Antler Hill Oil & Gas Ltd.

September 17, 2015 10:46 ET

Antler Hill Announces Qualifying Transaction

CALGARY, ALBERTA--(Marketwired - Sept. 17, 2015) - Antler Hill Oil & Gas Ltd. (the "Corporation" or "Antler Hill") (NEX:AHO.H), a capital pool company listed on the NEX, is pleased to announce details concerning its proposed qualifying transaction involving a proposed business combination with Innovative Alert Systems inc. ("Innovative"). Innovative is a privately held company incorporated under the Business Corporations Act (Alberta) and specializes in the development of innovative and non-intrusive fall detection camera and alert systems.

Antler Hill entered into a letter agreement with Innovative dated September 4, 2015 (the "Letter Agreement"), pursuant to which Antler Hill and Innovative intend to complete a business combination (the "Transaction") by way of an amalgamation to form a new company ("Amalco") called "Innovative Alert Systems Inc." Pursuant to the Transaction, Antler Hill will amalgamate with Innovative to form Amalco. Under the Letter Agreement the parties will complete the following exchange of securities, at a deemed issue price of $0.20 per common share, for an aggregate purchase price of $3,356,680:

  1. each outstanding Innovative common share and the Innovative common shares to be issued under the Innovative Bridge Financing, as such term is defined below, shall be exchanged for two (2) common shares of Amalco ("Amalco Common Shares"), resulting in an aggregate issuance of 16,783,400 Amalco Common Shares;

  2. each outstanding Innovative Warrant, as such term is defined below, along with the warrants to be issued under the Innovative Bridge Financing and the warrants to be issued to current holders of Innovative Common Shares pursuant to the Letter Agreement shall be exchanged for two (2) warrants of Amalco ("Amalco Warrants") with exercise prices ranging from $0.225 to $0.375, resulting in an aggregate issuance of 7,016,350 Amalco Warrants;

  3. each outstanding Innovative Option, as such term is defined below, will be exchanged for two (2) stock options of Amalco exercisable at $0.25 per share;

  4. each three (3) outstanding Antler Hill common shares will be exchanged for one (1) Amalco Common Share, resulting in an aggregate issuance of 3,666,667 Amalco Common Shares, and each three (3) outstanding stock options of Antler Hill will be exchanged for one (1) stock option of Amalco, resulting in the issuance of 366,667 stock options of Amalco, exercisable at $0.25 per share; and

  5. 4,500,000 Amalco units will be issued in connection with the conversion of the Innovative Shareholder Payables, as further described below.

It is intended that the Transaction, when completed, will constitute the qualifying transaction of the Corporation pursuant to Policy 2.4 of the TSX Venture Exchange Inc. (the "TSX Venture") Corporate Finance Manual. The Transaction is subject to the policies of the TSX Venture relating to qualifying transactions, as well as shareholder approval of each of Antler Hill and Innovative. Following completion of the Transaction, it is anticipated the resulting issuer will be classified as a Tier 2 technology issuer.

About Innovative

Innovative was incorporated under the Alberta Business Corporations Act ("ABCA") on October 2, 2012 and is a Calgary, Alberta-based technology company that will develop, design, manufacture and market an intelligent, non-intrusive fall detection system to the world market. Innovative was founded by the two largest shareholders, Platinum Engineering Ltd. ("Platinum") and Complex Systems Inc. ("Complex"), who each own 29%. Platinum is a privately held Alberta company with a major shareholder controlled indirectly by Frank Der, a director of Innovative. Complex is a privately held Alberta company majority owned and controlled by Henry Leung, a director of Innovative.

With the senior population increasing worldwide, the alarming rate and critical health implications of fall incidents, the increased burden of expense to governments, and a lack of technological advancement in Personal Emergency Response Systems (PERS), today's market demands an innovative PERS that addresses the increasing demands of an aging population, their care, and the cost to loved ones and the health system. Innovative's goal is to provide an affordable, leading-edge and innovative solution in the form of the next-generation fall detection product.

Innovative Corporate History and Structure

Prior to giving effect to the exchange ratio noted above, Innovative has the following securities outstanding: (i) 6,891,700 Innovative common shares; (ii) 424,250 share purchase warrants exercisable at $0.45 and 236,000 share purchase warrants exercisable at $0.75 (collectively, the "Innovative Warrants"); (iii) 225,000 options to purchase Innovative common shares held by current directors, officers, consultants or employees of Innovative at an exercise price of $0.50 (the "Innovative Options"); and (iv) 750,000 bridge financing share purchase warrants exercisable to purchase Innovative Common Shares at $0.75 (the "Innovative Bridge Warrants").

Innovative has approximately $1,180,000 of outstanding shareholder's loans due to shareholders or companies controlled by shareholders as of December 31, 2014 (the "Innovative Shareholder Payables"), of which $900,000 will be converted into 4,500,000 units of Amalco at a conversion price of $0.20 per unit and which will have the identical terms and conditions as those Amalco Units being issued under the Innovative Private Placement. The remaining balance of $280,000 will be converted into a long term loan with a term of 24 months and an interest rate of 3% per annum.

Summary of the Proposed Qualifying Transaction

Pursuant to the arm's length Letter Agreement, and subject to the terms and conditions thereof, Antler Hill and Innovative have agreed to complete the Transaction to form Amalco.

Pursuant to the Letter Agreement, the parties have agreed to use their "commercially reasonable efforts" to cause Innovative to complete a private placement (the "Innovative Private Placement") of subscription receipts of Innovative (the "Subscription Receipts") at a price of $0.20 per receipt (the "Offering Price") for gross proceeds of a minimum of $1,500,000 and a maximum of $2,500,000. Each Subscription Receipt will be automatically converted into one Amalco unit ("Amalco Unit") concurrent with the completion of the Transaction at no additional cost to the holder. Each Amalco Unit shall consist of one common share and one-half of one share purchase warrant of Amalco ("Amalco Warrant") with each Amalco Warrant exercisable at a price of $0.50 for a period of 24 months. The parties acknowledge that Innovative intends to engage a syndicate of agents (the "Agents") to act as agents on a "commercially reasonable efforts" basis for the Innovative Private Placement and in connection therewith intends to pay a cash commission to the Agents in an amount to be determined. The parties agree the net proceeds of the Innovative Private Placement will be held in escrow and released concurrent with the completion of the Transaction.

The Letter Agreement also provides that Innovative may proceed with a non-brokered private placement of up to 1,500,000 units of Innovative (the "Innovative Units"), at a price of $0.375 per Innovative Unit (the "Innovative Bridge Financing"), for gross proceeds of up to $562,500 to close on or before November 30, 2015. Each Innovative Unit will consist of one Innovative common share and one-half of one share purchase warrant of Innovative exercisable at a price of $0.75 per share, for a period of two years from closing of such private placement.

The proceeds of the Innovative Private Placement and Innovative Bridge Financing will be used to fund a portion of Innovative's costs of the Transaction, continuing operating expenses and for general working capital purposes.

Upon completion of the Transaction, the Innovative Bridge Financing, and the minimum Innovative Private Placement, Amalco will have approximately 32,450,067 Amalco Common Shares and 13,016,350 Amalco Warrants outstanding.

Summary of Proposed Directors and Officers

The board of Antler Hill will be replaced to consist of seven (7) directors all of whom will be nominees of Innovative, namely, Frank Der, Allan Mar, Douglas M. Stuve, Victory Luhowy, Harris Dvorkin and two independent directors to be determined by Innovative, provided TSX Venture does not object to such nominations and such persons are eligible to act as directors pursuant to the requirements of the ABCA.

After the closing of the Transaction, the officers of Amalco will be appointed by the Board of Directors of Amalco and will include Frank Der as President, Allan Mar as Chief Executive Officer, Dr. Henry Leung as Chief Technology Officer, Douglas M. Stuve as Corporate Secretary and a Chief Financial Officer to be determined by the Board of Directors of the Resulting Issuer.

Frank Der, Age 55,
Proposed President and Director
Frank Der has been the President and a Director of Innovative since October 2012. Mr. Der graduated from the University of Alberta with a B.Sc. in Engineering in 1983 and is a Professional Engineer registered with APEGA. He is President of Platinum Engineering Ltd. with over 30 years' experience in engineering, design and business management of multi-million dollar projects and companies. He successfully led businesses that designed, constructed and maintained the power and control systems on the Calgary and Edmonton LRT systems.
Allan Mar, Age 78,
Proposed CEO and Director
Allan Mar, has been the Chief Executive Officer and a Director of Innovative since February 2013. Mr. Mar is President of Panorama Hills Shopping Centre Inc., and CEO of Alberta Foothills Properties Ltd., developers of the "Smart Community" Wind Walk, an innovative new community of single and multi-family residential and commercial subdivision in the MD of Foothills, adjacent to the Town of Okotoks. Mar has been very active in the real estate development industry and has developed several significant subdivisions as well as commercial and industrial projects during his career of more than 50 years. He is a graduate from the Faculty of Commerce and Business Administration at the University of British Columbia where he also completed the Master of Business Administration program and served as a Teaching Fellow. He has also been active as a consultant to a number of international and private corporations and investment groups.
Douglas M. Stuve, Age 47,
Proposed Corporate Secretary and Director
Mr. Stuve is a partner with the law firm Burstall Winger Zammit LLP of Calgary, Alberta and has been with Burstall Winger Zammit LLP since July 1993. Mr. Stuve's principal area of practice is corporate finance and securities law, as well as general corporate commercial law. Mr. Stuve holds a Bachelor of Arts degree (with distinction) from the University of Alberta and a Bachelor of Laws degree (LL.B) from Queen's University, Kingston, Ontario. Mr. Stuve served as a member of the advisory committee in Calgary, Alberta to the Canadian Venture Exchange Inc. (the predecessor to TSX Venture) to assist in formulating policy prior to and after its formation in November 1999. Mr. Stuve has served as a Director and officer of several public companies and is currently a Director of Border Petroleum Corp., Pivot Technology Solutions, Inc., Pediapharm Inc., Quantum International Income Corp. and Kairos Capital Corporation, six public companies listed on TSX Venture. Mr. Stuve is a past director of several public companies, including Athabasca Minerals Inc., Tesoro Energy Corp., Pelorus Energy Corp. and Regal Energy Ltd., three public companies that were listed on TSX Venture. He is also a past director of Deepwell Energy Services Ltd., the operating subsidiary of Deepwell Energy Services Trust, a public oil and gas services trust that was listed on TSX. Mr. Stuve is also a past Director of Patfind Inc., the first capital pool company offering completed on TSX Venture (that changed its name to Incorporated), and Canadian Public Venture Capital I Inc., two capital pool companies that completed their Qualifying Transactions. Mr. Stuve was also a Director of Sabrich Capital Corporation, Amalfi Capital Corporation, Lime Hill Capital Corporation and Chelsea Acquisition Corporation, four CPCs listed on TSX Venture that completed their Qualifying Transactions. Mr. Stuve was also the Corporate Secretary of Southtech Capital Corporation, a CPC that completed its Qualifying Transaction and is now Vogogo Inc.
Dr. Henry Leung, Age 51,
Proposed Chief Technology Officer
Dr. Leung is the President and Chief Technology Officer of Complex System Inc. and has provided research and development, consulting, software development, and system integration for organizations in the utilities and military markets. He has over 20 years of image processing and sensor network experience in both academia and industry. He has published over 200 articles in premier journals and over 200 conference papers. He has 14 patents out of which 8 patents are related to advanced image/video processing.
Victor Luhowy, Age 67,
Proposed Director
Mr. Luhowy has been the Chairman and a Director of Antler Hill since August 2012 and Interim President and Chief Executive Officer since 2013. Mr. Luhowy has over 45 years of experience in the petroleum industry. He graduated from the University of Alberta with a B.Sc. in Engineering in 1971 and obtained an MBA from the University of Calgary in 1992. Most recently he has been President and Chief Executive Officer of BelAir Energy Inc. (1997 to 2003) and President and Chief Executive Officer of Mystique Energy Inc. (2004-2007). Mr. Luhowy is a Director of BlackPearl Resources Inc. (2009-Present) and President and Director of Bel Air Petroleum Management Ltd. (2010-Present), a private consulting company.
Harris Dvorkin, Age 74,
Proposed Director
Mr. Dvorkin has been a Director of Antler Hill since September 2009, Chief Executive Officer from April 2011 until August 2012 and Corporate Secretary from August 2015 until July 2015. Mr. Dvorkin founded and currently manages a number of private companies such as Ranchmans's Cookhouse and Dancehall Inc. He is also President and CEO of Ranchman's Hospitality Group Inc. which serves as the operating entity for a number of companies including Ranchman's Classic Catering Inc., Ranchman's Overland Express Inc., Ranchmans's Rodeo Stock Company Inc., Am-Can International Talent Inc. and Ranchman's Renegades Inc.

Information Concerning Antler Hill

Antler Hill is a capital pool company listed for trading on the NEX board of the TSX Venture. Antler Hill currently has 11,000,000 common shares outstanding, stock options outstanding to acquire 1,100,000 Antler Hill common shares at a price of $0.05 per share until April 22, 2020. As at June 30, 2015, Antler Hill had cash and near cash assets, net of liabilities, of approximately $160,000.

Additional Information and Description of Significant Conditions to Closing

The completion of the Transaction is subject to the approval of TSX Venture and all other necessary regulatory approval.

The completion of the Transaction is also subject to additional conditions precedent, including completion of the Innovative Private Placement for minimum gross proceeds of $1,500,000, shareholder approval of Antler Hill and Innovative, satisfactory completion of due diligence reviews by the parties, execution of a definitive agreement, board of directors approval of Antler Hill and Innovative, and certain other usual conditions.

When a definitive agreement between Antler Hill and Innovative is executed, which is expected to occur shortly, in accordance with the policies of the TSX Venture, Antler Hill will issue a subsequent press release containing the details of the definitive agreement and additional terms of the Transaction, including information relating to sponsorship, summary financial information in respect of Innovative, and to the extent not contained in this press release, additional information with respect to the Innovative Private Placement and pro forma share capital of Amalco.

The Transaction will be an arm's length transaction as none of the directors, officers or insiders of Antler Hill own any interest in Innovative.

Antler Hill also announces it has reserved a price of $0.20 per Antler Hill Common Share ($0.20 per Amalco Common Share) for the grant of stock options to acquire up to 10% of the number of issued and outstanding Amalco Common Shares (the "Stock Options") in the event the Transaction is completed. The grant of the Stock Options is subject to regulatory approval. The Stock Options will be granted to directors, officers, employees and consultants of Amalco, concurrent with the completion of the Transaction.

Sponsorship of Qualifying Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the TSX Venture unless exempt in accordance with TSX Venture policies. Antler Hill intends to apply for an exemption from the sponsorship requirements. There is no assurance that Antler Hill will ultimately obtain an exemption from sponsorship.

Reinstatement to Trading

Trading of the Antler Hill Common Shares will not resume until all documents required by the TSX Venture have been filed. Antler Hill will issue a further news release when TSX Venture has received the necessary documentation and trading of the Antler Hill Common Shares is to resume.

The 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.

Cautionary and Forward-Looking Statements

As indicated above, completion of the Transaction is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. 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 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 the Corporation should be considered highly speculative.

Neither the TSX Venture nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture) has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither Innovative nor Antler Hill will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Antler Hill.

The securities of Antler Hill being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Contact Information

  • Innovative Alert Systems Inc.
    Frank Der, P. Eng
    President and Director
    (403) 280-6744 Ext. 222

    Antler Hill Oil & Gas Ltd.
    Vic Luhowy
    Interim President & CEO
    (403) 860-4225