Sato Technologies increase private placement to $1.4M

Executive Summary

• Sato Technologies Corp. has closed the first tranche of its non-brokered private placement, raising aggregate gross proceeds of $867,381.82.
• The company upsized the total offering size to $1.4 million, consisting of equity units and convertible debenture units.
• The first tranche was heavily subscribed by management and insiders, including CEO Romain Nouzareth and Director Mathieu Nouzareth, who triggered early warning disclosure requirements due to significant ownership increases.

Key Details

• Total Offering Size: Upsized to aggregate gross proceeds of up to $1.4 million.
• First Tranche Closed: Aggregate gross proceeds of $867,381.82.
• Equity Units Issued (Tranche 1): 8,272,655 units at a price of 6.375 cents per unit for proceeds of $527,381.82.
  • Each unit consists of one common share and one common share purchase warrant.
  • Warrant terms: Exercise price of 8.5 cents for the first year, then 10 cents thereafter; expires March 16, 2031.
• Debenture Units Issued (Tranche 1): 340 debenture units at $1,000 per unit for proceeds of $340,000.
  • Each unit consists of a $1,000 principal amount unsecured convertible debenture and detachable warrants.
  • Interest: 15% annual interest, payable quarterly in cash or common shares (at holder's option).
  • Maturity: March 16, 2029.
  • Conversion Price: 8.5 cents for the first year, then 10 cents thereafter.
  • Detachable Warrants: Exercise price of 10 cents until March 16, 2029.
• Use of Proceeds: Working capital and general corporate purposes.
• Regulatory Status: Subject to final acceptance of the TSX Venture Exchange (TSX-V). Securities subject to a four-month-and-one-day statutory hold period.
• Debt Settlement: The company settled a $25,000 (USD) debt to a creditor via the issuance of 534,980 units at 6.375 cents per unit.
• Insider Participation & Early Warning Disclosures:
  • Mathieu Nouzareth (Director): Acquired 5,816,184 units. Post-closing beneficial ownership is ~17.23% (non-diluted) and ~25.40% (fully diluted).
  • Romain Nouzareth (CEO/Chairman): Acquired 340 convertible debenture units. Post-closing beneficial ownership is ~13.50% (non-diluted) and ~25.26% (fully diluted).
  • Other Insiders: CFO Kyle Appleby and two independent directors also participated.
  • Arm's Length Subscriber: A Quebec operating partner purchased 2.08 million units.
  • The company relies on exemptions from formal valuation and minority shareholder approval under MI 61-101 as insider subscriptions do not exceed 25% of market capitalization.

Notable Quotes

• "This is the most aligned capital raise I've been part of," said Romain Nouzareth, chief executive officer and chairman. "When your co-founder, your CFO, your board and your local operating partner all invest alongside you, it says more than any pitch deck. We're building something real, and we're backing it with our own capital."