The Good Shroom Co Inc. (CVE:MUSH), previously Cluny Capital Corp, (CVE:CLN.H), a Toronto Venture Exchange (TSX) capital pool company, has announced the completion of its qualifying transaction, which involved the amalgamation of Teonan Biomedical Inc. with the company's wholly-owned subsidiary, as part of a three-cornered amalgamation between the parties.
Immediately prior to the transaction, the company was continued under the Canada Business Corporations Act, its outstanding common shares were consolidated on a 3 for 1 basis and, the company changed its name to The Good Shroom Co Inc. (Les Bons Champignons Inc.).
WATCH: The Good Shroom Co to go public on the Toronto Stock Exchange Venture under the ticker MUSH
The company also announced the conversion of the subscription receipts issued under the private placement offering which closed on February 10, 2021, and, led by Leede Jones Gables for gross proceeds of $2,875,000. Each subscription receipt issued at $0.25 has been automatically exchanged for one common share of the company and one common share purchase warrant of the company (on a post-consolidation basis).
Each warrant is exercisable at the price of $0.50 and expires February 10, 2023. The warrants may be subject to an accelerated expiry at the discretion of the company if the volume-weighted average closing price of the shares is greater than $0.60 for a period of 10 consecutive trading days on the venture exchange.
In connection with the offering, the agent received a cash commission of $214,965 and 920,000 compensation options were issued, with each compensation option granting the right to acquire one share, at the price of $0.25, for a period of 24 months. The securities issued under the offering remain subject to resale restrictions until June 11, 2021.
It is expected that the net proceeds of the offering will be used to support the company's retail initiative, marketing activities, development and launch of new products as well as for general working capital.
Final acceptance of the transaction is subject to and will occur, upon the issuance of the Final Exchange Bulletin after which, The Good Shroom Co will no longer be a capital pool company and will be classified as a Tier 2 Industrial Issuer trading under the symbol MUSH. Subject to final approval, the shares are expected to resume trading the week of April 26.
New board headed by Teonan's Eric Ronsse
In connection with the transaction, the company's incumbent board of directors has resigned, and the board of directors has been reconstituted and is now comprised of the following individuals: Eric Ronsse, Stephanus Rossouw, Franck Aton, Claude Dufresne and Steve Saviuk. The board has appointed Ronsse as chief executive officer, Stephanus Rossouw, as chief marketing officer, Scott Jardin as chief financial officer and Anik Gendron as corporate secretary.
In a statement, Ronsse commented: "We are all very excited by the closing of this transaction as it will permit us to fuel various sales and development initiatives in both our functional beverage brands, Teonan and Velada. We've experienced early signs of growth under the Teonan brand and this transaction allows us to allocate more capital to push our marketing efforts further and execute our retail distribution initiatives both in Canada and the US. It will also allow us to execute on a functional beverage private labelling initiative in our effort to lead the functional beverage space."
As principal shareholders of Teonan, upon completion of the transaction, Ronsse received and now owns and controls, 18,383,353 shares, including 6,355,736 shares held by 9438-9160 Quebec Inc., a company controlled by him, together, representing 38% of the outstanding shares on a non-diluted basis and 30% on a diluted basis. Rossouw now owns and controls 6,127,451 shares, representing 13% of the outstanding shares on a non-diluted basis and 10% on a diluted basis.
The Quebec-based company is a manufacturer of functional mushroom and CBD-infused beverages products under the Teonan and Velada brands, which it is currently selling within the US and in Canada.
Contact the author at jon.hopkins@proactiveinvestors.com