Maritime Launch Services Inc. is pleased to confirm it has secured agreements and regulatory approval to complete its previously announced financing valued at approximately $1,600,000 in cash proceeds at a price of $0.05 per share, of which $331,525 was previously released to the Company over the preceding five months from existing shareholders, as short-term interest free loans. The Company has incurred finder’s fees associated with the financing of $128,000 to be settled in shares ($0.05 per share totalling 2,560,00) and 2,560,000 broker warrants at a strike price of $0.05 per warrant, expiring in two years, as a further finder’s fee.

As a further component of the financing, the Company expects to issue 4,170,000 shares ($208,500 at $0.05 per share) to certain officers, directors and employees as payment for previously unpaid fees and salaries owed from 2024, subject to regulatory approval.

Total shares to be issued per above in conjunction with the equity financing, including fees, are approximately 38,730,000 (plus 2,560,000 warrants).

A portion of the proceeds will be used for the redemption of previously issued debentures (see below), and the remaining will be used for vendor payments and ongoing operations.

Debenture Extension

The Company has received conditional regulatory approval to close the two-year extension agreement (previously announced as an agreement in principle on November 13, 2024) with the holders of its outstanding convertible debentures dated May 7, 2021 (as amended) and the holders of its outstanding convertible debentures dated December 7, 2023. This will extend the maturity date of all outstanding convertible debentures from December 7, 2024, to December 7, 2026.

As a condition of the extension, the Company will be using $500,000 of the proceeds from the financing to settle $500,000 of the outstanding convertible debentures in accordance with their terms. In addition, the Company will issue 4,830,105 common shares, in aggregate, from Treasury to the debenture holders as an extension fee.

On or about February 18, 2025, the Company will issue 2,706,978 shares as payment for $324,837 of payment-in-kind (“PIK”) interest owing at December 7, 2024 (share price of $0.12 per share) in accordance with the pre-extension convertible debenture terms.

Total shares issued in payment of outstanding PIK interest and the extension fee are a combined total of 7,537,083.

The cash interest rate of 10% plus an additional PIK interest rate of 5%, payable in common shares, remains unchanged. All cash interest will compound annually, and all principal and cash interest will be payable on the maturity of the convertible debentures. The 5% PIK interest, payable in common shares, will now be paid semi-annually, starting June 7, 2025 and every six months thereafter until maturity. Under the previously existing terms of the convertible debentures, the conversion rate on all principal and interest will be adjusted to $0.05 to match the pricing of the equity financing.

The debenture extension was approved in writing by a majority of non-debenture holding shareholders.

Two of the holders of the convertible debentures are “related parties” and, accordingly, the debenture extension will be considered a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on the exemption from the formal valuation and minority approval requirements of MI 61-101 on the basis that the Company is (i) in a situation of serious financial difficulty as it is not currently in a position to repay the convertible debentures on their maturity, (ii) the Debenture Extension is designed to improve the financial position of the Company, (iii) the independent members of the board of directors have, acting in good faith, determined that (i) and (ii) apply and the terms of the Debenture Extension are reasonable in the circumstances of the Company. The debenture extension is expected to close on or about the week of February 24, 2025, per the regulatory approval conditions. The Company did not announce the closing of the related party debenture extension 21 days in advance because the terms of the extension require completion of the financing that was only secured on or about February 18, 2025.

Source: Business Wire