2018-10-02 15:31 ET – News Release

Mr. Carl Sheppard reports

DUCKWORTH CAPITAL CORP. ANNOUNCES OFFERING

Further to Duckworth Capital Corp.’s press release dated June 21, 2018, with respect to entering into a definitive agreement in connection with its qualifying transaction, GoldSpot Discoveries Inc. has finalized the terms of its brokered private placement, which is to be led by Canaccord Genuity Corp. and include a syndicate of Haywood Securities Inc.

The Agents have been engaged by GoldSpot as agents for the Offering of up to 362,538 subscription receipts (the “Subscription Receipts”) at a price of $16.55 per Subscription Receipt (the “Issue Price”) for gross proceeds of up to $6,000,004. GoldSpot has granted to the Agents an option (the “Agents’ Option”), exercisable by the Agents up to 48 hours prior to the closing of the Offering (the “Closing Date”), to arrange for the purchase of up to an additional approximately 25% (a total of up to 90,635 Subscription Receipts) of the maximum number of Subscription Receipts that may be sold under the Offering at the Issue Price. If the Agent’s Option is exercised in full, the total gross proceeds of the Offering shall be up to approximately $7,500,013. Each Subscription Receipt will be automatically converted, without payment of any additional consideration and without further action on the part of the holder thereof, for one common share in the capital of GoldSpot (each, a “GoldSpot Share”) upon satisfaction of the Escrow Release Conditions (as defined below), subject to adjustment in certain events. The GoldSpot Shares issued upon conversion of the Subscription Receipts will be exchanged for common shares (each, a “Resulting Issuer Share’) of the issuer resulting from the Qualifying Transaction (the “Resulting Issuer”) on the same terms as any other GoldSpot Share in connection with the Qualifying Transaction.

In connection with the Offering, GoldSpot has agreed to pay the Agents a cash commission (the “Cash Commission”) equal to 8% of the gross proceeds of the Offering (provided that the Cash Commission payable shall be reduced to 4% of the gross proceeds of the Offering resulting from investors identified by GoldSpot (the “President’s List”) which is capped at $2,000,000).

As additional consideration, the Agent will be granted on the Closing Date compensation options (“Compensation Options”) equal to 8% of the number of Subscription Receipts issued under the Offering (provided that the number of Compensation Options issuable shall be reduced to 4% of the number of Subscription Receipts sold to investors on the President’s List). Each Compensation Option will be exercisable for one (1) Goldspot Share (subject to any necessary adjustments), as applicable, at the Issue Price (subject to any necessary adjustments) for a period of 12 months following the satisfaction of the Escrow Release Conditions. The Agents will receive replacement Compensation Options upon the completion of the Qualifying Transaction with necessary adjustments to reflect the terms of the Qualifying Transaction.

The Closing Date is expected to be on or about October 23, 2018. On the Closing Date, the gross proceeds from the Offering, less 50% of the Cash Commission and certain expenses and a corporate finance fee of $100,000 (payable 50% in cash and 50% in GoldSpot Shares) (the “Escrow Proceeds”, together with all interest and other income earned thereon, the “Escrowed Funds”) will be delivered to and held by an escrow agent mutually acceptable to GoldSpot and the Agents (the “Escrow Agent”) subject to the following material escrow release conditions, among others (collectively, the “Escrow Release Conditions”):

All conditions precedent to the completion of the Qualifying Transaction, other than the release of the Escrowed Funds to GoldSpot, shall have been satisfied to the satisfaction of, or waived by, the Agents including, without limitation: (a) any necessary government and regulatory approvals; (b) any required shareholder approvals of each of GoldSpot and Duckworth; (c) the conditional approval of the Exchange of the Qualifying Transaction and the listing of the Resulting Issuer Shares to be issued to the purchasers of the Subscription Receipts upon completion of the Qualifying Transaction;
The Agents having received an officer’s certificate from each of GoldSpot and Duckworth that each party has irrevocably instructed its counsel that upon release of the Escrowed Funds to GoldSpot, to issue the GoldSpot Shares underlying the Subscription Receipts and to complete the Qualifying Transaction and issue the securities of the Resulting Issuer;
A joint notice from GoldSpot and Duckworth, and acknowledged by, or on behalf of, the Agents, is delivered to the Escrow Agent stating that all conditions precedent to the completion of the Qualifying Transaction have been satisfied or waived, other than the release of the Escrowed Funds to GoldSpot (the “Release Notice”).
In the event that the Escrow Agent does not receive the Release Notice prior to 5:00 p.m. (Toronto time) on November 30, 2018, or such later date as GoldSpot and the Agents may agree (the “Release Deadline”), the Escrow Agent will return to holders of Subscription Receipts an amount equal to the aggregate Issue Price of the Subscription Receipts held by them and their pro rata portion of any interest earned thereon.

The Qualifying Transaction is anticipated to close towards the end of October, with an annual and special meeting of the shareholders of Duckworth to approve certain matters related to the Qualifying Transaction scheduled to take place on October 12, 2018.

Provided the Escrow Release Conditions are satisfied and the Qualifying Transaction (including a 2:1 consolidation of the Resulting Issuer Shares) is completed, the GoldSpot Shares issued upon conversion of the Subscription Receipts will be issued at effective price of $0.40 per Resulting Issuer Share and convert into 15,000,000 Resulting Issuer Shares, in the event that the minimum gross proceeds of $6,000,000 are raised in connection with the Offering and 18,750,000 Resulting Issuer Shares in the event that the Agents’ Option is exercised if full.