EQ Inc. Announces up to approximately $1,450,000 Non-Convertible Secured Promissory Notes and Issuance of Bonus Shares
TORONTO, ON – August 20, 2015 — EQ Inc. (TSXV: EQ) (the “Corporation”) announced today that, subject to the approval of the TSX Venture Exchange (the “TSX-V”), it intends to issue up to approximately $1,450,000 non-convertible secured promissory notes (the “New Promissory Notes”) to certain arm’s length and non-arm’s length lenders. The New Promissory Notes will bear interest at a rate of 8% per annum, calculated annually, and will be due twelve months from the date of issuance.
The Corporation currently has $700,000 of 15% secured promissory notes (the “Existing Promissory Notes”) outstanding, $600,000 of which is set to expire on September 10, 2015 and $100,000 of which is set to expire on September 30, 2015. The amounts owed pursuant to the Existing Promissory Notes, including the interest accrued, shall comprise an aggregate of approximately $750,000 at maturity. The Corporation intends to issue the New Promissory Notes: (i) in the amount of approximately $750,000 to the current holders of the Existing Promissory Notes in exchange for the Existing Promissory Notes and the accrued interest owing thereon; and (ii) in an amount of up to $700,000 to certain new lenders. The obligations under the New Promissory Notes will be secured by a general security interest in all of the assets of the Corporation.
The non-arm’s length lenders will be Vernon Lobo, the Chairman and a director of the Corporation, Geoffrey Rotstein, the President, Chief Executive Officer and a director of the Corporation, and Dilshan Kathriarachchi, the Chief Technology Officer of the Corporation.
The lenders will receive seven non-transferable warrants (the “Bonus Warrants”) for each dollar of principal amount of New Promissory Notes, with each Bonus Warrant being exercisable for a period of twelve months from the date of issuance for one common share of the Corporation (a “Bonus Share”) at an exercise price of $0.10 per Bonus Share. All Bonus Shares will be subject to a four months hold period from the date of issuance in accordance with applicable securities law.
The Corporation expects to use the proceeds from the issuance of the New Promissory Notes to execute its business plan and for working capital requirements.
The issuance of the Bonus Warrants is subject to acceptance by the TSX-V.
The issuance of the New Promissory Notes and the Bonus Warrants constitutes a “related party transaction” under Multilateral Instrument 61-101 Protection of Minority Holders in Special Transactions (“MI 61-101”). The Corporation is relying, however, on an exemption from the valuation and minority voting requirements of MI 61-101.
About EQ Works
EQ Works (www.eqworks.com) provides a smarter way to target customers. The Corporation uses its real-time technology and advanced analytics to detect the actionable data that boosts performance for all web, mobile, social and video initiatives. EQ Works balances the many components that comprise the complex advertising ecosystem and establishes equilibrium for reaching the right audience at the right time through any web or mobile device.
Neither the TSX-V nor its Regulation Services Provider (as that term is defined in policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.
This news release may contain forward-looking statements that are based on management’s current expectations and/or assumptions relating to, among other things, the use of proceeds from the issuance of the New Promissory Notes, and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. This list is not exhaustive of the factors that may affect any of the Corporation’s forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Corporation’s forward-looking statements. The Corporation is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.
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