UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
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Item 1.01 Entry into a Material Definitive Agreement.
The information provided under Item 3.02 is responsive to the information required by this Item 1.01.
Item 3.02 Unregistered Sales of Equity Securities.
On December 29, 2021, we completed a private placement of an aggregate of 173,609 shares of common stock at a price of US$0.288 per share for aggregate gross proceeds of US$50,000.
Of the 173,609 shares, 57,291 shares were issued pursuant to the exemption from registration under the Securities Act of 1933, as amended provided by Section 4(a)(2) of the Securities Act of 1933, as amended to 1 investor who is an director of our company; and 116,318 shares were issued to 2 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) who are a director or executive officer in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
Of the 173,609 shares: (i) Cameron Chell, our chairman and director, subscribed for 59,027 shares of our common stock; (ii) Swapan Kakumanu, our Chief Financial Officer, subscribed for 57,291 shares of our common stock; and (iii) James P. Geiskopf, our lead director, subscribed for 57,291 shares of our common stock (collectively, the “Insiders”).
Disclosure Required by MI 61-101
The Insiders participated in the private placement and subscribed for 173,609 shares of our common stock, which constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”).
The following supplementary information is provided in accordance with Section 5.2 of MI 61-101.
(a) a description of the transaction and its material terms:
We entered into subscription agreements with each of the Insiders, whereby the Insiders agreed to purchase 173,609 shares of our common stock at a price of US$0.288 per share for proceeds of US$50,000.
(b) the purpose and business reasons for the transaction:
Proceeds of the private placement are expected to be used for working capital and general corporate purposes.
(c) the anticipated effect of the transaction on the issuer’s business and affairs:
See item (b).
(d) a description of:
(i) the interest in the transaction of every interested party and of the related parties and associated entities of the interested parties:
See item (a).
(ii) the anticipated effect of the transaction on the percentage of securities of the issuer, or of an affiliated entity of the issuer, beneficially owned or controlled by each person or company referred to in subparagraph (i) for which there would be a material change in that percentage:
The following table sets out the effect of the private placement (the “Offering”) on the percentage of securities of our company beneficially owned or controlled by the Insiders:
Name and Position |
Dollar Amount of Shares Purchased |
Number of Shares Purchased | No. of Shares Held prior to Closing of the Offering | Percentage of Issued and Outstanding Shares prior to Closing of the Offering | No. of Shares Held After Closing of the Offering | Percentage of Issued and Outstanding Shares After Closing of the Offering | ||||||
Cameron Chell Chairman and Director |
US$17,000 | 59,027 Shares |
Undiluted: 2,211,000(1)
Diluted: 3,211,000(2) |
Undiluted: 3.10%(3)
Diluted: 4.44%(4) |
Undiluted: 2,270,027(5)
Diluted: 3,270,027(6) |
Undiluted: 3.17%(7)
Diluted: 4.52%(8) | ||||||
Swapan Kakumanu Chief Financial Officer
|
US$16,500 | 57,291 Shares |
Undiluted: 50,000(9)
Diluted: 791,667(10) |
Undiluted: 0.07%(3)
Diluted: 1.10%(11) |
Undiluted: 107,291(12)
Diluted: 848,958(13) |
Undiluted: 0.15%(7)
Diluted: 1.18%(14) | ||||||
James P. Geiskopf Lead Director
|
US$16,500 | 57,291 Shares |
Undiluted: 2,500,000(15)
Diluted: 4,416,667(16) |
Undiluted: 3.51%(3)
Diluted: 6.12%(17) |
Undiluted: 2,557,291(18)
Diluted: 4,473,95819) |
Undiluted: 3.51%(7)
Diluted: 6.10%(20) |
*Less than one percent
| (1) | Comprised of 11,000 shares of our common stock held directly, 2,000,000 shares of our common stock held indirectly through Blockchain Fund GP Inc. and 200,000 shares of our common stock held indirectly through 1373024 Alberta Inc. Mr. Chell has the sole power to vote or direct the vote, and to dispose or direct the disposition of the shares of our common stock held by Blockchain Fund GP Inc. and 1373024 Alberta Inc. |
| (2) | Comprised of the shares of common stock set out in footnote (1) and 1,000,000 options to purchase shares of our common stock exercisable within 60 days, held by Mr. Chell. |
| (3) | Based on 71,229,300 shares outstanding prior to the completion of the Offering. |
| (4) | Based on 71,229,300 shares comprised of: (i) 71,229,300 shares outstanding prior to the completion of the Offering and (ii) 1,000,000 shares that may be issuable on exercise of options held by Mr. Chell. |
| (5) | Comprised of 70,027 shares of our common stock held directly, 2,000,000 shares of our common stock held indirectly through Blockchain Fund GP Inc. and 200,000 shares of our common stock held indirectly through 1373024 Alberta Inc. |
| (6) | Comprised of the shares of common stock set out in footnote (5) and 1,000,000 options to purchase shares of our common stock exercisable within 60 days, held by Mr. Chell. |
| (7) | Based on 71,402,909 shares outstanding after the completion of the Offering. |
| (8) | Based on 72,402,909 shares comprised of: (i) 71,402,909 shares outstanding after the completion of the Offering and (ii) 1,000,000 shares that may be issuable on exercise of options held by Mr. Chell. |
| (9) | Comprised of 50,000 shares of our common stock held indirectly through Red to Black Inc. Mr. Kakumanu has the sole power to vote or direct the vote, and to dispose or direct the disposition of the shares of our common stock held by Red to Black Inc. |
| (10) | Comprised of the shares of common stock set out in footnote (9) and: (i) 250,000 options to purchase shares of our common stock exercisable within 60 days, held by Mr. Kakumanu directly and (ii) 491,667 options to purchase shares of our common stock exercisable within 60 days, held by Mr. Kakumanu indirectly through Red to Black Inc. |
| (11) | Based on 71,970,967 shares comprised of: (i) 71,229,300 shares outstanding prior to the completion of the Offering and (ii) 741,667 shares that may be issuable on exercise of options held by Mr. Kakumanu directly or indirectly through Red to Black Inc. |
| (12) | Comprised of 57,291 held directly and 50,000 shares of our common stock held indirectly through Red to Black Inc. |
| (13) | Comprised of the shares of common stock set out in footnote (12) and (i) 250,000 options to purchase shares of our common stock exercisable within 60 days, held by Mr. Kakumanu directly and (ii) 491,667 options to purchase shares of our common stock exercisable within 60 days, held by Mr. Kakumanu indirectly through Red to Black Inc. |
| (14) | Based on 72,144,576 shares comprised of: (i) 71,402,909 shares outstanding after the completion of the Offering and (ii) 741,667 shares that may be issuable on exercise of options held by Mr. Kakumanu directly or indirectly through Red to Black Inc. |
| (15) | Comprised of 2,500,000 shares of our common stock held directly. |
| (16) | Comprised of the shares of common stock set out in footnote (15), 916,667 options to purchase shares of our common stock exercisable within 60 days and 1,000,000 common share purchase warrants exercisable within 60 days. |
| (17) | Based on 72,145,967 shares comprised of: (i) 71,229,300 shares outstanding prior to the completion of the Offering, (ii) 916,667 shares that may be issuable on exercise of options held by Mr. Geiskopf; and (iii) 1,000,000 shares that may be issuable on exercise of warrants held by Mr. Geiskopf. |
| (18) | Comprised of 2,557,291 shares of our common stock held directly. |
| (19) | Comprised of the shares of common stock set out in footnote (18), 916,667 options to purchase shares of our common stock exercisable within 60 days and 1,000,000 common share purchase warrants exercisable within 60 days. |
| (20) | Based on 73,319,576 shares comprised of: (i) 71,402,909 shares outstanding after to the completion of the Offering, (ii) 916,667 shares that may be issuable on exercise of options held by Mr. Geiskopf; and (iii) 1,000,000 shares that may be issuable on exercise of warrants held by Mr. Geiskopf. |
(e) unless this information will be included in another disclosure document for the transaction, a discussion of the review and approval process adopted by the board of directors and the special committee, if any, of the issuer for the transaction, including a discussion of any materially contrary view or abstention by a director and any material disagreement between the board and the special committee:
Mr. Chell and Mr. Geiskopf abstained on the resolution of the board of directors approving the Offering with respect to share subscriptions by the Insiders. A special committee was not established in connection with the approval of the Offering, and no materially contrary view or abstention was expressed or made by any director.
(f) a summary in accordance with section 6.5 of MI 61-101, of the formal valuation, if any, obtained for the transaction, unless the formal valuation is included in its entirety in the material change report or will be included in its entirety in another disclosure document for the transaction:
Not applicable.
(g) disclosure, in accordance with section 6.8 of MI 61-101, of every prior valuation in respect of the issuer that related to the subject matter of or is otherwise relevant to the transaction:
(i) that has been made in the 24 months before the date of the material change report:
Not applicable.
(ii) the existence of which is known, after reasonable enquiry, to the issuer or to any director or officer of the issuer:
Not applicable.
(h) the general nature and material terms of any agreement entered into by the issuer, or a related party of the issuer, with an interested party or a joint actor with an interested party, in connection with the transaction:
See item (a).
(i) disclosure of the formal valuation and minority approval exemptions, if any, on which the issuer is relying under sections 5.5 and 5.7 of MI 61-101 respectively, and the facts supporting reliance on the exemptions:
The issuance of 173,609 shares to the Insiders was exempt from the valuation requirement of MI 61-101 by virtue of the exemptions contained in (i) Section 5.5(a) of MI 61-101 in that the fair market value of the shares subscribed by the Insiders did not exceed 25% of our company’s market capitalization and (ii) section 5.5(b) of MI 61-101 as shares of our common stock are not listed on a specified market and from the minority shareholder approval requirements of MI 61-101 by virtue of the exemption contained in section 5.7(a) of MI 61-101 in that the fair market value of the shares subscribed by the Insiders did not exceed 25% of our company’s market capitalization.
As this current report on Form 8-K is being filed less than 21 days before the closing of the Offering, there is a requirement under MI 61-101 to explain why the shorter period was reasonable or necessary in the circumstances. In the view of our company, it was necessary to immediately close the Offering and therefore, such shorter period was reasonable and necessary in the circumstances to improve our company’s financial position.
Item 7.01 Regulation FD Disclosure.
A news release dated December 30, 2021 is furnished herewith as Exhibit 99.1.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 of this current report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| 10.1 | Form of Private Placement Subscription Agreement |
| 99.1 | News release dated December 30, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CurrencyWorks Inc. |
|
| /s/ Bruce Elliott | |
| Bruce Elliott | |
| President | |
| December 30, 2021 |