Solegear Announces First Tranche Close of Oversubscribed Private Placement for $1,053,850 Led by Gravitas Securities

August 28, 2017   Investor News

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES

August 28, 2017— (Vancouver, BC) Solegear Bioplastic Technologies Inc. (the “Company” or “Solegear”) (TSX-V:SGB) and Gravitas Securities Inc. (the “Agent” or “Gravitas”) today announced the successful completion of an interim close (the “First Tranche”) of a brokered private placement announced on August 1, 2017 (the “Private Placement”) for aggregate gross proceeds of $1,053,850, an increase from the originally announced $500,000 due to market demand. The Company further announces that it is accepting a limited number of additional oversubscriptions in anticipation of a final close on or before September 22, 2017.

In this first of two tranches, the Company has issued 10,538,500 Units at a price of $0.10 per Unit. Each unit is comprised of one common share of the Company (each, a “Share”) and one common share purchase warrant (each, a “Warrant”, and together, a “Unit“).  As a result, the Company has a total of 91,138,354 common shares issued and outstanding. Insider and related party participation in the private placement totaled 1,219,500 Units. Proceeds from the Private Placement will be used to accelerate the fulfillment of pending customer orders and product line extensions.

Each Warrant entitles its holder to acquire one additional Share of the Company at a price of $0.15 per Share within the 24-month period following the closing of the First Tranche.

“The demand in our latest Private Placement is further validation of the market opportunity for our plant-based products and packaging,” said Paul Antoniadis, CEO of Solegear. “After having achieved record sales in our last quarter, the Company is entering a new chapter of growth, and with Gravitas’ support we’re in an excellent position to capture additional market share.”

In connection with the closing of the First Tranche, the Company paid Gravitas, plus certain members of the selling group, an aggregate cash commission of $64,175.48. The Company also issued to the Agent and certain members of the Agent’s selling group non-transferable options to acquire 638,195 Units from treasury at a price of $0.10 per Unit, exercisable at any time within the 24-month period following the closing date of the First Tranche.

The closing of the First Tranche is subject to final approval by the TSX Venture Exchange (the “TSX-V“). The securities issued by the Company in connection with the First Tranche are subject to a four month “hold period” expiring on December 29, 2017 under applicable securities laws.

Acceleration Right

The expiry date of the Warrants will be subject to an acceleration right in favour of the Company that is exercisable if the Shares trade at or above a volume-weighted average trading price of $0.20 on the TSX-V on any 20 non-consecutive trading days, following the expiry of the 4-month statutory hold period beginning on the closing date of the applicable tranche of the Private Placement. If the acceleration right is exercised by the Company, the Warrants will expire on the 20th business day following the date that notice of acceleration is sent to the Warrant holders.

Related Party Participation in the First Tranche

Paul Antoniadis, CEO of the Company, subscribed for 1,100,000 Units having a subscription price of $110,000, Don Holmstrom, CFO of the Company, subscribed for 19,500 Units having a subscription price of $1,950, and Jim Zadra, a director of the Company, subscribed for 100,000 Units having a subscription price of $10,000. Following the closing of the First Tranche, Paul Antoniadis will beneficially own or control 4,988,886 Shares, representing 5.5% of the issued outstanding Shares on an undiluted basis, Don Holmstrom will beneficially own or control 39,106 Shares, representing 0.04% of the issued outstanding Shares on an undiluted basis, and Jim Zadra will beneficially own or control 368,568 Shares, representing approximately 0.4% of the issued and outstanding Shares on an undiluted basis.

As insiders of Solegear participated in this First Tranche, it is deemed to be a “related party transaction” as defined under Multilateral Instrument 61-101—Protection of Minority Security Holders in Special Transactions (“MI 61-101”).

Each Share provides the holder with the right to one vote per Share. The Warrants do not entitle the holders to any voting rights. Therefore, all Warrants subscribed for pursuant to this Private Placement provide the subscriber, including the related party, with no additional votes at present but the holders thereof will have one vote per common share if and when issued upon the exercise of the Warrants. The Private Placement was unanimously approved by the directors of the Company.

Other than the subscription agreement between the aforementioned insiders and the Company relating to the issuance of the Units pursuant to the Private Placement, the Company has not entered into any agreement with an interested party or a joint actor with an interested party in connection with the Private Placement. Neither the Company, nor to the knowledge of the Company after reasonable inquiry, a related party, has knowledge of any material information concerning the Company or its securities that has not been generally disclosed.

The Private Placement is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 (pursuant to subsections 5.5(c) and 5.7(1)(b)) as it was a distribution of securities for cash and neither the fair market value of the Shares distributed to, nor the consideration received from, interested parties exceeded $2,500,000. The material change report in connection with the Private Placement was not filed 21 days in advance of the closing of the Private Placement for the purposes of Section 5.2(2) of MI 61-101 on the basis that the subscriptions under the Private Placement were not available to the Company until shortly before the closing.

Shares for Debt Transaction

Following the closing of the First Tranche, the Company plans to issue 321,150 Shares at a deemed price of $0.10 per Share to settle approximately $32,150 of corporate debt owed to various arm’s length parties of the Company (the “Share Settlement“). The Share Settlement remains subject to TSX-V approval and is expected to occur upon receipt of such approval. The Shares to be issued pursuant to the Share Settlement will be subject to a four-month hold period.

 

About Gravitas Securities Inc.

Gravitas Securities is a leading wealth management and capital markets firm comprised of tactical individuals known for their sophisticated sector expertise, commitment to excellence, and a global platform committed to integration and innovation. Gravitas provides a wide range of investment services for retail and corporate clients globally with offices in Toronto and Vancouver, and is represented in the United States through its FINRA representative, Gravitas Capital International, in New York.

Gravitas Securities Inc. is a member of IIROC and CIPF.

About Solegear Bioplastic Technologies Inc.
Solegear Bioplastic Technologies Inc. (TSX-V:SGB) is an innovator in the field of next generation bioplastics made from annually renewable plant-based sources. Committed to the principles of Green Chemistry, Solegear is driven by its mission to create healthier, safer and stronger communities by fundamentally changing the way plastics are made.

Solegear’s proprietary bioplastic formulations are designed to meet today’s social and corporate requirements to lower carbon emissions, reduce waste and remove toxicity typically associated with traditional petroleum-based plastics. Together with its partners, Solegear custom engineers, produces and distributes its high-performance bioplastics as resin, sheets and finished goods with some of the highest percentages of renewable, plant-based materials currently available in the industry.
For more information: www.solegear.ca

On behalf of the Company:

“Paul Antoniadis” Chief Executive Officer and Director

Contact: 604-566-8466

Investor Contact:                                                     Media Contact:
Caleb Jeffries                                                             Elisha McCallum
Kin Communications                                             FleishmanHillard Vancouver
1-866-684-6730                                                      1-778-668-0185
SGB@kincommunications.com                        Elisha.McCallum@fleishman.ca

Capital Markets Advisor:
Nicole Marchand
1-416-428-3533
Nicole@nm-ir.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.

This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

Cautionary Statement Regarding Forward-Looking Information

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the risk that: (i) the bioplastics market may not grow as anticipated by the Company, and (ii) the economic circumstances of the Company may change and result in the proceeds of the Private Placement being used other in the manner described above.

When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

Other than as required under securities laws, we do not undertake to update this information at any particular time.

Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date.  All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.