Liberty Defense Closes Oversubscribed Private Placement for $7.06m and Provides Update on Gulfstream 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

Vancouver, B.C. – March 20, 2019 – Gulfstream Acquisition 1 Corp. (TSXV-NEX: GFL.H) (“Gulfstream” or the “Company”), and Liberty Defense Holdings, Inc. (“Liberty”, together with Gulfstream, the “Companies”) are pleased to announce that Liberty has closed an oversubscribed private placement offering (the “QT Financing”) for gross proceeds of approximately $7.06 million and provide an update with respect to their previously announced reverse takeover transaction (the “Proposed Qualifying Transaction”).

Commenting on the QT Financing, Liberty’s Chief Executive Officer Bill Riker said, “The completion of this financing represents a key milestone to allow us to continue to aggressively pursue the development of HEXWAVE. We were delighted to be able to increase size of the private placement to accommodate the additional interest in Liberty. With shareholder approval now received from both Companies and the financing in place we will now look to close the reverse takeover of Gulfstream prior to April 1, 2019.”

QT Financing

The QT Financing was led by a syndicate of agents comprised of Canaccord Genuity Corp., GMP Securities L.P. (together with Canaccord Genuity Corp., the “Co-Lead Agents”), Haywood Securities Inc. and Jett Capital Advisors LLC (together with Co-Lead Agents, the “Agents”).

Pursuant to the terms of an agency agreement among Liberty, Gulfstream and the Agents dated March 7, 2019 (the “Agency Agreement”), Liberty sold 8,826,630 subscription receipts of Liberty (the “Subscription Receipts”) at a price of $0.80 per Subscription Receipt (the “Subscription Price”), for gross proceeds of approximately $7.06 million. Each Subscription Receipt will, upon satisfaction of the Escrow Release Conditions (as defined below), be automatically converted into one unit of the Corporation comprised of one common share of the Corporation (a “Common Share”) and one Common Share purchase warrant (a “Warrant”). Each Warrant will entitle thereof to purchase one Common Share for a period of 24 months following the date the Escrow Release Conditions are satisfied at a price of $1.10 per Common Share.

Such gross proceeds, less 50% of the Agents’ cash compensation and all of the estimated expenses of the Agents payable by Liberty (the “Escrowed Proceeds”), are being held in escrow on behalf of the subscribers by Computershare Trust Company of Canada, as escrow agent for the Subscription Receipts (the “Subscription Receipt Agent”), and invested in an interest bearing account pursuant to a subscription receipt agreement entered into among Liberty, the Co-Lead Agents, Gulfstream and the Subscription Receipt Agent (the “Subscription Receipt Agreement”). The Escrowed Proceeds, together with all interest and other income earned thereon, are referred to herein as the “Escrowed Funds”.

The Escrowed Funds, net the balance of the Agents’ cash compensation and any additional reasonable expenses of the Agents pursuant to the Agency Agreement will be released from escrow to Liberty upon the satisfaction of all of the following conditions (collectively, the “Escrow Release Conditions”) prior to the Termination Date (as defined below):

  1. Liberty and Gulfstream shall have entered into the definitive agreement for the Proposed Qualifying Transaction (the “Definitive Agreement”) in form and substance satisfactory to the Co-Lead Agents, acting reasonably;
  2. written confirmation from each of Liberty and Gulfstream that: (A) all conditions precedent to the completion of the Proposed Qualifying Transaction have been satisfied or waived, other than the release of the Escrowed Funds; and (B) no material terms of the Definitive Agreement have been modified and/or waived (unless such modifications or waivers were consented to by the Co-Lead Agents);
  3. the common shares of the resulting issuer pursuant to Proposed Qualifying Transaction (the “Resulting Issuer”), being approved for listing on the TSXV;
  4. the receipt of all regulatory, shareholder and third-party approvals, if any, required in connection with the Proposed Qualifying Transaction;
  5. counsel to Liberty having delivered an opinion addressed to the Agents confirming, among other things, that the Resulting Issuer shares and the warrants of the Resulting Issuer (the “Resulting Issuer Warrants”) issued in connection with the exchange of the Common Shares and Warrants comprising the Subscription Receipts pursuant to the Proposed Qualifying Transaction shall be free of any statutory hold periods in Canada upon the issue thereof, in each case, other than in respect of control block sales;
  6. Liberty, Gulfstream and the Resulting Issuer shall not be in breach or default of any of its covenants or obligations under the Subscription Receipt Agreement or the Agency Agreement, except, in the case of the Agency Agreement only, for those breaches or defaults that have been waived by the Agents, and all conditions set out in the Agency Agreement shall have been fulfilled, which shall all be confirmed to be true in a certificate of a senior officer of each of Liberty and Gulfstream;
  7. each of the amalgamation agreement to be entered into pursuant to the Definitive Agreement and the supplement to the warrant indenture entered into between Liberty and Computershare Trust Company of Canada acting, in its capacity as warrant agent, in respect of the Warrants shall have been entered into and be in form and substance satisfactory to the Co-Lead Agents, acting reasonably; and
  8. Liberty, Gulfstream and the Co-Lead Agents, on their own behalf and on behalf of the other Agents, shall have delivered a release notice and direction (the “Release Notice”) to the Subscription Receipt Agent confirming that items (i) through (vii), inclusive, have been satisfied.

In the event that the Escrow Release Conditions are not satisfied on or before April 30, 2019 (the “Termination Date”), the Escrowed Funds shall be used by Liberty to repurchase the Subscription Receipts at a redemption price per Subscription Receipt equal to the Subscription Price plus a pro rata amount of any interest and other income accrued in respect of the Escrowed Proceeds to the date of redemption. To the extent that the Escrowed Funds are not sufficient to purchase all of the Subscription Receipts on the foregoing terms, Liberty will be liable for and will contribute such amounts as are necessary to satisfy any shortfall.

A total of 503,935 warrants of Liberty were issued to the Agents in connection with the QT Financing, each such warrant exercisable to subscribe for and purchase one unit of Liberty at an exercise price of $0.80 for a period of 24 months following the date on which the Escrow Release Conditions are satisfied. Each such unit will consist of one Common Shareand one Warrant.

Pursuant to the Agency Agreement, lock-up agreements were entered into by: (a) each of the executive officers and directors of Liberty; and (b) each shareholder of Liberty holding 5% or greater of the Common Shares.

The net proceeds from the QT Financing will be used to develop and deploy Liberty’s security technology, to explore various venue applications as well as for general working capital purposes.

The Proposed Qualifying Transaction

Liberty is pleased to announce that the shareholders of Liberty on February 28, 2019 passed a special resolution approving the amalgamation of Liberty and 2675553 Ontario Limited, a wholly-owned subsidiary of Gulfstream, in accordance with the terms of the business combination agreement dated January 24, 2019, between Liberty and Gulfstream. Upon completion of the Qualifying Transaction, the current directors of Gulfstream will resign and the following individuals are expected to be appointed to the Board of Directors: John McCoach (Independent Chairman); Bill Riker (CEO); Damian Towns (CFO and Corporate Secretary); Corby Marshall (Independent Director) and Sam Parrotta (Independent Director).

About Liberty Defense
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.

For further information contact:
Adam Ross
Telephone: 604-229-9445
Toll-Free: 1-833-923-3334

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.

For further information contact:
Charles Shin
Chief Executive Officer
Telephone: 416-846-5580

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, amongst others, information relating to the business plans of Gulfstream and Liberty, the Proposed Qualifying Transaction, the conversion of the Subscription receipts. 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.

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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