Globalive Technology Announces Agreement with Socati Corp. to Complete a Reverse Takeover Transaction
Globalive Technology Announces Agreement with Socati Corp. to Complete a Reverse Takeover Transaction
Globalive Technology today announced that it has signed a binding letter agreement to complete a reverse takeover transaction with Socati Corp., a US-based company that produces THC-free broad-spectrum hemp extracts for use in a variety of cannabinoid products.
TORONTO, June 4, 2020 /CNW/ - Globalive Technology Inc. (TSX-V: LIVE) (the "Company"), a technology company based in Toronto, Ontario, announced today that it has signed a binding letter of intent (the "LOI") with Socati Corp. ("Socati") dated June 3, 2020 to complete a reverse takeover pursuant to which the Company will acquire all of the issued and outstanding securities of Socati in exchange for common shares of the Company (the "RTO").
Socati is a leading processor of THC-free broad-spectrum hemp extracts and ingredients for use in cannabinoid products. Leveraging investments in new technologies, Socati engages in large-scale manufacturing and has logistics in place to meet growing demand. With the ability to manufacture broad-spectrum hemp extracts at scale, Socati is built to serve the needs of large, international consumer packaged goods (CPG) companies that are seeking high quality raw materials.
Socati is a private corporation, incorporated under the laws of Delaware on August 28, 2018, with several wholly owned subsidiaries that together make up the Socati business. Its corporate headquarters is located in Austin, Texas, and it has significant assets in Woodburn, Oregon, where it operates a seed genetics, research and development and agricultural operations facility, and in Missoula, Montana, where it operates a 22,000 sq. ft. production facility and testing laboratory.
Being in a growth phase of its business cycle, Socati is incurring significant expenses, which are partially offset by revenue from the operating portion of its business and capital raised through equity offerings. Socati has raised a total of US$42 million over two funding rounds (including, most recently, a US$33 million Series A round completed in January 2019).
Subject to regulatory and shareholder approval, and the satisfaction of other conditions precedent, the Company intends to acquire all of the issued and outstanding securities of Socati (collectively, the "Socati Securities") from the holders of the Socati Securities (collectively, the "Socati Securityholders") for aggregate consideration of approximately US$25 million. The consideration will be paid by issuing common shares of the Company to the Socati Securityholders at a price per share (the "Share Price") calculated by dividing the value of all assets remaining in the Company on closing (including cash and cash-equivalents, investment and technology assets), plus US$500,000, by the number of issued and outstanding common shares of the Company, on a fully-diluted basis, on the date of the closing. The Company currently holds cash and cash-equivalents of approximately US$5,151,000 and estimates that it will hold no less than US$4,500,000 by the closing date of the RTO.
The terms of the RTO contemplate that, with the exception of cash and cash-equivalents, the Company's existing business, assets and liabilities, including its technology venture subsidiaries and their intellectual property, its interest in Flexiti Financial Inc. and its affiliates (the "Flexiti Group") and some or all of its technology investments (collectively, the "Legacy Assets") will, subject to regulatory and shareholder approval, be transferred to a third-party that is to be determined, with the value of the Legacy Assets captured or distributed to the shareholders of the Company immediately prior to the RTO (the "Spin-Off"). Any investment assets that are not transferred out of the Company prior to closing the RTO will be valued as at the closing date and included in the calculation of the Share Price as detailed above.
Socati and the Company will rationalize their equity incentive plans, any equity incentives issued under such plans and all other outstanding convertible securities to create one or more post-RTO equity incentive plans in the go-forward entity (the "Resulting Issuer") to properly incentivize management, directors and key employees.
Following completion of the RTO, the name of the Resulting Issuer will be changed to a name to be determined by Socati, subject to regulatory and shareholder approval.
The RTO is subject to certain conditions precedent (the "Conditions"), including but not limited to: (i) the Company continuing to be listed on the TSX Venture Exchange (the "Exchange"); (ii) director and shareholder approval for both Socati and the Company; (iii) receipt of any necessary Exchange, regulatory and third-party approvals or consents; (iv) no material adverse change in either the Company or Socati between the date of the LOI and the closing of the RTO; (v) the Company holding cash and cash-equivalents of no less than US$4,500,000 on closing of the RTO; (vi) completion of the pre-closing matters described above, (vii) the completion of the Spin-Off on terms satisfactory to the parties, acting reasonably; and (ix) other conditions typical for a transaction of this nature.
Socati and the Company are arm's length, provided that Globalive Capital, the controlling shareholder of the Company, owns a minimal (less than 1%) equity interest in Socati.
No insider of the Company, or any of their associates or affiliates, has any material interest, direct or indirect, in the RTO other than in connection with: (i) the entitlement of such insiders who are shareholders of the Company to receive shares of the Resulting Issuer on the same basis as other shareholders of the Company; and (ii) Mr. Lacavera as a potential director of the Resulting Issuer. No finder fee will be paid in connection with the RTO.
Prior to completion of the RTO, the Company and Socati will seek to complete a private placement of subscription receipts for aggregate gross proceeds of up to US$5 million on terms to be determined. The subscription receipts are expected to convert automatically into common shares of the Resulting Issuer on closing of the RTO at the Share Price. The conversion of the subscription receipts are expected to be subject to standard terms and conditions, including the satisfaction of the Conditions for the RTO described above.
Sponsorship of the RTO is required by the policies of the Exchange unless an exemption is granted by the Exchange. The Company intends to apply for an exemption from the sponsorship requirement in accordance with Exchange policy, however, there can be no assurance that the Exchange will grant such an exemption.
Proposed Management and Board of Directors of the Resulting Issuer
Upon completion of the RTO, it is anticipated that the persons identified below will serve as directors and officers of the resulting issuer.
Josh Epstein – Chief Executive Officer and Director
Brian Goldberg – Chief Financial Officer
Leon Ojalvo – Chief Commercial Officer
Rusty Sutterlin – Chief Science Officer
Brad Kelley – Chief Operating Officer
Mark Elfenbein – Chief Revenue Officer
Scott Seder – SVP of Regulatory Affairs
Lorne Abony – Chairman and Director
Edward Lonergan – Director
Eric Ball – Director
Anthony Lacavera - Director
A copy of the LOI with more detailed information about the RTO is available for review on the Company's SEDAR page at www.sedar.com. The Company will disclose additional information relating to the RTO, the Spin-Off and related matters as soon as they becomes available, including additional financial information relating to Socati, the backgrounds of any other person who may constitute an insider of the Resulting Issuer, and any other relevant information.
The LOI is binding on the parties, however, the parties are continuing to negotiate the more detailed, definitive agreements that will govern the RTO, the Spin-Off and related matters. In the course of those negotiations, material terms pertaining to the RTO, including its structure, timing, the consideration payable for the Socati Securities, the calculation of the Share Price, the Financing, closing conditions and other matters may be added, amended or removed. The Company will provide an update on any material terms not already disclosed as soon as reasonably possible once that information becomes available.
Completion of the RTO is subject to a number of conditions precedent, including the Conditions described above. If the conditions precedent cannot be satisfied or (if applicable) waived, the RTO will not close. There can be no assurance that the RTO will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the RTO, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the Company's securities in anticipation of the RTO should be considered highly speculative.
The Exchange has not considered or made any determination on the merits of the proposed RTO and has neither approved nor disapproved of the contents of this press release.
About Globalive Technology Inc.
Globalive Technology is a next generation software company and venture partner developing innovative solutions to disrupt traditional industries by leveraging artificial intelligence and machine learning technology stacks. Globalive Technology is controlled by Globalive Capital Inc., which has founded and co-founded 12 businesses over the past 20 years with six successful exits ranging from US$10M to US$1.3B. It has also made over 100 venture investments and has over 45 technology companies in its portfolio. For more information, visit www.globalivetech.com.
About Socati Corp.
Socati is a leading processor of broad-spectrum hemp extracts. Leveraging investments in new technologies, Socati engages in large-scale manufacturing and has logistics in place to meet growing demand. With the ability to manufacture broad-spectrum hemp extracts at scale, Socati is built to serve the needs of large, international CPG companies that are seeking high quality raw materials.
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CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release contains forward-looking statements relating to the timing and completion of the proposed RTO and Spin-Off, the future operations of the Company and the Resulting Issuer and other statements that are not historical facts. Such forward-looking statements are often identified by terms such as "possible", "if", "would", "will", "is incurring", "subject to", "intends", "estimates", "contemplated", "following", "continuing to", "anticipates", "anticipated" and similar expressions. All statements, other than statements of historical fact included in this release, including those noted above, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include changes to Socati or the Company's business focus, strategic plan or capital requirements; changes in market, industry and regulatory conditions for Socati or the Company; unexpected operating gains or losses in the Socati or the Company; a breakdown in the Company's relationship with Socati; the inability to satisfy the conditions precedent to complete the RTO; the inability to raise adequate financing or adequate financing on terms sufficiently favourable to Socati and the Company; the inability to obtain the necessary regulatory, shareholder and third-party approvals for the RTO; changes in Socati or the Company's assessment of the desirability of the RTO; other parties seeking to acquire an interest in Socati or the Company; competitors in the industry and other risks as set out in the Company's Filing Statement available on its SEDAR page at www.sedar.com.
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. The Company cannot guarantee that any of the forward-looking statements contained in this press release will occur as disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information.
Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will only update or revise publicly the included forward-looking statements as expressly required by Canadian securities law.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities of the Company, Socati or the resulting issuer in either Canada or the United States. The securities of such entities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "US Securities Act"), or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the US Securities Act and applicable state securities laws or an exemption from such registration is available.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Globalive Technology
Company Codes: TorontoVE:LIVE
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