Bitcoin Well Reports Q1 2024 Financial Results
This strategic business combination between FWTC and FMAC marks a significant milestone for both entities. FMAC is contributing its founders’ extensive public market and business experience to FWTC, a pioneering entity with a revolutionary method for economically filtering water. With FWTC’s proven concept and existing customer base coupled with FMAC’s financial resources and access to capital, this partnership heralds an era of accelerated growth and innovation. Together, we are poised to revolutionize the water filtration industry, offering enhanced solutions that drive efficiency, sustainability, and profitability. This combination not only amplifies the strengths of both entities, but also underscores our collective commitment to delivering value to our stakeholders and shaping the future of the industry.
FMAC is a “capital pool company” which completed its initial public offering on February 22, 2023. The common shares of FMAC (“ FMAC Shares “) are listed for trading on the TSX Venture Exchange Inc. (“ TSXV “) under the stock symbol FMAC.P. FMAC has not commenced commercial operations and has no assets other than cash. It is intended that the Transaction, when completed, will constitute the “Qualifying Transaction” of FMAC pursuant to Policy 2.4 – Capital Pool Companies (the “ CPC Policy “) of the TSXV.
FWTC is a publicly traded Canadian company. Its common shares (the “ FWTC Shares “) are listed for trading on the TSXV under the stock symbol FWTC. FWTC is dedicated to saving the earth’s water supply using its patented Forward Osmosis technology. FWTC was founded by Green Centre Canada, a leading technology innovation centre supported by the government of Canada. FWTC’s technology allows for the reduction of challenging waste streams simultaneously returning fresh water for re-use or surface release. FWTC’s mandate is to focus on the large-scale implementation of its technology in multiple sectors, including industrial wastewater, oil and gas, DLE, mining, agriculture and ultimately municipal water supply and re-use market sectors. In addition, the Company has initiated early-stage R&D for the treatment of food and beverage process streams.
Terms of the Transaction
The LOI was negotiated at arm’s length. The LOI contemplates that FWTC and FMAC will negotiate and enter into a definitive agreement (the “ Definitive Agreement “) including the following terms:
All issued and outstanding FMAC Shares will be exchanged for FWTC Shares (as defined below) at an exchange ratio of 10.3666848 FWTC Shares for every one (1) FMAC Share (the “ Exchange Ratio “) with a total of 213,253,073 pre-Consolidation FWTC Shares being issued based on the 20,571,000 FMAC Shares that are issued and outstanding (which excludes any securities that will be issued in connection with the Concurrent Financing (as defined below)).
Each outstanding option and warrant to purchase an FMAC Share will be exchanged for or converted into comparable FWTC options or FWTC broker warrants based on the Exchange Ratio with each such FWTC Option or FWTC Broker Warrant entitling the holder to purchase FWTC Shares at the applicable exercise prices, with the appropriate adjustments for the Exchange Ratio.
FMAC will complete a minimum concurrent financing of at least $1,500,000 in gross proceeds, such minimum subject to reduction to $1,400,000 at FMAC’s discretion (the “ Concurrent Financing “), consisting of one or more private placements of subscription receipts at a price of $0.15 per subscription receipt (equivalent to $0.0145 per FWTC Share on a pre-exchange basis – the “ Concurrent Financing Price “), each subscription receipt entitling the holder to receive one common share and one-half of a common share purchase warrant, each whole such warrant entitling the holder to purchase one FMAC Share at an exercise price of $0.20 at any time prior to the third anniversary of the issuance of such warrant. The subscription receipts would convert into the underlying FMAC Shares and warrants immediately prior to completion of the Transaction, which FMAC Shares and warrants would be exchanged for FWTC Shares and like warrants of FWTC based on the Exchange Ratio pursuant to the Transaction. Assuming that $1,500,000 is raised in the Concurrent Financing this will result in 103,666,848 pre-Consolidation FWTC Shares being issued to the investors in the Concurrent Financing on closing of the Transaction.
FMAC will provide FWTC with a secured loan in the amount of $250,000 (the “ FMAC Loan “), $25,000 of which will be advanced forthwith, with the balance to be advanced promptly upon receipt of TSXV approval thereof. The FMAC Loan will follow advances by First Line Venture Partners Corporation (“ FirstLine “) and Sustainable Chemistry Alliance (“ SCA “), in an aggregate amount of $200,000. The First Line and SCA advances and the FMAC Loan will share a pari passu first ranking secured position, will mature on December 31, 2024 and will in each case bear interest at a rate of 20% per annum commencing on the date that is 120 days following the entering into of the Definitive Agreement, with no interest being charged prior to such date. $100,000 principal amount of the First Line and SCA loans will convert into FWTC Shares and warrants concurrently with the completion of the Transaction at a price equivalent to the Concurrent Financing Price and with the warrants having terms economically equivalent to the warrants issued pursuant to the Concurrent Financing. If the Transaction is not completed no portion of the First Line and SCA loans will be convertible.
First Line and SCA each hold greater than 20% of the outstanding FWTC Shares and as such are considered related parties for the purposes of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions (“MI 61-101”). The participation of First Line and SCA will constitute a “related party transaction” within the meaning of MI 61-101. FWTC is relying upon exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to sections 5.5(b) and 5.7(1)(a), respectively – Fair Market Value Not More Than 25 Per Cent of Market Capitalization, on the basis that at the time the issuances were agreed to, neither the fair market value of the securities to be distributed to First Line or SCA, nor the consideration to be received for the securities, will exceed 25 per cent of FWTC’s market capitalization. The Board of Directors of FWTC has unanimously approved the issuances and no materially contrary view or abstention was expressed or made by any director in relation to the issuances. FWTC did not file a material change report in respect of the participation of FirstLine or SCA in the issuances at least 21 days before anticipated closing as FWTC wished to close on an expedited basis for sound business reasons.
Green Centre has agreed to convert approximately $31,000 in interest and penalties on its $300,000 principal amount of debt (the “ Green CentreDebt “) with FWTC into 2,168,987 FWTC Shares at a conversion price equivalent to the Concurrent Financing Price, contemporaneously with the closing of the Transaction (“ Closing “).
It is anticipated that upon completion of the Transaction, and presuming achievement of $1.5 million in gross proceeds from the Concurrent Financing and after giving effect to the Concurrent Financing and the conversion of amounts advanced by First Line, SCA and the FMAC Loan, but before conversion of the interest and penalties pursuant to the Green Centre Debt, the current shareholders of FWTC will hold approximately 26.91% of the total issued and outstanding shares of the Resulting Issuer and the current shareholders of FMAC will hold approximately 48.54% of the total issued and outstanding shares of the Resulting Issuer. It is anticipated that FWTC will complete a “ten (10) old shares for one (1) new share” share consolidation (the “ Consolidation “) immediately following…
