SOURCE: Imperus Technologies Corporation

Imperus Technologies Corporation

February 02, 2015 10:03 ET

Imperus Technologies Completes Diwip Acquisition

TORONTO, ON--(Marketwired - February 02, 2015) - Imperus Technologies Corp. ("Imperus" or the "Company") (TSX VENTURE: LAB) (FRANKFURT: ISX) (Frankfurt WKN: A12B58) is pleased to announce that on January 30, 2015 it completed a previously announced acquisition (the "Acquisition") of all of the shares of Diwip Ltd. ("Diwip") pursuant to a share purchase agreement dated October 14, 2014, as amended (the "Agreement"), between the Company, Imperus Technologies (Israel) 2014 Ltd. ("Israeli Sub"), Diwip and Diwip's two shareholders, Messrs. Yaniv Gamzo and Ehud Kantzuker (the "Vendors"). 

The Acquisition

The Acquisition was completed by Imperus and its wholly-owned Israeli subsidiary, Israeli Sub, as buyers. The total adjusted purchase price payable on closing of the Acquisition was US$49,576,521 (the "Closing Purchase Price"), of which US$39,661,216.80 was paid in cash by Israeli Sub and US$9,915,304.20 (C$12,345,545.26) was satisfied by Imperus issuing a total of 30,558,280 common shares to the Vendors at a price of $0.404 per share, all in accordance with the terms of the Agreement.

In addition to the Closing Purchase Price, the Vendors are entitled to certain contingent earn-out payments upon the achievement of certain financial milestones. Please see the Company's press release dated October 14, 2014 and the Agreement, which are available on SEDAR at www.sedar.com, for details of the Vendors' earn out rights. 

As the result of the Acquisition, Diwip is now a wholly-owned indirect subsidiary of Imperus, and Imperus will continue to operate the Diwip business through the Israeli Sub as well as continue to operate Imperus' existing business lines.

The Vendors, Messrs. Gamzo and Kantzuker, have resigned as directors and co-CEO's of Diwip and Mr. Daniel Kajouie, Chairman, President and CEO of Imperus, has been appointed as sole director and CEO of Diwip. The Vendors will continue in senior officer roles with Diwip, where Mr. Kantzuker will serve as co-President and Chief Product Officer (CPO) of Diwip, and Mr. Gamzo will serve as co-President and Chief Technical Officer (CTO) of Diwip.

The Acquisition is subject to final approval of the TSX Venture Exchange.

Term Loan

In conjunction with, and as a condition of completion of, the Acquisition, Imperus also completed a secured debt financing pursuant to a credit agreement dated January 30, 2015 (the "Credit Agreement") among the Company, as borrower, the subsidiaries of Imperus, as credit parties, a syndicate of lenders (the "Lenders"), and the Lenders' administrative agent, Third Eye Capital Corporation ("TEC"). In accordance with the Credit Agreement, the Lenders advanced a senior secured term loan in the principal amount of US$39,000,000 (the "Term Loan"). The Term Loan has a term of three years, subject to acceleration by TEC on certain events of default and subject to the Company's right to repay the Term Loan after the first anniversary upon three months prior notice, and bears interest at 12% per annum, calculated and payable monthly in arrears. Interest for the first year of the term was pre-paid in advance at closing pursuant to the terms of the Credit Agreement.

If the Term Loan is outstanding on the second anniversary of closing, it will be subject to a US$1,000,000 maintenance fee payable on the second anniversary to TEC, on behalf of the Lenders. After the first anniversary of closing, the Company will be required to make principal repayments of US$1,500,000 per quarter, with the first quarterly installment due on April 1, 2016. As well, the Company is required to make certain principal repayments in certain other circumstances prior to maturity.

The Credit Agreement contains financial, operational and reporting covenants, as well as other negative and affirmative covenants typical of a transaction of this nature. The Credit Agreement will be available on SEDAR at www.sedar.com.

The Term Loan is secured by, among other things, (i) a first priority security agreement in favour of TEC, on behalf of the Lenders, on all of the present and future real and personal property of the Company and its subsidiaries; (ii) source code escrow arrangements in respect of commercialized software of the Company and its subsidiaries; (iii) the assignment of certain third party licensing and service agreements; (iv) deposit account control agreements over certain bank accounts of the Company and its subsidiaries; and (v) a pledge of the shares of the subsidiaries of the Company.

In consideration for the Term Loan, the Company paid fees to TEC as disclosed previously along with an additional fee of C$180,000, as well as reimbursement for certain expenses of TEC. Further, pursuant to a letter agreement entered into by the Company with a third party assisting with the arrangement of the Term Loan, the Company has paid such third party a cash fee equal to 2% of the gross amount advanced under the Term Loan.

In addition, as further consideration for the Term Loan, pursuant to the Credit Agreement, the Company issued to the Lenders an aggregate of 20,000,000 non-transferrable common share purchase warrants (the "Lender Warrants"). Each Lender Warrant entitles the holder to subscribe for one common share of the Company at $0.385 per share for 36 months, subject to adjustment in accordance with the terms of the certificates representing the Lender Warrants and the requirements of the TSX Venture Exchange, including, without limitation, that the number of Lender Warrants are subject to reduction or cancellation on a pro rata basis if the Term Loan principal amount is reduced or paid out in the first year after the issuance of the Lender Warrants. The Lender Warrants are subject to a four month hold period expiring May 31, 2015.

The net proceeds of the Term Loan were used to fund the cash portion of the Closing Purchase Price for the Acquisition.

In addition to the Term Loan, on closing, the Lenders also advanced a secured working capital loan (the "WC Loan") to Diwip in the principal amount of US$1,000,000. TEC acts as the administrative agent for the Lenders under the WC Loan. The WC Loan bears interest at 12% per annum and is secured by, among other things, a fixed and floating charge over the assets of Diwip and a source code escrow arrangement in respect of commercialized software of Diwip.

Release of Subscription Receipt Proceeds

On January 28, 2015, the Company, through Dundee Securities Ltd. and Euro Pacific Canada Inc. (the "Agents"), completed a brokered private placement of 70,644,500 subscription receipts (the "Subscription Receipts") at $0.35 per Subscription Receipt for aggregate gross proceeds of approximately $24.7 million. The gross proceeds from the sale of the Subscription Receipts (less 1/3 of the Agents' cash commission and all of the Agents' expenses) were placed in escrow pending the satisfaction of certain escrow release conditions including the Company satisfying all conditions precedent to the closing of the Acquisition and the Company completing the Term Loan. 

As a result of the closing of the Acquisition and the Term Loan and the satisfaction of the other escrow release conditions, the release conditions for the escrowed Subscription Receipts proceeds were met and the escrowed funds, less 2/3 of the Agents' cash commission, were released to the Company on January 30, 2015. Part of the released escrowed funds was used to partly pay the cash portion of the Closing Purchase Price to the Vendors on closing of the Acquisition, and the balance will be used, among other things, for working capital purposes.

The Subscription Receipts will be automatically converted into units of one common share (a "Unit Share") and one-half of one common share purchase warrant (a "Warrant") at the time (the "Qualification Time") that is the earlier of (i) 4:59 p.m. (Toronto time) on May 29, 2015; and (ii) 12:01 a.m. (Toronto time) on the third business day after the issuance of a final receipt for a prospectus qualifying the issuance of the Unit Shares and the Warrants underlying the Subscription Receipts. If the final receipt for the prospectus has not been obtained by March 28, 2015, each Subscription Receipt will be automatically converted at the Qualification Time into 1.05 Unit Shares (in lieu of one Unit Share) and 0.525 Warrants (in lieu of 0.5 Warrant). Please see the Company's press release dated January 28, 2015 for more details of the Subscription Receipts and the underlying Unit Shares and Warrants.

"We are very pleased to have completed the acquisition of Diwip," said Daniel Kajouie, Chairman, President and CEO of Imperus. Mr. Kajouie went on to say, "The acquisition of Diwip provides Imperus immediate access to a broad market base. Diwip's proprietary top ranking online social gaming and mobile gaming products are synergistic with Imperus' product line and our corporate development goals. Messrs. Gamzo and Kantzuker have built a great company to date, and we are thrilled to have them join our team with a common vision of building Imperus to great new heights."

About Imperus

Imperus Technologies Corp. specializes in the convergence of social networking, mobile gaming, and real money gaming and is the developer of CASINA, an award winning social gaming software platform. The Corporation's wholly owned subsidiary, Vast Studios, specializes in the development and delivery of hidden object games, having delivered 18 titles to date, of which 8 are classified "collector's editions".

CASINA, the Corporation's flagship product developed for, social, mobile, and monetized gaming is considered to be the first true social network built for the online gaming market providing audiences with a product differentiator from a social interaction perspective, and is on track to host one of the most substantial and innovative portfolio of games. CASINA is scalable, modular, with the capability to expand integrations without limitation, while supporting third-party game integrations, cashier support, customer support, social networking, and backend operator support. For clients operating within fully regulated markets, CASINA offers a turnkey solution, including a full commerce application and back office suite.

With experienced social gaming leadership and development teams, Imperus looks to leverage the anticipated growth in regulated, real-money, social, mobile and online gaming through the application of the social graph and the gamblification of social games.

About Diwip

Diwip, a private software company based in Tel Aviv, Israel, is a developer of social and mobile gaming for PC, Mac, iOS and Android platforms. Diwip is involved in the business of constructing a social gaming experience consisting of a full suite of attractive and compelling casino-themed games -- including slots, bingo, Texas hold'em Poker, roulette, blackjack and video poker -- under the Best Casino and Slots Club brands. Diwip designs, develops and distributes its top ranked social casino-themed games within online social networks (such as Facebook) and mobile platforms (such as Android or iPhone). All of Diwip's games are free to play and generate revenue primarily through the in-game sale of virtual coins.

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.

Caution Regarding Forward Looking Information

This press release contains certain statements or disclosures relating to Imperus and its subsidiaries, including Diwip, that are based on the expectations of Imperus as well as assumptions made by and information currently available to Imperus which may constitute forward-looking information under applicable securities laws. Forward-looking information includes, but is not limited to, statements with respect to the Acquisition, the Agreement, the Credit Agreement with TEC, the release of Subscription Receipt proceeds, the use of proceeds of the debt and equity financing, the business of Imperus, the business of Diwip, the conversion of the Subscription Receipts, the Term Loan and other inter-company agreements and payments. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that Imperus anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms such as "forecast", "future", "may", "will", "expect", "anticipate", "believe", "potential", "enable", "plan", "continue", "contemplate", "pro-forma", or other comparable terminology. Many factors could cause the performance or achievement by Imperus to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These factors include the failure to obtain the required approvals, and changes to economic conditions. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The Company is not under any duty to update any of the forward-looking statements after the date of this press release or to conform such statements to actual results or to changes in the Company's expectations and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

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