Katipult Announces Amendments to Convertible Debentures

Rhea-AI Summary

Katipult Technology Corp. (TSXV: FUND) has announced amendments to its convertible debentures originally issued in May 2018. The key changes include:

1. Extension of maturity date to May 30, 2027
2. Debentures now secured against all present and after-acquired personal property
3. Reduction of base interest rate from 8.5% to 4%, with adjustments based on cash balance
4. Interest grace period from April 15 to November 30, 2024
5. Reduction of conversion price to $0.20 per common share

The amendments are considered a 'related party transaction' due to director Brian Craig's involvement as a debenture holder. Katipult intends to rely on exemptions from certain requirements of MI 61-101 for this transaction.

Positive

• Extension of debenture maturity date to May 30, 2027, providing more time for repayment
• Reduction of base interest rate from 8.5% to 4%, potentially lowering interest expenses
• Implementation of interest grace period from April 15 to November 30, 2024, offering temporary financial relief
• Reduction of conversion price to $0.20 per common share, potentially making conversion more attractive to debenture holders

Negative

• Addition of security against all present and after-acquired personal property, potentially increasing risk for the company
• Introduction of interest rate adjustments based on cash balance, which could lead to higher interest rates if cash management is poor
• Related party transaction involving a director, which may raise governance concerns

Calgary, Alberta--(Newsfile Corp. - July 18, 2024) - Katipult Technology Corp. (TSXV: FUND) ("Katipult" or the "Corporation") is pleased to announce that the terms of its convertible debentures originally issued on May 30, 2018, as amended on August 11, 2023 and November 30, 2023, in the total initial principal amount of $3,050,000 (the "Convertible Debentures"), now in the total principal amount of $3,000,000, have been amended by the holders of the Convertible Debentures (the "Holders") and the Corporation through the entering into of amended and restated convertible debentures (the "Amended Convertible Debentures").

The key changes represented by the Amended Convertible Debentures are as follows (collectively, the "Convertible Debenture Amendments"):

• Term Extension: The maturity date of the Amended Convertible Debentures has been extended to May 30th, 2027.

• Security: The Amended Convertible Debentures are secured against all the present and after-acquired personal property of the Corporation.

• Interest: The base interest rate has been reduced from 8.5% to 4%. The Amended Convertible Debentures are subject to interest rate adjustments if the Corporation fails to maintain a cash balance equal to its 12-month burn rate whereby the interest rate increases by 0.5% for each month of inadequate cash balance. The maximum interest rate, which was formerly 12% per annum compounded quarterly, is now adjusted to a maximum of 10% per annum compounded quarterly.

• Interest Grace Period: Interest will not accrue during the period from April 15, 2024 until November 30, 2024.

• Conversion Price: The conversion price has been reduced to $0.20 per common share of the Corporation.

Mr. Brian Craig is one of the Holders and is a director of the Corporation. Accordingly, the Convertible Debenture Amendments are considered a "related party transaction" pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Corporation intends to rely on exemptions from the valuation and the minority approval requirements of MI 61-101 provided for in subsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the Convertible Debenture Amendments do not represent additional consideration of a market value exceeding more than 25% of the Corporation's market capitalization as determined in accordance with MI 61-101. The Convertible Debenture Amendments have been approved by the directors of the Corporation who are independent in connection with the Convertible Debenture Amendments.

The Corporation did not file a material change report more than 21 days before the expected closing of the Convertible Debenture Amendments, as the details of the Convertible Debenture Amendments were not finalized until immediately prior to the closing and the Corporation wished to close the transaction as soon as practicable for sound business reasons.

About Katipult

Katipult (www.katipult.com) is a provider of industry leading and award-winning software infrastructure for powering the exchange of capital in equity and debt markets. Our cloud-based platform and solutions digitize investment workflow by eliminating transaction redundancy, strengthening compliance, delighting investors, and accelerating deal flow. Katipult provides unparalleled adaptability for regulatory compliance, asset structure, business model, and localization requirements.

Cautionary Note Regarding Forward-Looking Statements

This news release includes forward-looking statements that are subject to risks and uncertainties, ‎‎‎including with respect to statements, beliefs, expectations or intentions regarding the Convertible Debenture Amendments. The Corporation ‎‎provides forward-‎looking statements for the purpose of conveying information about current ‎‎expectations and plans ‎relating to the future and readers are cautioned that such statements may not be ‎‎appropriate for other ‎purposes. In making the forward-looking statements in this release, the Corporation has applied certain factors and assumptions that are based on the Corporation's current beliefs as well as assumptions made by the Corporation including that the Corporation will receive TSX Venture Exchange final acceptance for the Convertible Debenture Amendments. By its nature, this information is subject to inherent risks and ‎‎uncertainties that may be general ‎or specific and which give rise to the possibility that expectations, ‎‎forecasts, predictions, projections, or ‎conclusions will not prove to be accurate, that assumptions may not ‎‎be correct, and that objectives, ‎strategic goals and priorities will not be achieved. These risks and ‎‎uncertainties include but are not ‎limited those identified and reported in the Corporation's public filings ‎‎under the Corporation's SEDAR+ profile ‎at www.sedarplus.ca. Although the Corporation has attempted to identify ‎‎important factors that could cause ‎actual actions, events, or results to differ materially from those ‎‎described in forward-looking information, ‎there may be other factors that cause actions, events or ‎‎results not to be as anticipated, estimated or ‎intended. There can be no assurance that such information ‎‎will prove to be accurate as actual results and ‎future events could differ materially from those ‎‎anticipated in such statements. The Corporation disclaims ‎any intention or obligation to update or revise any ‎‎forward-looking information, whether as a result of ‎new information, future events or otherwise unless ‎‎required by law.‎

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 this release.

For further information: Katipult Technology Corp., Gord Breese, CEO, gbreese@katipult.com, +1 (604) 760-4000

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/217044

FAQ

What are the key amendments to Katipult's convertible debentures announced on July 18, 2024?

The key amendments include extending the maturity date to May 30, 2027, reducing the base interest rate to 4%, adding security against company property, implementing an interest grace period, and reducing the conversion price to $0.20 per common share.

How does the interest rate change for Katipult's (KTPPF) amended convertible debentures?

The base interest rate has been reduced from 8.5% to 4%. However, it's subject to adjustments if the company fails to maintain adequate cash balance, with a maximum rate of 10% per annum compounded quarterly.

What is the new conversion price for Katipult's (KTPPF) convertible debentures as of July 18, 2024?

The new conversion price for Katipult's convertible debentures has been reduced to $0.20 per common share of the

Why is Katipult's (KTPPF) debenture amendment considered a 'related party transaction'?

The amendment is considered a 'related party transaction' because Mr. Brian Craig, one of the debenture holders, is also a director of Katipult Technology Corp.