Plurilock Announces Amendment to Terms of Convertible Debentures and Warrant Inducement Program and Closing of Debt Settlement

Rhea-AI Summary

Plurilock Security has received TSX Venture Exchange approval to amend the terms of its unsecured convertible debentures issued in 2022. From May 27, 2024, to June 26, 2024, the conversion price of these debentures will be reduced from $2.00 to $0.25 per share. Debenture holders converting during this period will receive new warrants allowing them to purchase shares at $0.30 for one year. Additionally, Plurilock settled $218,552.50 of debt by issuing 1,092,762 units at $0.20 per unit. Each unit includes one common share and a warrant to buy an additional share at $0.25 in the first year or $0.40 in the second year. The company has also launched an investor relations campaign with Social Network Effect Communications, costing US$432,272, and clarified terms for its private placement finders' warrants.

Positive

• TSX Venture Exchange approval for debenture term amendments increases financial flexibility.
• Debenture conversion price reduction to $0.25 per share may attract more conversions and enhance liquidity.
• Issuance of new warrants at $0.30 could potentially increase shareholder value.
• Successful debt settlement of $218,552.50 by issuing 1,092,762 units at $0.20 per unit reduces liabilities.
• Investor relations campaign with Social Network Effect Communications aims to expand awareness and potentially increase investor interest.
• Clarification on private placement finders' warrants terms provides transparency.

Negative

• Reduction of debenture conversion price to $0.25 could dilute existing shareholders' equity.
• Issuing shares and warrants for debt settlement and private placements may lead to further shareholder dilution.
• The cost of US$432,272 for the investor relations campaign is a significant expense.
• Insider participation in private placements may raise concerns about related party transactions.

Vancouver, British Columbia--(Newsfile Corp. - May 23, 2024) - Plurilock Security Inc. (TSXV: PLUR) (OTCQB: PLCKF) ("Plurilock" or the "Company") announces that further to its news release dated April 3, 2024, it has received TSX Venture Exchange (the "Exchange") approval to amend (the "Debenture Amendment"), for a thirty (30) day period, certain terms of the unsecured convertible debentures of the Company (each, a "Debenture") that were issued by the Company on August 15, 2022 and September 20, 2022 in connection with the private placement of debenture units consisting of $1,000 principal amount of 10% Debentures and 500 common share purchase warrants (each, a "Warrant").

Prior to the Debenture Amendment taking effect, the Debentures were convertible into common shares of the Company (each, a "Debenture Share") at a price of $2.00 per Debenture Share, on a post-consolidation basis. The Warrants were also exercisable into common shares of the Company (each, a "Warrant Share") at a price of $2.00 per Warrant Share, on a post-consolidation basis.

Commencing on May 27, 2024 and ending on June 26, 2024 (the "Inducement Period"), the conversion price of the Debentures will be amended from $2.00 per Debenture Share to $0.25 per Debenture Share. After the expiry of the Inducement Period, the conversion price of the Debentures will revert to $2.00 per Debenture Share.

In addition to the Debenture Amendment and as an inducement to the debentureholders who elect to convert their Debentures into Debenture Shares during the Inducement Period, the Warrants held by such debentureholders will be cancelled in exchange for one new common share purchase warrant for each Debenture Share issued on conversion of their respective Debentures (each, an "Inducement Warrant"). Each Inducement Warrant will entitle the holder thereof to purchase one additional common share of the Company ("Shares") for a period of one year at a price of $0.30.

Debt Settlement

The Company also announces that, further to its news release dated April 3, 2024, the Company has issued 1,092,762 units (each, a "Debt Settlement Unit") at a deemed price of $0.20 per Debt Settlement Unit to arm's length creditors (each, a "Creditor") to settle an aggregate of $218,552.50 owed to such Creditors (the "Debt Settlement"). Each Debt Settlement Unit consists of one Share and one common share purchase warrant (each, a "Debt Settlement Warrant"). Each Debt Settlement Warrant entitles the holder thereof to purchase one Share for a period of two years at a price of $0.25 in the first year and $0.40 in the second year.

The Debt Settlement Warrants and Shares issued in connection with the Debt Settlement are subject to a statutory hold period of four months plus a day from the date of issuance in accordance with the policies of the Exchange and applicable securities legislation.

Investor Relations Agreement

The Company is also pleased to announce that it has entered into a campaign agreement (the "Campaign Agreement") with 2501490 Alberta Inc. dba Social Network Effect Communications (the "Service Provider"), pursuant to which the Service Provider will assist the Company with its investor relations programs with the general objective of expanding awareness of Plurilock and its business through one or more influencer campaigns. Pursuant to the terms of the Campaign Agreement, the Company will pay the Service Provider US$432,272 payable in cash in two tranches. US$300,000 is payable upon entering into the Campaign Agreement and the remaining US$132,272 is payable 30 calendar days thereafter. The term of the Campaign Agreement commenced on May 1, 2024 and ends on September 30, 2024. The Service Provider is also eligible to receive options of the Company, the number and terms of which will be determined by mutual agreement of the Company and Service Provider and in accordance with the policies of the Exchange.

Unit Private Placement and Investor Relations Agreement Clarifications

Further to the Company's news release dated April 26, 2024, the Company wishes to clarify the terms of the finder's warrants issued in connection with the $0.20 and $0.225 unit private placements. The 1,016,575 finder's warrants issued to finders in connection with the $0.20 private placement entitle the holders thereof to acquire one Share for a period of two years at a price of $0.25 in the first year and $0.40 in the second year. The 155,555 finder's warrants issued to a finder in connection with the $0.225 private placement entitle the holder thereof to acquire one Share for a period of two years at a price of $0.30.

The Company also confirms that Insiders of the Company participated in the $0.20 unit private placement, acquiring an aggregate of 1,650,000 units for a total subscription price of $330,000. Their participation constitutes a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on exemptions from the formal valuation requirements contained in sections 5.5(b) and 5.7(1)(a) of MI 61-101, on the basis that the Company is not listed on a specified market and the fair market value of the securities issued to the related parties does not exceed 25% of the Company's market capitalization, as determined in accordance with MI 61-101. The Company did not file a material change report 21 days before closing of the private placement as the details of the insider participation were not known at that time.

The Company also confirms that pursuant to the terms of the capital markets advisory agreement with Sophic Capital Inc. ("Sophic Capital"), announced on May 2, 2024, Sophic Capital is eligible to receive options of the Company, the number and terms of which will be determined by mutual agreement of the Company and Sophic Capital and in accordance with the policies of the Exchange.

About Plurilock

Plurilock sells Cyber Security solutions to the United States and Canadian Federal Governments along with Global 2000 companies. Through these relationships, Plurilock sells its unique brand of Critical Services - aiding clients with our expertise to defend against, detect, and prevent costly data breaches and cyber-attacks. For more information, visit https://www.plurilock.com or contact:

Ian L. Paterson
Chief Executive Officer
ian@plurilock.com
416.800.1566

Ali Hakimzadeh
Executive Chairman
ali@sequoiapartners.ca
604.306.5720

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

Forward-Looking Statements

This press release may contain certain forward-looking statements and forward-looking information (collectively, "forward-looking statements") related to future events or Plurilock's future business, operations, and financial performance and condition. Forward-looking statements normally contain words like "will", "intend", "anticipate", "could", "should", "may", "might", "expect", "estimate", "forecast", "plan", "potential", "project", "assume", "contemplate", "believe", "shall", "scheduled", and similar terms. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions, and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. Although management believes that the forward-looking statements herein are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Plurilock's business. Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation, the impact of general economic conditions, and unforeseen events and developments. This list is not exhaustive of the factors that may affect the Company's forward-looking statements. Many of these factors are beyond the control of Plurilock. All forward-looking statements included in this press release are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this press release are made as at the date hereof, and Plurilock undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws. Risks and uncertainties about the Company's business are more fully discussed under the heading "Risk Factors" in its most recent Annual Information Form. They are otherwise disclosed in its filings with securities regulatory authorities available on SEDAR at www.sedarplus.ca.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/210360

FAQ

What changes were made to Plurilock's convertible debentures?

The conversion price was reduced from $2.00 to $0.25 per share for a period from May 27, 2024, to June 26, 2024.

What is the new conversion price for Plurilock's debentures during the inducement period?

The new conversion price is $0.25 per share.

What terms apply to the new warrants issued during Plurilock's inducement period?

The new warrants allow holders to purchase shares at $0.30 each for one year.

How much debt did Plurilock settle through the issuance of units?

Plurilock settled $218,552.50 of debt.

What is the price and composition of Plurilock's debt settlement units?

Each unit was priced at $0.20 and consists of one common share and a warrant to buy an additional share at $0.25 in the first year or $0.40 in the second year.

How much is Plurilock spending on its investor relations campaign?

Plurilock is spending US$432,272 on the campaign.

When is the investor relations campaign by Social Network Effect Communications for Plurilock set to end?

The campaign will end on September 30, 2024.

What are the terms of the finders' warrants issued in Plurilock's private placements?

The finders' warrants allow acquisition of shares at $0.25 in the first year and $0.40 in the second year for the $0.20 private placement, and at $0.30 for the $0.225 private placement.