ParcelPal closes $1.05-million (U.S.) private placement PARCELPAL CLOSES $1,050,000 USD FINANCING TO SUPPORT RECORD GROWTH
ParcelPal Technology Inc. has completed a non-brokered private placement pursuant to which it issued an unsecured multitranche convertible note with a face value of up to $1.05-million (U.S.) to an arm's-length investor.
Chief executive officer of ParcelPal, Rich Wheeless, commented: "This new growth financing comes at an exciting time for the company as we continue to see record growth and are onboarding numerous new clients. Additionally, we have been surpassing the company milestones and believe this will continue through and beyond 2021. This financing provides immediate capital for undertaking the additional steps in the company's growth plan which we have implemented."
Mr. Wheeless continued: "Importantly, not only are the terms of this financing improved over prior such financings, but it is similar in numerous respects to the equity line of credit which we have in place. This financing also bolsters our balance sheet and preserves the entirety of our SEC-registered $5-million equity line for future business and/or operational opportunities as they arise. Having these capital options while we continuously look at synergistic operational expansion and/or acquisition targets to help us expand is vitally important. Lastly, I am also pleased with the recent improved operating performance and looking forward to working hard to continuing this trend."
The terms of the note include the following:
The net sum of $350,000 (U.S.) was advanced to the company on closing, and carries a 5-per-cent original issue discount (OID) for expenses related to the offering, and a one-time issuance of 300,000 restricted common shares to the noteholder as commitment shares;
An additional aggregate of $650,000 (U.S.) will be financed by the noteholder upon request by the company in two subsequent tranches, each in the amount of $325,000 (U.S.) within 30 and 60 days, respectively, together with the prorated 5-per-cent OID;
The note bears interest at a one-time guaranteed rate of 5 per cent on the principal sum of each financed tranche, and has a maturity date of six months from the effective date of the financing of each tranche;
The principal amount of the notes may be converted into common shares of the company prior to the maturity date, at the option of the noteholder, at a fixed conversion price of 13 U.S. cents/17 Canadian cents per share; following the maturity date, if the note has not been repaid or fully converted, then the remaining outstanding principal amount may be converted into common shares at a price equal to the lower of (a) 13 U.S. cents per share or (b) 83 per cent of the two lowest volume-weighted average prices of the company's common shares during the 10 consecutive trading days prior to the date on which the noteholder elects to convert all or part of the note; provided, however, that any such discount to the fixed conversion price is subject to compliance with applicable Canadian securities laws and the policies and rules of the Canadian Securities Exchange or such other stock exchange on which the securities of the company are principally traded;
The net proceeds from this financing are currently intended to be used for continued scaling operations, costs associated with business expansion plans, including the acquisition or leasing of additional fleet vehicles, and the entrance into a real property lease agreement for a storage and fulfilment warehouse, and for such other general corporate purposes;
The principal sum due to the noteholder is prorated based on the consideration, plus the 5-per-cent OID. The company may prepay any outstanding portion of the note in cash prior to the maturity date;
Subject to certain delineated exemptions, the company granted a right of first refusal to the noteholder during the term of the note to invest, at similar or better terms to the company, in an amount equal to or greater than any future capital or equity or debt financing by the company.
The company did not pay any finders fees or issue any warrants in connection with the offering.