Dragonfly and Black Swan Graphene Enter into Definitive Agreement for Business Combination

·7 min read

Vancouver, British Columbia--(Newsfile Corp. - January 27, 2022) - Dragonfly Capital Corp. (TSXV: DRC.H) ("Dragonfly" or the "Company") is pleased to announce that, further to its news release dated December 16, 2021, the Company and Black Swan Graphene Inc. ("Black Swan"), a private Ontario company, and the shareholders of Black Swan (collectively, the "Black Swan Shareholders") have entered into a share exchange agreement dated effective as of January 17, 2022 (the "Share Exchange Agreement"), pursuant to which Dragonfly will acquire all of the issued and outstanding common shares (each, a "Black Swan Share") of Black Swan and grant certain options (each, a "Replacement Option") of the Company in exchange for those outstanding options (each, a "Black Swan Option") of Black Swan (the "Transaction"). In connection with the Transaction, the Company and Black Swan intends to complete a concurrent equity financing with minimum gross proceeds of $5,000,000 (the "Subscription Receipt Financing").

The Transaction is subject to the approval of the TSX Venture Exchange ("TSXV") and is intended to constitute the Company's Qualifying Transaction as defined in TSXV Policy 2.4 - Capital Pool Companies ("Policy 2.4"). Subject to TSXV approval, the common shares (each, a "Resulting Issuer Share") of the Resulting Issuer will trade on the Exchange, under the symbol "SWAN", and the business of the Resulting Issuer will be the business of Black Swan. It is expected that the Resulting Issuer will be listed on the Exchange as a Tier 2 Industrial Issuer under the name "Black Swan Graphene Inc." or such other name as mutually agreed to by the parties.

Black Swan Graphene Inc.

Black Swan is a private graphene processing technology (the "Graphene Technology") company headquartered in Toronto, Ontario. Black Swan recently purchased strategic assets related to the patented Graphene Technology from Thomas Swan & Co. Limited ("Thomas Swan"), a leading United Kingdom based specialty chemical company founded in 1926 exporting today to over 80 countries.

For more information on Black Swan and its business, please see the Company's news release dated December 16, 2021 available on SEDAR. A summary of Black Swan's financial information will be included in a subsequent press release once such financial information has been obtained by the Company. It is anticipated that Black Swan will provide audited financial statements in due course. For more information, please see Mason Graphite's news releases dated July 26, September 2, September 15, September 20, and October 7, 2021 available on SEDAR.

Summary of the Transaction

The Share Exchange Agreement provides that Dragonfly will acquire all of the outstanding Black Swan Shares from the Black Swan Shareholders in consideration for the issuance of an aggregate 210,229,434 common shares (each, a "Share") in the capital of the Company to the Black Swan Shareholders, at a deemed price of $0.15 per Share. In addition, each outstanding Black Swan Option will be exchanged for an equivalent Replacement Option in accordance with the Share Exchange Agreement. Following Closing, Black Swan will become a wholly-owned subsidiary of the Company and the business of the Company will be that of Black Swan.

In connection with the Transaction, and in order to raise sufficient operating capital for the Resulting Issuer, the Company anticipates completing the Subscription Receipt Financing; a non-brokered subscription receipt financing of at least 33,333,333 subscription receipts (each, a "Subscription Receipt") at a price of $0.15 per Subscription Receipt to raise gross proceeds of at least $5,000,000. Each Subscription Receipt shall be convertible into one Share upon satisfaction of certain escrow release conditions (collectively, the "Escrow Release Conditions"). There may be cash commissions and/or broker warrants paid and/or issued to eligible finders in relation to the Subscription Receipt Financing in accordance with the policies of the TSXV.

Assuming the completion of the Transaction (the "Closing"), the issuance of a minimum 33,333,333 Shares upon conversion of the Subscription Receipts pursuant to the Subscription Receipt Financing, and that no convertible securities of Dragonfly or Black Swan are exercised, a minimum of 261,310,290 common shares of the Resulting Issuer (each, a "Resulting Issuer Share") are expected to be issued and outstanding on the Closing Date of which approximately 6.79% Resulting Issuer Shares will be held by the current shareholders of the Company, approximately 80.45% will be held by the Black Swan Shareholders, and 12.76% will be held by the subscribers under the Subscription Receipt Financing.

The completion of the Transaction is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to: (i) the Company having had the reasonable opportunity to perform searches and other due diligence, and being satisfied with the results of such due diligence; (ii) receipt of all requisite consents, waivers and approvals for the Transaction, including the approval of the NEX Board of the TSXV, if applicable; (iii) the absence of any material adverse change in the business, affairs or operations of Black Swan; (iv) completion of the Subscription Receipt Financing and all Escrow Release Conditions being satisfied (other than the completion of the Transaction); (v) the cancellation of the Black Swan Options and corresponding grant of the Replacement Options; and (iv) Black Swan having received the requisite approvals from its shareholders for the Transaction, if applicable.

The Transaction is an arm's length transaction and therefore will not require shareholder approval under Policy 2.4.

Directors, Officers and Insiders of the Resulting Issuer

Upon Closing, it is expected that each of Anthony Kent Deuters, Eric Boehnke and Gregory Galanis will resign as directors of the Company, and Mr. Deuters will resign as the President and Chief Executive Officer ("CEO") of the Company, and Jennie Choboter will resign as the Chief Financial Officer ("CFO") of the Company. Following such resignations, it is expected that each of Simon Marcotte, Peter Damouni, Harry Swan (Chairman), Michael Edwards, David Deak and Roy McDowall are expected to be appointed as directors of the Resulting Issuer. Further, Mr. Marcotte is expected to be appointed as the CEO, Greg Duras is expected to be appointed as the CFO and Corporate Secretary, and Peter Damouni is expected to be appointed as the Executive Director of the Resulting Issuer. For a brief description of the proposed directors and officers of the Resulting Issuer, please see the Company's news release dated December 16, 2021 available on SEDAR.

Sponsorship

Sponsorship of a Qualifying Transaction of a Capital Pool Company is required by the TSXV unless an exemption from the sponsorship requirement is available. The Company intends to apply for a waiver from the sponsorship requirements. There is no assurance that the Company will be able to obtain such a waiver.

Finder's Fee

In connection with the Transaction, the Parties agree that finder's fees may be paid concurrently with the Closing to eligible finders who are not Related Parties to either Black Swan or Dragonfly, as defined by the policies of the TSXV, up to the maximum amount permitted by applicable securities laws and the policies of the TSXV, as applicable.

About Dragonfly Capital Corp.

Dragonfly Capital Corp. is a Capital Pool Company as defined by the policies of the TSXV. The Company's principal business activity is to identify and evaluate opportunities for acquisition of assets or business. The Company is headquartered in Vancouver, British Columbia.

About Black Swan Graphene Inc.

Black Swan Graphene Inc. is a Canadian private company focusing on the large-scale production and commercialization of patented high-performance and low-cost graphene products aimed at several industrial sectors, including concrete, polymers, Li-ion batteries, and others, which are expected to require large volumes of graphene and, in turn, require large volumes of graphite. Black Swan aims to leverage the low cost and green hydroelectricity of the province of Quebec as well as the proximity of the eventual production sites of Mason Graphite in order to establish a fully integrated supply chain, reduce overall costs, and accelerate the deployment of graphene usage.

Additional Information

A comprehensive press release with further particulars relating to the Transaction, including further particulars of the Resulting Issuer and the Subscription Receipt Financing, will follow in accordance with the policies of the TSXV. In addition, a summary of Black Swan' financial information will be included in a subsequent press release.

All information contained in this press release with respect to the Company and Black Swan was supplied, for inclusion herein, by the respective Parties and each Party and its directors and officers have relied on the other Party for any information concerning the other Party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV Requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

For more information please contact:

Dragonfly Capital Corp.

Eric Boehnke
Director
(604) 307-4274

Black Swan Graphene Inc.

Paul Hardy
Vice President, Corporate Development
phardy@blackswangraphene.com; (416) 844-7365

Disclaimer for Forward-Looking Information

Certain statements in this press release are forward-looking statements, which reflect the expectations of management regarding the Company's completion of the Transaction and related transactions. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future, including but not limited to, the Company completing the Transaction, the completion of the Subscription Receipt Financing, the proposed officers and directors of the Resulting Issuer, and the conditions to be satisfied for completion of the Transaction. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company. The risks include the following: the requisite corporate approvals of the directors and shareholders of Dragonfly or Black Swan, as applicable, may not be obtained; the Company may be unable to close the Subscription Receipt Financing in full or in part; the TSXV may not approve the Transaction; and other risks that are customary to transactions of this nature. The novel strain of coronavirus, COVID-19, also poses new risks that are currently indescribable and immeasurable. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/111831

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting