TORONTO, Canada – SPoT Coffee has announced a non-brokered private placement offering of up to 10,000,000 units (each a “Unit”) at a price of C$0.05 per Unit for aggregate gross proceeds of up to C$500,000. Each Unit will consist of one common share of SPoT (a “Common Share”) and one-half of one common share purchase warrant (a “Warrant”). Each whole Warrant issued under this equity financing will entitle the holder to acquire one additional Common Share at a price of $0.075 for a period of twenty-four months from the initial closing date.
The Warrants will include an acceleration clause to the effect that if at any time the closing trading price of the Common Shares on the TSX Venture Exchange is $0.09 or more for a period of thirty (30) consecutive days, the Company will be entitled to notify all holders of Warrants of its intention to force the exercise of the Warrants and to issue a press release to such effect, following which the holders of Warrants shall have thirty (30) days from the date of the press release to exercise the Warrants.
All of the Common Shares and Warrants issued in connection with this financing will be subject to a statutory four-month hold period in accordance with applicable securities laws. Closing of this private placement is expected to occur in one or more tranches and is subject to receipt of approval from the TSX Venture Exchange.
The proceeds raised under this financing are expected to be used for the following purposes:
(i) To support and expand the Company’s 2021 franchise program;
(ii) To pay off a portion of the Company’s outstanding debentures; and
(iii) For general working capital purposes.
The Company also announces that each of its ten (10) US subsidiaries has applied for the Paycheck Protection Program loan (PPP-2) of the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (United States).
Each PPP-2 loan amount will be equal to the average monthly payroll for the year 2019, multiplied by 3.5. This multiplication factor of 3.5 has been used instead of the previous PPP-1 multiplication factor of 2.5 times and is due to the fact that SPoT falls under code 722511, which provides that full service restaurants are allowed to use this special multiplication factor that applies to the business category that has been officially recognized as the hardest hit of all small businesses.
As a follow-up, the SPoT Coffee will issue a separate news release upon confirmation by the SBA of the approved loan amounts to its subsidiaries.