|By Marketwired .||
|February 3, 2014 04:04 PM EST|
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 02/03/14 -- VendTek Systems Inc. (TSX VENTURE:VSI) (the "Company"), a developer and licensor of software for the global prepaid and financial services markets, announces that effective January 31, 2014 it has closed the sale of substantially all of its Canadian business operations (the "Canadian Business") to Payment Source Inc. ("PSI") pursuant to an asset purchase agreement between the Company and PSI dated December 18, 2013 (the "Agreement"). PSI is wholly-owned by George DeMarchi, the Company's former Senior Vice President of Canadian Operations.
Under the terms of the Agreement, the Company has sold the Canadian Business (assets and associated liabilities) constituting its Now Prepay division to PSI in exchange for $4,500,000 and the assumption of up to $1,500,000 of working capital deficit, excluding cash and cash equivalents (the "Working Capital"), for a total consideration of $6,000,000 (the "Purchase Price"). Payment arrangements for the Purchase Price are as follows:
(a) a deposit of $200,000, which was paid to the Company on November 15, 2013;
(b) a cash payment of $3,850,000, and $24,142 in closing adjustments which was paid at closing; and
(c) a further $450,000 (the "Holdback"), to be paid within 90 days following the closing of the transaction.
The Holdback is subject to further adjustment based on the Working Capital of the Canadian Business being either (i) less than -$1,500,000 at closing, in which case the Purchase Price will be reduced by the amount that Working Capital is less than -$1,500,000; or (ii) greater than -$1,000,000 at closing, in which case the Purchase Price will be increased by the amount that working capital is greater than -$1,000,000. Such adjustment will take place within 90 days following the closing of the transaction.
The transaction contemplated by the Agreement required the approval of the shareholders of the Company by way of a special resolution requiring two-thirds of the votes cast on the matter to vote in favour of the transaction. The Company obtained such shareholder approval at an annual general and special meeting of its shareholders held on January 28, 2014, when shareholders voted 99% in favour of pursuing the transaction.
Effective on the closing, George DeMarchi has resigned as Senior Vice-President of Canadian Operations for the Company. Mr. DeMarchi has played a pivotal role in the operation of the Canadian Business, and the Company anticipates a smooth transition with PSI going forward. The Company thanks Mr. DeMarchi for his years of service to the organization, and wishes him the very best in his new business endeavour.
The Company intends to use the proceeds from the sale to support its ongoing operations and to further its growth strategy in Brazil. The Company believes that its Brazilian operation holds tremendous potential. This proposed transaction will allow the Company to refocus its resources on this important growth opportunity while simplifying its overall operating structure. Over the long-term, Vendtek's strategy is to refocus on licensing its e-Fresh(TM) transaction processing software internationally and move away from the direct operating model, while retaining its established licensing relationships as has been accomplished with this transaction.
In connection with this transaction, PSI has agreed to license and use VendTek's e-Fresh(TM) transaction processing software for a minimum two-year period to manage its Canadian operations for its suppliers and merchant customers under VendTek's 'Now Prepay' brand.
For more information about this transaction, please contact Irwin Studen, Interim CFO at 1-800-806-4958 or [email protected].
VendTek is headquartered in Vancouver, British Columbia, Canada, and develops and licenses automated transaction system software and supporting technologies that improve the efficiency of product delivery, reduce costs to clients and offer superior safety measures. VendTek's customers, its division, Now Prepay and its subsidiaries are using e-Fresh(TM) software to build electronic, prepaid services networks, which enable consumers to purchase prepaid services via point-of-sale terminals (POS) and self-serve terminals connected to a central e-Fresh(TM) server. This system creates significant value through improved efficiencies compared to the traditional distribution paradigm. e-Fresh(TM) reduces shrinkage and inventory requirements while improving consumer access to prepaid services by completely eliminating physical cards and vouchers. For further information please visit the Company's websites www.vendteksystems.com and www.nowprepay.com.
This news release contains statements which are not current statements or historical facts and are "forward-looking information" within the meaning of applicable Canadian securities laws. All statements, other than statements of historical fact, contained in this news release constitute forward-looking information. Wherever possible, words such as "plans", "expects" or "does not expect", "budget", "forecasts", "projections", "anticipate" or "does not anticipate", "believe", "intent", "potential", "strategy", "schedule", "estimates" and similar expressions or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved and other similar expressions have been used to identify forward-looking information. These forward-looking statements relate to, among other things, the anticipated use of proceeds, the potential of the Brazilian operations, and the transition with PSI going forward.
Although the forward-looking information in this news release reflects the Company's current beliefs on the date of this news release based upon information currently available to management and based upon what management believes to be reasonable assumptions, the Company cannot be certain that actual results, performance, achievements, prospects and opportunities, either expressed or implied, will be consistent with such forward-looking information. By its very nature, forward-looking information necessarily involves significant known and unknown risks, assumptions, uncertainties and contingencies that may cause the Company's actual results, assumptions, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forwardlooking information. These risks and uncertainties include, among other things, revenue growth, operating results, the market demand for the Company's products, product development, and litigation as well other factors described in the Risks Related to our Business Section in the Company's 2013 annual Management Discussion and Analysis. There may be other factors that cause results, assumptions, performance, achievements, prospects or opportunities in future periods not to be as anticipated, estimated or intended.
There can be no assurances that forward-looking information and statements will prove to be accurate, as many factors and future events, both known and unknown could cause actual results, performance or achievements to vary or differmaterially, from the results, performance or achievements that are or may be expressed or implied by such forwardlooking statements contained in this news release. Accordingly, all such factors should be considered carefully when making decisions with respect to the Company, and prospective investors should not place undue reliance on forwardlooking information. The Company assumes no obligation to update or revise forward-looking information to reflect changes in assumptions, changes in circumstances or any other events affecting such forward-looking information, except as 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 release.
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