TORONTO, ON / CRWEPRESSRELEASE / September 14, 2015 / ALGAE DYNAMICS CORP (OTCMKTS:ADYNF) (the “Company”), a development stage company focused on the commercialization of its proprietary BioSilo(R) cultivation system for the growth of algae strains for use in the food and health supplement markets, today announced it has completed a financing and established a facility expected to lead to additional funding within the next 60 days.
The completed financing consists of a $25,000 convertible note (the “Convertible Note”) and the facility is an Equity Purchase Agreement (“EPA”) which permits the Company to drawdown up to $750,000 subject to certain conditions over the next twelve months. The Convertible Note and the EPA were provided by RY Capital Group, LLC (“RY”). All currency references herein are US dollars.
Paul Ramsay, President of the Company, stated, “These financings are instrumental in the continued progress and development of Algae Dynamics. We look forward to using this new capital as part of our overall business and financing strategy.”
On September 2, 2015, RY and the Company entered into a securities purchase agreement (“Purchase Agreement”) whereby RY purchased from the Company a senior convertible note with a principal amount of $25,000 (the “Convertible Note”) for a purchase price of $25,000.
The Convertible Note matures on September 1, 2016 and accrues interest at the rate of 12% per annum. The Convertible Note is convertible at any time after six months, in whole or in part, at RY’s option into common shares of the Company’s capital stock at a variable conversion price equal to a 45% discount from the lowest trading price in the twenty (20) trading days prior to the day that RY requests conversion. At no time will RY be entitled to convert any portion of the Convertible Note to the extent that after such conversion, RY (together with its affiliates) would beneficially own more than 9.99% of the outstanding common shares.
The Convertible Note includes customary event of default provisions, and provides for a default interest rate of 24%. The Company has the right at any time prior to March 1, 2016 to redeem all, but not less than all, of the total outstanding amount then remaining under the Convertible Note in cash at a prices ranging from 115% to 139% of the total amount of the Convertible Note then outstanding.
The Purchase Agreement contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Company also agreed to pay up to $2,000 of reasonable attorneys’ fees and expenses incurred by RY in connection with the transaction. The Purchase Agreement also provides for indemnification of RY and its affiliates in the event that RY incurs losses, liabilities, obligations, claims, contingencies, damages, costs and expenses related to a breach by the Company of any of its representations, warranties or covenants under the Purchase Agreement.
The foregoing descriptions of the Purchase Agreement and the Convertible Note are qualified in their entirety by reference to the provisions of the Convertible Note and the Purchase Agreement filed as exhibits 4.1 and 10.1 to Form 8-K filed on September 9, 2015.
Equity Purchase Agreement
On September 10, 2015 (the “Closing Date”), the Company entered into an equity purchase agreement dated as of the Closing Date (the “EPA”) with RY. The EPA provides that, upon the terms and subject to the conditions set forth therein, RY is committed to purchase up to $750,000 (the “Total Commitment”) worth of the Company’s common shares (the “Put Shares”) over the 12-month term (the “Term”) of the EPA.
From time to time over the term of the EPA, commencing on the trading day immediately following the date on which the registration statement covering the resale of the Put Shares (the “Registration Statement”) is declared effective by the Securities and Exchange Commission (the “Commission”), as further discussed below, the Company may, in its sole discretion, draw upon the EPA periodically during the Term (a “Draw Down”) by the Company’s delivery to RY of a written notice (a “Draw Down Notice”) requiring RY to purchase a dollar amount in common shares (a ‘Draw Down Amount”). The shares issuable pursuant to a Draw Down Notice, when aggregated with the shares then held by the Purchaser on the date of the Draw Down, may not exceed the lesser of (i) 4.99% of the Company’s outstanding common shares, (ii) $62,500 dollars in any 30 days period or (iii) 100% of the aggregate trading volume for the 10 trading days immediately preceding the date of the Draw Down Notice without the prior written consent of RY. The purchase price per common share purchased under the EPA shall equal 65% of the lowest closing bid for the 10 days immediately preceding the date of the Draw Down Notice (the “Purchase Price”).
RY has agreed that during the term of the EPA, neither RY nor any of its affiliates will, directly or indirectly, engage in any Short Sales (as defined in Regulation SHO adopted by the Commission) involving the Company’s securities.
The EPA contains customary representations, warranties and covenants by, among and for the benefit of the parties. The Company also agreed to pay reasonable attorneys’ fees and expenses incurred by RY in connection with the transaction equal to 5% of each Draw Down Amount.
Unless earlier terminated, the EPA will terminate automatically on the earliest to occur of (i) the first day of the month next following the 12-month anniversary of the date on which the Registration Statement is declared effective by the Commission, (ii) the date on which RY purchases the Total Commitment worth of common shares under the EPA and (iii) the date on which the Company’s common shares cease to be listed or quoted on a Principal Market (as defined in the Purchase Agreement).
The Company paid to RY a commitment fee for entering into the Purchase Agreement equal to 50,000 restricted common shares of the Company.
The Purchase Agreement also provides for indemnification of RY and its affiliates in the event that the Investor incurs losses, liabilities, obligations, claims, contingencies, damages, costs and expenses related to a breach by the Company of any of its representations and warranties under the EPA or the other related transaction documents or any action instituted against RY or its affiliates due to the transactions contemplated by the EPA, subject to certain limitations.
The foregoing description of the EPA is qualified in its entirety by reference to the provisions of the EPA filed as exhibit 10.2 to Form 8-K filed on September 14, 2015.
This press release is neither an offer to sell nor the solicitation of an offer to buy any securities. The securities have not been registered under the Securities Act and may not be offered or sold in the United States of America absent registration or an exemption from registration under the Securities Act.
About Algae Dynamics Corp
ADC is currently engaged in the commercialization of our proprietary BioSilo(R) algae cultivation system for the high volume, low cost production of pure contaminant-free algae biomass. This biomass is high in Omega-3s DHA/DPA, vitamins, minerals and antioxidants, all of which are in demand by the growing multibillion dollar food/beverage and health care sectors. Our integrated BioSilo(R) manufacturing system provides low cost algae biomass production with modest capital cost requirements compared to conventional approaches. Furthermore, our “controlled outcomes” technology provides ultra-high purity algae biomass, differentiating it from other producers in the market. Following completion of a commercial-scale production facility we intend to produce algae biomass for sale into the functional additive and supplement markets, focusing on Chlorella and Omega-3 oil.
About RY Capital Group, LLC
RY Capital Group, LLC is a Northeast, U. S. based private investment firm that focuses on transactions with small to medium-sized private and public companies. The firm sources, structuresand executes on investments with companies that have market capitalizations primarily under $300 million.RY Capital Group’s expertise is having both the experience and understanding of the markets to identify undervalued companies and the ability to structure both straightforward and complex transactions in the equity and debt markets, providing an infusion of capital at critical times. For more information please contact RY Capital Group. E-mail: firstname.lastname@example.org – Phone: 646-895-6150
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains “forward-looking statements” as that term is defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Statements in this press release which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, use of proceeds and the development, costs and results of current or future actions and opportunities in the sector. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with new projects and development stage companies, our ability to raise the additional funding we will need to continue to pursue our exploration and development program, and our ability to retain important members of our management team and attract other qualified personnel. These forward-looking statements are made as of the date of this news release, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although we believe that any beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that any such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-K for the most recent fiscal year, our quarterly reports on Form 10-Q and other periodic reports filed from time-to-time with the Securities and Exchange Commission.
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SOURCE: Algae Dynamics Corp