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:
----------------------------------------------------------------------------
Assuming the Minimum Assuming the Maximum
Use of Proceeds Raise of $4,000.000 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).
FOR FURTHER INFORMATION PLEASE CONTACT:
MCM Capital One Inc.
Joseph Heng
Director & CFO
jheng@macdonaldmines.com
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