Vancouver, B.C., October 7, 2021 – Further to its press release dated September 17, 2021, Cerro Mining Corp. (NEX:CRX.H) (“Cerro” or the “Company”) is pleased to announce that it has received the approval of 91.8% of the subscription receiptholders (the “Subscription Receiptholders”) from the Company’s concurrent financing (the “Concurrent Financing”) of 20,218,000 subscription receipts (“Subscription Receipts”) at a price of $0.50 per Subscription Receipt for aggregate gross proceeds of $10,109,000 on May 20, 2021 to the previously announced amendments to the Subscription Receipt Agreement dated May 10, 2021 (the “Subscription Receipt Agreement”) between the Company and Computershare Trust Company of Canada (the “Subscription Receipt Agent”).
Michael Kobler, Director of Cerro, comments: “Our management team and board would like to thank the subscription receiptholders for their overwhelming support of the amendments to the subscription receipt agreement and for their continued support and confidence in our transaction with Friday’s Dog. We look forward to continuing the process to successfully close the transaction.”
Pursuant to the extraordinary resolution passed by Subscription Receiptholders (the “Extraordinary Resolution”), all proposed amendments to the Subscription Receipt Agreement were approved including, among other things, an amendment to the terms of the Subscription Receipts such that each Subscription will be automatically exchanged for one common share and one half of a share purchase warrant (each whole warrant a “Warrant”) with each Warrant exercisable to purchase one common share at a price of $1.00 for two years following the closing of the proposed reverse take-over (the “Transaction”) of the Company by Friday’s Dog Inc. (formerly CAIR by David Cosmetics Inc.) (“FDI”) by way of amalgamation of FDI and a wholly-owned subsidiary of Cerro, 1308821 B.C. Ltd., and an extension of the deadline for satisfaction or waiver of all escrow release conditions set out in the Subscription Receipt Agreement (the “Escrow Release Conditions”) to December 31, 2021 or such later date on or before February 28, 2022 as the board of directors of the Company may determine (except as otherwise may be extended in accordance with the terms of the Subscription Receipt Agreement).
Following receipt of the requisite approval of the Extraordinary Resolution by the Subscription Receiptholders, the Company and the Subscription Receipt Agent entered into an amending agreement and an amended and restated subscription receipt agreement each dated as of September 30, 2021 pursuant to which the Company effected the changes to the Subscription Receipt Agreement approved pursuant to the Extraordinary Resolution.
In connection with the Extraordinary Resolution, the Company received a total of 1,416,000 votes against or withheld (the “Dissenting Receiptholders”) representing $708,000 of the escrowed proceeds of the Concurrent Financing and the Company agreed to return the aggregate purchase price of the Subscription Receipts plus the pro rata share of the interest thereon to all Dissenting Receiptholders. Those Subscription Receiptholders that did not vote on the Extraordinary Resolution (a total of 2,986,000 Subscription Receipts) did not receive a return of escrowed funds. The Subscription Receipts held by Dissenting Receiptholders will be cancelled by the Subscription Receipt Agent as of September 30, 2021, without any action on the part of the holder thereof, and such holder will thereafter have no rights under the Subscription Receipt Agreement except to receive from the escrowed funds, an amount equal to the aggregate purchase price of the Subscription Receipts then held, plus a pro rata share of subscription receipt interest earned thereon (less any withholding tax required to be withheld in respect thereof). The balance of the escrowed funds for the Concurrent Financing, totalling approximately $9,400,000 will remain in escrow pending satisfaction of the Escrow Release Conditions set out in the Subscription Receipt Agreement.
Upon satisfaction or waiver of the Escrow Release Conditions or such other date as determined in accordance with the amended terms of the Subscription Receipt Agreement (the “Termination Date”), each Subscription Receipt will be automatically exchanged for one Cerro common share and one half of a Warrant and the escrowed funds will be released from escrow by the Subscription Receipt Agent to Cerro. If the Escrow Release Conditions have not been satisfied or waived by the Termination Date, the escrowed funds will be returned to the holders of the Subscription Receipts and the Subscription Receipts will be cancelled in accordance with the terms of the Subscription Receipt Agreement. The Subscription Receipts, and the common shares and warrants of the Company issuable upon exchange, are subject to a statutory hold period of four months and one day following the closing date of the Concurrent Financing in accordance with applicable securities law.
The Proceeds of the Concurrent Financing are intended to be used by the Company following closing of the Transaction for the following purposes: tooling for both bottles and over caps, bottles and over cap production, bottle filling and cost of materials, asset production for marketing, packaging and packaging design work, ongoing marketing and inventory costs for roll out of SKU’s, website development and marketing costs, transaction expenses, listing fees and general working capital expenses.
Following the recent approval of the Extraordinary Resolution by the Subscription Receiptholders, Cerro and FDI intend to call a special meeting of their respective shareholders on a date to be determined by Cerro and FDI to seek approval of the Transaction by their respective disinterested shareholders. Cerro’s meeting will also be an annual general meeting.
A joint management information circular in connection with the meetings of Cerro and FDI will be filed under Cerro’s issuer profile on SEDAR at www.sedar.com. Each registered shareholder of FDI has the right to dissent with respect to the Transaction and be paid fair value for their FDI Shares in accordance with sections 237 to 247 of the BCBCA. The votes of Non-Arm’s Length Parties (within the meaning of TSXV policies) will be excluded, including the votes of Andrew Bowering, director and CEO of the Company, and Anthony Paterson, director of the Company, and their respective Associates (within the meaning of TSXV policies), who are considered Non-Arm’s Length Parties to the Transaction.
About Friday’s Dog Inc.
The following table summarizes selected financial information for FDI as at September 30, 2021:
FDI is a consumer brand company that is commercializing a science-driven formulation portfolio of pet care products which use natural, non-toxic ingredients and cruelty-free testing. The first products to be rolled out as part of FDI’s high margin, diversified product portfolio will be its pet care merchandise targeting a diversity of dog breeds. The entire pet care product portfolio consists of 9 stock keeping units (SKU) in total which are focused on several product categories: wash and care products, high-quality medicated aids, premium calming treats and grooming tools. The majority of the products are for pet wash and care/grooming.
In 2022, FDI intends to introduce and launch six SKUs in the wash and care product category, 3 SKUs in the treats category, and one SKU in grooming tools. All products, both the pet grooming and pet treats, will be free of additives and toxins, with cruelty-free testing. Following a careful review and assessment of all competitors’ pet care products that are currently available in the same categories, product briefs were prepared, and FDI engaged Synergy Labs, Inc. of Fort Lauderdale, Florida (“Synergy”) to develop the formulas with ingredients that would produce the desired attributes. While there are no regulations that hold manufacturers to standards for ingredient purity, all of FDI’s dog grooming products have non-toxic ingredients.
The pet care products will be packaged in plastic bottles, or food safe, resealable, flexible packaging. Generic containers which come in a variety of shapes, and volumes and functional tops (pour, spray, pump, dropper) provide the base to which distinctive details are then added to customize the packaging. FDI’s containers are topped with distinctive, iconic bottlecaps. Individual colors identify various products. The Friday’s Dog logo is playful and communicates a wholesome “family” appeal.
FDI is focusing its marketing strategy and sales efforts on direct-to-consumer channels, representing high-margin revenue. Primary sales are expected to be driven through the corporate website fridaysdog.com, and televised home shopping channels (i.e., QVC). The in-house sales force will leverage long standing relationships for targeted social media and influencer marketing. FDI management will leverage prior business relationships with contract manufacturers who will develop product formulations and manufacture the pet wash and care products for the initial 6 SKUs, and the 3 SKU for treats in the portfolio.
FDI has entered into a Private Label and Manufacturing Supply Agreement with Synergy. Synergy is in the business of manufacturing specialty consumer products and associated packaging materials and will be the contract manufacturer for the pet wash and care products formulation and packaging. Synergy follows a rigorous series of rules and procedures to meet its standards for quality control. The company’s laboratory, manufacturing practices and systems in place are compliant with good manufacturing practices (GMP), EPA and FDA, HAZMAT, NASC, as well as OSHA regulations. Synergy has an expansive, state of the art facility. Should sales volume require an increase in production, it is expected it could be accommodated.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and disinterested shareholder approval. 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 Filing Statement or Management Information Circular 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 Cerro should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this news release.
On Behalf of the Board of Cerro Mining Corp.
Michael Kobler, Director
For further information, please contact:
Cerro Mining Corp. Tel: +1-604-428-6128
Neither the 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.
The securities of Cerro have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements relate to information that is based on assumptions of management, forecasts of future results, and estimates of amounts not yet determinable. Any statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be “forward-looking statements.” Readers are cautioned not to place undue reliance on forward-looking statements. Statements about, among other things, the expected timing and terms of the Transaction, the number of securities of Cerro that may be issued in connection with the Transaction, the ownership ratio of the Resulting Issuer post-closing, the required shareholder approvals or the ability to obtain such approvals, the Company’s strategic plans and the parties’ ability to satisfy closing conditions and receive necessary approvals are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management’s reasonable assumptions, there can be no assurance that the Transaction will occur or that, if the Transaction does occur, it will be completed on the terms described above. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation: risks related to the Transaction, approval of the amendments to the Transaction and the listing of the Resulting Issuer common shares on the TSXV or such other recognized stock exchange in Canada, risk related to the failure to obtain adequate financing on a timely basis and on acceptable terms; risks related to the outcome of legal proceedings; risk related to the protection of intellectual property; general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; political and regulatory risks associated with the cosmetics and pet care industry; and risks related to the maintenance of stock exchange listings. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances, except in accordance with applicable securities laws. Actual events or results could differ materially from the Company’s expectations or projections.