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Gulfstream Acquisition 1 Corp. and Liberty Defense Holdings, Inc. Provide Update on Proposed Qualifying Transaction

Liberty Defense Holdings, Inc. Announces Private Placement in Preparation for Public Listing. NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Toronto, ON – February 22, 2019 – Gulfstream Acquisition 1 Corp. (TSXV-NEX: GFL.H) (“Gulfstream” or the “Company”), a capital pool company, and Liberty Defense Holdings, Inc. (“Liberty”), a private corporation incorporated under the Business Corporations Act (Ontario) (the “OBCA”), are pleased to provide an update with respect to their previously announced business combination and reverse takeover transaction (the “Proposed Qualifying Transaction”) and related financing activities, including a private placement offering of up to 7,500,000 subscription receipts of Liberty (the “Subscription Receipts”) at a price of C$0.80 per Subscription Receipt for aggregate gross proceeds of up to C$6.0 million, subject to an agents’ option to arrange for purchase of up to an additional 5,000,000 Subscription Receipts for additional gross proceeds of up to C$4.0 million (the “QT Financing”).

Commenting on the Proposed Qualifying Transaction, Bill Riker, Chief Executive Officer of Liberty, said, “The listing of Liberty’s shares on the TSXV will enable us to raise the necessary capital so that we can focus on successfully launching our HEXWAVE product and expanding our revolutionary business of concealed weapons detection in high volume foot traffic areas.”

The Proposed Qualifying Transaction

As previously announced in the news release of Gulfstream dated November 30, 2018, the Proposed Qualifying Transaction is to be implemented in accordance with the terms of the Definitive Agreement (as defined below). Subject to TSX Venture Exchange (“TSXV”) approval, the Proposed Qualifying Transaction will constitute Gulfstream’s “Qualifying Transaction”, as defined by Policy 2.4 – Capital Pool Companies (“Policy 2.4”) of the TSXV.
The parties recently entered into a definitive agreement for the Proposed Qualifying Transaction (the “Definitive Agreement”) and have made significant progress with respect to due diligence, completion of audited and pro forma financial statements of Liberty and the drafting of a filing statement (the “Filing Statement”) in accordance with the policies of the TSXV.

The Proposed Qualifying Transaction will be structured as a “three-cornered amalgamation” involving Gulfstream, a wholly-owned subsidiary of Gulfstream (“Gulfstream Subco”) and Liberty. On closing of the Proposed Qualifying Transaction (the “Closing”), it is expected that, among other things:

  • Gulfstream will consolidate all of its issued and outstanding common shares (the “Gulfstream Common Shares”) on the basis of one (1) post-consolidation Gulfstream Common Share for every two and one-half (2.5) pre-consolidation Gulfstream Common Shares (the “Consolidation”);
  • Gulfstream will pay to 1043619 B.C. Ltd. (the “Finder”), a finder’s fee (the “Finder’s Fee”) of $933,730.40 payable in Gulfstream Common Shares at a deemed price of $0.80 per share, for a total of 1,167,163 post-Consolidation Gulfstream Common Shares issued to the Finder, as full and final payment and satisfaction of the Finder’s services provided with respect to finding and arranging the Proposed Qualifying Transaction;
  • Liberty and Gulfstream Subco will be amalgamated under the OBCA (the “Amalgamation”) and continue as one corporation (“Amalco”), and Amalco will become a wholly-owned subsidiary of Gulfstream;
  • Gulfstream will change its name to “Liberty Defense Holdings, Inc.” (on a post-Closing basis, the “Resulting Issuer”); and
  • Each Liberty common share (the “Liberty Common Shares”) will be cancelled, and the former holders of Liberty Common Shares will receive one post-Consolidation Gulfstream Common Share for each Liberty Common Share held by them.

The Resulting Issuer’s business objective will be to commercialize the HEXWAVE product for clients, which are expected to include public venues, corporate or secured buildings, ground transportation operations, schools, hotels, casinos, places of worship, malls and other urban infrastructure.
The final structure for the Proposed Qualifying Transaction is subject to satisfactory tax, corporate and securities law advice on the part of both Gulfstream and Liberty, and approval by the TSXV.

Assuming completion of the Proposed Qualifying Transaction, and before giving effect to the QT Financing and the Finder’s Fee, the Resulting Issuer will have 56,655,788 common shares outstanding. Gulfstream shareholders would hold approximately 3,544,263 common shares of the Resulting Issuer (assuming exercise of all outstanding stock options) being approximately 6.26%, and former Liberty shareholders would hold an aggregate of 53,111,525 common shares, being approximately 93.74% of such common shares.

Shareholders Approval Obtained from Shareholders of Gulfstream

Gulfstream is pleased to announce the special meeting of the shareholders of Gulfstream (the “Special Meeting”) was held at 3:00 p.m. (Toronto time) on February 20, 2019 and that all of the resolutions proposed to the shareholders were passed, in anticipation of Gulfstream proceeding with the Proposed Qualifying Transaction.

At the Special Meeting, shareholders of Gulfstream approved the following resolutions:

  • to set the number of directors at three (3) until the Change of Board Time (as defined in the management information circular of Gulfstream dated January 22, 2019 (the “Gulfstream Circular”), being the time of closing of the Proposed Qualifying Transaction; and to elect Mark Korol, Charles Shin and Frank Dottori as directors of Gulfstream, effective until the earlier of the Change of Board Time, or the next annual meeting of the shareholders;
  • to set at six (6) the number of directors following the Change of Board Time; and to elect David Sidoo, John McCoach, Sam Parrotta, Corby Marshall, Bill Riker and Damian Towns as directors of Gulfstream, to be effective following the Change of Board Time;
  • following closing of the Proposed Qualifying Transaction, to appoint PricewaterhouseCoopers LLP, Chartered Professional Accountants as auditor of Gulfstream, and the directors are authorized to fix the auditor’s remuneration;
  • to consolidate the issued and outstanding Gulfstream Common Shares on the basis of two and one-half (2.5) pre-Consolidation Gulfstream Common Shares for one (1) post-Consolidation Gulfstream Common Share;
  • following closing of the Proposed Qualifying Transction, to adopt a new Omnibus Equity Incentive Plan dated for reference January 22, 2019, particulars of which are disclosed in detail in the Gulfstream Circular; and
  • to change Gulfstream’s name to “Liberty Defense Holdings, Inc.”

For further information with respect to the Proposed Qualifying Transaction and the matters before the shareholders at the Special Meeting, please refer to the Gulfstream Circular posted under Gulfstream’s SEDAR profile at www.sedar.com.

Conditions to Completion of Proposed Qualifying Transaction & Regulatory Matters

Completion of the Proposed Qualifying Transaction is subject to a number of conditions, including closing of the QT Financing, receipt of applicable regulatory approvals, including the approval of the TSXV for the Proposed Qualifying Transaction, completion of satisfactory due diligence and the execution of any transaction documents related to the Definitive Agreement. A special meeting of shareholders of Liberty to approve the Amalgamation is expected to be convened on February 28, 2019. The necessary approvals of the shareholders of Gulfstream in order to implement the Proposed Qualifying Transaction were obtained at the Special Meeting as discussed above.

A request will be made to the TSXV for a waiver of the sponsorship requirements of Policy 2.2 – Sponsorship and Sponsorship Requirements of the TSXV, but there is no assurance that such waiver will be granted.

Investors are cautioned that, except as disclosed in the Gulfstream Circular and as will be disclosed in the Filing Statement that will be prepared in connection with the Proposed Qualifying Transaction, any information released or received with respect to the Proposed Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The Filing Statement in respect of the Proposed Qualifying Transaction will be prepared and filed on SEDAR at www.sedar.com in accordance with Policy 2.4 no less than seven business days prior to the Closing. A press release will be issued once the Filing Statement has been filed.

The TSXV has in no way passed upon the merits of the Proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

The Proposed Qualifying Transaction is not a “Non-Arm’s Length Qualifying Transaction” within the meaning of Policy 2.4 and, as such, approval of Gulfstream’s shareholders is not required, unless otherwise mandated by the TSXV.

Upon completion of the Proposed Qualifying Transaction, it is expected that the Resulting Issuer will meet the public distribution requirements of a Tier 2 issuer in accordance with TSXV requirements.

Liberty Financings

First Offering

The first offering of Liberty, which was comprised of a first tranche and a second tranche, was completed on April 30, 2018 and August 30, 2018, respectively, on a non-brokered basis, and consisted of 21,250,000 units of Liberty (each unit consisting of one Liberty Common Share and one common share purchase warrant of Liberty (a “Liberty Warrant”), and collectively, “Liberty Units”) at a price of $0.05 per Liberty Unit for aggregate gross proceeds of $1,062,500.

Second Offering

On October 24, 2018, Liberty completed a second offering (the “Second Offering”), being an equity private placement offering, on both a brokered and non-brokered basis, of 8,638,750 Liberty Units at a price of $0.80 per Liberty Unit for gross proceeds of $6,911,000. The brokered portion of the Second Offering was completed pursuant to an agency agreement dated October 24, 2018 between Liberty and the Canaccord Genuity Corp. (“Canaccord”), as agent, which contained representations, warranties, covenants and termination provisions that are customary for an offering of this kind.

The net proceeds from the Second Offering were used to develop and deploy Liberty’s security technology, to explore various venue applications as well as for general working capital purposes. A total of 292,087 Liberty broker warrants were issued to Canaccord in connection with the Second Offering, each such broker warrant exercisable to subscribe for and purchase one Liberty Unit at an exercise price of $0.80 for a period of 24 months following the closing date of the Second Offering, being October 24, 2018.

QT Financing

Prior to the Completion of the Proposed Qualifying Transaction, Liberty will carry out the QT Financing, which will be in the form of a private placement, on both a brokered and non-brokered basis, of up to 7,500,000 Subscription Receipts at a price of C$0.80 per Subscription Receipt, for aggregate gross proceeds of C$6,000,000, subject to an agents’ option to arrange for purchase of up to an additional 5,000,000 Subscription Receipts for additional gross proceeds of up to C$4,000,000.

Pursuant to the terms and conditions of a subscription receipt agreement to be entered into by and among Liberty, Gulfstream, Canaccord and GMP Securities L.P. (together with Canaccord, Haywood Securities Inc. and Jett Capital Advisors, LLC the “Agents”)) and Computershare Trust Company of Canada (the “Subscription Receipt Agent”), as escrow agent for the Subscription Receipts, each Subscription Receipt will be automatically converted, without payment of any additional consideration and without further action on the part of the holder thereof, into one Liberty Unit upon the satisfaction of the Escrow Release Conditions (as defined below). Pursuant to the Proposed Qualifying Transaction, holders of Liberty Common Shares will receive one common share of the Resulting Issuer in exchange for each Liberty Common Share held and the holders of Liberty Warrants will receive one warrant of the Resulting Issuer in exchange for each Liberty Warrant held.

Liberty has retained the services of the Agents for the QT Financing. Once the Escrow Release Conditions have been satisfied and the Subscription Receipt Agent has released the net proceeds of the QT Financing to Liberty, it is expected that such proceeds will be used to develop and deploy Liberty’s security technology, to explore various venue applications as well as for general working capital purposes.

On the closing date for the QT Financing, the gross proceeds from the QT Financing, less 50% of the Agents’ fees and the reasonable expenses of the Agents payable by Liberty (the “Escrowed Proceeds”) will be delivered to and held by the Subscription Receipt Agent and invested in an interest bearing account (the Escrowed Proceeds, together with all interest and other income earned thereon, are referred to herein as the “Escrowed Funds”) pending the satisfaction or waiver (to the extent permitted) of the Escrow Release Conditions.

The balance of the Agent’s fees and expenses will be released to the Agents out of the Escrowed Funds and the balance of the Escrowed Funds will be released from escrow to Liberty upon certain escrow release conditions being met, which include, without limitation (collectively, the “Escrow Release Conditions”):

  • The certification by Liberty and Gulfstream that all conditions precedent to the Closing (as included in the Definitive Agreement in respect of the Proposed Qualifying Transaction) have been satisfied or waived;
  • The receipt of all required third party, shareholder and regulatory approvals required in connection with the Proposed Qualifying Transaction; and
  • The receipt of conditional approval from the TSXV to list the common shares of the Resulting Issuer on the TSXV.

In the event that the Escrow Release Conditions are not satisfied by April 30, 2019, the proceeds of the QT Financing will be returned pro rata to each holder of Subscription Receipts, and the Subscription Receipts will be automatically cancelled, void and of no value or effect. To the extent that the Escrowed Funds are not sufficient to return to the holders of Subscription Receipts the entire subscription price for there Subscription Receipts, Liberty will be liable for and will contribute such amounts as are necessary to satisfy any shortfall.

The closing of the QT Financing will be conditional on, inter alia, the receipt by the Agents of executed lock-up agreements from: (a) each of the officers and directors of Liberty; and (b) each shareholder of Liberty holding 5% or greater of the Liberty Common Shares.

Financial Information of Liberty

At this point, Liberty is preparing its audited financial information which will be disclosed once completed in an updated news release.

Directors and Officers of the Resulting Issuer

Concurrent with the completion of the Proposed Qualifying Transaction, it is expected that all directors and officers of Gulfstream will resign and be replaced by Liberty nominees. The directors and officers of the Resulting Issuer are expected to be the following:

David Sidoo (Executive Chairman and Director)

Mr. Sidoo is a businessman based in Vancouver where he oversees a successful private investment banking and financial management firm. Upon graduating from the University of British Columbia in 1982 where he held a four-year football scholarship with the UBC Thunderbirds, he was drafted to play professional football with the Canadian Football League. Mr. Sidoo retired from football in 1988 and was introduced to the brokerage business with Yorkton Securities Inc. where he quickly became one of the company’s top revenue generators before leaving in 1999. Mr. Sidoo was a founding shareholder of American Oil & Gas Inc. (NYSE – AEZ) which was sold to Hess Corporation in December 2010 for over US$630 million in an all-stock transaction (NYSE – HES) In 2014, Mr. Sidoo was appointed by the British Columbia Government to the Board of Governors for the University of British Columbia. Mr. Sidoo is a board member and the President and CEO and a director of East West Petroleum Corp. (TSXV – EW), a company he founded in 2010. Mr. Sidoo is also the current President and CEO of Advantage Lithium Corp.

William (Bill) E. Riker Jr. (Chief Executive Officer and Director)

Appointed as the Liberty CEO in August 2018, Bill Riker brings a career of more than 35 years in leading global defense, aerospace and security systems products and services. Mr. Riker has had extensive experience in general management, programs, product development, engineering and operations. During his career, Mr. Riker has held executive positions within Smiths Detection, Inc., Leonardo DRS, Inc., General Dynamics and the U.S. Department of Defense. Mr. Riker received his MBA and Masters of Engineering from the University of Michigan and his Bachelor of Science from United States Military Academy at West Point.

Damian Towns (Chief Financial Officer, Corporate Secretary and Director)

Damian Towns is an established financial executive with extensive public company experience, working with various public companies in Canada in senior executive and board roles for over ten years. Mr. Towns is a Canadian Chartered Accountant (CPA, CA) with over 20 years of accounting and financing experience. Mr. Towns has significant experience in building and developing companies from the ground floor up and establishing them as public companies. Mr. Towns has worked with both development and operating stage companies and acutely understands the risks associated with building companies. Mr. Towns has a first class honors degree in accounting and finance (combined) from the University of Otago, New Zealand.

Aman Bhardwaj (Chief Operating Officer and President of U.S. Operations)

Aman Bhardwaj is a product development executive with over 20 years of experience in building and leading global teams for large multi-national and startup companies such as Panasonic, Flextronics/Imerj, Educo and Hisense. Mr. Bhardwaj has led partner management activities for organizations such as Netflix, Amazon, Google, YouTube, Roku, Sling, Clarovideo, and Cinnepolis for the development of Smart TV products in North America.

John McCoach (Director)

John McCoach has more than 35 years of experience in the investment industry, serving as President of the TSX Venture Exchange Inc. from July 2009 until he retired in July 2016. Mr. McCoach also previously served as senior vice president of the TSX Venture Exchange Inc. and as a senior executive in other roles since 2003. Prior to joining TMX Group, Mr. McCoach served as a Senior Vice President of Corporate Finance for a Canadian investment dealer. Mr. McCoach currently serves as director of Capital Markets Authority Implementation Organization. He is a non-executive director of Nautilus Minerals Inc. and Foremost Ventures Corp.

Sam Parrotta (Director)
Sam Parrotta was appointed Chief Financial Officer in 2006 of Onni Group, one of North America’s largest fully integrated private real estate development and property management company with offices in Los Angeles, Seattle, Chicago, Phoenix, Toronto and Vancouver. Mr. Parrotta was a director of Palko Environmental Ltd., a public energy services company, from June 2009 until December 2011, when it was acquired by Gibson Energy Ltd.

Corby Marshall (Director)

Corby Marshall is the Chief Executive Officer of Hilltop Cybersecurity. Prior to joining Hilltop Cybersecurity, Mr. Marshall was Senior Vice President of Alliances and Partnerships for AppOrbit, where he developed and led the go-to-market programs for all consulting, reseller and solution partners. Mr. Marshall is an expert at developing new programs and leading through transformational change, skills he honed during his service as an Airborne-qualified Field Artillery Officer in the United States Army. He is a distinguished graduate of the United States Military Academy at West Point.

About Gulfstream

Gulfstream was incorporated under the Business Corporations Act (Ontario) on June 8, 2012. The Company is listed as a capital pool company on the NEX Board of the TSXV. The Gulfstream Common Shares were listed for trading on the TSXV on June 14, 2013 and commenced trading at the opening of trading on Tier 2 of the TSXV on June 17, 2013 under the trading symbol “GFL”. Gulfstream’s business objective is to identify and evaluate assets or businesses with a view to a potential acquisition by completing a Qualifying Transaction (like the Proposed Qualifying Transaction). Trading in the Gulfstream Common Shares is currently halted pending completion of the Proposed Qualifying Transaction.

About Liberty

Liberty was incorporated on April 30, 2018 pursuant to the Business Corporations Act (Ontario). Liberty provides security solutions for concealed weapon detection in high volume foot traffic areas and has secured an exclusive license from MIT Lincoln Laboratory, as well as a technology transfer agreement, for patents related to active 3D imaging technology that are packaged into the HEXWAVE product. The system is designed to provide discrete, modular and scalable protection to provide layered, stand-off detection capability. This is intended to provide a means to proactively counter evolving urban threats. The integrated sensor-AI array is designed to detect metallic and non-metallic firearms, knives, explosives and other threats. Liberty is committed to protecting communities and preserving peace of mind through superior security detection solutions.

Gulfstream Media Contact:
Charles Shin
Chief Executive Officer
Telephone: 416-846-5580
Email: cshin@gulfstreamcapital.ca

Liberty Media Contact:
William (Bill) E. Riker Jr.
Chief Executive Officer
Telephone: 734-730-4940
Email: briker@libertydefense.com

Forward-Looking Statements:

When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. Although Gulfstream and Liberty believe, in light of the experience of their respective officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in the forward-looking statements and information in this press release are reasonable, undue reliance should not be placed on them because the parties can give no assurance that such statements will prove to be correct. The forward-looking statements and information in this press release include information relating to the business plans of Gulfstream and Liberty, the Proposed Qualifying Transaction (including the ultimate size of the QT Financing and the closing of the QT Financing and the Amalgamation) and the officers and directors of the Resulting Issuer upon completion of the Proposed Qualifying Transaction. Such statements and information reflect the current view of Gulfstream and/or Liberty, respectively. There are risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: (a) there is no assurance that Gulfstream and Liberty will obtain all requisite approvals for the Proposed Qualifying Transaction, including the approval of the TSXV for the Proposed Qualifying Transaction (which may be conditional upon amendments to the terms of the Proposed Qualifying Transaction); (b) following completion of the Proposed Qualifying Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations and financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer; (c) new laws or regulations could adversely affect the Resulting Issuer’s business and results of operations; and (d) the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer’s securities, regardless of its operating performance. There are a number of important factors that could cause Gulfstream and Liberty’s actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: currency fluctuations; limited business history of the parties; disruptions or changes in the credit or security markets; results of operation activities and development of projects; project cost overruns or unanticipated costs and expenses; and general market and industry conditions. The parties undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of their securities or their respective financial or operating results (as applicable).

Gulfstream and Liberty caution that the foregoing list of material factors is not exhaustive. When relying on the parties’ forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The parties have assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The forward-looking information contained in this press release represents the expectations of the parties as of the date of this press release and, accordingly, are subject to change after such date. The parties do not undertake to update this information at any particular time except as required in accordance with applicable laws.
All amounts referred to herein are in Canadian dollars unless otherwise indicated.

There can be no assurance that the Proposed Qualifying Transaction will be completed as proposed or at all.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

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