SPoT Coffee Announces Updated Terms of $3.0M Debenture Financing

TORONTO, April 21, 2020 /CNW/ - SPOT COFFEE (CANADA) LTD. (TSX-V: SPP) ("SPoT" or the "Company") is pleased to announce updated terms of its pending offering of subordinate convertible secured debentures for aggregate gross proceeds of up to $3.0 million (the "Debenture Financing").  As noted in the Company's press release dated December 10, 2019, the Company's directors previously approved the terms of a $2.5 million offering of convertible debentures.  The updated terms of the debentures being offered are as follows:

• The total principal amount of the debentures to be offered will be up to $3.0 million
• There will be two classes of debentures – Class A and Class B
• Class A Subordinate Convertible Secured Debentures will be offered with the following terms:
• aggregate principal amount of $1,000,000 (denominations of not less than $1,000 each);
• bearing interest at a rate of 6% per annum;
• term of two (2) years from issuance;
• principal amount convertible at maturity into common shares at a price of $0.12 per common share;
• interest portion convertible at the market price on the date of conversion; and
• first tranche closing is expected to occur on approximately June 1, 2020.
• Class B Subordinate Convertible Secured Debentures will be offered with the following terms:
• aggregate principal amount of $2,000,000 (denominations of not less than $1,000 each)
• bearing interest at a rate of 6% per annum;
• term of three (3) years from issuance;
• principal amount convertible at maturity into common shares at a price of $0.18 per common share;
• interest portion convertible at the market price on the date of conversion; and
• closing is expected to occur in mid-August.

To date, the Company has received subscriptions for an aggregate of $800,000 principal amount of Class A Debentures.

The proceeds of the Company's Debenture Financing will be applied towards the Company's 2020 financial plan, which includes the following:

• The cost of the full development of one (1) Company-owned traditional SPoT café and one (1) SPoT Express café location in the City of Toronto, Ontario, Canada;
• The cost of the full development of SPoT's new coffee roasting facility to accommodate the continually rising retail demand for the Company's award-winning gourmet coffee, as well as the demand by SPoT's Company-owned and managed cafés along with a growing number of new franchises scheduled to open in 2020;
• Partial repayment of the Company's current outstanding debentures (approximately $1.3M principal amount and interest outstanding), which carry an interest rate of 9% per annum; and
• The cost of upgrades to Company-owned cafés and SPoT's central kitchen facility.

The Class A and Class B Debentures will be secured against the assets of the Corporation, subject to the priority of previously issued secured indebtedness and any further secured indebtedness as may be incurred in connection with government related emergency COVID measures (for details on such programs and the Company's pending or potential applications, see the Company's press releases dated April 6 and April 20, 2020).  

All Class A and Class B Debentures (and any common shares issued upon conversion) will be subject to a statutory four-month hold period in accordance with applicable securities laws.  

About Spot Coffee

Spot Coffee has been designing, building and operating company-owned and franchise community cafés in the northeastern United States for over 25 years. Spot's cafés provide their customers with the highest quality service, signature made-to-order meals and award-winning micro-roasted coffee. Each Spot café is distinctively designed to suit the local neighbourhood. creating a warm and friendly gathering place for the community. Spot's commercial business focuses on the sale of roasted coffee beans to food service and grocery chains, business offices, and resellers such as universities and hospitals.

We seek Safe Harbor.

Forward Looking Statements

Except for statements of historical fact relating to the Company, certain information contained herein constitutes forward-looking statements. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

SOURCE Spot Coffee (Canada) Ltd.

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