MCM Capital One Inc. Signs Letter of Intent With Enerdynamic Hybrid
Technologies Inc. as Its Qualifying Transaction
TORONTO, ONTARIO--(Marketwired - Jan 24, 2014) - MCM Capital One
Inc. (TSX-VENTURE:ZGN.P) ("MCM"), a Capital Pool Company,
wishes to provide further details concerning the letter of intent
(the "LOI") dated
October 3, 2013 for the acquisition of Enerdynamic Hybrid
Technologies Inc. ("EHT"), previously announced on
October 9, 2013. The acquisition, if completed, will constitute
MCM's qualifying transaction pursuant to the policies of the TSX
Venture Exchange Inc. (the "Exchange").
The Proposed Qualifying
Transaction
The acquisition of EHT (the "Acquisition") is to be
completed no later than January 31, 2014 as a share exchange
through the issuance of one common share of MCM for each common
share of EHT, and one warrant to purchase an MCM common share for
each warrant to purchase an EHT common share. The exercise price
and term of the MCM warrants will be the same as those for the EHT
warrants being purchased.
It is a condition of closing the Acquisition that EHT will raise
at least $4,000,000 through the First Private Placement and the
Second Private Placement described below. Completion of the
Acquisition is also conditional on the execution of a definitive
share exchange agreement to be negotiated among the parties, the
satisfactory completion of due diligence, approval of the
Acquisition by the directors of MCM and EHT, approval by the
shareholders of MCM of the name change and appointment of the
directors described below and Exchange acceptance of the
Acquisition.
The acquisition by MCM of all of the issued and outstanding
shares in the capital of EHT is not a Non-Arm's Length Qualifying
Transaction under the policies of the Exchange. The Acquisition
will not be subject to approval of the shareholders of MCM.
However, it is a condition of the Acquisition that the shareholders
of MCM shall have approved the appointment of the directors
described below and the change of MCM's name to Enerdynamic Hybrid
Technologies Corp. or such other name as EHT and MCM may agree
upon.
EHT Capital Structure
and Financing
EHT is conducting a brokered private placement (the
"First Private
Placement") to raise up to $3,000,000 by issuance of units
(the "First Placement
Units") at $0.25 per unit, each unit consisting of one EHT
common share and one warrant (a "First Placement Warrant"). Each
First Placement Warrant will entitle the holder to acquire one
common share at a price of $0.50 per share at any time prior to
5:00 p.m. (Eastern Standard Time) on the date that is 12 months
(the "First
Anniversary") following the date on which the shares of EHT
either (a) become publicly traded on a recognized stock exchange,
or (b) are exchanged for shares in a corporation which are (or
become in connection with such exchange) publicly traded on a
recognized stock exchange (in either case, the "IPO Date") and, at a price of
$0.75 per Share during the period following the First Anniversary
and ending at 5:00 p.m. (Eastern Standard Time) on the date that is
24 months following the IPO Date. EHT has raised approximately
$2,700,000 in the First Private Placement and expects to complete
the balance of the First Private Placement.
EHT intends to conduct a second brokered private placement (the
"Second Private
Placement") to raise up to $8,000,000 by issuance of units
(the "Second Placement
Units") at $0.50 per unit, each unit consisting of one EHT
common share and one-half of a warrant (a "Second Placement Warrant").
Each whole Second Placement Warrant is to be exercisable for one
EHT common share at a price of $1.00 for a period of 2 years
following closing. The Second Private Placement will close
immediately prior to the closing of the Acquisition.
A minimum of $4,000,000 must be raised as a condition of closing
the Acquisition. A maximum of $11,000,000 would be raised if both
of those private placements are fully sold. The proceeds of the
First Private Placement and the Second Private Placement will be
used as follows:
Use of Proceeds |
Assuming the Minimum Raise of $4,000.000 |
|
Assuming the Maximum Raise of $11,000.000 |
Research and development |
750,000 |
|
1,500,000 |
Purchase of machinery and equipment |
750,000 |
|
1,200,000 |
Inventory and raw materials |
1,000,000 |
|
2,000,000 |
Agent's fees and other costs of the private placements and
qualifying transaction |
500,000 |
|
1,125,000 |
Working capital |
1,000,000 |
|
5,175,000 |
Immediately prior to the First Private Placement, there were
31,885,493 EHT common shares and warrants to purchase 4,225,000 EHT
common shares at $0.25 each for a period of approximately 2 years.
Up to an additional 8,000,000 EHT common shares and 4,000,000 First
Placement Warrants could be issued in the First Private Placement
and up to an additional 16,000,000 EHT common shares and 8,000,000
Second Placement Warrants could be issued in the Second Private
Placement.
Kingsdale Capital Markets Inc. will act as the agent for the
First Private Placement and the Second Private Placement and it
will receive a 7.5% cash commission, 24 month warrants to purchase
First Placement Units equal to 10% of the First Placement Units
sold, 24 month warrants to purchase Second Placement Units equal to
10% of the Second Placement Units sold, plus an advisory fee
consisting of 1,082,538 EHT common shares. Rob Fia, the CEO and a
director of MCM, is Co-Head Corporate Finance of Kingsdale Capital
Markets Inc.
MCM Capital Structure
and Financing
MCM intends to conduct a non-brokered private placement (the
"MCM Private
Placement") to raise up to $200,000 by issuance of common
shares at $0.20 per share.
There are 3,350,000 MCM common shares now outstanding and up to
1,000,000 MCM common shares could be issued in the MCM Private
Placement. MCM has 460,000 common share purchase warrants
outstanding, exercisable at prices between $0.20 and $0.23.
Enerdynamic Hybrid
Technologies Inc.
EHT, an Ontario corporation, has acquired (i) substantially all
of the assets of OSM Solarform Corp. ("OSM"), a solar panel
manufacturer, and (ii) the energy products technology of
EnerDyanamic Systems Inc. ("ESI"). Prior to completion of
the acquisition of those assets, EHT did not have any operations or
assets. EHT did not assume any of the liabilities of OSM or ESI. As
a result of the acquisition of those assets, EHT is in the business
of manufacturing and distributing solar panels and vertical wind
turbines that are combined with solar panels for optimal energy
creation and which will be used to power micro grids for use on
cell phone towers, light poles, trucks and remote locations. EHT
will carry on its manufacturing and distribution business from the
OSM facility in Welland, Ontario.
OSM Solarform
Corp.
OSM was founded in 2011. OSM is a privately held Canadian
corporation headquartered in Welland, Ontario. Prior to the sale of
substantially all its assets to EHT, OSM designed, assembled,
manufactured and distributed photovoltaic solar panels in Canada.
Based on OSM's September 30, 2013 unaudited financial statements
prepared in accordance with Canadian generally accepted accounting
principles, OSM had gross revenues of $5,215,011, an adjusted
EBITDA of $106,033, and retained earnings of ($2,272,876). OSM's
total assets and total liabilities were $5,784,596 and $8,057,472,
respectively, as at September 30, 2013.
EnerDyanamic Systems
Inc.
ESI was founded in 2010. ESI is a privately held Ontario
corporation headquartered in Brantford, Ontario. ESI is focused on
developing innovative products that capture both wind and solar
energy. This new technology, known as Ener-Tree, is the first true
wind and solar hybrid generator available in a single, portable
device. ESI is a research and development company and has no sales
and no measurable fixed assets or liabilities.
The controlling shareholder of ESI is Tom Bryson, of Brantford,
Ontario, who owns securities carrying 100% of the voting rights
attached to the shares of ESI.
MCM Capital One
Inc.
MCM, a capital pool company within the meaning of the policies
of the Exchange, was listed on the Exchange on or about January 24,
2012. MCM does not have any operations and has no assets other than
cash. MCM's business is to identify and evaluate businesses and
assets with a view to completing a qualifying transaction under the
policies of the Exchange.
Insiders of the
Resulting Issuer
The planned officers and directors of MCM, upon completion of
the Acquisition, are:
John Gamble - CEO and
Director
John Gamble has over 25 years working with international public
and private companies in the energy, environmental, resource and
technology sectors and 8 years experience in the renewable energy
and clean tech sectors and has worked on raising over C$25 million
in public equity issues
Tom Bryson - President
and Director
Tom Bryson has over 20 years of international business and
engineering experience with large public companies and 7 years
experience in renewable energy product development, patenting and
licensing he has also set up and managed international divisions
and supply chain management for tier 1 auto supplier
Bruce Bent - Director
and CFO
Mr. Bent is the Vice President of Finance with Matthews
Southwest Development, a $500 million development company based in
Dallas Texas and Mississauga, Ontario. Mr. Bent has a successful
track record of enhancing both top and bottom line performance
through a clear, consistent focus on margin improvement, cost
management and effective analysis of possible business
opportunities. Mr. Bent has held various directorships in both
private and public companies.
Paul Ghezzi -
Director
Paul Ghezzi is the CEO of Solar Income Fund (SIF). SIF is a
Canadian-based company focused on the development, ownership and
management of solar PV energy power generation installations backed
by long-term power purchase agreements. Mr. Ghezzi has been focused
on creating structured opportunities in the renewable energy sector
since 2006. With experience in Europe, North America and most
recently Central and South America, Mr. Ghezzi is veteran of the
solar energy industry with a strong understanding of all facets of
the solar value chain. Under his leadership the SIF group of
companies is managing in excess of 10 megawatts of solar energy
projects in Ontario and have a pipeline of over 250 megawatts of
solar energy projects, in development, globally.
Rob Fia -
Director
Rob Fia is Co-Head Corporate Finance of Kingsdale Capital
Markets Inc., an investment dealer. Mr. Fia is also the CEO and a
director of MCM. Mr. Fia has over 14 years' experience in the
investment business, including both equity research and corporate
finance.
Litigation
Claim
On November 28th, 2013, Dynamic Systems Holdings Inc.
("DSHI") commenced
an action pursuant to a statement of claim issued in Toronto (Court
File No. CV-13-10345-00CL) against, among others, ESI, Tom Bryson,
Pole-R Power Inc. ("PRP"), EHT, OSM and MCM,
seeking relief which includes damages in the amount of
$30,000,000.00, the disgorgement of the Defendants' profits, and
certain other relief, including injunctive relief (the
"Claim"). The Claim
was amended on December 16th, 2013 to add Allan Cruikshank as a
defendant. The Claim principally stems from certain alleged
breaches under license agreements and other contractual relations
between ESI, Bryson and DSHI, the alleged misappropriation by all
of the defendants of information alleged to be confidential and
proprietary to DSHI, the alleged interference by all of the
defendants in the economic relations of DSHI and alleged negligence
by the law firm acting for ESI, PRP, Bryson and DSHI in connection
with commercial arrangements amongst those parties. On January
17th, 2014, ESI, Tom Bryson and PRP filed a statement of defence
and counterclaim denying the allegations against them set forth in
the Claim and, pursuant to the counterclaim, seeking relief against
DSHI and two of its principals, Allen Scott and Angelo Carlucci,
which includes $30,000,000.00 in damages and declarations that
certain of the license agreements and other commercial agreements
are of no force or effect. Also on January 17th, 2014, EHT and OSM
filed a statement of defence in which they denied the allegations
against them in the Claim.
Tom Bryson, the President of ESI, when asked about the
litigation stated "I do not believe there is any merit to the claim
brought by the plaintiffs and I'm confident that the defendants
will be able to successfully defend this claim".
Further
Information
Completion of the transaction is subject to a number of
conditions, including but not limited to, TSX Venture Exchange
acceptance and if applicable pursuant to TSX Venture Exchange
requirements, majority of the minority shareholder approval. Where
applicable, 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
management information circular or filing statement to be prepared
by 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 a capital pool company should be considered highly
speculative.
The TSX Venture Exchange Inc. has in no way passed upon the
merits of the proposed transaction and has neither approved nor
disapproved the contents of this press release.
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 State in which such offer, solicitation or sale
would be unlawful. The securities have not been 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 requirements.
Forward Looking Information
The information in this news release includes certain
information and statements about management's view of future
events, expectations, plans and prospects that constitute
forward-looking information. Forward-looking information includes
the transfer of assets to EHT, the satisfaction of the conditions
of the Acquisition, the amount raised in the First Private
Placement and the Second Private Placement and the insiders of the
resulting issuer. These statements are based upon assumptions that
are subject to significant risks and uncertainties. Because of
these risks and uncertainties and as a result of a variety of
factors, the actual results, achievements or performance may vary
materially from those anticipated and indicated by these forward
looking statements. The material risk factors that could cause
actual results to differ include the risk of delays in completing
the private placements, the risk that EHT may not be able to raise
sufficient funds through the private placements, the risk that the
shareholders or directors of MCM may not approve the elements of
the Acquisition which require their approval, the risk that the
resulting issuer may not satisfy the listing requirements of the
Exchange and the risk that the due diligence of the parties may
result in a decision not to proceed with the Acquisition. Although
MCM believes that the expectations reflected in the forward-looking
information are reasonable, it can give no assurances that the
expectations of any forward-looking information will prove to be
correct. Except as required by law, MCM disclaims any intention and
assumes no obligation to update or revise any forward-looking
information to reflect actual results, whether as a result of new
information, future events, changes in assumptions, changes in
factors affecting such forward looking statements or otherwise.
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 release).
MCM Capital One Inc.Joseph HengDirector &
CFOjheng@macdonaldmines.com
(TSXV:ZGN.P)
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