The Private Placement was executed carefully, with the Company taking care not to disturb its valuable tax attributes. As previously disclosed in the Company's financial statements, Intermap has $221 million in Net Operating Losses ("NOLs"), including $164 million in the United States and $57 million in Canada. Greater ownership diversification protects the Company's tax assets from a deemed ownership change, as defined by US IRC Section 382. A deemed ownership change would limit the Company's ability to utilize its tax attributes to increase future cash flow. As a result of this private placement, the total ownership shift for the prior three years immediately after the private placement will be approximately 40%, well within the US IRC Section 382 allowances. The Board and management will remain diligent in maximizing these tax assets as they consider alternative capital strategies to accelerate the Company's growth and strategic alternatives.
The Company intends to use the net proceeds of the Private Placement to satisfy obligations under the amended settlement agreement (the "Settlement Agreement") entered into among the Company, its wholly-owned subsidiary, Intermap Technologies Inc. ("ITI"), and PenderFund Capital Management Ltd. (the "Lender"). Under the terms of the Settlement Agreement, the Company and ITI can fully settle the Company's outstanding debt of US$33.9 million to the Lender with a payment to the Lender of US$1 million on or before September 1, 2020.
"This is the first time we have issued stock in nearly three years and we issued only the amount of stock necessary to achieve our goals," commented Patrick Blott, Intermap's Chairman and CEO. "Because the offering was oversubscribed, we issued fewer shares at a higher price to raise more capital with less dilution than we announced previously. With this financing, the Company has eliminated its debt overhang, strengthened its investor base, and positioned itself for highly scalable growth, while preserving the Company's valuable tax assets, which can fund growth and acquisitions. Investors and customers have begun to respond favorably as we continue to responsibly execute on Intermap's business plan."
The Company also issued 139,284 warrants to certain finders (the "Warrants") under the Private Placement. Each Warrant is exercisable for one Share at an exercise price of US$0.417 per Share, being the U.S. dollar equivalent to CAD$0.56 as of the date of issuance of the Warrants, at any time until July 31, 2022.
All Shares and Warrants issued in connection with the Private Placement are subject to a 4-month hold period during which trading in the securities is restricted in accordance with applicable securities laws.
The Company intends to close a second tranche of the Private Placement within the next two weeks at the same offering price of $0.56 per Share, up to the cumulative maximum number of Shares and Warrants issuable under the Private Placement of 4,317,118. The second tranche is oversubscribed.
The Private Placement and the listing of the Shares issued under the Private Placement and the Shares issuable upon exercise of the Warrants on the Toronto Stock Exchange (the "TSX") are subject to final approval of the TSX upon satisfaction of customary closing conditions. The TSX conditionally approved the Private Placement and the listing of the Shares issued thereunder and the Shares issuable upon exercise of the Warrants prior to closing of the first tranche.
Patrick A. Blott, the Chairman and Chief Executive Officer of the Company, subscribed for 267,857 Shares. His participation constitutes a "related party transaction" as defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Such participation is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 on the basis that participation in the Private Placement by Mr. Blott does not exceed 25% of the fair market value of the Company's market capitalization. Mr. Blott's participation was reduced by strong demand among other investors and reflects continued insider commitment to the Company's business plan. In order to accommodate strong investor demand, amounts allocated to insiders were reduced to approximately 8% of the newly issued shares, down from an initial requested allocation of approximately 23% of the Offering.
The Board of Directors and management team are committed to the ongoing protection of shareholder value and re-establishment of credibility in the capital and business markets where the Company competes. The Company completed the Private Placement among 41 investors, including existing, former and new shareholders. As a result, the Company expanded and diversified its investor base, and following the lock-up the publicly traded stock, now has a bigger float with greater liquidity. The Company will continue to minimize dilution as it seeks to capitalize on opportunities to grow the Company and safeguard and maximize shareholder value.
For more information about Intermap's geospatial solutions, visit intermap.com/investors to download a presentation.
Intermap Reader Advisory
Certain information provided in this news release, including (but not limited to): the completion of additional issuances of Shares and Warrants in one or more subsequent tranches, the use of proceeds of the Private Placement, the elimination of the Company's debt to the Lender, the future value and liquidity of the Company's updated investor base and the Company's future efforts to minimize dilution, the Company's future growth prospects, and the value of the NOLs including their ability to fund future growth and acquisitions, constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast", "will be", "will consider", "intends" and similar expressions are intended to identify such forward-looking statements. Although Intermap believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of known and unknown risks and uncertainties. Intermap's forward-looking statements are subject to risks and uncertainties pertaining to, among other things, COVID-19 and its impact on both the Company's business and operations and those of its customers, cash available to fund operations, availability of capital, revenue fluctuations, nature of government contracts, economic conditions, loss of key customers, retention and availability of executive talent, competing technologies, common share price volatility, loss of proprietary information, software functionality, internet and system infrastructure functionality, information technology security, breakdown of strategic alliances, and international and political considerations, as well as those risks and uncertainties discussed Intermap's Annual Information Form and other securities filings. While the Company makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to Intermap or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the forward‐looking statements made herein, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.
About Intermap Technologies
Founded in 1997 and headquartered in Denver, Colorado, Intermap (TSX:
IMP) (ITMSF:
BB) is a global leader in geospatial intelligence solutions. The Company's proprietary NEXTMap® database and value-added geospatial data management, processing, analytics, fusion and orthorectification software and solutions are utilized across a range of industries that rely on accurate, high-resolution elevation data, including aviation, engineering, environmental planning, government markets, hydrology, insurance, land management, law enforcement and patrol, oil and gas, renewable energy, telecommunications, transportation and utilities. Intermap's commercial applications include location‐based intelligence, risk assessment, geographic information systems, global positioning systems and 3D visualization. For more information, please visit
www.intermap.com .
