms, knives, explosives and other threats. Liberty is committed to protecting communities and preserving peace of mind through superior security detection solutions.

We seek Safe Harbor.

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