edgeTI announces that it has amended its line of credit facility (the “Credit Facility”) with Lotus Domaine III LP (“Lotus”), an investment fund which is also a significant shareholder of the Company.
“This amendment increases our line of credit and adds the Company’s election to convert this debt into common shares, which when executed will improve our debt ratio and other related metrics as we look to reach cash-flow positive operations”, remarked Jim Barrett, CEO of edgeTI. “The increase intends to better support existing and new investors and prepare edgeTI for growth as we help customers put more AI and automation technologies to work as adoption rates are expected to grow at more than 40% year-over-year as stated in our recent 2023 outlook release.”
The Credit Facility was entered into on June 1, 2022 and most recently amended on March 1, 2023 (the “Amendment”). The Credit Facility bears interest at 8% compounded monthly with a maturity date of January 20, 2026. Pursuant to the Amendment, the Credit Facility was increased from US$5.1 million to US$5.95 million, with the purpose of funding investor marketing activities. The Amendment also includes a new conversion option that allows the Company to convert the debt owed under the Credit Facility to single voting shares of the Company (the “Convertible Shares”), in accordance with the rules and approval process of the TSX Venture Exchange (the “TSXV”). The Amendment as it relates to the issuance of the Convertible Shares and the issuance of Convertible Shares is subject to TSXV approval.
The Convertible Share price is set to CA$0.90, in accordance with the rules of the TSXV.
The Company has also approved the issuance of a warrant to the Lender (the “Warrant”) to purchase 75,000 single voting shares of the Company at a price of CA$0.01. The Warrant has a cashless exercise feature and a ten-year term.
As a result of Lotus being a control person of the Company, the Credit Facility is considered a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”).
The Company is relying on the exemptions from (i) the formal valuation provisions of MI 61-101 as set out in section 5.5(b) of MI 61-101 (Issuer Not Listed on Specified Markets) on the basis that the Company is a TSX Venture Exchange listed issuer and (ii) the minority approval provisions of MI 61-101 as set out in section 5.7(1)(a) of MI 61-101 (Fair Market Value Not More than 25% of Market Capitalization) on the basis that the fair market value of the Credit Facility, insofar as interested parties are involved, will not exceed 25% of the market capitalization of the Company.
The disinterested directors of the Company approved the Credit Facility and no materially contrary view or abstention was expressed or made by any director of the Company in relation thereto.
edgeTI helps customers sustain situational awareness and accelerate data-driven action with its real-time digital operations software, edgeCore™. Global enterprises, service providers, and governments are more profitable when insight and action are united to deliver fluid experiences via the platform’s low-code development capability and compostable experiences. With edgeCore™, customers improve their margins and agility by rapidly transforming siloed systems and data across evolving, complex situations in business, technology, and cross-domain operations — helping them achieve the impossible.
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Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Information and Statements
Certain statements in this news release are forward-looking statements or information for the purposes of applicable Canadian and US securities law. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations, or intentions regarding the future including but not limited to statements regarding the Credit Facility terms including, the maturity date, the intended use of the increased Credit Facility, that the Company will convert the debt to Convertible Shares, the timing of such conversion, and the approval of the TSXV. Such information can generally be identified by the use of forwarding-looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, completion of due diligence by lenders, business, economic and capital market conditions. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, anticipated costs, and the ability to achieve goals.
Factors that could cause the actual results to differ materially from those in forward-looking statements include the continued availability of capital and financing, the impact of viruses and diseases on the Company’s ability to operate, competition and general economic, market or business conditions and the ability to obtain TSXV for the Amendments and the issuance of Convertible Shares. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.