Ceres Capital Corp.
TSX VENTURE : SRS.P

July 11, 2007 15:27 ET

Ceres Capital Corp.: Letter of Intent to Acquire Securities of Mavix, Inc. as Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - July 11, 2007) - Ceres Capital Corp. (the "Corporation" or "Ceres") (TSX VENTURE:SRS.P), a capital pool company, is pleased to announce that it has entered into a letter of intent (the "LOI") dated June 27, 2007 with certain of the majority shareholders of Mavix, Inc., a Delaware corporation, whereunder the parties have agreed to negotiate a definitive agreement relating to a proposed reverse takeover transaction (the "Transaction") pursuant to which Ceres will acquire all of the issued and outstanding securities of Mavix (the combined entity hereinafter referred to as the "Resulting Issuer"). The arm's length Transaction will constitute Ceres's "Qualifying Transaction" under the applicable policies of the TSX Venture Exchange (the "TSXV"). Pursuant to the Letter of Intent, the parties have agreed to the essential terms of the Transaction.

If the Transaction is completed, Ceres will issue 37,480,543 common shares to the Mavix shareholders having a deemed value of $0.27 per share, which implies an entity value for Mavix of approximately $10,119,746. As such, if the Transaction is completed, Ceres will have 47,741,793 common shares issued and outstanding (on a non-diluted basis). The share consideration paid by Ceres may be adjusted based on an independent valuation of Mavix if the results of such valuation show Mavix to be valued at an amount materially less than $10,119,746.

About Mavix

Mavix, Inc. ("Mavix") owns all of the issued and outstanding shares of Mavix U.S.A., LLC ("Mavix USA"), an Illinois corporation. Mavix USA owns 91% of the issued and outstanding shares of Mavix Ltd. ("Mavix Israel"), an Israeli company. Mavix also owns all of the issued and outstanding shares of Mavix Security Technology Inc. ("Mavix CDN"), a Canadian corporation based in Montreal, Quebec. For the purposes of the disclosure contained herein, the term "Mavix" shall include Mavix USA, Mavix Israel and Mavix CDN, unless otherwise specified.

Mavix produces video encoding hardware and software and offers all the tools required to build a digital surveillance and response system. Mavix hopes to become a leader in the market of high-end, scalable surveillance and response systems designed for homeland protection, intelligent monitoring of traffic, high-end surveillance, and the coordination of isolated islands of video data in the North American market. It provides such products and services to governments, militaries, local municipalities, cities, and defense and communications companies worldwide. Mavix products and systems have been successfully implemented in over 150 projects to date.

Mavix's video encoding hardware has three primary qualities: (i) quality of video produced using MPEG2 and/or MPEG4 compression, (ii) reliability with mean time between failure (MTBF) of over 17 years, and (iii) unique methodology for transmitting the video through wireless networks. Mavix also provides clients flexibility in designing a system for surveillance and response. Its alliances with third party software providers, coupled with its open software development kit (SDK), results in clients being able to select packages and features that best meet their needs.

Mavix currently is a lower profile player in the United States market. The Mavix boxes are designed to provide maximum flexibility to clients who are leveraging high-end cameras for the purpose of surveillance and response. This means that Mavix is able to focus on solutions that are appropriate and designed to meet the needs of key cornerstone markets.

Mavix manufactures a line of products that provides the basic elements of a surveillance and response system. Mavix products are sold through Original Equipment Manufacturers (OEMs) or directly to system integrators. These integrators architect and install the overall security solution from remote cameras to central processing on incoming data. Specifically, Mavix provides mission critical components including: (i) hardware to translate analog video signals into digital (MR100, MR150, MR152, MR154), (ii) software required to configure, control, view and utilize the video (e.g. MAVIEW Configurator, MAVIEW Console, MAVIX Player) and (iii) the software to record the video digitally (STREAMR) in RAID5 systems. These components comprise all the essential components required to transform an analog camera system into an advanced digital surveillance and response system.

Mavix targets the following industries: (i) homeland security, (ii) intelligent traffic systems, (iii) casinos and (iv) high-end clients seeking surveillance and response systems.

Mavix Inc. is a holding company and does not conduct any operations. Mavix Israel is responsible for research and development and assembling Mavix's products. Mavix Israel is also responsible for sales in all parts of the world except for North America, Central America, South America, which are all the responsibility of Mavix USA. Mavix USA is also responsible for all of Mavix's marketing activities worldwide. Mavix CDN is responsible for all marketing and sales in Canada. Mavix's principal executive offices are located at 4711 West Golf Road, Suite 1030, Skokie, Illinois 60076.

Summary of the Transaction

It is anticipated that the transaction will be structured as a 'three-cornered' amalgamation involving Ceres, Mavix and a wholly-owned subsidiary of Ceres incorporated under the laws of the State of Deleware, pursuant to which Ceres will acquire all of the issued and outstanding securities of Mavix in exchange for 37,480,543 common shares of Ceres. Accordingly, upon completion of the transaction, Mavix will be a wholly-owned subsidiary of Ceres and the former shareholders of Mavix will be shareholders of Ceres. Following the proposed transaction, the business of Mavix will be conducted by a wholly-owned Delaware subsidiary of Ceres.

Mavix is currently undertaking a private placement of up to 7,500,000 shares at a price of $0.10 per share for aggregate gross proceeds of up to $750,000 (the "Mavix Private Placement"), or such greater amount as may be required by the TSXV. It is a condition precedent to the Transaction that the Mavix Private Placement be completed and that Mavix have positive working capital on closing of the Transaction. No additional Ceres common shares will be issued in exchange for the Mavix Private Placement shares as such Mavix shareholders will receive their pro rata portion of the 37,480,543 Ceres common shares issued in connection with the Transaction. The proceeds from the Mavix Private Placement will be used to provide the Resulting Issuer with additional working capital.

Upon completion of the Transaction, Ceres will grant an aggregate of 2,300,000 stock options to purchase common shares in Ceres, having an exercise price of $0.30 per share, to the employees and officers of Mavix.

Financial Information Concerning Mavix

The following information is derived from Mavix's management-prepared unaudited financial statements as at and for the twelve month period ended December 31, 2006. Such information is subject to all other information contained in the relevant financial statements.



Twelve Months Ended
Dec. 31, 2006
(unaudited)(1)
--------------------
Revenues $ 2,026,489
Expenses, including cost of sales $ 2,632,565
Loss for the period $ 772,676
Loss per share (basic and diluted) $ 0.0097
Total Assets $ 1,967,406
Current Assets $ 1,049,268
Current Liabilities $ 2,483,897
Long-term debt, excluding current portion $ 470,000
Share Capital $ 1,334,819
Deficit $ 2,321,310

Note:
(1) All of the funds are set out in United States Dollars.


Management

The board of directors of Ceres currently consists of Bohdan Romaniuk, Dennis Nerland, Mario Mannella, Donald Verdonck, Dr. Peter Neweduk, Ronald Allen and Allen Laird. It is anticipated that Donald Verdonck, Dr. Peter Neweduk, Ronald Allen and Allen Laird will resign from the Ceres board following the Transaction. Further, it is anticipated that Bohdan Romaniuk, Dennis Nerland and Mario Mannella will remain on the board following the Transaction and that Lazaro Fraiman, Dr. Roberto Levi and Dr. Angel Bassuk will also be appointed to the Ceres board of directors. None of the current directors or officers of Ceres are directors, officers or shareholders of Mavix and none of the directors, officers or shareholders of Mavix are directors or officers Ceres, although the current directors of Ceres may participate in the Mavix Private Placement.

Following the Transaction, it is anticipated that Mr. Romaniuk will resign as the President and Chief Executive Officer of Ceres and will be replaced by Mr. Fraiman. Furthermore, it is expected that Mr. Ronald Allen will resign as the Chief Financial Officer of Ceres and will be replaced by a full-time Chief Financial Officer approved by both Ceres and Mavix prior to closing the Transaction.

The current directors and officers of Mavix are Lazaro Fraiman (President, Chief Executive Officer, Chief Financial Officer and Director), Dr. Roberto Levi (Director), Dr. Angel Bassuk (Director), David Schneider (Director), Moni Shabtay (Treasurer and CFO of Mavix Israel), Uri Gorin (Vice President, Research and Development), Eyal Beit-Halachmi (Chief Technology Officer), Ariel Dermer (Vice President, Customer Service and Operations and Vice President, Sales (Israel)). As a group, the directors and senior officers of Mavix own or control (directly or indirectly) 36,848,614 Mavix common shares representing approximately 46.05% of Mavix's outstanding securities. Mavix currently has approximately 80 shareholders and will have approximately 100 shareholders upon completion of the Mavix Private Placement. Upon completion of the Transaction, it is anticipated that the board of directors of Mavix will be changed so that the board of directors of Mavix is the same as the board of directors for Ceres. Eventually, it is expected that the name of Ceres will be changed to "Mavix Inc.".

Mavix has two controlling shareholders, being LBNF, LLC ("LBNF") and CIDAV Printed Circuits Ltd. ("CIDAV"). LBNF, a private company, holds an aggregate of 36,848,614 Mavix common shares representing approximately 46.05% of Mavix's outstanding securities. The issued and outstanding shares of LBNF are held by Lazaro Fraiman (10%), Dr. Roberto Levi (45%) and Dr. Angel Bassuk (45%). CIDAV, a public Israeli company, holds an aggregate of 14,402,562 Mavix common shares representing approximately 18% of Mavix's outstanding securities. Mr. David Schneider owns or controls an aggregate of 53.4% of the issued and outstanding CIDAV shares and is the controlling shareholder of CIDAV. LBNF and CIDAV are expected to be Insiders of the resulting issuer.

The municipalities of residence and biographies of Mavix's directors and key officers are as follows:

Lazaro Fraiman - President, Chief Executive Officer,Chief Financial Officer and Chairman of Board (Skokie, Illinois)

Mr. Fraiman is the Chairman of the Board, President and Chief Executive Officer of Mavix. From 1991 to January 2002, Mr. Fraiman was the Vice President of Marketing & Sales of Bridgeware Inc. From January 2002 to January 2003, he was a Strategic Consultant for SAP America. From January 2003 to August 2003, Mr. Fraiman was the President of BnF-Group. In August 2003, Mr. Fraiman became the President and Chief Executive Officer of Mavix Israel and Mavix USA, and in May 2006, he became the Chairman of the Board, President and Chief Executive Officer and Chief Financial Officer of Mavix.

Mr. Fraiman has an engineering degree from the Technion, Israel Institute of Technology and his MBA is from the University of Chicago.

Dr. Roberto Levi - Director (Chicago, Illinois)

Dr. Levi has been a director of Mavix USA since August 2003 and of Mavix since May 2006. Since 1987, Dr. Levi has served as the President of the Orthopedic and Rehabilitation Center. He currently serves on the Board of Directors of Baldies Towing.

Dr. Angel Bassuk - Director and Secretary (Tampa, Florida)

Dr. Bassuk has been a director of Mavix USA, since August 2003 and of Mavix since May 2006. He has also been the Secretary of Mavix since May 2006. From January 1996 to January 2000, Dr. Bassuck was a director of Pediatric Surgery at Mount Sinai Hospital in Chicago, Illinois. Since January 2000, Dr. Bassuk has been retired from medicine. Dr. Bassuk has his MBA from the University of Chicago.

Moni Shabtay - Treasurer and CFO of Mavix Ltd. (Israel)

Mr. Shabtay is the Treasurer of Mavix and has served as the Chief Financial Officer of Mavix Israel since June 1995. From 1986 to 1990, Mr. Shabtay was the Chief Financial Officer of HATEHOF. From 1991 to 1993, Mr. Shabtay was the Chief Financial Officer of ADACOM. Since 1993, he has been the owner of Manof Ltd., a finance and economy advisement company. Mr. Shabtay is also a shareholder, Director and Chief Financial Officer of Bpath Ltd., an Internet company, and an advisor to Lito Group Ltd.

Uri Gorin - Vice President, Research and Development (Israel)

Mr. Gorin joined Mavix in January 2000. Prior thereto, Mr. Gorin spent 15 years in prominent R&D positions in leading Israeli data communication companies, such as Fibronics, Elbit and MRV. From 2000 until he became Vice President, Research and Development in 2003 Mr. Gorin held the position of Mavix's Hardware Director, being responsible for all hardware facilities. Mr. Gorin is also experienced in leading complex R&D activities and operation, and supervising multi-disciplinary R&D teams in the development of new lines and products. Mr. Gorin graduated from the Technion Institute of Technology in Israel with a degree in Engineering, in 1984.

Eyal Beit-Halachmi - Chief Technology Officer (Israel)

Mr. Beit-Halachmi joined Mavix in May 1996 and currently serves as the Chief Technology Officer. Prior to joining Mavix, his previous technical specialty had been image archiving and communication systems, various compression techniques. Prior to joining Mavix, he had served 8eight years as a senior engineering officer in the Israeli Defense Forces, and eight years at Fonar. Mr. Beit-Halachmi received his B.Sc. Electrical Engineering from Technion Institute of Technology in Israel, in 1981.

Ariel Dermer - Vice President, Customer Service and Operations and Vice President, Sales (Israel)

Mr. Ariel Dermer, Vice President of Customer Service and Operations, has extensive experience in the surveillance field including DVR technology. He is responsible for the manufacturing operations in Mavix as well as Customer Service. He is currently filling the position of VP of Sales for Israel. He has an engineering degree from the Tel Aviv Practical University.

Conditions

The proposed qualifying transaction is subject to a number of conditions including the following:

(a) approval by the board of directors of both Ceres and Mavix;

(b) approval by the Mavix shareholders;

(c) satisfactory due diligence by both Ceres and Mavix;

(d) conversion of all outstanding Mavix shareholder loans, if any, to equity;

(e) completion of the Mavix Private Placement;

(f) Ceres having at least $1,200,000 in working capital;

(g) Mavix having positive working capital;

(h) all issued and outstanding Mavix warrants shall be exercised or terminated;

(i) Mavix appointing a Chief Financial Officer (who will become the Chief Financial Officer of the Resulting Issuer) who is acceptable to Ceres and who has experience with Canadian GAAP and Canadian public reporting requirements;

(j) negotiation and execution of a definitive agreement; and

(k) regulatory approval.

Sponsorship

Ceres has not yet retained a sponsor in connection with the Transaction. Ceres will retain a sponsor to conduct due diligence on the Transaction and to deliver a sponsor report to the TSXV. Ceres will issue a further press release disclosing the name of the sponsor once a sponsor has been retained.

Trading in the common shares of the Corporation will remain halted until a sponsor has been retained and certain required documents have been provided to the TSXV.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to 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 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 a capital pool company should be considered highly speculative.

The offered securities mentioned in this press release will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons except in certain transactions exempt from the registration requirements of the U.S. Securities Act.

This new release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

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.

Contact Information

  • Ceres Capital Corp.
    Bohdan Romaniuk
    President, Chief Executive Officer and Director
    (403) 813-8949