NexgenRx Announces Amendment of Share Capital, Creation and Issuance of Series 1 Preferred Shares
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NexgenRx Announces Amendment of Share Capital, Creation and Issuance of Series 1 Preferred Shares

Thursday, July 9, 2020 7:30 PM
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TORONTO, ON / July 9, 2020 / ACCESSWIRE / NEXGENRX INC. (TSXV:NGX) ("NexgenRx" or the "Corporation") is pleased to announce that it has given effect to the amendment of its share capital, as approved at the annual meeting of shareholders on May 27, 2020, with the removal of its previous five (5) classes of preferred shares and the replacement thereof with a single class of preferred shares, issuable in series. The directors have also approved the creation of a first series of preferred shares (the "Series 1 Preferred Shares"), which have the following attributes:

  • Non-voting;
  • Non-convertible into common shares;
  • Priority over common shares upon liquidation, dissolution or wind-up;
  • Coupon rate of 8% per annum, to be issued as a preferred dividend annually;
  • Eligible to receive general dividends on the same basis as holders of common shares;
  • Issue price of $0.25 per share (closing market price of common shares over the previous 30 days is between $0.17 and $0.20);
  • In the event of a liquidity event (being a transaction resulting in an offer and sale of all of the common shares or all or substantially all of the assets of the Corporation), holders of Series 1 Preferred Shares would be entitled to receive an amount per share as is equal to the offer price for the common shares, less the issuance price of the Series 1 Preferred Shares (being $0.25); and
  • Total aggregate value up to a maximum of $2,000,000 (8,000,000 Series 1 Preferred Shares).

Following the creation of the Series 1 Preferred Shares, the Corporation has issued an aggregate of 5,800,000 Series 1 Preferred Shares at an ascribed price of $0.25 per share. The consideration payable for the foregoing Series 1 Preferred Shares consists of the retirement of outstanding shareholder loans in the aggregate amount of $1,450,000, which accrue interest at a rate of 8% per annum and are due on January 1, 2021 (the "Current Loans"). Of the foregoing principal amount, $425,000 was advanced by and was owing to insiders of the Corporation. The balance of these Current Loans ($1,025,000) was advanced by and was owing to non-insiders of the Corporation. In accordance with applicable securities laws, all of the Series 1 Preferred Shares issued today are subject to a four (4) month plus one day hold period, which will expire on November 2, 2020.

With the Corporation's revenues having been substantially reduced as a result of the COVID-19 pandemic, it does not expect to have sufficient funds available to repay the amounts owing under the Current Loans when they come due on January 1, 2021. Further, with the equity markets having also been substantially damaged by the COVID-19 pandemic and financial crisis, it is not expected that the Corporation would be able to raise any funds via private placement (or any other financing measure) at the present time. Even if such funds were available, they would likely have to be raised at a price below the current market price (which has ranged from $0.17 to $0.20 over the previous 30 days) or less, as compared to the $0.25 price that has been ascribed for the Series 1 Preferred Shares (representing a 66% premium to the market for the common shares), which would be significantly more dilutive to the current holders of common shares than would the issuance of the Series 1 Preferred Shares.

As noted above, there are three individuals who are insiders (two of whom are directors) that held an aggregate of $425,000 (18%) of the principal amount owing under the Current Loans and were issued an aggregate of 1,700,000 Series 1 Preferred Shares. In respect of that portion of the Current Loans, the issuance of Series 1 Preferred Shares to such Insiders constitutes a Related Party Transaction within the meaning of Multi-lateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"), however exemptions are available from the valuation (s. 5.5(a) or (b)) and minority shareholder approval requirements (s. 5.7(a)) of MI 61-101.

About NexgenRx

NexgenRx is Canada's only independent full service technology solutions provider, offering proprietary full front end enrolment, hour bank and mobile access capabilities, combined with state of the art claims adjudication and full provider network coverage. These combined capabilities allow NexgenRx to provide complete proprietary solutions to plan sponsors that need sophisticated front end administration and health benefit technology applications, all in a cost- effective manner. NexgenRx is committed to building partnerships with organizations looking to exceed the expectations of their clients and plan members and deliver superior administration and claims processing solutions at a competitive cost. More information on NexgenRx can be found at www.nexgenrx.com.

Caution Regarding Forward-Looking Statements

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: uncertainty as to whether our strategies and business plans will yield the expected benefits; availability and cost of capital; the ability to identify and develop and achieve commercial success for existing and new products and technologies; the level of expenditures necessary to maintain and improve the quality of products and services; changes in technology and changes in laws and regulations; continued development and enhancement of the Corporation's proprietary software technology; cyber security risks and the other risks and uncertainties disclosed in our annual Management's Discussion and Analysis, as filed under our profile on SEDAR at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of the release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Ronald C. Loucks
NexgenRx Inc.
President and CEO
416.695.3393 x801

Kelly Ehler CPA, CA
NexgenRx Inc.
Chief Financial Officer
416-695-3393x803

SOURCE: NexgenRx Inc.

NexgenRx Inc.
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