VICTORIA, BRITISH COLUMBIA—Plurilock Security Inc. (formerly Libby K Industries Inc.), further to its news releases dated June 23 and Aug. 24, 2020, has closed its previously announced qualifying transaction and changed its name to Plurilock Security Inc. Also in connection with the transaction, the company completed a consolidation of its common shares on a one-for-two basis.
The shares are expected to resume trading on the TSX Venture Exchange as a Tier 2 technology issuer under the ticker symbol PLUR on or about Sept. 24, 2020, subject to the TSX-V issuing its final exchange bulletin confirming completion of the transaction and its approval thereof.
The transaction was effected pursuant to a three-cornered amalgamation whereby the company’s wholly owned subsidiary amalgamated with Plurilock Security Solutions Inc. under the Business Corporations Act (British Columbia) and Plurilock became a wholly owned subsidiary of the company.
The Concurrent Financings
In connection with the transaction, the company and Plurilock have completed concurrent brokered private placements for aggregate proceeds of $2.6-million. As disclosed in the company’s filing statement, the concurrent financings were conducted in two components:
By the company, for retail investors who subscribed under the prospectus exemption pursuant to B.C. Instrument 45-536;
By Plurilock, for investors who subscribed under all other prospectus exemptions.
The Libby K brokered component comprised 1,262,000 units of the company at a price of 30 cents per unit, for aggregate gross proceeds of $378,600. Each unit comprised one share and one-half of a warrant, and each warrant is exercisable for one share at an exercise price of 40 cents until Sept. 17, 2022, all on a postconsolidation basis. The shares and warrants issued under the Libby K brokered component, as well as any shares issued upon exercise of such warrants, are subject to a hold period and may not be traded until Jan. 18, 2021, except as permitted by applicable securities legislation and the rules and policies of the TSX-V.
The Plurilock brokered component comprised 7,416,162 subscription receipts of Plurilock at a price of 30 cents per subscription receipt, for aggregate gross proceeds of $2,224,848.60. Pursuant to the terms of the transaction (and after giving effect to the consolidation), each subscription receipt was effectively converted into one unit for a total of 7,416,162 units.
PI Financial Corp. (as lead agent) and Industrial Alliance Securities Inc. acted as agents for the concurrent financings. As consideration for certain services provided in connection with the concurrent financings, the agents and members of the selling group received an aggregate of $186,675.94 in cash and 622,252 compensation warrants. Each compensation warrant is exercisable for one share at an exercise price of 30 cents until Sept. 17, 2022. In addition, Plurilock issued to PI Financial 200,000 common shares of Plurilock as consideration for corporate finance advisory services. The corporate finance shares were exchanged for 200,000 shares upon completion of the transaction. The compensation warrants and any shares issued upon exercise of the compensation warrants are subject to a hold period and may not be traded until Jan. 18, 2021, except as permitted by applicable securities legislation, and the rules and policies of the TSX-V.
No other finders’ fees were payable in connection with the concurrent financings.
In accordance with the terms of the amalgamation agreement dated June 23, 2020, as amended, with Plurilock and a wholly owned subsidiary of Libby K, and immediately before completion of the share exchange (as defined below): (a) all of the in-the-money stock options and warrants of Plurilock were deemed to be exercised into 900,524 Plurilock common shares on a cashless basis; and (b) each outstanding Plurilock preferred share was cancelled and converted into 2,514,692 Plurilock shares.
After completion of such transactions, and before the share exchange and the completion of the Plurilock brokered component, there were an aggregate of 27,515,637 Plurilock shares issued and outstanding. All stock options of the Plurilock brokered component that were not in the money were cancelled.
The amalgamated entity formed pursuant to the amalgamation is now a wholly owned subsidiary of Libby K, and the outstanding securities of Plurilock were exchanged for securities of the resulting issuer immediately before the completion of the transaction, as follows:
Each outstanding Plurilock share held by certain shareholders that formed the founder trust distribution in 2020 were exchanged for 1.655 shares of the resulting issuer on a postconsolidation basis.
All securities issued pursuant to Plurilock’s bridge financings were exchanged for one resulting issuer unit (as defined below), at a discounted price of 22.5 cents per unit, for an aggregate of 6,879,992 units.
Each outstanding Plurilock share that (i) is not held by 1.655 exchange ratio Plurilock holders and (ii) does not comprise a portion of the bridge units was exchanged for 0.8152 resulting issuer share.
After the share exchange, each outstanding Plurilock share was exchanged for one resulting issuer share.
Outstanding Share Capital and Escrow
As a result of the transaction, there are an aggregate of 45,055,790 resulting issuer shares issued and outstanding, of which the previous shareholders of Libby K hold approximately 12.2 per cent, the purchasers under the concurrent financings hold approximately 19.7 per cent, the purchasers under the bridge financings hold approximately 15.3 per cent, and the former shareholders of Plurilock hold approximately 52.8 per cent, respectively.
Plurilock shareholders, representing an aggregate of 14,932,573 resulting issuer shares posttransaction, have entered into contractual lock-up agreements, an aggregate of 2,986,838 resulting issuer shares and 123,610 resulting issuer warrants are subject to Tier 2 surplus escrow agreements, an aggregate of 5,070,614 resulting issuer shares are subject to Tier 2 value escrow agreements, and the 1,262,000 units issued in the Libby K brokered component are subject to a four-month hold, pursuant to B.C. Instrument 45-536.
New Board and Management
Upon completion of the transaction, all directors and officers of Libby K, other than Robert Kiesman, have resigned and were replaced by the following nominees of Plurilock: (a) Ian Paterson as chief executive officer and director; (b) Barry Carlson as director; (c) Ed Hammersla as director; (d) Admiral Mike McConnell as director; (e) Roland Sartorius as chief financial officer and corporate secretary; and (f) Jord Tanner as chief technology officer. Mr. Kiesman will remain as a director and chair of the board.
Change of Auditor and Year-end
In connection with the closing of the transaction, the resulting issuer’s newly appointed board of directors approved the appointment of Deloitte LLP as auditor of the resulting issuer and accepted the resignation of Smythe LLP. Smythe LLP resigned as auditor at the resulting issuer’s request, and there were no reservations or modified opinions on any of the company’s financial statements since Smythe LLP was appointed auditor of the company, nor, in the opinion of the company, were there any reportable events as defined in National Instrument 51-102 — Continuous Disclosure Obligations during such period. The newly appointed board also resolved to change the year-end of the resulting issuer to coincide with that of Plurilock.
Complete details of the terms of the transaction are set out in the filing statement available on the resulting issuer’s profile on SEDAR.
Investors are cautioned that, except as disclosed in the filing statement, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading the securities of the resulting issuer should be considered highly speculative.
About Plurilock Security Inc.
Plurilock is an innovative identity-centric cybersecurity company that reduces or eliminates the need for passwords by measuring the pace, rhythm and cadence of a user’s keystrokes to confirm their identity, and is a global leader in continuous multifactor authentication (MFA) solutions. Based in Victoria, B.C., Plurilock’s software leverages state-of-the-art behavioral biometric, environmental and contextual technologies to provide invisible, adaptive and risk-based MFA, device and malware protection, and strong identity assurance — all with the lowest possible cost and complexity. Plurilock enables organizations to compute safely and with peace of mind. Plurilock reduces or eliminates the need for passwords by measuring the pace, rhythm and cadence of a user’s keystrokes to confirm their identity. Plurilock’s flagship products, Plurilock DEFEND and Plurilock ADAPT, leverage state-of-the-art behavioral biometric, environmental and contextual technologies to provide invisible, adaptive and risk-based device and malware protection, and continuous identity assurance.
We seek Safe Harbor.