Solegear Bioplastics Inc.
TSX VENTURE : SGB

Solegear Bioplastics Inc.

June 28, 2016 11:24 ET

Solegear Announces Closing of Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 28, 2016) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Solegear Bioplastic Technologies Inc. (the "Company" or "Solegear") (TSX VENTURE:SGB) is pleased to announce that the Company has completed a non-brokered private placement (the "Private Placement") of special warrants (the "Special Warrants") for aggregate gross proceeds of C$395,939.60. The Special Warrants are equity securities that entitle the holder to a future issuance of either common shares or units of the Company on the terms described below. No commissions or finder's fees were paid in connection with the Private Placement. The funds will be used for working capital and ongoing commercial activities.

"This latest Private Placement provides Solegear with additional working capital to execute on its growing sales pipeline and welcomes new investors who support our objective to reformulate, rebrand and relaunch everyday consumer products using plant-based plastics," said Paul Antoniadis, CEO of Solegear.

The Private Placement has received final approval from the TSX Venture Exchange (the "TSX-V"). All Special Warrants issued pursuant to this Private Placement are subject to a four-month hold period expiring on October 29, 2016 in accordance with applicable Canadian securities laws.

Terms of the Special Warrants

Each Special Warrant will be deemed to be exercised by the holder upon the earliest to occur of the following (the "Triggering Event"): (a) the date of the Company's next offering of common shares or units; (b) the date Solegear elects to cause a deemed exercise by providing notice to the holder of the Special Warrant; and (c) if neither of the foregoing have occurred, June 28, 2019. Promptly following the Triggering Event, the Company will issue either common shares or units to each holder of a Special Warrant, as determined by dividing the subscription price paid by the holder to the Company for such Special Warrant, plus 10% simple interest, by the applicable conversion price. If the Triggering Event is an offering of common shares or units, the applicable conversion price will be the greater of $0.155 and a 20% discount to the price of the common shares or units issued by the Company in such offering, and the securities to be issued will either be common shares or units, on consistent terms with the terms of the Company's next offering of common shares or units, as applicable. Otherwise, the applicable conversion price will simply be $0.155 and the securities to be issued will be common shares.

Other than the deemed exercise provisions outlined above, the Special Warrants do not provide the holders thereof with any ability to exercise the Special Warrants.

Related Party Participation in the Private Placement

Four insiders of Solegear participated in the Private Placement, thereby making the Private Placement a "related party transaction" as defined under Multilateral Instrument 61-101-Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Michel Labonté, Chief Technology Officer of the Company, and his spouse, each subscribed for a Special Warrant having a subscription price of $10,000; Noel Harvey, VP of Business Development of the Company, subscribed for a Special Warrant having a subscription price of $6,410; Paul Antoniadis, Chief Executive Officer and director of the Company, subscribed (through Scenario Ventures VCC Inc.) for a Special Warrant having a subscription price of $75,000; and Jim Zadra, a director of the Company, subscribed for a Special Warrant having a subscription price of $15,000.

Following the closing of the Private Placement, and taking into account the effect of a deemed exercise of the Special Warrants for common shares at the minimum conversion price of $0.155, Michel Labonté and his spouse will beneficially own and control 191,532 common shares, representing approximately 0.3% of the issued and outstanding common shares on an undiluted basis; Noel Harvey will beneficially own and control 41,355 common shares, representing approximately 0.1% of the issued and outstanding Shares on an undiluted basis; Paul Antoniadis will beneficially own and control 2,920,989 common shares, representing approximately 5.1% of the issued and outstanding common shares on an undiluted basis; and Jim Zadra will beneficially own and control 231,774 common shares, representing approximately 0.4% of the issued and outstanding common shares on an undiluted basis.

Each common share of the Company provides the holder with the right to one vote per common share. The Special Warrants do not entitle the holders to any voting rights. Therefore, all Special Warrants subscribed for pursuant to the Private Placement provide the subscriber, including Mr. Labonté and his spouse, Mr. Harvey, Mr. Antoniadis and Mr. Zadra, with no additional votes at present but the holders thereof will have one vote per common share when issued upon the deemed exercise pf the Special Warrants. The Private Placement was unanimously approved by the directors of the Company.

Other than the subscription agreements between Mr. Labonté, Mr. Harvey, Mr. Antoniadis, Mr. Zadra and the Company relating to the Private Placement, the Company has not entered into any agreement with an interested party or a joint actor with an interested party in connection with the Private Placement. Neither the Company, nor to the knowledge of the Company after reasonable inquiry, a related party, has knowledge of any material information concerning the Company or its securities that has not been generally disclosed.

The Private Placement is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 (pursuant to subsections 5.5(c) and 5.7(1)(b)) as it was a distribution of securities for cash and neither the fair market value of the Special Warrants distributed to, nor the consideration received from, interested parties exceeded $2,500,000. The material change report in connection with the Private Placement was not filed 21 days in advance of the closing of the Private Placement for the purposes of Section 5.2(2) of MI 61-101 on the basis that the subscriptions under the Private Placement were not available to the Company until shortly before the closing.

About Solegear Bioplastic Technologies Inc.

Solegear Bioplastic Technologies Inc. (TSX VENTURE:SGB) is an innovator in the field of next generation bioplastics made from annually renewable plant-based sources. Committed to the principles of Green Chemistry, Solegear is driven by its mission to create healthier, safer and stronger communities by fundamentally changing the way plastics are made.

Solegear's proprietary bioplastic formulations, Polysole® and Traverse®, are designed to meet today's social and corporate requirements to lower carbon emissions, reduce waste and remove toxicity typically associated with traditional petroleum-based plastics. Together with its partners, Solegear custom engineers, produces and distributes its high-performance bioplastics as resin, sheets and finished goods with some of the highest percentages of renewable, plant-based materials currently available in the industry.
For more information: www.solegear.ca and www.mygoodnatured.com

On behalf of the Company:

Paul Antoniadis, Chief Executive Officer and Director

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

This press release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

Cautionary Statement Regarding Forward-Looking Information

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the risk that: (i) the bioplastics market may not grow as anticipated by the Company, and (ii) the economic circumstances of Solegear may change and result in the proceeds of the Private Placement being used other in the manner described above.

When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

Other than as required under securities laws, we do not undertake to update this information at any particular time.

Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.

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