2019-12-24 09:56 ET - News Release
Mr. Allen Morishita reports
ROJO RESOURCES LTD. CLOSES OVERSUBSCRIBED $800,000 NON-BROKERED PRIVATE PLACEMENT
Further to Rojo Resources Ltd.'s news release dated Oct. 21, 2019, announcing a $650,000 non-brokered private placement, the private placement was heavily oversubscribed, and, therefore, the company has upsized and closed the private placement for gross proceeds of $800,000 through the issuance of 6.4 million units at a price of 12.5 cents per unit.
In connection with closing of the offering, the company paid finders' fees of $10,380 and issued 83,040 non-transferable finders' warrants to certain agents, in accordance with applicable securities laws and the policies of the TSX Venture Exchange. The net proceeds from the offering will be used for general working capital and, subject to the acceptance of the TSX-V, to advance funds to Salvation Botanicals Ltd., the target company of Rojo's previously announced reverse takeover. Rojo and Salvation have entered into a bridge loan agreement, under which Rojo has agreed, subject to TSX-V approval, to advance Salvation up to $500,000 in tranches of no more than $250,000 on a bridge loan basis. The loan is secured by a general security agreement over all of Salvation's assets.
Rojo and Salvation entered into an arrangement agreement, under which they propose to complete a plan of arrangement, which will continue the business of Salvation as a subsidiary of Rojo listed on the TSX-V. The transaction will result in Rojo's reactivation and graduation from the NEX board of the TSX-V to a Tier 2 industrial issuer. As a condition of closing the transaction, Rojo will consolidate its currently issued and outstanding common shares and convertible securities on a two-for-one basis.
Each unit consists of one common share of the company and one transferable common share purchase warrant, with each warrant entitling the holder thereof to acquire one additional common share at a price of 25 cents for a period of one year, subject to an accelerated expiry if the closing trading price of the resulting issuer shares is greater than 75 cents per share (postconsolidation price) for a period of 10 consecutive trading days. The resulting issuer will give notice to the holders of the acceleration event, and the warrants will expire 30 days thereafter. When Rojo completes the consolidation, the private placement securities will be consolidated accordingly (effective price of units is 25 cents, with warrant exercise price adjusting to 50 cents).
The securities issued under the offering are subject to a standard four-month-and-one-day hold period, expiring April 18, 2020.
Rojo has now commenced selling its previously announced subscription receipt private placement for up to 11 million subscription receipts at a price of 12.5 cents per subscription receipt. Each subscription receipt entitles the holder thereof to receive, upon satisfaction of the escrow release conditions (which will include, among other things, the closing of the transaction) on or before the escrow release deadline, and without payment of additional consideration therefor, to give effect to the consolidation, one-half of a resulting issuer share and one-quarter of a resulting issuer warrant, which would be 5.5 million resulting issuer shares and 2.75 million resulting issuer warrants, exercisable for two years at an exercise price of 50 cents, subject to the same acceleration event described above. Should the escrow release conditions not be satisfied by the escrow release deadline, the subscription receipts will be cancelled, and all proceeds from the sale of subscription receipts will be returned to subscribers. Rojo's transfer agent is expected to act as the subscription receipt agent in respect of the subscription receipts. The subscription receipts, as well as the securities into which they are convertible, bear a hold period of four months and one day from the closing of the subscription receipts.
Salvation is an independent, multifaceted, science-based cannabis/hemp and controlled substances technology company focused on progressing and servicing the evolving cannabis/hemp industry and supporting mental health research through Salvation Botanicals, including 1134337 BC Ltd., a wholly owned company under Salvation Botanicals.
Salvation has a fully functioning, 7,000-square-foot, Health Canada-licensed analytical testing facility and provides testing services to licensed cultivators, processors, patient growers and research facilities, and is positioned for rapid growth. Salvation also has a fully built and financed, 7,500-square-foot processing facility and is a late-stage applicant for a Health Canada standard processor licence.
Salvation holds the following licences:
- Analytical testing licence -- allowing for the analytic testing of cannabis for quality assurance purposes through the name Salvation Bioscience;
- An industrial hemp licence -- allowing for:
- Possession of grain for the purpose of processing it;
- The sale and distribution of seed and grain;
- Exportation of seed and grain.
- Controlled drugs and substances licence, which was received in July, 2019, allowing for the possession, testing, sale and distribution of the following psychedelic substances for medical and research purposes:
- Psilocybin;
- Psilocin;
- 3,4,5-trimethoxyphenethylamine (mescaline);
- N,N-dimethyltryptamine (DMT);
- N-methyl-3,4-methylenedioxamphetamine (MDMA).
- Salvation will be applying for an amendment to the licence to produce MDMA.
- On Sept. 27, 2019, Salvation submitted its evidence package to Heath Canada for a standard processor licence for its processing facility, where it will extract and produce cannabis products under its own brand. It expects to receive its processing licence in the first quarter of 2020, subject to Health Canada approval.
Allen Morishita, Rojo's chief executive officer, commented: "We are very pleased with the high interest in our proposed transaction with Salvation, as evidenced by a strong oversubscription to this private placement. Due to limits imposed under TSX-V policy, we sought and received approval to increase the maximum amount we could raise in this offering. We appreciate the flexibility shown by the TSX-V and advise that we had to cut off subscriptions, and Rojo is now in the process of taking in subscriptions for our subscription receipts financing. We expect to provide an update to the status of the transaction early in the new year."
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