The Agreement outlines the principal terms and conditions which will result in a reverse takeover of Capricorn by CCU.ai (the "Transaction"). As a condition precedent to the Transaction, CCU.ai will carry out a non-brokered private placement by way of the issuance of subscription receipts ("Subscription Receipts") for gross proceeds of at least
Capricorn is a
In connection with the announcement of the Agreement, which is deemed an Agreement in Principle (as defined in the Policies) for the Qualifying Transaction, it is anticipated that the trading in the common shares of Capricorn ("Capricorn Shares") will be halted. Trading will remain halted until, at a minimum, Capricorn completes certain regulatory filings in connection with the Qualifying Transaction with the TSXV and the TSXV has completed certain matters it considers necessary or advisable. It is expected that trading in the Capricorn Shares will not resume prior to the closing of the Transaction.
About CCU.ai
CCU.ai was incorporated pursuant to the Business Corporations Act (
Since its creation, CCU.ai operates a high-density computation center built for high-grade cryptocurrency mining, AI data processing and fintech infrastructure located in the city of
CCU.ai is led and managed by technology entrepreneurs, electricity and ventilation experts and network specialists. Since its inception, CCU.ai has pursued a vision of environmental stewardship and increased performance throughout the cryptocurrency mining process. The availability of energy from renewable sources in the province of
Selected Financial Information of CCU.ai
The following table sets out selected financial information with respect to CCU.ai as at the dates noted. The selected financial information is derived from CCU.ai's audited financial statements for the periods described, which have been prepared in accordance with International Financial Reporting Standards, issued by the
Balance Sheet Account | As at | As at |
Current Assets | 624,036 | 1,106,608 |
Digital assets (included in Current Assets) | 251,332 | 653,882 |
Property, plant and equipment | 2 385 762 | 1 596 015 |
Total Assets | 3 363 333 | 3 021 872 |
Current Liabilities | 210 927 | 1 929 958 |
Total Liabilities | 2 504 478 | 2 935 141 |
Total Shareholder's Equity | 858 855 | 86 731 |
Income Statement | Year Ending, Dec.31, 2019 (C$) | Year Ending, Dec.31, 2020 (C$) |
Digital assets mined | 1,494,940 | 1,691,939 |
Hosting | 26,805 | 143,439 |
Cost of revenue | (1,671,999) | (2,006,438) |
Gross profit (loss) | (12,443) | (135,060) |
Total Expenses | (1,031,249) | (577,523) |
Operating income (loss) | (1,031,491) | (254,317) |
Net income (loss) | (1,655,444) | (947,841) |
Total comprehensive income (loss) | (1,655,444) | (789,947) |
Summary of the Transaction
Pursuant to the Agreement, Capricorn will acquire CCU.ai by way of a three corner amalgamation carried out through a CCU.ai plan of arrangement, pursuant to which CCU.ai will be acquired by Capricorn. Upon completion of the Transaction, the resulting issuer (the "Resulting Issuer") will carry out the business of CCU.ai.
The Transaction values CCU.ai at
Pursuant to the Transaction: (i) holders of issued and outstanding CCU.ai Shares will receive 10.60425 Capricorn Consolidated Shares (as defined below) for each CCU.ai Share (the "Exchange Ratio") held by them; and (ii) all options and warrants convertible into CCU.ai Shares (including the warrants to be issued in connection with the Concurrent Financing) shall be exchanged, based on the Exchange Ratio, for similar securities to purchase Capricorn Consolidated Shares on substantially similar terms and conditions.
As a condition to closing the Transaction, concurrently with, or immediately prior to the closing of the Transaction, and subject to Capricorn shareholders' approval, Capricorn will undertake a share consolidation (the "Consolidation"). The Consolidation will occur on the basis of one post- Consolidation common share of Capricorn (a "Capricorn Consolidated Share") for every 2.7 currently existing Capricorn Shares. The 675,050 currently outstanding Capricorn options will be adjusted in accordance with the terms of the Capricorn option plan such that the holders will receive one new option (a "Capricorn Consolidated Option") for every 2.7 existing options with the exercise price of such options also adjusted to reflect the Exchange Ratio. Upon completion of the Consolidation, approximately 2,500,075 Capricorn Consolidated Shares and 250,018 Capricorn Consolidated Options will be issued and outstanding. For the purposes of the Transaction, the deemed value of each outstanding Capricorn Consolidated Share will be
It is expected that Capricorn shareholder approval will also be sought for an amendment of Capricorn's articles to effect a name change to "
Closing of the Transaction will be subject to a number of conditions precedent, including, without limitation:
a) | receipt of all regulatory approvals with respect to the Transaction and the listing of the shares of the Resulting Issuer on the TSXV; |
b) | approval of the Transaction by CCU.ai shareholders, |
c) | approval of the Consolidation, Name Change, the amendment to the share option plan of Capricorn and the approval of new directors by Capricorn shareholders; |
d) | completion of the Concurrent Financing; and |
e) | confirmation of no material adverse change by CCU.ai and Capricorn. |
Following the closing of the Transaction and the completion of the Concurrent Financing, it is expected that, in each case on a non-diluted basis:
- the former shareholders of CCU.ai will hold approximately 51,525,163 common shares of the Resulting Issuer (the "Resulting Issuer Shares"), representing 83.15% of all issued and outstanding Resulting Issuer Shares;
- that the former shareholders of Capricorn will hold approximately 2,500,075 Resulting Issuer Shares, representing 4.03% of all issued and outstanding Resulting Issuer Shares;
- the participants in the Concurrent Financing will hold approximately 6,900,000 Resulting Issuer Shares, representing 11.14% of all issued and outstanding Resulting Issuer Shares; and
- the recipients of finder's fees (as described below) will hold approximately 1,041,200 Resulting Issuer Shares, representing 1.68% of all issued and outstanding Resulting Issuer Shares.
Based on the information available at this stage, the shareholders holding more than 10% of the issued and outstanding Resulting Issuer Shares are expected to be Romain Nouzareth and Mathieu Nouzareth.
It is anticipated that the Resulting Issuer will qualify as a Tier 2 Technology issuer pursuant to the requirements of the TSXV.
The Transaction is not a Non-Arm's Length Qualifying Transaction (as defined in the Policies) and consequently the Transaction itself will not be subject to approval by Capricorn's shareholders. However, as noted above, Capricorn does plan to hold a special meeting of shareholders whereat, among other things, the shareholders of Capricorn will be asked to approve certain matters including but not limited to (i) the Consolidation, (ii) the Name Change, (iii) the appointment of a new slate of directors and (iv) the payment of the Capricorn Finder's Fee (as defined below).
Approximately 1,041,200 Resulting Issuer Shares will be issued as finders' fees in connection with the Transaction, of which approximately 822,000 Resulting Issuer Shares will be payable to Fecteau Côté
Concurrent Financing
Concurrent with the closing of the Transaction, CCU.ai intends to complete the Concurrent Financing for gross proceeds of at least
The Resulting Issuer plans to use the proceeds of the Concurrent Financing to accelerate strategic growth initiatives and expand its computing resources.
Board of Directors and Management of the Resulting Issuer
Prior to completion of the Transaction, and subject to approval by the TSXV and the filing of all required materials, CCU.ai and Capricorn will reconstitute the board of the directors of Capricorn with five nominees from CCU.ai and one nominee from Capricorn. It is expected that the individuals listed below will be directors of the Resulting Issuer. It is also expected that a third independent director will be announced prior to the completion of the Transaction.
Dominique LL.B. J.D., LL.M. is a lawyer and has been practicing technology law and privacy law at National Bank of Canada since 2017. She was called to the Québec Bar in 2014. She advises on the responsible and ethical deployment of finance technologies, such as artificial intelligence, including on their governance. She is also a proactive advocate for such matters in the finance industry and community at large. Namely, she has participated in several industry-wide publications and roundtables, and does pro bono legal work with start-ups, a civil rights association, and graduate students. Dominique received a Master of Law from University of
Mr.
Romain Nouzareth: Co-Founder, Chairman, and Chief Executive Officer
Mr. Romain Nouzareth is a seasoned tech entrepreneur, Co-Founder, and Chief Executive Officer of CCU.ai. He co-founded with his brother Mathieu Web Concept, one of the first web agencies in
Mathieu Nouzareth: Co-Founder, Director, and Advisor
Mr. Mathieu Nouzareth is a
Sponsorship for Qualifying Transaction
Sponsorship of a Qualifying Transaction of a
Filing Statement
In connection with the Transaction and pursuant to the requirements of the TSXV, Capricorn will file on SEDAR (www.sedar.com) a filing statement which will contain details regarding the Transaction, CCU.ai, Capricorn and the Resulting Issuer.
Further information
Capricorn intends to issue a subsequent press release in accordance with the Policies providing further details in respect of the Transaction, including information relating to the Transaction structure and descriptions of the final proposed director and certain other Insiders (as defined in the Policies) of the Resulting Issuer.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV Requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the 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 TSXV has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.
NEITHER THE TSXV NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXV) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
Cautionary Statement Regarding Forward-Looking Information
This news release contains certain forward-looking statements, including statements relating to the Transaction and certain terms and conditions thereof, the ability of the parties to complete the Transaction, the Consolidation, the Exchange Ratio, the Name Change, the Concurrent Financing, the Resulting Issuer's ability to qualify as a Tier 2 Technology issuer, the TSXV sponsorship requirements, the finding of a sponsor, if applicable, shareholder, director and regulatory approvals, future press releases and disclosure, and other statements that are not historical facts. Wherever possible, words such as "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict" or "potential" or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management as at the date hereof.
Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. As a result, the Company cannot guarantee that the Transaction will be completed on the terms described herein or at all. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.
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