JM Capital Corp.
TSX VENTURE : JMC.P

JM Capital Corp.

February 20, 2008 14:46 ET

JM Capital Corp. Announces Details of Qualifying Transaction with Tekion, Inc.

TORONTO, ONTARIO--(Marketwire - Feb. 20, 2008) - JM Capital Corp. ("JMC") (TSX VENTURE:JMC.P) is pleased to provide this comprehensive news release which provides a detailed summary of the letter of intent (the "Agreement in Principle") dated November 13, 2007 between JMC and Tekion, Inc. ("Tekion") pursuant to which JMC will acquire all of the issued and outstanding securities of Tekion (the "Purchased Securities"). Tekion is a corporation incorporated on June 5, 2005 and is governed by the laws of the State of Delaware.

The Agreement in Principle provides that the consideration to be paid for the Purchased Securities shall be CDN$25,000,000, which consideration shall be paid to the shareholders of Tekion (collectively, the "Vendors") by issuing to the Vendors 45,454,577 treasury shares in the capital of JMC. In addition each option and warrant holder of Tekion will be issued options (192,128) and warrants (758,312) in the resulting issuer.

The only controlling shareholder of Tekion (shareholders who control at least 20% of the voting shares) is C. Allen Born, a director of Tekion, of Denver, Colorado, who controls 43% of the issued and outstanding shares of Tekion.

JMC and Tekion do not contemplate making any deposit, advance or loan, with regard to the transactions contemplated by the Agreement in Principle. The transactions contemplated by the Agreement in Principle are arm's length transactions and it is not expected that JMC will require shareholder approval.

In connection with the qualifying transaction Tekion expects to complete a private placement (the "Private Placement"), through Research Capital Corporation, for aggregate gross proceeds of a minimum of $6,000,000 and a maximum of $10,000,000. The Private Placement will consist of subscription receipts of the Corporation (the "Subscription Receipts") at a price of $0.50 per Subscription Receipt. Each Subscription Receipt is automatically exchangeable, without additional payment, into units (the "Units") of JMC on a one-for-one basis upon the closing of the qualifying transaction. Each Unit consists of one common share in the capital of JMC (a "Common Share") and one-half (1/2) of one Common Share purchase warrant (each whole Common Share purchase warrant, a "Warrant"). Each Warrant shall entitle the holder thereof to acquire one (1) Common Share at a price of $0.60 until the date that is 24 months following the closing date of the Private Placement. The issuance and listing of up to 30,000,000 Common Shares pursuant to the private placement is subject to the final approval of the TSX Venture Exchange (the "Exchange").

Research Capital Corporation will be paid a commission of 6% of the aggregate gross proceeds raised as well as broker compensation options (the "Broker's Compensation Options") equal to 10% of the aggregate number of Subscription Receipts purchased. Each Broker Compensation Option will entitle the holder thereof to purchase one Unit at an exercise price of $0.50 per Unit for a period of 24 months from the closing of the Private Placement. In addition, the Agent will receive a corporate finance fee equal to 2% of the aggregate gross proceeds raised, and a fiscal advisory fee in the amount of $20,000.

The net proceeds of the Private Placement are expected to be used to further Tekion's business objectives, as follows: costs associated with the transaction ($350,000); marketing ($850,000-$900,000); research and development ($2,500,000-$2,800,000); capital equipment ($450,000-$600,000); general and administrative expenses ($870,000-$1,100,000); unallocated working capital ($1,161,000-$2,061,000). In addition, in the event the maximum Private Placement is achieved the resulting issuer will repay $2,050,000 of debt pursuant to a demand promissory note.

The completion of the transactions contemplated by the Agreement in Principle is subject to certain conditions, which include the following: (i) the approval of applicable regulatory authorities including the TSX Venture Exchange, (ii) the completion of full accounting, business and legal due diligence by JMC, (iii) the negotiation and execution of the required definitive agreement(s) between JMC, the Vendors and Tekion, (iv) the approval to proceed with the acquisition of the Purchased Securities by the board of directors of JMC, (v) the approval of the shareholders of Tekion, (vi) receipt of all necessary third party consents and (vii) completion of the minimum Private Placement.

In addition, the resulting issuer will pay Standard Securities Capital Corporation a finder's fee equal to 1% of the aggregate gross proceeds of the Financing, as well as options (the "Finder's Options") equal to 1% of the aggregate number of Subscription Receipts purchased. Each Finder's Option will entitle it to purchase one Unit at an exercise price of $0.50 per Unit for a period of 24 months from the closing of the qualifying transaction.

Following the completion of the transactions contemplated hereby, JMC will continue to carry on the business of Tekion.

Except for Mr. Michael Kraft, the existing officers and directors of JMC will resign on closing and the following individuals will become insiders of the resulting issuer:

Neil Huff, Coquitlam, BC (Director, President & CEO)

Mr. Neil Huff is currently the chief executive officer and a director of Tekion. Mr. Huff has a Chemical Engineering degree from Queens University and an MBA from the University of Toronto. Mr. Huff was also instrumental in developing two additional advanced battery technologies from the laboratory to a certified product for the US Army. Mr. Huff's experience in high volume manufacturing in both the plastics and battery industries uniquely positions Tekion for its role as a high volume fuel cell producer.

David McLeod, Langley, BC (Vice-President of Marketing & Business Development)

Mr. McLeod is currently the vice-president of marketing and business development for Tekion. Mr. McLeod was responsible for Ballard Power Systems's first order of fuel cells in 1987 and was also instrumental in developing its key strategic relationships.

Dr. Sharon Blair, Coquitlam, BC (Vice-President of Technology)

Dr. Sharon Blair is currently the Vice-President of Technology for Tekion. Dr. Blair is an expert in nanomaterials for energy related applications, in particular, thin films and composite nanomaterials for batteries, hydrogen storage, and catalysis. Dr. Blair holds a Bachelor of Science in Chemistry form St. Francis Xavier (Antigonish, Nova Scotia) and a Ph.D. in Materials Chemistry from Simon Fraser University.

C. Allen Born, Denver, Colorado (Director)

Mr. Born is currently Chairman and director of Panoro Minerals Ltd., a Canadian mineral exploration company trading on the TSX Venture Exchange, Frankfurt Stock Exchange and the Junior Board of the Lima Exchange, Chairman of Born Investments, LLC, a private investment firm with involvement in venture capital and directional drilling for natural gas production, and a director of Tekion. Mr. Born is a former director of Inmet Mining Inc., Aksteel Holding Corporation and the Kennedy Center's Corporate Fund Board, the former CEO of AMAX, Inc., Alumax, Inc., and Placer Development Inc., and the former Chairman of Cyprus-Amax.

Rob Schultz, Champaign, Illinois (Director)

Mr. Schultz is a Senior Director with IllinoisVENTURES where he is responsible for managing the Champaign, Illinois office. In his role, he evaluates investment opportunities and works with early stage companies on all strategic, operating, financial and business development activities. On behalf of IllinoisVENTURES, he currently serves on the boards of a variety of companies. Mr. Schultz received an MBA in finance from the University of Chicago and a Bachelor's degree in economics from Northwestern University.

Michael Kraft, Ontario (Director)

Michael P. Kraft is the Chairman & CEO of Buckingham Group Limited, a private merchant banking corporation and President of MPK Inc., a private business consulting corporation to private and public companies since 1994. He is also the President, CEO and a Director of Lingo Media Corporation since its inception in 1996. Mr. Kraft is a director of JM Capital Corp. since June 2006, Pioneering Technology Inc. since July 2006, Grenville Gold Corporation since April 2007 and Canadian Shield Resources Inc. since July 2007, all TSX Venture Exchange listed companies. He received a Bachelor of Arts in Economics from York University in 1985.

Prior to the closing of the qualifying transaction, and subject to Exchange approval, JMC will announce a Chief Financial Officer.

As of the date of this news release, JMC has not retained a sponsor for the transactions contemplated hereby.

About Tekion, Inc. (www.tekion.com)

Tekion, a Delaware corporation, currently operates out of Burnaby, British Columbia, through its wholly owned subsidiary, Tekion (Canada) Inc., a corporation incorporated pursuant to the laws of Canada. Tekion is currently developing a micro fuel cell that will be used to power cell phones, laptop computers and other mobile devices. By integrating advanced battery technology with a unique micro fuel cell technology, Tekion is creating a new "personal power source". Known as a Formira™ Power Pack, this new power source is capable of fitting inside a mobile device.

Tekion has patent pending technology relating to fuel, cost, size, and performance which creates a significant barrier to competition in certain micro fuel cell applications. Utilizing its patent pending Formira™ fuel cell technology, Tekion has developed an operational fuel cell-powered portable communications device, which has the potential to deliver more energy at costs competitive to the best available batteries. Tekion is focused on defined market segments that require immediate solutions in the milliwatts to watts range. Tekion has assembled a pre-eminent fuel cell development team consisting of scientists, engineers and marketers. This team has collectively over 100 years of fuel cell and battery development experience. Tekion's business focus is to develop, market and sell viable products to generate revenue and returns to shareholders within a reasonable timeframe.

Tekion's audited financial statements for the fiscal year ended December 31, 2006 show a net loss of US$8,167,000 and total assets of US$2,229,000. It's audited financial statements for the fiscal year ended December 31, 2005 show a net loss of US$6,471,000 and total assets of US$4,864,000. Its unaudited financial statements for the nine-month period ended September 30, 2007 (third quarter of its current fiscal year) show a net loss of US$5,278,000 and total assets of US$954,000. Tekion has not had any commercial revenues since incorporation, but expects to record revenues beginning in the third quarter of 2008.

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 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

  • JM Capital Corp.
    Jay Freeman
    Chief Executive Officer
    (416) 972-6197
    or
    Tekion, Inc.
    Neil Huff
    Chief Executive Officer
    (604) 656-6617
    Email: nhuff@tekion.com
    Website: www.tekion.com