VANCOUVER, B.C. – April 25, 2017 – Mission Ready Services Inc. (“Mission Ready” or the “Company”) (TSX-V: MRS) announces that further to its News Release of April 5, 2017 that it has reached an amended agreement with First Republic Capital Corporation (the “Agent”) to act as agent in relation to a brokered private placement whereby the Company proposes to raise up to $1,500,000 through the issuance of secured convertible debentures of the Company (the “Offering”). Closing of the Offering is expected to occur on or before May 1, 2017 and is expected to close in more than one tranche.
Under the terms of the amended agreement each Debenture is convertible at the option of the holder, in whole or in part, into units consisting of one common share and one share purchase warrant at a price of $0.10 (the “Conversion Price”) per unit at any time before 5:00 p.m. (Toronto time) on the date that is twelve months following the closing of the Offering, or each tranche thereof. Each Debenture matures twelve months from the date of issuance (the “Maturity Date”) and contains a clause entitling the holder at its option to extend the Maturity Date of the debenture for a further 12 months on terms acceptable to the TSX-V at the time of the extension. The Debentures bear interest at a rate of 15% per annum, accrued and payable in on the Maturity Date or where the whole or any part of the Debenture is converted, on the date of conversion in proportion to amount of the Debenture converted on such date. The Debenture is subject to a default clause whereby if the Company issues shares for at a price per share less than the Conversion Price during the term of the Debenture this will be treated as a default and all amounts due under the Debenture will become payable where the Company does not cure such default within a 30 day period after receiving notice of such default from the holder.
Each share purchase warrant (each, a “Warrant”) that is issued as a result of any conversion is exercisable by the holder to acquire one common share of the Corporation for a period of thirty-six (36) months from the date of conversion at an exercise price of $0.15 per warrant share.
Were the Debentures to be fully converted into common shares of the Company this would result in the issuance of up to 15,000,000 common shares and 15,000,000 Warrants each exercisable into one common share.
The Company will provide a covenant in the Debenture that it may not issue any security that ranks senior to or pari-passu with the Debentures without the approval of Debenture holders. The Company has agreed to enter into a general security agreement (the “GSA”) and UCC security agreement in first ranking on the Company’s assets in Canada and the United States, which secures the obligations of the Company to the Subscriber under the Debenture, and to cause its material subsidiaries to deliver guarantees of the Company’s obligations under the GSA and register first ranking security against the assets of the Company and its material subsidiaries in accordance with the terms and conditions of the security agreements.
Notwithstanding the forgoing, the Debentures will allow the Company to enter into an agreement with a third party for the factoring of receivables and inventory of up to USD$1,000,000 at one time (which shall not exceed US$750,000 in factoring until the Company provides a subordination agreement executed by an existing secured creditor pursuant to a secured promissory note up to a maximum of US$100,000), which may rank senior to the Debentures.
In connection with the Offering, the Agent will receive a cash commission equal to 5% of the gross proceeds raised and broker warrants in a quantity equal to 10% of the aggregate number of Units (on a fully converted basis) sold. Each broker warrant will entitle the holder to purchase one common share and one share purchase warrant of the Company at a price of $0.10 per unit, at any time during the 24-month period following the closing of the Offering. Any share purchase warrants issued pursuant to the exercise of the broker warrant will entitle the Agent to acquire one common share of the Company and will be exercisable at $0.15 per warrant any time during 36 months following issuance of such share purchase warrant.
The completion of the Offering shall be subject to and conditional upon, among other things, the receipt of all necessary regulatory, stock exchange, shareholder and third party approvals as are necessary in the circumstances, including the approval of the TSX Venture Exchange. All of the securities issued in connection with the Offering are subject to a “hold period” of four months plus one day from the date of closing pursuant to the applicable securities laws.