NYCE Sensors Inc. to go Public pursuant to a “Reverse Takeover” with Verdant Financial Partners I Inc. (NEX.VFL.H)
Posted on : 2013-12-11
For Immediate Release:
NYCE Sensors Inc. (“NYCE”) and Verdant Financial Partners I, Inc. (“Verdant” or the “Company”) announced today that they have entered into a letter agreement dated December 4, 2013 (the “Agreement”) with respect to a proposed reverse takeover (the “Transaction”) of Verdant by NYCE. The Transaction is expected to be structured as a triangular amalgamation of Verdant and NYCE pursuant to a statutory plan of arrangement or other applicable corporate transaction, with the resulting issuer to be named “NYCE Sensors Inc.” (“Amalco”). The Transaction will constitute a qualifying transaction (“Qualifying Transaction”) as contemplated by the policies of the TSX Venture Exchange (the Exchange”), and this news release has been prepared to fulfill certain disclosure requirements ontained within those policies.
Business of NYCE
NYCE, a private company incorporated under the laws of British Columbia, designs, manufactures and sells wireless ZigBee sensing products into market leading Security, Monitoring and Automation ecosystems worldwide. Based in Vancouver, Canada, NYCE leads its industry by selling products with the lowest possible power consumption, smallest physical size and simplest installation. NYCE’s mandate is to be “invisible” to the end user.
NYCE has developed and sells cost-effective wireless sensors using industry-leading ZigBee technology. NYCE designs and manufactures its products in Canada and engages contract manufacturers for high-volume production. NYCE’s wireless sensors are certified by regulatory and safety agencies for North American and International sales.
NYCE’s products have been shipping for over two years and its key customers are large retail home automation and security companies and commercial automation and security companies. According to analysts, the annual addressable market for its sensor products will exceed $500 million globally over the next several years (source: IPTV Magazine, Multimedia Research Group, Inc.).
NYCE’s wireless sensors are based on industry standard ZigBee HA profile IEEE 802.5.14 protocols. This standard is becoming the “go to” communications system for home automation, security, energy management, home health care and many other applications. NYCE is already supplying its sensors to multiple ZigBee compliant system manufacturers in this space. NYCE’s wireless sensors are the market leader, with a smaller form factor, longer battery life and more effective wireless range. NYCE’s technical roadmap is driven by market demand and is executed by a seasoned team of managers and engineers.
Details of the Transaction
Verdant is a capital pool company listed on the NEX Board of the Exchange. There are currently 3,534,494 common shares of Verdant issued and outstanding. In addition, Verdant has issued outstanding options to purchase 141,380 shares of Verdant (the “Verdant Options”).
There are currently 19,027,523 common shares of NYCE issued and outstanding. In addition, NYCE has issued outstanding options to purchase 4,061,000 shares of NYCE (the “NYCE Options”); outstanding warrants to acquire 1,517,500 shares of NYCE (the “NYCE Warrants”) and 190,000 convertible debentures each with interest at 2% per month convertible into NYCE common shares at $0.10 (the “NYCE Debentures”).
Pursuant to the Agreement, holders of Verdant shares will receive one (1) share of Amalco for every two and a half (2.5) Verdant shares held and holders of Verdant Options will receive one (1) Amalco option for every two and a half (2.5) Verdant Options held. Holders of NYCE shares will receive one (1) share of Amalco for every one (1) NYCE share held and holders of NYCE Options, NYCE Warrants and NYCE Debentures will receive one (1) Amalco option, warrant or debenture for each NYCE Option, NYCE Warrant or NYCE Debenture held. It is anticipated that there will be no controlling shareholders in Amalco upon completion of the Transaction.
Upon completion of the Transaction, the NYCE Pre-RTO Financing (as defined below) and the RTO Financing (also as defined below) (assuming both financings have been fully subscribed for including brokerage firm over-allotments), Amalco will have a total of approximately 47,941,320 shares issued and outstanding of which approximately 1,413,797 shares will be held by the current shareholders of Verdant, 15,000,000 will be held by new investors under the NYCE Pre-RTO Financing, 12,500,000 will be held by investors under the RTO Financing and 19,027,523 shares will be held by the current NYCE shareholders, all of which will result in a change of control of the Company.
The Transaction is an arm’s length transaction and therefore is not a related party transaction. Accordingly, unless otherwise required by the corporate organization pursuant to which the Transaction is completed, no meeting of the Verdant shareholders will be required as a condition to completion of the Transaction.
Following the completion of the Transaction, Amalco will be involved in the technology industry sector carrying out the business currently conducted by NYCE as described above under the heading “Business of NYCE”. The Transaction is an arm’s length transaction and there are no shareholders of NYCE that hold controlling interests in NYCE. The proposed Transaction is expected to proceed without shareholder approval of the shareholders of Verdant but it is expected that shareholder approval for NYCE will be required.
Conditions to Completion
The Agreement provides that the Transaction is subject to the following conditions, among others:
- Prior to the closing of the Transaction, the completion of a private placement by NYCE (“NYCE Pre-RTO Financing”) of NYCE shares at a price of $0.10 per NYCE share (with an attached warrant exercisable at $0.20 for 24 months) for aggregate gross proceeds of $1,250,000. Of the $1,250,000 Pre-RTO Financing Canaccord Genuity will have the right to sell $500,000 on a brokered basis with an additional over-allotment of $250,000 (brokered) which, if completed, would result in a total Pre-RTO Financing in the amount of $1,500,000. The proceeds of the NYCE Pre-RTO Financing will be to fund NYCE’s ongoing operations through closing of the Transaction and ongoing working capital requirements.
- The completion of a private placement concurrent with the closing of the Transaction (the “RTO Financing”) of Amalco shares at a price of $0.20 per Amalco share (with an attached warrant exercisable at $0.30 for 24 months) for aggregate gross proceeds of $2,000,000. Canaccord Genuity will have the right to sell the RTO Financing on a brokered basis with an additional over-allotment of up to $500,000 (brokered) which, if completed, would result in total RTO Financing in the amount of $2,500,000. The proceeds of the RTO Financing will be to fund Amalco on an on-going basis with respect to its current business plan.
- The completion of due diligence investigations.
- The Amalco shares shall have been conditionally accepted for listing on the Exchange.
- Approval of the Transaction by required parties including, as applicable, the NYCE shareholders, the Verdant shareholders and the Exchange.
There can be no assurance that the Transaction will be completed as proposed or at all.
Summary of Significant Financial Information Concerning NYCE
On the basis of the unaudited financial statements for the eight months ended August 31, 2013, NYCE had total assets of $341,893, liabilities of $698,461, shareholders’ deficiency of $356,568, and working capital deficiency of $424,208.
NYCE requires additional working capital to finance future sales; the majority of which will be needed to build product and to expand the sales and marketing efforts.
Proposed Management of Amalco
The board of directors of Amalco will be finalized prior to closing of the Transaction but will include the following current board of NYCE:
Brian Leeners: Mr. Leeners received both his B.Comm. and LL.B. degrees from the University of British Columbia in 1992 and since that time has been focused on the management of private to public venture companies. In 1997, Mr. Leeners joined his first public company where he became President and CEO of Totally Hip Software Inc. in 1999. In 2002, Mr. Leeners founded Nexvu Capital Corp. which is a venture capital firm focused on developing companies in the Resource and Technology Sectors. Brian was a founding board member of DigiBC and a former member of the Funding Review Committee in Computers and Computing for the Science Council of British Columbia as well a former member of the Business Advisory Board of the BC Advanced Systems Institute.
William Reishman: Mr. Reishman graduated from the University of Notre Dame in 1968 as a Danforth Fellow. He began his career in the securities industry in 1979 as a broker with Bache & Co., and has had extensive experience with major Wall Street firms as well as the former Dain Bosworth/Rauscher. Beginning in 2001, Mr. Reishman served for seven years as branch manager of Euro Pacific Capital’s office in Medford, Oregon. In 2008, he became associated with the regional investment advisory firm,
Strategic Financial Management, Inc., where Mr. Reishman is senior portfolio manager. He also has served as consultant to numerous technology and resource companies and has assisted in their financing activities.
It is proposed that on closing of the Amalgamation management of Amalco will consist of Brian Leeners (Chief Executive Officer) and Annie Storey (Chief Financial Officer).
Annie Storey: Ms. Storey, CA brings over 25 years of experience of providing accounting, financial reporting and corporate services to Canadian and US public companies with operations around the world. Her experience includes twelve years in public practice in the areas of audit, accounting and quality control with KPMG, MNP and other small CA firms registered with the Canadian Public Accountability Board and the Public Company Accounting Oversight Board. She is proficient in the areas of International Financial Reporting Standards and U.S. Generally Accepted Accounting Standards (GAAP). Ms. Storey was certified as a Chartered Accountant after obtaining a Bachelor of Business Administration from Simon Fraser University with majors in finance and international business and is a member of the Institute of Chartered Accountants of B.C.’s Practice Review & Licensing Committee, the Canadian Institute of Chartered Accountants’ Practitioners’ Technical Advisory Committee, and regularly participates on boards of non-profit organization.
Sponsorship of Qualifying Transaction
Verdant intends to make application to the Exchange that the Qualifying Transaction should be exempt from sponsorship requirements in accordance with Exchange Policy 2.2. However, there can be no assurance that Verdant will obtain such exemption.
Engagement Agreement with Canaccord Genuity Corp.
In conjunction with the Qualifying Transaction, NYCE has executed an Engagement Agreement with Canaccord Genuity Corp. (“Canaccord Genuity”) under which Canaccord Genuity will act as Agent to sell, on a commercially reasonable efforts basis: (i) part of the NYCE Pre-RTO Financing to raise gross proceeds of up to $500,000 plus an option to solicit the sale of an additional $250,000 of further shares (with attached warrants); and (ii) the RTO Financing to raise gross proceeds of $2,000,000 plus an option to solicit the sale of an additional $500,000 of further shares (with attached warrants).
Canaccord Genuity will also prepare a Sponsorship Report, subject to its due diligence review, for the Qualifying Transaction should that be required by the Exchange.
Trading is expected to remain halted until the Transaction is accepted by, or satisfactory documentation has been filed with, the Exchange pursuant to section 3.4 of Exchange Policy 5.2.
Completion of the Transaction is subject to a number of conditions, including Exchange acceptance. 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 Joint 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 Verdant should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.
On behalf of the Board of Directors of NYCE Sensors Inc.
Brian Leeners, CEO & Director
For further information:
Certain statements in this news release may constitute “forward-looking” information that involves known and unknown risks, uncertainties and other factors, and actual results, performance or achievements or industry results, may be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information is identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. Such information includes, without limitation, statements with respect to: market opportunities for NYCE; accelerated growth in demand for in-home, cost-effective sensors ; increases in sales of NYCE products; increasing market share for NYCE products; savings rates associated with NYCE products; forecasts relating to home security and home automation; and estimates with respect to the total annual addressable market for NYCE products. Actual events or results may differ materially.
Forward-looking information contained in this news release is based on certain key expectations and assumptions made by Verdant and NYCE, including, without limitation, expectations and assumptions respecting: stability of the economy; growth in the technology sectors; no material adverse changes to the NYCE business; growth in demand for the products and services of the NYCE business; and NYCE’s ability to offer products from its businesses to a wider customer base. Although the forward-looking information contained in this news release is based upon what Verdant and NYCE’s management believe to be reasonable assumptions, Verdant and NYCE cannot assure investors that actual results will be consistent with such information.
Forward-looking information reflects current expectations of NYCE’s management regarding future events and operating performance as of the date of this news release. Such information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward looking information including without limitation: potential undisclosed liabilities associated with the Transaction; failure to realize the benefits of the Transaction; decreased demand for products and services of the NYCE business; industry and economic related risk; political and social uncertainties; regulatory risk; and reliance on key personnel. Readers are cautioned that the foregoing list is not exhaustive.
The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects current beliefs and is based on information currently available to Verdant and NYCE. The forward-looking information is made as of the date of this news release and Verdant and NYCE assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.
NEITHER 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 NEWS RELEASE.
THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.