FRX Innovations Inc. (formerly Good2GoRTO Corp.) (TSXV:FRXI) (“FRXI” or the “Resulting Issuer”) is pleased to announce the completion of the previously announced business combination transaction (the “Business Combination”) involving FRX Polymers, Inc. (“FRX”) as the “Qualifying Transaction” of the Resulting Issuer (as such term is defined within the meaning of Policy 2.4 of the TSX Venture Exchange (the “Exchange”). Pursuant to the Business Combination, FRX Polymer (Canada) Inc. (“Finco”), a wholly owned Canadian subsidiary of FRX and 13448061 Canada Inc. (“Pubco Sub”), a wholly owned subsidiary of the Resulting Issuer, completed a three-cornered amalgamation and FRXI, FRX and G2G Merger Sub, Inc. (“Merger Sub”) completed a reverse triangular merger. Subject to receiving final Exchange acceptance, the common shares of the Resulting Issuer (the “Resulting Issuer Shares”) are expected to resume trading on the Exchange on or about May 24, 2022 under the new name “FRX Innovations Inc.”, on a post-Consolidation (as defined below) basis and under the new trading symbol “FRXI”. In addition, it is anticipated that warrants of the Resulting Issuer (the “Resulting Issuer Warrants”) will also commence trading on the Exchange under the symbol “FRXI.WT” on or about May 24, 2022, subject to the Exchange providing final approval of the listing of the Resulting Issuer Warrants.
Summary of the Business Combination
Pursuant to the terms of a business combination agreement among FRX, Finco, Pubco Sub, the Resulting Issuer and Merger Sub dated November 2, 2021, as amended February 1, 2022 and April 29, 2022 (the “Business Combination Agreement”): (a) Finco and Pubco Sub completed a three-cornered amalgamation under the Canada Business Corporations Act to form “Amalco”; and (b) the Resulting Issuer, FRX and Merger Sub completed a reverse triangular merger under the laws of the State of Delaware (“MergeCo”). MergeCo will carry on the business previously carried on by FRX as a subsidiary of the Resulting Issuer.
Prior to the completion of the Business Combination, the Resulting Issuer completed: (i) a name change from “Good2GoRTO Corp.” to “FRX Innovations Inc.”, and (ii) a share consolidation of its issued and outstanding capital on the basis of one post-consolidation Resulting Issuer Share for each 3.5 pre-consolidation Resulting Issuer Shares (the “Consolidation”).
Following completion of the Consolidation and pursuant to the Business Combination (with each Resulting Issuer Share being issued on a post-Consolidated basis):
- the holders of common shares of Finco (“Finco Shares”), including persons receiving Finco Shares upon conversion of the Subscription Receipts (as defined below) and the Convertible Debentures (as defined below), other than FRX, received one Resulting Issuer Share for each Finco Share held in exchange for the issuance to the Resulting Issuer of one common share of Amalco for each Finco Share so exchanged;
- the holders of shares of FRX (“FRX Shares”) received either 1.0767 Resulting Issuer Shares or an amount of cash equal to CAD$1.0767 for each FRX Share held in exchange for the issuance to the Resulting Issuer of 1.0767 common shares of MergeCo for each FRX Share so exchanged;
- all of the options to purchase FRX Shares (“FRX Options”) were replaced with options to purchase one Resulting Issuer Share for each FRX Share issuable on exercise of the FRX Options; and
- all of the warrants to purchase Finco Shares (“FRX Warrants”) were replaced with warrants to purchase one Resulting Issuer Share for each Finco Share issuable on exercise of the FRX Warrants.
Upon completion of the Business Combination, there were 80,003,312 Resulting Issuer Shares and 3,436,513 Resulting Issuer Warrants issued and outstanding. An aggregate 35,200,157 Resulting Issuer Shares, 314,337 options to purchase Resulting Issuer Shares and 159,195 warrants to purchase Resulting Issuer Shares, issued to the former holders of FRX Shares were placed in escrow pursuant to a value security escrow agreement pursuant to the policies of the Exchange and will be released in accordance with the terms thereof.
Private Placement Financings
Prior to the closing of the Business Combination, Finco completed a non-brokered unsecured 8% convertible debenture (“Finco Convertible Debentures”) financing in multiple tranches between August 30, 2021 and October 5, 2021, for aggregate gross proceeds of CAD$3,953,000 (the “Finco Convertible Debenture Financing”). Immediately prior to closing of the Business Combination, the principal amount plus accrued interest of the Finco Convertible Debentures were converted at a price of $0.80 per Finco Share, for a total issuance of 5,209,069 Finco Shares. Immediately prior to closing of the Business Combination, each Finco Convertible Debenture was deemed to be exercised without payment of any additional consideration and without further action on the part of the holders thereof, into one Finco Share. For certain services in connection with the Finco Convertible Debenture Financing, Echelon Wealth Partners Inc. (“Echelon”) received 142,030 warrants to purchase an equivalent number of Finco Shares (“Finco Convertible Debenture Warrants”) and Haywood Securities Inc. (“Haywood”) received 26,600 Finco Convertible Debenture Warrants exercisable at a price of $1.00 per Finco Share until May 16, 2024. Upon closing of the Business Combination, all Finco Convertible Debenture Warrants were exchanged for warrants of the Resulting Issuer with identical terms to the Finco Convertible Debenture Warrants.
On February 3, 2022, Finco completed a brokered private placement (the “Private Placement”) of an aggregate of 5,899,000 Subscription Receipts at a subscription price of $1.00 per Subscription Receipt for aggregate gross proceeds of $5,899,000. Finco also completed the non-brokered sale of: (i) 115,000 Subscription Receipts, at a subscription price of $1.00 per Subscription Receipt for aggregate gross proceeds of $115,000, and (ii) $482,029 principal amount of unsecured non-interest bearing convertible debentures (the “Finco New Convertible Debentures”, and collectively with the Finco Convertible Debentures, the “Convertible Debentures”). On April 18, 2022, Finco completed an additional private placement offering of CAD$377,000 Finco New Convertible Debentures. Immediately prior to closing of the Business Combination, each Subscription Receipt and Finco New Convertible Debenture was deemed to be exercised or converted at $1.00 without payment of any additional consideration and without further action on the part of the holders thereof, into one unit of Finco, comprised of one Finco Share and one-half of one Finco Share purchase warrant. Pursuant to an agency agreement dated February 3, 2022, between FRX, Finco, Echelon, as lead agent, Eight Capital Corp. and Haywood (together with Echelon, the “Agents”) in connection with the Private Placement, the Agents received (A) a cash commission equal to: (i) 7.0% of the aggregate gross proceeds of the Private Placement excluding proceeds from subscribers on a president’s list (the “President’s List”) plus (ii) 3% of the gross proceeds of the Private Placement from subscribers on a President’s List, and (B) such number warrants to purchase Finco Shares (“Agents Warrants”) as is equal to: (i) 7.0% of the aggregate number of Subscription Receipts issued under the Private Placement excluding Subscription Receipts issued to President’s List subscribers and (ii) 3.0% of the aggregate number of Subscription Receipts issued under the Private Placement to President’s List subscribers. Each Agent Warrant is exercisable into one Finco Share at an exercise price equal to the $1.00 per share for a period of 24 months following closing of the Business Combination. In addition, Finco paid Echelon a corporate finance fee by way of a cash payment of CAD$17,500 (plus tax) and the issuance of 17,500 Agent Warrants. In addition, Finco paid an arm’s length finder a finder’s fee consisting of a cash fee of CAD$9,040 and warrants to purchase 9,040 Finco Shares (“Finco Finder Warrants”). Upon closing of the Business Combination, all Agents Warrants and Finco Finder Warrants were exchanged for warrants of the Resulting Issuer with identical terms to the Agents Warrants and Finco Finder Warrants.
New Board of Directors
Pursuant to the Business Combination, the Resulting Issuer’s board of directors has been reconstituted to include Ross Haghighat, James Cassina, Frank Hallam, CPA, Marc-Andre Lebel, P.Eng., Mark Lotz, Dr. Bernhard Mohr, PhD, Ekaterina Terskin and Fanglu Wang.
The Resulting Issuer is pleased to announce that FRX, its wholly-owned subsidiary, has entered into an investor relations agreement (the “Investor Relations Agreement”) with Harbor Access Inc. (“Harbor”) whereunder Harbor has been engaged to provide strategic investor relations and capital markets communications services to FRX.
The terms of the Investor Relations Agreement provide that FRX will pay Harbor a monthly fee of USD$8,000. The term of the Investor Services Agreement commenced on January 1, 2022 and will continue until June 30, 2022, unless extended by mutual agreement of the parties.
Harbor Access is a strategic investor relations advisory firm with offices in Stamford, Connecticut and Toronto, Ontario. With over 20 years of capital markets experience, Harbor specializes in working with small and mid-cap companies that are looking to build, support or expand their existing investor relations strategy and capabilities. Harbor nor any of its principals does not have an ownership interest, directly or indirectly, in the Resulting Issuer or it securities, nor has the Resulting Issuer granted Harbor or its principals any rights to acquire any such interests.
About FRX Innovations Inc.
FRXI is a global manufacturing company, producing a family of environmentally sustainable flame-retardant products that serve a number of large markets spanning electronics, automotive, electric vehicles (EV) and medical devices. FRXI is led by a team of highly experienced business and technical professionals and is positioned to be a leader in the rapidly growing flame retardant plastics and additives market. Nofia® is a registered trademark of FRX Polymers, Inc. Nofia® products are manufactured at its manufacturing facility on the Port of Antwerp Belgium, one of the world’s largest chemicals producing clusters. Nofia® phosphonates are produced using sustainable green chemistry principles such as a solvent-free production process, no waste by-products, and near 100% atom efficiency. FRXI’s portfolio includes an extensive patent estate. FRXI has been the recipient of numerous awards, including the EPA’s Environmental Merit Award, the Belgium Business Award for the Environment, and the Flanders Investment of the Year Award. FRXI has also been recognized six times on the Global Cleantech 100 list. For more information on FRXI, visit https://www.frx-innovations.com.
None of the securities issued pursuant to the Business Combination have been or will be registered under the United States Securities Act of 1933, as amended, or any state securities laws, and any securities issued pursuant thereto will be issued in reliance upon available exemptions from such registration requirements. This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
For further information, please contact:
FRX Innovations Inc.
Marc-Andre Lebel, Chief Executive Officer
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.
Investors are cautioned that, except as disclosed in the listing statement prepared in connection with the Business Combination, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon.
The TSX Venture Exchange has in no way passed upon the merits of the Business Combination and has neither approved nor disapproved the contents of this news release.
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would” , “might “ or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: (a) timing and listing of the Resulting Issuer Shares and Resulting Issuer Warrants on the Exchange, and (b) details with respect to the business of the Resulting Issuer. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; the delay or failure to receive board, shareholder, court or regulatory approvals; the supply and demand for labour and other project inputs; changes in commodity prices; changes in interest and currency exchange rates; risks relating to inaccurate geological and engineering assumptions; risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters); risks relating to adverse weather conditions; political risk and social unrest; changes in general economic conditions or conditions in the financial markets; changes in laws; risks related to the direct and indirect impact of COVID-19 including, but not limited to, its impact on general economic conditions, and the ability to obtain financing as required; and other risk factors as detailed from time to time. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, the Resulting Issuer assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law. The statements in this news release are made as of the date of this release.