Nextech AR Solutions Corp. (CSE:NTAR, OTCQB:NEXCF) has announced plans to spin-out its ARitize Maps platform and associated assets into a new ‘Subco’, and seek its subsequent listing on the Canadian Securities Exchange.
If completed, the plan will result in Nextech retaining about 65% of the issued and outstanding shares of Subco, 20% by Nextech shareholders on a pro-rata basis as a dividend or return of capital, and the remaining 15% by certain service providers of Nextech in consideration of past services.
“These positive changes to our spin-out structure are expected to result in less dilution to Nextech and allow our shareholders to receive a larger number of dividend shares of the spun-out entity,” Nextech CEO Evan Gappelberg said in a statement.
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Gappelberg continued: “As previously announced, under the PC 1 (Corp) transaction, we anticipated a minimum of 1,600,000 dividend shares, now however with a direct listing on the CSE, we anticipate being able to distribute 3,200,000 shares of the spun-out entity to Nextech shareholders as a dividend or return of capital on a pro-rata basis."
“This ARitize Maps spin-out and the possibility of additional future spin-outs are intended to unlock the value of the technology that we have been incubating and building inside Nextech for the last three years. I believe that these highly focused spin-out companies will garner more investors’ attention and will increase Nextech’s shareholder value,” he added.
Fund-raising for growth
In connection with the arrangement, the Subco will undertake a private placement of a minimum of 6,000,000 subscription receipts at a price of C$0.25 each to raise aggregate gross proceeds of a minimum of C$1,500,000 for the development and promotion of ARitize Maps and general corporate purposes, Nextech said.
Each subscription receipt will automatically convert, upon the satisfaction or waiver of all conditions precedent to the arrangement and certain other ancillary conditions, into units at no additional cost and without further action by the holder. Each unit will ultimately comprise of one Subco share and one share purchase warrant, with each warrant exercisable for one additional Subco share at an exercise price of C$0.50 for a period of three years from the date of issuance.
Gross proceeds from the private placement will be held in escrow pending the satisfaction of the conditions precedent to the arrangement, whereupon the units underlying the subscription receipts will be issued to the purchasers and the gross proceeds paid to the Subco.
Alternatively, each receipt will terminate on the earlier of (i) the failure to satisfy the conditions precedent before 5.00pm Toronto time on a scheduled date to be determined (deadline); or (ii) public announcement by Nextech prior to the deadline that (A) it does not intend to satisfy any of the conditions or (B) the conditions are not achievable by the deadline.
The gross proceeds will be returned to the purchasers pro-rata without any deduction or interest on termination of the subscription receipts, which will automatically be cancelled.
The private placement is expected to close by July 31, 2022.
Senior Subco management
The Subco directors and officers are expected to comprise Evan Gappelberg as director, chairman, and president; Paul Duffy as director and CEO; Belinda Tyldesley as director and corporate secretary; and Andrew Chan as CFO.
The spin-out is subject to court and shareholder approvals, and standard closing conditions, Nextech said, cautioning that there is no guarantee the arrangement will be successful.
In view of the spin-out, the company said it has terminated its previously announced letter of agreement dated June 1, 2022, with PC 1 Corp relating to the proposed merger of ARitize Maps with PC 1.
The ARitize Maps mobile app allows users to spatially map their location within minutes, and populate it with interactive 3D content, augmented reality navigation, audio, text, images and more. Nextech provides a number of created and pre-loaded 3D objects, and creators can also upload their own OBJ/GLB files and create their own 3D objects to populate their Metaverse.
Nextech president Paul Duffy said: “As the Metaverse begins to take hold, indoor navigation with wayfinding, brand activations and geo-marketing is poised to take off. The latest release of our app makes creating a Spatial point-cloud as easy as taking a video on your smartphone. This is ground-breaking technology and another huge step in our goal of creating a no-code Metaverse Builder platform for Properties, Brands and Creators alike.”
Contact the author at jon.hopkins@proactiveinvestors.com