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IVRNET INC. (:IVI) IVRNET INC. Provides Update on Previously Announced Reverse Takeover Transaction with FLEXITY SYSTEMS LTD. and Announces Special Shareholder Meeting Results

Directive transparence : information réglementée

29/03/2022 20:00

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

CALGARY, AB / ACCESSWIRE / March 29, 2022 / IVRNET INC. ("IVRNET" or the "Company") (TSXV:IVI), is pleased to provide an update, further to its news release dated November 19, 2021 (the "Initial News Release"), on its previously-announced reverse takeover transaction with FLEXITY SYSTEMS LTD. ("FLEXITY") and 1333749 B.C. Ltd., a wholly owned subsidiary of the Company ("IVRNET Subco", and together with "IVRNET" and "FLEXITY", the "Parties"), pursuant to which IVRNET will, by way of a "three-cornered amalgamation", acquire all of the issued and outstanding securities of FLEXITY (the "Transaction").

The Transaction will constitute a "reverse takeover" of IVRNET by FLEXITY as such term is defined by TSX Venture Exchange (the "TSXV") Policy 5.2 - Changes of Business and Reverse Takeovers and is subject to TSXV approval. Upon closing of the Transaction ("Closing"), the resulting issuer (the "Resulting Issuer") will carry on the business of FLEXITY and anticipates being listed on the TSXV as a Tier 1 Industrial, Technology or Life Sciences Issuer, subject to TSXV acceptance.

Transaction Amendments and Updates

On November 19, 2021, the Parties entered into an amalgamation agreement (the "Amalgamation Agreement") outlining the principal terms and conditions of the Transaction. The Parties and BHG (as defined herein) have now entered into an amending agreement dated March 25, 2022 to the Amalgamation Agreement (the "Amendment") in order to amend certain material terms of the Transaction and to address certain new developments, as follows:

  • The exchange ratio of the Transaction (the "Exchange Ratio") has changed from 77.803251 (as disclosed in the Initial News Release) to 75.4989184. As such, pursuant to the Transaction, IVRNET will now issue 75.4989184 post-Consolidation (as defined below) common shares of IVRNET ("IVRNET Shares") for each common share of FLEXITY (a "FLEXITY Share") outstanding immediately prior to the completion of the Transaction.
  • FLEXITY, instead of IVRNET, anticipates conducting the Offering (as defined, and the expected terms of which are summarized, below under the heading "Concurrent Financing.").
  • FLEXITY has acquired the healthcare business of Genesis Integration Inc. ("Genesis"), an arm's length party to both FLEXITY and IVRNET, for an aggregate purchase price of $5,000,000, a portion of which will be paid in cash and a portion of which will be paid by the issuance of FLEXITY Shares. The acquisition of Genesis by FLEXITY is exclusively an asset purchase transaction and will not impact the corporate structure of the Resulting Issuer. All FLEXITY Shares issued to acquire Genesis will ultimately be exchanged for IVRNET Shares in accordance with the Exchange Ratio at the time of Closing, and such shares are included in the total Transaction consideration summarized below.

As used herein, "Resulting Issuer Share" means a common share of the Resulting Issuer, as constituted following the completion of a consolidation of the IVRNET Shares to be undertaken in connection with the Transaction on a 20:1 basis (the "Consolidation").

As a result of the Amendment, upon completion of the Transaction, it is now expected that IVRNET will issue:

  • up to 87,105,262 Resulting Issuer Shares at a deemed price of $0.90 each, in exchange for approximately 1,153,728 FLEXITY Shares expected to be issued and outstanding at Closing (which includes 993,392 FLEXITY Shares issued and outstanding as of the date hereof and up to approximately 160,336 FLEXITY Shares to be issued upon the conversion of the Subscription Receipts (as defined below) prior to Closing, assuming completion of the maximum Offering (as defined below) and full exercise of the Over-Allotment Option (as defined below)) all of which will be exchanged at the Exchange Ratio;
  • 6,267 preferred shares of the Resulting Issuer with a principal amount of $1,000 per preferred share and convertible into 8,356,000 Resulting Issuer Shares, in exchange for 6,267 preferred shares of FLEXITY issued and outstanding as of the date hereof;
  • up to 6,052,630 Resulting Issuer share purchase warrants ("Resulting Issuer Warrants"), in exchange for approximately 80,168 FLEXITY Warrants (as defined below) (to be issued upon the conversion of the Subscription Receipts prior to Closing assuming completion of the maximum Offering and full exercise of the Over-Allotment Option) to be exchanged at the Exchange Ratio;
  • 3,019,956 common share purchase options of the Resulting Issuer with a nominal exercise price, in exchange for the common share purchase options of FLEXITY outstanding as of the date hereof, to be exchanged at the Exchange Ratio;
  • 6,562 convertible debentures of the Resulting Issuer with a principal amount of $1,000 per convertible debenture and convertible into 8,749,775 Resulting Issuer Shares, in exchange for 6,562 convertible debentures of FLEXITY issued and outstanding as of the date hereof; and
  • compensation warrants in exchange for outstanding compensation warrants of FLEXITY that are expected to be issued by FELXITY to any agents that are engaged in connection with the Offering.

Concurrent Financing

As per the Amendment noted above, FLEXITY anticipates conducting a brokered private placement of a minimum of 5,263,158 and a maximum of 10,526,316 (or 12,105,262 assuming the Over-Allotment Option is exercised in full) subscription receipts ("Subscription Receipts"), at a price of $0.95 per Subscription Receipt (the "Offering Price"), for gross proceeds of a minimum of $5,000,000 and up to a maximum of $10,000,000 (the "InitialOffering") (or approximately $11,499,999 assuming the Over-Allotment Option is exercised in full). FLEXITY intends to engage a syndicate of agents (the "Agents") to conduct the Offering.

In addition, FLEXITY intends to grant the Agents an option (the "Over-Allotment Option" and together with the Initial Offering, the "Offering") to arrange for the purchase of additional Subscription Receipts in an amount equal to 15% of the Subscription Receipts sold pursuant to the Initial Offering at a price equal to the Offering Price for aggregate gross proceeds of up to a maximum of approximately $11,499,999.

The Subscription Receipts are expected to be governed by a subscription receipt agreement (the "Subscription Receipt Agreement") anticipated to be entered into among FLEXITY, the Agents and a licensed Canadian trust company or other escrow agent mutually acceptable to FLEXITY and the Agents, each acting reasonably. Assuming completion of the Offering, each Subscription Receipt will entitle the holder thereof to receive, upon satisfaction of certain standard escrow release conditions (the "Escrow Release Conditions") and without further consideration, one unit of FLEXITY (each, a "FLEXITY Unit"), with each FLEXITY Unit comprised of 0.013245223 of one FLEXITY Share, and 0.006622611 of one share purchase warrant of FLEXITY (each, a "FLEXITY Warrant") which will ultimately result in each holder of a Subscription Receipt receiving one Resulting Issuer Share and one-half of one Resulting Issuer Warrant, upon completion of the Transaction. Each Resulting Issuer Warrant may be exercisable into a Resulting Issuer Share at an exercise price of $1.25 per Resulting Issuer Share for a period of 24 months from the date of issuance thereof.

FLEXITY expects to pay certain expenses, cash fees and issue compensation warrants to the Agents at market standard rates, in consideration for their services provided in respect of the Offering, the particulars of which will be disclosed in a subsequent news release.

If completed, the Offering may close in one or more tranches, depending on market demand. The net proceeds from the Offering are expected to be used by the Resulting Issuer following the completion of the Transaction for potential acquisitions, certain capital expenditures and general and administrative expenses, which include but are not limited to, salaries and benefits, premises leasing, professional fees and office related expenses.

Upon completion of the Transaction and satisfaction of the Escrow Release Conditions, the securities of the Resulting Issuer issuable in exchange for securities comprising the FLEXITY Units and any compensation warrants issued by FLEXITY are not expected to be subject to any hold period under applicable Canadian securities laws.

The BHG Distribution

BHG-BC Holdings Ltd. ("BHG"), an entity incorporated under the BCBCA holds 880,000 FLEXITY Shares representing approximately 89% of the FLEXITY Shares outstanding prior to completion of the Transaction (on an undiluted basis). As a condition to completion of the Transaction, BHG is required to distribute, on a pro rata basis, FLEXITY Shares to certain unitholders of RC Morris (as defined herein), being the ultimate beneficial owners of BHG (the "Unitholders"). BHG has determined that it will no longer distribute all of its 880,000 FLEXITY Shares to such Unitholders as previously contemplated, but instead, it will distribute approximately 22% of those FLEXITY Shares to the Unitholders and it will continue to hold the remainder. The aforementioned 880,000 FLEXITY Shares will be exchanged for 66,439,028 Resulting Issuer Shares at closing of the Transaction. Approximately 6 million of such 66,439,028 Resulting Issuer Shares to be issued will be held by Public Shareholders (as defined in TSXV Policy 1.1) and the remaining amount will be held by BHG or other associates/affiliates of RC Morris.

Directors and Officers of Resulting Issuer

As disclosed in the Initial News Release, the Resulting Issuer intends to appointLenny Liscio as Chief Executive Officer, Louis Gervais as Chief Operating Officer and Ehsaan Akram as Chief Financial Officer and Corporate Secretary, and it is anticipated that the board of directors of the Resulting Issuer will be comprised of six directors, being Conrad Krebs, Bradley Meadows, Dave King (current director of the Company), Dave Snell (current director of the Company), Robert Barlow (current director of the Company) and John Burdiga.

In addition, the Resulting Issuer intends to appoint Duncan McGregor as it's Vice President of Operations and Chief Technology Officer and Geoff Kereluik as Senior Vice President of Sales.

Duncan McGregor, VP Operations and Chief Technology Officer

Duncun McGregor is a technology executive with over 20 years of experience. He has held technology leadership roles at some of Canada's most successful technology companies, including OpenText (2000-2012), Cogeco Peer 1 (now Aptum - 2013-2017) and TeraGo (2017-2021). Mr. McGregor has experience leading teams across a wide range of technologies. His experience includes cloud, security, networking, telecommunications, wireless & 5G, software development and data center infrastructure. Mr. McGregor also has deep knowledge of enterprise transformation and process improvement and has led teams through ERP and CRM implementations as well as process methodologies like ITIL and Agile. Mr. McGregor holds a degree in English with a minor in Computer Science from the University of Waterloo (1998).

Geoff Kereluik, Executive VP Sales

Geoff Kereluik is an accomplished Sales and Marketing Executive with a track record of consistently exceeding profitability, revenue growth and operating efficiency objectives. He is an inspirational leader with a passion for winning and extensive experiences in successfully transforming organizations into high performing, customer obsessed teams. As the Resulting Issuer's Executive VP of Sales, Mr. Kereluik will lead the sales organization. He will be accountable for the short and long term sales strategy for the Resulting Issuer and will be focused on helping customers achieve better business outcomes by helping enable their competitive advantage and maximizing their operational efficiencies. As an accomplished executive, Mr. Kereluik has held several sales and marketing Vice President positions at Hewlett Packard (1992-2012) as well as Vice President roles at Bell Canada (2013-2015) and TeraGo (2019-2020). Mr. Kereluik is also a former Chief Executive Officer for a SaaS based start-up (2016-2018). Mr. Kereluik holds a Bachelor of Commerce degree from the University of Calgary (1992). He has held several board and board advisory positions including for Learning for a Sustainable Future (2006-2017). The Monieson Institute (2000-2002), HealthCare365 (2017-2018), Alliance Edge (2000-2008) and The ISV Factory (2001-2018).

Special Shareholder Meeting Results

Shareholders representing 49.61% of the 99,311,181 issued and outstanding IVRNET Shares as of the record date of December 6, 2021 either attended or were represented by proxy at the special meeting of IVRNET shareholders (the "IVRNET Shareholders") held on January 25, 2022. The IVRNET Shareholders voted in favor of all of the items put forward by the IVRNET board of directors (the "IVRNET Board") and management, including:

  • the amendment to the articles of IVRNET to change the name from Ivrnet Inc. to "FLEXITY Enterprises Inc;"
  • the authorization of the IVRNET Board to effect the Consolidation;
  • the continuance of IVRNET from the Business Corporations Act (Alberta) to the Business Corporations Act (British Columbia); and
  • the amendment to the current articles of IVRNET as to the rights, privileges, restrictions and conditions attached to the common shares and preferred shares of IVRNET.

IVRNET Shares for Debt Settlement

As contemplated in the Company's news release dated November 19, 2021, the Company has entered into an agreement with RC Morris & Company Special Opportunities Fund III Limited Partnership ("RC Morris") whereby concurrently with the completion of the RTO, the Company will create a new series of preferred shares, as approved by the IVRNET Shareholders at the special meeting of IVRNET shareholders on January 25, 2022, (the "Preferred Shares") and complete an arm's length shares for debt settlement in respect of approximately $3.2 million in outstanding debt and approximately $500,000 in outstanding payables of the Company owed to RC Morris and its affiliate (the "IVRNET Shares for Debt Transaction"). Pursuant to the IVRNET Shares for Debt Transaction, in order to settle the aforementioned debt, it is anticipated that the Company will issue to RC Morris 3,732 Preferred Shares with a principal amount of $1,000 per Preferred Share, which may be convertible into 4,976,000 Resulting Issuer Shares in aggregate at $0.75 per Resulting Issuer Share, subject to TSXV acceptance.

FLEXITY Financial Information

In accordance with TSXV Policy 5.2, FLEXITY is preparing audited consolidated financial statements for the years ended October 31, 2021 and October 31, 2020, which will provide audited financial information for the past two fiscal years of FLEXITY and its predecessor business. Final audited financial statements for the aforementioned periods will be included in the filing statement that will filed on SEDAR prior to completion of the Transaction.

Filing Statement

IVRNET is also pleased to announce that it has made its submission to the TSXV in connection with the approval of the Transaction in accordance with Policy 5.2 - Changes of Business and Reverse Takeovers. It is anticipated that the Company's filing statement in connection with the Transaction will be available on IVRNET's issuer profile on SEDAR (www.sedar.com) following conditional acceptance by the TSXV, once obtained.

Trading Halt

The IVRNET Shares are currently halted from trading, and the trading of the IVRNET Shares is expected to remain halted pending completion of the Transaction.

Cautionary Note

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV Requirements, disinterested 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 Filing Statement, 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 IVRNET should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

For further information, please contact:

Andrew Watts, CEO of IVRNET
Phone: 1.800.351.7227
Email: investors@ivrnet.com
Conrad Krebs, Director of FLEXITY
Phone: 604.629.5977
Email: ckrebs@rcmorris.com

Forward Looking Information

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect IVRNET's current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.

The forward-looking statements and information in this press release include information relating to the Transaction (including TSXV approval and the closing of the Transaction) and the anticipated terms and completion of the Offering (including the satisfaction of any Escrow Release Conditions, the use of proceeds from the Offering and the closing of the Offering).

Such statements and information reflect the current view of IVRNET. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks:

  • there is no assurance that the Offering will be completed or as to the actual gross proceeds to be raised in connection with the Offering;
  • there is no assurance that IVRNET and FLEXITY will obtain all requisite approvals for the Transaction, including the approval of the TSXV for the Transaction (which may be conditional upon amendments to the terms of the Transaction), as applicable;
  • following completion of the Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations. Financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer;
  • COVID-19 could cause material delays in the consummation of the Transaction;
  • unanticipated costs and expenses;
  • new laws or regulations could adversely affect the Resulting Issuer's business and results of operations; and
  • the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer's securities, regardless of its operating performance.

Such forward information and statements are based on numerous assumptions, including among others, that all conditions required for the Transaction will be fulfilled, that the Company will be able to obtain receipt of all shareholder, regulatory and third party approvals required for the Transaction, that COVID-19 will not materially impact the consummation of the Transaction or the businesses or personnel of IVRNET and FLEXITY, and that general business and economic conditions will not change in a material adverse manner. Although the assumptions made by the Company in providing forward looking information or making forward-looking statements are considered reasonable by management at the time, there can be no assurance that such assumptions will prove to be accurate.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those contained in the forward-looking information or implied by forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended Accordingly, readers should not place undue reliance on forward-looking statements or information.

The forward-looking information contained in this press release represents the expectations of IVRNET as of the date of this press release and, accordingly, is subject to change after such date. Accordingly, readers should not rely upon this information as of any other date. While IVRNET may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable laws.

SOURCE: Ivrnet Inc.



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https://www.accesswire.com/695113/IVRNET-INC-Provides-Update-on-Previously-Announced-Reverse-Takeover-Transaction-with-FLEXITY-SYSTEMS-LTD-and-Announces-Special-Shareholder-Meeting-Results