NEW YORK, May 23, 2019 /CNW/ -- Frankly Inc. (TSX VENTURE:
TLK) (the "Company") is pleased to announce that it has
completed a third and final tranche of its previously announced
non-brokered private placement offering of units (the "Private
Placement"), for which it received more subscriptions than
units available for sale. The Company raised gross proceeds of
approximately C$9.42 million
(approximately US$7 million) across
all three tranches of the Private Placement.
The third tranche issuance consisted of an aggregate of
10,890,900 Units at a price of C$0.35
per Unit, for gross proceeds of C$3,811,815.00. Each unit ("Unit")
consisted of one common share in the capital of the Company
("Common Share") and one-half of one warrant to acquire a
Common Share (each whole warrant to purchase one common share, a
"Warrant"). Each Warrant entitles the holder to acquire one
Common Share from the Company at a price of C$0.65 per Common Share until twenty-four months
from the date of issuance.
The Common Shares and Warrants are subject to a hold period of
four months and one day from the date of issuance in accordance
with applicable Canadian securities legislation, as well as
contractual "lock-up" restrictions pursuant to which subscribers in
the Private Placement agreed not to dispose or otherwise transfer
the economic consequences of securities composing the Units, or
securities of the Company held prior to the completion of the
Private Placement (collectively, the "Locked-up
Securities"), for eleven months from the issue date, with 30%
of the Locked-up Securities being released from lock-up four months
and one day from the issue date, and the remainder of the Locked-up
Securities being released on a schedule of 10% of the Locked-up
Securities each month thereafter. In connection with the Private
Placement, the Company will pay a finder's fee to a third-party
finder who is a current shareholder of the Company consisting of
(i) 6.5% of the gross proceeds of the Private Placement raised in
cash, and (ii) that number of finder's warrants as is equal to 6.5%
of the securities sold in the Private Placement. Each finder's
warrant is exercisable to purchase one Unit at the offering price
of C$0.35 for a period of two years
from the closing date of any applicable tranche of the Private
Placement. The finder's fee will not be payable on subscriptions
completed by the finder for the finder's own account, subscriptions
from insiders of the Company, subscriptions from residents of
the United States, or on
subscriptions from subscribers introduced to the Private Placement
by persons other than the finder.
Certain directors and senior officers of the Company
participated in the third tranche of the Private Placement, as
described in the table below. There is no material effect or change
on the percentage of outstanding securities of the Company owned by
any director or senior officer other than Mr. Lou Schwartz, who, prior to completion of the
Private Placement, beneficially owned 157,331 Common Shares
(including Common Shares issuable upon the exercise of options), or
approximately 5.77% of the outstanding Common Shares on a partially
diluted basis, and after the Private Placement will beneficially
own 2,514,694 Common Shares (including Common Shares issuable upon
the exercise of options and Warrants), or approximately 8.57% of
the outstanding Common Shares on a partially diluted basis, which
post-Private Placement percentage ownership calculation excludes
1,092,614 Common Shares indirectly owned and controlled by Gray
Media, Inc., and SKP America LLC from the number of outstanding
Common Shares used in the denominator, as such Common Shares are
expected to be purchased and cancelled from each such
shareholder.
Subscriber
|
Subscription
Amount
(Units)
|
Subscription
Amount
(C$)
|
Tom Rogers,
Director
|
386,100
|
135,135.00
|
Steve Zenz,
Director
|
115,830
|
40,540.50
|
Lou Schwartz, Chief
Executive Officer
|
1,571,575
|
550,051.25
|
Mike Munoz, Chief
Financial Officer
|
75,290
|
26,351.50
|
Omar Karim, Chief
Operating Officer
|
144,788
|
50,675.80
|
John Wilk, General
Counsel and Secretary
|
102,317
|
35,810.95
|
Total:
|
2,395,900
|
$838,565
|
The subscriptions by directors and senior officers constitute
"related party transactions" under Multilateral Instrument MI
61-101 - Protection of Minority Securityholders in Special
Transactions ("MI 61-101"). Absent exemptions therefrom,
transactions subject to MI 61-101 are subject to valuation and
shareholder approval requirements. The Company is relying on the
exemption from the formal valuation requirement at section 5.5(a)
of MI 61-101 - Issuer Not Listed on Specified Markets, as no
securities of Frankly are listed or quoted on the Toronto Stock
Exchange, Aequitas NEO Exchange Inc., the New York Stock Exchange,
the American Stock Exchange, the NASDAQ exchange, or a stock
exchange outside of Canada and
the United States (each, a
"Specified Market").
The Company is relying on the exemption from minority approval
available at Section 5.7(b) of MI 61-101 - Fair Market Value Not
More than $2,500,000 for the
related party transactions, as (i) no securities of the issuer are
listed or quoted on a Specified Market; (ii) at the time the
related party transaction was agreed to, neither the fair market
value of the securities to be distributed in the transaction nor
the consideration to be received for those securities, insofar as
the transaction involved interested parties, exceeded C$2,500,000; (iii) the Company had one or more
independent directors in respect of the transaction who is an not
employee of the issuer; and (iv) such director approved the
transaction.
The Company expects to use the proceeds of the Private Placement
to satisfy its obligations under a debt reduction and share
repurchase agreement with Raycom Media, Inc., and a share
repurchase agreement with SKP America, LLC, as well as for
transaction expenses and working capital. A portion of the proceeds
and subscriptions remain "in trust" pending completion of
normal-course review procedures applicable to insider subscriptions
and subscribers above certain investment thresholds. For additional
information related to the Private Placement and the use of
proceeds therefrom, including information with respect to the
Private Placement of the type considered in section 5.2 of MI
61-101, see the Company's news releases dated May 1, 2019, May 13,
2019 and May 17, 2019, and the
associated material change report filed in connection
therewith.
The Company has received conditional approval from TSXV for the
Private Placement, which remains subject to TSXV final
approval.
About Frankly
Frankly Media provides a complete suite of digital solutions for
media companies to create, manage, distribute and monetize their
content on all platforms maximizing audience engagement and revenue
potential. The company is headquartered in New York with offices in Atlanta. For more information, visit
www.franklymedia.com.
Notice Regarding Forward-Looking Statements
This release includes forward-looking statements regarding the
Company and anticipated transactions involving the Company.
Forward-looking events and circumstances discussed in this release
include statements regarding the use of proceeds from the Private
Placement, and approval of the Private Placement by the TSXV. The
subject or results of any forward-looking statement may not occur
by any specified or expected dates or at all, and could differ
materially as a result of known and unknown risk factors and
uncertainties affecting the parties, including but not limited to
failure to obtain investor participation in the Private Placement,
market sentiment toward the Company's securities and market
conditions generally, lack of regulatory approval for the Private
Placement, and the ability to obtain future financing proceeds. The
outcome of the subject of any forward-looking statement cannot be
guaranteed. Except as required by applicable securities laws,
forward-looking statements speak only as of the date on which they
are made, and the Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events, or otherwise.
Neither TSXV nor its Regulation Services Provider (as that
term is defined in policies of the TSXV) accepts responsibility for
the adequacy or accuracy of this release.
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SOURCE Frankly Media