PAT.V News
Patriot One signs definitive deal with Patriot Detection
2016-10-03 17:41 ET - News Release
Mr. Geoff Balderson reports
PATRIOT ONE TECHNOLOGIES INC. ANNOUNCES THE EXECUTION OF A DEFINITIVE SECURITIES EXCHANGE AGREEMENT WITH PATRIOT ONE DETECTION LTD.
Patriot One Technologies Inc. (formerly Clear Mountain Resources Corp.) has entered into a definitive securities exchange agreement (SEA) dated Sept. 14, 2016, with Patriot One Detection Ltd. (formerly Patriot One Technologies Inc.) and each securityholder of Patriot. Pursuant to the terms of the SEA, all outstanding securities of Patriot will be exchanged for securities of the issuer, following which Patriot will exist as a wholly owned subsidiary of the issuer, and the resulting issuer will carry on the business of Patriot. The transaction will constitute a change of business of the issuer from mining to technology and is an arm's-length transaction.
Following closing of the transaction, the issuer will carry on with the development and launch of Patriot's cognitive microwave radar technology, used for the unobtrusive detection of concealed weapons. In connection with the transaction, the issuer completed a change of its name from Clear Mountain Resources Corp. to Patriot One Technologies Inc. and, on closing of the transaction, will continue trading on the TSX Venture Exchange under the symbol PAT.
Terms of the SEA
Pursuant to the SEA, the issuer, Patriot and the securityholders of Patriot have agreed to the terms shown in the attached table.
Securities exchange
The issuer will acquire 100 per cent of the issued and outstanding securities of Patriot as tabulated.
Patriot security Security of the issuer, granted to Patriot securityholders pursuant to the securities exchange governed by the SEA 22,959,925 common shares of Patriot, 22,959,925 common shares of the issuer representing 100 per cent of the at a deemed price of 15 cents issued and outstanding Patriot shares per issuer share 7.2 million Patriot warrants, each entitling the 7.2 million issuer warrants, each entitling the holder thereof to purchase one Patriot share at holder thereof to purchase one issuer share at an exercise price of 10 cents on or before July 29, an exercise price of 10 cents on or before July 29, 2018, and 5,074,924 Patriot warrants, each 2018, and 5,074,924 issuer warrants, each entitling the holder thereof to purchase one entitling the holder thereof to purchase one Patriot share at an exercise price of 30 cents on issuer share at an exercise price of 30 cents on or or before Aug. 22, 2018 before Aug. 22, 2018 650,000 Patriot options, each entitling the 650,000 issuer options, each entitling the holder thereof to purchase one Patriot share at holder thereof to purchase one issuer share at an exercise price of 30 cents on or before Aug. an exercise price of 30 cents on or before Aug. 1, 2021 1, 2021
Under the terms of the SEA, Patriot securityholders who acquired their Patriot shares and Patriot warrants pursuant to Patriot's Aug. 22, 2016, private placement have agreed to have the issuer shares and issuer warrants issued to them subject to voluntary resale restrictions, over and above those imposed by applicable securities laws. These voluntary resale restrictions place an absolute restriction on the ability of applicable resulting issuer shareholders to resell their resulting issuer securities, and will be released four months and one day from closing of the concurrent offering (defined below). A total of 5,074,924 issuer shares and issuer warrants (included above) will be subject to these voluntary resale restrictions.
In connection with the transaction and pursuant to the SEA, the issuer has also agreed to grant up to four million issuer options to management, directors, consultants and/or employees of the resulting issuer, as directed by Patriot management. The issuer granted 250,000 of those options to a director of the issuer and resulting issuer today at an exercise price of 18.5 cents for a period of five years.
Board of directors and senior management
On completion of the transaction, the following persons will comprise the board of directors and senior management of the resulting issuer:
Dinesh Kandanchatha: director and president
Martin Cronin: director and chief executive officer
C. Scott M. Shepherd: director
Jeffery Tindale: director
Michael Malana: chief financial officer
Carrie Cesarone: corporate secretary
On completion of the transaction, the following persons will comprise the board of directors and senior management of the Patriot:
Mr. Kandanchatha: director and president
Mr. Cronin: director and CEO
Mr. Shepherd: director
Mr. Malana: CFO
For biographical information regarding the above board and senior management members, please refer to the issuer's news release of Aug. 12, 2016.
Private placement
In connection with the transaction and pursuant to the SEA, the issuer has agreed to undertake a concurrent private placement financing. It is intended that the offering will consist of the issuance of up to 15,333,333 issuer units at a price of 15 cents per unit for gross proceeds of up to $2.3-million. For more information in respect of the offering and the proposed use of proceeds, please refer to the issuer's news release dated Sept. 14, 2016.
Selected financial information
The associated table provides summary financial information of Patriot. The summary audited consolidated financial information is derived from the audited financial statements of Patriot to be included in the issuer's TSX-V filing statement being prepared for filing in connection with the transaction, and should be read in conjunction with the audited financial statements of Patriot, related notes and other financial information appearing elsewhere in the filing statement.
Period from incorporation to July 31, 2016 Total revenue Nil (Loss) before non-recurring items $(604,242) Net (loss) $(604,242) Total assets $225,357 Total liabilities $229,109
The associated table sets out certain pro forma financial data for the resulting issuer as at Aug. 31, 2016, consolidated and adjusted to give effect to the transaction as if it had occurred at Aug. 31, 2016, assuming maximum gross proceeds of the offering. The summary unaudited pro forma consolidated financial information is derived from the pro forma financial statements of the resulting issuer, and should be read in conjunction with such pro forma financial statements, related notes and other financial information appearing elsewhere in the filing statement.
Total assets $3,708,981 Total liabilities $769,875
Finally, the SEA contains a condition precedent for the benefit of Patriot and the shareholders of Patriot that the issuer must have net assets of no less than $2-million on closing of the transaction (including net proceeds of the offering).
Miscellaneous terms of the transaction
The transaction remains subject to approval by the securityholders of Patriot and the issuer, the respective boards of directors of Patriot and the issuer (each of which such approvals is expected to be obtained by written consent on or before closing of the transaction), and approval of the TSX-V. The issuer confirms it has filed a draft copy of the filing statement with the TSX-V and is currently awaiting comment.
Certain securities of the resulting issuer will be subject to escrow or resale restrictions pursuant to TSX-V Policy 5.4 -- Escrow, Vendor Consideration and Resale Restrictions, to be more particularly set out in the filing statement.
About Patriot
Patriot is a private company incorporated under the British Columbia Business Corporations Act and headquartered in Vancouver, B.C., Canada. Patriot and a research team at McMaster University, a well-respected Canadian centre for research, and led by the expert guidance of Dr. Natalia Nikolova (EEE fellow, CAE fellow, PEng, professor, Canadian research chair in high-frequency electromagnetics) have come together in a quest to commercialize a system to detect concealed weapons utilizing novel radar technologies. For more information about the business of Patriot, please refer to the issuer's news release of Aug. 12, 2016.
About the issuer
The issuer's business activity has been related to the exploration and development of resource properties. Subsequent to completing the transaction, the issuer will cease resource-related activities.
Trading update
Trading of the issuer shares will resume at market open Tuesday, Oct. 4, 2016.
Completion of the transaction is subject to a number of conditions, including TSX-V acceptance and shareholder approval, if applicable. The transaction cannot close until the required approvals are obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete, and should not be relied upon. Trading in the securities of the issuer should be considered highly speculative.
We seek Safe Harbor.