Item 3.02 Unregistered Sales of Equity Securities
On February 6, 2017, the Company completed the issuance and sale of an aggregate of 455,000 units at a price of CAD$0.25 per unit for gross proceeds of CAD$113,750 (the “Private Placement”) comprising the first tranche of an offering of up to 800,000 units. Each unit consists of one share of the Company’s common stock and one transferable share purchase warrant exercisable into one share of common stock at a price of CAD$0.40 until February 6, 2019. All securities issued pursuant to the Private Placement and the finder’s fee are subject to statutory hold periods in accordance with applicable United States securities laws for a minimum of six months and to statutory hold periods in accordance with applicable Canadian securities laws for a minimum of four months
In connection with the Private Placement, the Company paid a finder a cash commission of CAD$2,625, being 6% of the gross proceeds raised from investors introduced to the Company by that finder, and issued 10,500 finders’ warrants, being 6% of the number of Units sold to investors introduced to the Company by the finder. Each warrant is exercisable into one share of the Company’s common stock at a price of CAD$0.40 until February 6, 2019.
The Company plans to use the proceeds from the Private Placement for general working capital purposes.
In addition, on February 7, 2017, the Company granted 500,000 incentive stock options to Skanderbeg Capital Advisors Inc., the Company’s investor relations advisor, pursuant to its stock option plan. Each option vests immediately and is exercisable into one share of the Company’s common stock at a price of CAD$0.33 per share until February 7, 2020.
The Company issued the shares and warrants underlying the foregoing units and granted the foregoing options and finders’ warrants in reliance on the exemptions from registration provided by Rule 903 of Regulation S under the Securities Act of 1933, as amended (the “Securities Act”) for offers and sales outside of the United States and Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D thereunder for offers and sales in the United States and to U.S. persons. The Company’s reliance on Rule 903 of Regulation S under the Securities Act (“Regulation S”) was based on the fact that the securities were sold in “offshore transactions”, as defined in Rule 902(h) of Regulation S. The Company did not engage in any directed selling efforts in the United States in connection with the sale of the securities, and none of the applicable investors was a U.S. person or acquired the securities for the account or benefit of any U.S. person. The Company’s reliance on Rule 506(b) was based on the fact that the sole U.S. investor in the Private Placement provided representations to the Company regarding his status as an “accredited investor”, as defined in Rule 501(a) of Regulation D, and that neither the Company nor anyone acting on its behalf engaged in any general advertising or general solicitation in connection with the Private Placement.
As of the date of this current report on Form 8-K, the Company has 57,297,841 issued and outstanding shares of common stock, outstanding warrants to purchase 26,593,070 shares of common stock and outstanding options to purchase 5,729,142 shares of common stock.