| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously disclosed in the current report on Form 8-K filed on December 14, 2020, on that date, Torchlight Energy Resources, Inc. (“Torchlight”) and its newly formed subsidiaries, Metamaterial Exchangeco Inc. (formerly named 2798832 Ontario Inc., “Canco”) and 2798831 Ontario Inc., both Ontario corporations, entered into an Arrangement Agreement (the “Agreement”) with Metamaterial Inc., an Ontario corporation headquartered in Nova Scotia, Canada (“Metamaterial”), to acquire all of the outstanding common shares of Metamaterial by way of a statutory plan of arrangement (the “Arrangement”) under the Business Corporations Act (Ontario), on and subject to the terms and conditions of the Agreement. On February 3, 2021, Torchlight and its Ontario subsidiaries entered into an Amendment to Arrangement Agreement (the “Amendment”) with Metamaterial, to amend the Agreement as follows:
| | • | | To extend the date by when Metamaterial must hold its meeting of security holders to March 31, 2021; |
| | • | | To extend the date by when Metamaterial must apply to the Ontario Superior Court of Justice for the interim order with respect to the Arrangement to February 28, 2021; |
| | • | | To extend the date by when Torchlight must hold its meeting of stockholders to March 31, 2021; |
| | • | | To provide that upon the closing of the pre-closing financing contemplated by the Agreement, Torchlight will use a portion of the net proceeds to provide $5,000,000 of additional bridge financing to Metamaterial, to be evidenced by a third unsecured promissory note, substantially in the same form as the previous bridge notes issued by Metamaterial to Torchlight on September 20, 2020 and December 16, 2020; in the event the Agreement is terminated, and the closing of the Arrangement does not otherwise occur, then Metamaterial will be obligated to repay to Torchlight, on the one-year anniversary of the closing of the pre-closing financing, an amount equal to $5,400,000 (which amount represents the outstanding principal of $5,000,000 plus interest accrued on such principal at the rate of 8% per annum); and |
| | • | | To update the Plan of Arrangement attached to the Agreement (the “Plan of Arrangement”) to, among other things, include amended terms for the shares issuable by Canco (the “Exchangeable Shares”) in the Arrangement and update certain defined terms contained therein. |
The description of the Amendment, the Plan of Arrangement and the terms of the Exchangeable Shares set forth herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, including the updated Plan of Arrangement and terms of the Exchangeable Shares attached thereto, which are attached to this current report as Exhibit 2.1 and incorporated by reference herein.
Forward-Looking Statement
This current report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the “safe harbor” created by those sections. All statements in this current report that are not based on historical fact are “forward looking statements.” These statements may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “strategy,” “goal,” or “planned,” “seeks,” “may,” “might”, “will,” “expects,” “intends,” “believes,” “should,” and similar expressions, or the negative versions thereof, and which also may be identified by their context. All statements that address operating performance or events or developments Torchlight expects or anticipates will occur in the future, such as stated objectives or goals, refinement of strategy, attempts to secure additional financing, exploring possible business alternatives, or that are not otherwise historical facts, are forward-looking statements. While management has based any forward-looking statements included in this current report on its current expectations, the information on which such expectations were based may change. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements as a result of various factors, including risks associated with Torchlight’s ability to obtain additional capital in the future to fund planned expansion, the demand for oil and natural gas which demand could be materially affected by the economic impacts of COVID-19 and possible increases in supply from Russia and OPEC, the proposed business combination transaction with Metamaterial, general economic factors,
