News release......
Galileo closes $524,665 shares-for-debt deal
2020-10-05 09:23 PT - News Release
Mr. John Kanderka reports
GALILEO EXPLORATION ANNOUNCES CLOSING OF SHARES FOR DEBT TRANSACTION
Galileo Exploration Ltd. has closed its shares for debt transaction, previously announced on Aug. 13, 2020. Pursuant to the transaction, an aggregate of $524,665.28 of the company's outstanding debts were settled through the issuance of 10,493,306 common shares in the capital of the company at a deemed price of five cents per Share. The creditors included certain related parties of the company, including: John Kanderka, Galileo's chief executive officer and a director; Wes Adams, Galileo's chief financial officer and a director; Marc Blythe, a director; and John Adams, a holder of greater than 10 per cent of the issued and outstanding shares. Every other creditor is an arm's length party who has provided consulting services to the company.
Pursuant to the transaction, an aggregate of 9,288,493 shares were issued to the related parties. An aggregate of 2,015,535 shares were issued to John Kanderka, representing $100,776.75 in full satisfaction of the amount owing for services rendered in his capacity as the CEO and for expenses paid on behalf of the company. An aggregate of 3,927,473 shares were issued to Wes Adams, representing $196,373.63 in partial satisfaction of the amount owing for services rendered in his capacity as the CFO, for loans extended to the company and for expenses paid on behalf of the company. An aggregate of 797,540 shares were issued to Marc Blythe, representing $39,877.02 in full satisfaction for expenses paid on behalf of the company. An aggregate of 2,547,945 shares were issued to John Adams, representing $127,397.26 in full satisfaction of loans extended to the company.
Pursuant to these share issuances to the related parties, their fully diluted beneficial ownership of the issued and outstanding shares will increase as follows: John Kanderka, 6.03 percent (previously 2.67 per cent); Wes Adams 18.45 per cent (previously 13.61 per cent); Marc Blythe 1.76 per cent (previously 0.27 per cent); and John Adams 16.64 per cent (previously 14.69 per cent).
The company determined to satisfy the indebtedness with shares in order to preserve its cash for development of its business. The shares issued pursuant to the shares for debt agreements will be subject to a four month plus one day hold period pursuant to applicable securities legislation.
The shares for debt transactions involving the related parties will constitute a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security-holders in Special Transactions. The company intends to rely on the exemptions from the valuation and the minority approval requirements of MI 61-101 provided for in subsections 5.5(b) and 5.7(1)(e) of MI 61-101, respectively, as, respectively, the company is not listed on a specified exchange and the company is experiencing serious financial difficulty. The participation by the related parties in the shares-for-debt transactions has been approved by directors of the company who are independent in connection with such transactions. A material change report will be filed less than 21 days before the closing date of the transactions contemplated by this news release. The company believes this shorter period is reasonable and necessary in the circumstances as the company wishes to improve its financial position by reducing its liabilities as soon as possible.
With the closing of the transaction, and the recently announced private placement of $850,000, the company intends to use its improved financial position to move forward with its plans for the Wolf project in Fremont County, Wyoming, United States, as announced on September 30.