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Cypher Metaverse Inc. Capital/Financing Update 2025
47165_rns_2025-01-07_54fc0ade-594a-4a73-a1db-6d81291490e5.pdf
Capital/Financing Update
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Offering Document under the Listed Issuer Financing Exemption
January 7, 2025
Cypher Metaverse Inc.
Digital. Connection. DeFi.
CYPHER METAVERSE INC. ("Cypher or Corporation")
SUMMARY OF OFFERING
What are we offering?
| Offering: | Private placement of Common Shares (“Placement Shares”) of the Corporation.
The holders of Common Shares are entitled to: (i) receive notice of, and to vote at every meeting of the shareholders of the Corporation and shall have one (1) vote for each Common Share held; (ii) receive such dividend as the directors may from time to time, by resolution, declare; and (iii) to share pro rata in the event of liquidation, dissolution or winding up of the Corporation or upon any distribution of the assets of the Corporation among shareholders (other than by way of dividend). The Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights. |
| --- | --- |
| Offering Price: | $0.475 per Placement Share |
| Offering Amount: | Up to 1,978,332 common shares of proceeds of up to $939,970.77 (the “Offering”). Collectively, the Offering and the Concurrent Placement (described below) are subject to a maximum of for gross proceeds of $939,970.77.
All references in this offering document to “dollars”, “C$” or “$” are to Canadian dollars, unless otherwise stated. |
| Concurrent Placement: | The Corporation is also offering a private placement under the usual exemptions other than LIFE exemption on the same terms to a maximum of $800,000. It is the Corporation’s preference that each placement contribute roughly half to the total amount to be raised. |
| Closing Date: | On or about January 31, 2025, or on such other date or dates as the Corporation may determine (the “Closing Date”) |
|---|---|
| Exchange: | The Common Shares are listed on the Canadian Securities Exchange (the “CSE”) under the trading symbol “CODE”, the OTC Pink Market (“OTC”) under the trading symbol "BKLLF", and the Frankfurt Stock Exchange (“FWB”) under the trading symbol "C5B". |
| Last Closing Price: | The closing price of the Common Shares on the CSE on January 2, 2025 was Cdn $0.59, off of which the Corporation obtained price protection under the rules of the CSE. The closing price on January 7, 2025 was $0.99 on the CSE. |
No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this document. Any representation to the contrary is an offence. This offering may not be suitable for you and you should only invest in it if you are willing to risk the loss of your entire investment. In making this investment decision, you should seek the advice of a registered dealer.
Cypher is conducting a listed issuer financing under section 5A.2 of National Instrument 45-106 – Prospectus Exemptions. In connection with this offering, the issuer represents the following is true:
The issuer has active operations and its principal asset is not cash, cash equivalents or its exchange listing.
The issuer has filed all periodic and timely disclosure documents that it is required to have filed.
The total dollar amount of this offering, in combination with the dollar amount of all other offerings made under the listed issuer financing exemption in the 12 months immediately before the date of this offering document, will not exceed $5,000,000.
The issuer will not close this offering unless the issuer reasonably believes it has raised sufficient funds to meet its business objectives and liquidity requirements for a period of 12 months following the distribution.
The issuer will not allocate the available funds from this offering to an acquisition that is a significant acquisition or restructuring transaction under securities law or to any other transaction for which the issuer seeks security holder approval.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This offering document contains "forward-looking information" within the meaning of applicable Canadian securities laws, which is based upon the Corporation's current internal expectations, estimates, projections, assumptions and beliefs. The forward-looking information included in this offering document is made only as of the date of this offering document. Such forward-looking statements and forward-looking information include, but are not limited to, statements concerning: Cypher's current and future development efforts, including timelines and anticipated costs; Cypher's partnerships and the anticipated benefits thereof; Cypher's funding expectations; Cypher's expectations with respect to the use of proceeds and the use of the available funds following completion of the Offering; the completion of the Offering and the Concurrent Placement; and the expected Closing Date. Forward-looking statements or forward-looking information relate to future events and future performance and include statements regarding the expectations and beliefs of management based on information currently available to the Corporation. Such forward-looking statements and forward-looking information often, but not always, can be identified by the use of words such as "plans", "expects", "potential", "is expected", "anticipated", "is targeted", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements or forward-looking information are subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in such forward-looking statements and forward-looking information, including, without limitation, risks with respect to: Cypher's ability to obtain the necessary financing and the general impact of financial market conditions; the demand for Cypher's services; the success of Cypher's current and future development efforts; changes in prices of required commodities; volatility of the capital markets; competition risks; government regulations; potential conflicts of interest; political instability and hyperinflation; coronavirus; Russia's military action in Ukraine; litigation risks; volatility in the price of the Common Shares; potential dilution of present and prospective shareholdings; currency risks; financial reporting standards; and climate change. This list is not exhaustive of the factors that may affect any of the Corporation's forward-looking statements or forward-looking information. Forward-looking information includes statements about the future and are inherently uncertain, and the Corporation's actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors, including, without limitation, filings available at www.sedar.com.
The Corporation provides no assurance that forward-looking statements or forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements and information. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Corporation disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, changing circumstances, or otherwise.
SUMMARY DESCRIPTION OF BUSINESS
What is our business?
Cypher focuses on identifying and investing in early-stage opportunities across the digital landscape. The Corporation leverages its strategic relationships to drive innovation and growth, creating new possibilities and opportunities. Cypher is a hands-on team of financial and technology entrepreneurs who invest early in emerging technologies. The Corporation operates from the understanding that technology is always evolving and identifying early opportunities
for strategic investments. The Corporation’s mandate is to seek out and empower the innovators who are building tomorrow’s standards with platforms and protocols, not just products.
Currently Cypher is focused on monetizing its metaverse lands. It is currently developing a virtual lounge within its previously acquired metaverse properties. The first lounge is set to launch early next year and will seamlessly incorporate advanced virtual reality technology with an elegant design, creating a unique space for users to unwind, connect, and network within this immersive environment.
Recent developments
On April 15, 2024, the Company settled debt of $149,215 through the issuance of 117,031 shares. All share and per share amounts reflect the 15 for one consolidation referred to below.
On August 6, 2024, the Company issued 90,471 units at a price of $1.275 per unit raising gross proceeds of $115,350. Each unit consisted of one common share and one common share purchase warrant which entitles the holder to acquire an additional common share at a price of $2.25 for a period of two years from closing.
On September 18, 2024, the Company issued 39,980 units at a price of $1.275 per unit raising gross proceeds of $50,975. Each unit consisted of one common share and one common share purchase warrant which entitles the holder to acquire an additional common share at a price of $2.25 for a period of two years from closing. The Company paid cash finders fees of $1,254.
On September 23, 2024, the Company cancelled 9,333 units that were issued in error during the September 18, 2024 closing.
On October 9, 2024, the Company issued 4,000 units at a price of $1.275 per unit raising gross proceeds of $5,100. Each unit consisted of one common share and one common share purchase warrant which entitles the holder to acquire an additional common share at a price of $2.25 for a period of two years from closing.
On November 14, 2024 the Company announced that it has entered into a settlement agreement dated November 14, 2024 in which it terminates its agreement with Agapi Luxury Brands Inc. (“Agapi”) that contemplated a business combination of the two companies.
Terms of the Settlement
The parties have agreed that Agapi will issue 802,290 common shares at $1.20 per share and issue a royalty on all future sales in settlement of the approximately $962,748 in principal and interest that the Company has advanced to Agapi.
The royalties on the gross sales of all current and future products, such royalties to be paid in priority to all existing royalties are as follows:
a) A 5% royalty on the first $5,000,000 of gross sales;
b) An additional 2.5% royalty on gross sales from $5,000,001 CAD to $7,500,000.
c) An additional $2.5\%$ royalty on gross sales from $\$7,500,001$ CAD to $\$10,000,000$ .
The Company proceeded with a consolidation of its common shares (each, a "Share") on the basis of fifteen (15) pre-consolidation Shares for one (1) post-consolidation Share (the "Consolidation"). The shareholders approved the consolidation at the Annual and Special Meeting held on September 30, 2024, and the Board of Directors approved and confirmed the consolidation ratio on October 16, 2024. Post consolidation, Cypher had 1,435,253 CODE Common Shares issued and outstanding and securities exercisable or exchangeable into another 272,065 CODE Common Shares.
On December 5, 2024, the Corporation entered into debt settlement agreements whereby the Company issued 543,079 common shares at a price of $.70 per share for a total of $380,155.54.
On December 19, 2024, the Company announced continued expansion into the Metaverse with the development of virtual lounge experiences within its previously acquired metaverse properties. The first lounge is set to launch early next year and will seamlessly incorporate advanced virtual reality technology with an elegant design, creating a unique space for users to unwind, connect, and network within this immersive environment. This initiative represents a natural extension of our strategy to cultivate immersive digital experiences and leverage emerging technologies that transform how individuals connect and socialize within virtual communities.
As the growing adoption of cryptocurrency and blockchain technology continues its upward trajectory, Cypher recognizes that the timing could not be better for further development of their Metaverse property holdings. Cypher remains dedicated to long-term value and is seeking new investment opportunities in new trends, technologies, and assets which have potential.
Material facts
There are no material facts about the securities being distributed that have not been disclosed in this offering document or in any other document filed by the Corporation in the 12 months preceding the date of this offering document.
What are the business objectives that we expect to accomplish using the available funds?
The Corporation intends to use net proceeds of the Offering and the Concurrent Financing for working capital requirements, development of its metaverse property and other general corporate purposes. The Offering will not close unless the minimum of $450,000 has been raised under both the Offering and the Concurrent Financing. The Corporation expects these events will occur within the following time frames, with the following costs related to each event:
| Event | Time Frame | Cost (assuming minimum offering only) | Cost (assuming 100% of offering) |
|---|---|---|---|
| Working capital deficit | February | $250,000 | ($250,000) |
| G&A for the next 12 months, including offering costs | 2025 | $150,000 | $150,000 |
| G&A for the next 12 months, including 100% of offering costs | 2025 | $150,000 | $150,000 |
| Metaverse development costs | February | $50,000 | $150,000 |
|---|---|---|---|
| Working capital, further development, acquisitions | Balance of 2025 | nil | $390,000 |
USE OF AVAILABLE FUNDS
What will our available funds be upon the closing of the Offering?
| Assuming minimum offering only | Assuming 100% of offering | ||
|---|---|---|---|
| A | Amount to be raised by this offering(1) | $450,000 | $940,000 |
| B | Selling commissions and fees | n/a | 40,000 |
| C | Estimated offering costs (e.g., legal, accounting, audit) | 10,000 | 10,000 |
| D | Net proceeds of offering: D = A – (B+C) | 440,000 | 890,000 |
| E | Working capital as at most recent month end (deficiency)(3) | (250,000) | (250,000) |
| F | Additional sources of funding | N/A | N/A |
| G | Total available funds: G = D+E+F | $450,000 | $640,000 |
Notes:
(1) This amount does include the Concurrent Placement.
(2) The Corporation assumes that some of the Offering will be through Qualified Finders.
(3) The Corporation's working capital deficiency as at December 31, 2024 is estimated to be approximately $250,000.
How will we use the available funds?
| Description of intended use of available funds listed in order of priority | Assuming minimum offering only | Assuming 100% of offering |
|---|---|---|
| G&A | $150,000 | $150,000 |
| Working capital deficit | (250,000) | (250,000) |
| Metaverse development Costs | 50,000 | 150,000 |
| Further development, working capital, acquisitions | N/A | 90,000 |
| Total | 450,000 | $640,000 |
The above-noted allocation of capital and anticipated timing represents the Corporation's current intentions based upon its present plans and business condition, which could change in the future as its plans and business conditions evolve. Although the Corporation intends to expend the proceeds from the Offering as set forth above, there may be circumstances where, for sound business reasons, a reallocation of funds may be deemed prudent or necessary and may vary materially from that set forth above, as the amounts actually allocated and spent will depend on a number of factors, including the Corporation's ability to execute on its business plan. See the "Cautionary Statement Regarding Forward-Looking Information" section above.
The Corporation's most recent interim financial statements included a going concern note. The funds raised as contemplated herein should alleviate the need for such a note for the next period.
How have we used the other funds we have raised in the past 12 months?
In the past 12 months, the Corporation raised aggregate gross proceeds of $171,425 proceeds were raised and then spent as follows;
| Description | Amount | Variances to what was previously disclosed as use of proceeds, if any, and why |
|---|---|---|
| Loans to Agape Luxury Brands | $170,171 | N/A |
| Finders fees | 1,254 | |
| Working Capital | nil | N/A |
| Total | $171,425 | N/A |
FEES AND COMMISSIONS
Who are the dealers or finders that we have engaged in connection with this Offering, if any, and what are their fees?
The Corporation has not engaged a dealer in connection with the Offering. The Corporation may pay qualified finders a fee of 8% cash and 8% warrants.
PURCHASERS' RIGHTS
Rights of Action in the Event of a Misrepresentation
If there is a misrepresentation in this offering document, you have a right to rescind your purchase of these securities with the Corporation, or to damages against the Corporation and may, in certain jurisdictions, have a statutory right to damages from other persons.
These rights are available to you whether or not you relied on the misrepresentation. However, there are various circumstances that limit your rights. In particular, your rights might be limited if you knew of the misrepresentation when you purchased the securities.
If you intend to rely on the rights described in paragraph (a) or (b) above, you must do so within strict time limitations.
You should refer to any applicable provisions of the securities legislation of your province or territory for the particulars of these rights or consult with a legal adviser.
ADDITIONAL INFORMATION
Where can you find more information about us?
Security holders can access the Corporation's continuous disclosure filings on SEDAR at www.sedar.com under the Corporation's profile.
For further information regarding the Corporation, visit our website at: www.cypher-meta.com
Investors should read this offering document and consult their own professional advisors to assess the income tax, legal, risk factors and other aspects of their investment in Units.
CERTIFICATE OF THE CORPORATION
This offering document, together with any document filed under Canadian securities legislation on or after June 28, 2022, contains disclosure of all material facts about the securities being distributed and does not contain a misrepresentation.
January 7, 2025
By: "George Tsafalas"
Name: George Tsafalas
Title: Chief Executive Officer
By: "Michael Hopkinson"
Name: Michael Hopkinson
Title: Director