Maple Power Capital Corporation
TSX VENTURE : MPX.P

March 06, 2015 17:37 ET

Maple Power Capital Corporation Announces Merger Agreement With Intrinsic4D LLC in Respect of Qualifying Transaction

TORONTO, ONTARIO--(Marketwired - March 6, 2015) -

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Maple Power Capital Corporation (TSX VENTURE:MPX.P) (the "Corporation") is pleased to announce that it has entered into a definitive agreement dated March 6, 2015 (the "Merger Agreement") with Intrinsic4D LLC ("Intrinsic4D"), pursuant to which the Corporation's wholly-owned subsidiary will merge with Intrinsic4D (the "Merger") to complete the Corporation's qualifying transaction (the "Transaction") in accordance with the policies of the TSX Venture Exchange (the "TSXV"). The Merger is being structured as a three-cornered merger. As a result of the Merger, Intrinsic4D will become a wholly-owned subsidiary of the Corporation. Upon completion of the Merger, the Corporation will change its name to "Intrinsic4D Inc." (the "Resulting Issuer"). The Transaction is subject to all necessary regulatory and shareholder approvals, as well as the satisfaction of conditions to closing set out in the Merger Agreement. The Transaction and the Private Placement (as defined below) were initially announced by the Corporation in a press release on October 21, 2014.

About Intirisic4D

Intrinsic4D owns a patented, FDA-cleared software and service platform that translates static, 2D magnetic resonance imaging (MRI) and computed tomography (CT) data and produces a non-invasive, 360 degree, novel visualization of patient anatomy in 3D.

Intrinsic4D is monetizing the platform through an innovative and compelling service targeted at the medical and legal fields, with an additional opportunity in the cardiovascular market. Intrinsic4D's proprietary technology is protected by four issued patents and eleven pending patent applications. In May 2012, Intrinsic4D received 510(k) regulatory clearance from the United States Food and Drug Administration to market its product.

In the medical market, Intrinsic4D believes the platform provides a potential reduction in hospital costs, better understanding of images for patients and medical practitioners and does not require an expert to operate. The technology allows doctors and other medical practitioners to better plan for surgical procedures, while bridging the communication gap that can exist between medical practitioners and patients. On December 23, 2014, Intrinsic4D partnered with U.S. Radiology Partners, Inc., a leading provider of hospital-focused tele-radiology services and patient second opinion radiology services. Intrinsic4D serves the partnership as the 3D laboratory.

In the legal market, the platform creates a new paradigm for case resolution. Launched in January 2014, the platform is intended to meet the needs of the legal market and has generated revenue since its launch. In 2014, the legal platform completed cases across the United States and multiple provinces in Canada with a limited sales and marketing budget.

Separately, Intrinsic4D has developed an innovative, non-invasive approach for improving the diagnostic accuracy of cardiovascular disease. Intrinsic4D's computer algorithm based stenosis severity mapping invention utilizes a coronary CT to enable a non-invasive functional assessment of coronary lesions.

On October 10, 2014, Intrinsic4D acquired all of the assets of Legal Artworks LLC, based in Jacksonville, Florida, which provides visual evidence services to the legal field.

To date, Intrinsic4D has raised more than US$8.5 million of equity through a series of private placements.

Founded in 2011, Intrinsic4D is a Delaware limited liability company, with its offices located in Bloomfield Hills, Michigan. Intrinsic4D does not have any subsidiaries and there is currently no public market for the securities of Intrinsic4D. Mosaic Makro Medical Partners, LLC, a Delaware limited liability company ("Mosaic"), owns approximately 60% of the issued and outstanding participating membership units of Intrinsic4D. Mosaic is controlled equally by Jorey Chernett, resident of the State of Michigan, and Daniel Herr, resident of the State of South Dakota. The remaining 40% of Intrinsic4D's participating membership units are owned by officers, managers and employees of Intrinsic4D and strategic investors. For more information on Intrinsic4D, please visit Intrinsic4D's website at www.intrinsic4d.com.

Summary Financial Information for Intrinsic4D

The following table sets out the summary financial information of Intrinsic4D as at September 30, 2014, which has been derived from Intrinsic4D's unaudited financial statements, prepared in accordance with International Financial Reporting Standards (IFRS).

Income Statement Data
(US$)
As at September 30, 2014
Total Revenues 454,456.49
Total Expenses 2,157,867.00
Net Loss Before Income Tax Expense (1,703,482.92 )
Balance Sheet Data
(US$)
As at September 30, 2014
Total Assets 449,005.85
Total Current Liabilities 2,179,845.80
Working Capital (Deficiency) (2,060,657.33 )

Intrinsic4D Financing

In conjunction with the Transaction, and prior to the closing of the Transaction, Intrinisic4D intends to complete a "best efforts" brokered private placement (the "Private Placement") of up to 9,433,962 subscription receipts (the "Subscription Receipts"), the first tranche of which is expected to close on or about March 11, 2015, for aggregate gross proceeds of up to C$5,000,000 at a price of C$0.53 per Subscription Receipt. Mackie Research Capital Corporation has been engaged as agent in connection with the Private Placement (the "Agent"). The Agent has the option, exercisable at any time prior to the closing of the Private Placement, to arrange for the purchase of up to an additional 1,415,094 Subscription Receipts on the same terms as the Private Placement. Immediately prior to the Merger, each Subscription Receipt will, without payment of any additional consideration or taking of any action, be converted into one unit of Intrinsic4D (an "Intrinsic4D Unit"), with each Intrinsic4D Unit consisting of one common share of Intrinsic4D (an "Intrinsic4D Share") and one Intrinsic4D Share purchase warrant (an "Intrinsic4D Warrant"). Each Intrinsic4D Unit will, without payment of any additional consideration or taking of any action, subsequently be exchanged for one unit of the Resulting Issuer (a "Resulting Issuer Unit") pursuant to the terms of the Merger Agreement. Each Resulting Issuer Unit will consist of one common share in the capital of the Resulting Issuer (a "Resulting Issuer Share") and one Resulting Issuer Share purchase warrant (a "Resulting Issuer Warrant"). Each Resulting Issuer Warrant will be exercisable at the option of its holder for one Resulting Issuer Share at an exercise price of C$0.66 for a period of 24 months from the closing of the Transaction. The expiry date of the Resulting Issuer Warrants may be accelerated by the Resulting Issuer at any time following the six-month anniversary of the closing of the Transaction, if the volume weighted average trading price of the Resulting Issuer Shares is greater than C$0.80 for any 20 trading days.

The Agent will receive a cash commission equal to 6% of the aggregate gross proceeds of the Private Placement (the "Agent's Commission"), together with compensation options (the "Agent's Compensation Options") entitling the Agents to subscribe for that number of Resulting Issuer Shares as is equal to 7% of the total number of Subscription Receipts issued pursuant to the Private Placement. Each Agent's Compensation Option will ultimately be exercisable to purchase one Resulting Issuer Share at the price of C$0.53 for a period of 24 months following the completion of the Escrow Release Conditions (as defined below). In addition, the Company will pay an advisory fee equal to 4% of the aggregate gross proceeds of the Private Placement to Ravenna Technologies Inc., as special advisor to the Company ("Ravenna"), pursuant to the terms of an advisory agreement dated July 31, 2014 between the Company and Ravenna (the "Ravenna Agreement"). The proceeds from the Private Placement (less certain expenses of the Agent in connection with the Private Placement) (the "Escrowed Proceeds") will be held in escrow until the satisfaction of certain escrow release conditions, including the confirmation that all conditions precedent to the Transaction, other than the release of the Escrowed Proceeds, have been satisfied (the "Escrow Release Conditions").

Principal Purposes of the Proceeds

The proceeds to be available to the Resulting Issuer upon the closing of the Transaction, expected to be approximately C$4,730,000, are anticipated to principally be used as follows:

Principal Use of Proceeds Amount (C$)
Engineering and Research and Development 443,000
General & Administrative 886,000
Business Development and Marketing 1,329,000
Strategic Acquisitions 1,772,000
Estimated Transaction Expenses(1) 300,000
TOTAL 4,730,000
Note:
(1) Estimated expenses include listing fees, professional services and miscellaneous out-of-pocket costs and expenses.

The Resulting Issuer intends to spend the proceeds available to it as stated above. There may be circumstances; however, where for sound business reasons, a reallocation of the proceeds may be necessary.

Bridge Loan

Subject to TSXV approval and in accordance with Section 8.5 of TSXV Policy 2.4, the Corporation intends to provide a secured bridge loan (the "Bridge Loan") of $225,000 to Intrinsic4D. The proceeds from the Bridge Loan will be applied by Intrinsic4D to general working capital requirements. The Bridge Loan will not be advanced until (i) at least 15 days from the dissemination of this news release, and (ii) the Corporation has received TSXV approval for the Bridge Loan.

If Transaction is not completed, the Bridge Loan will become payable in full on demand with a 60 day repayment period. The Bridge Loan will be evidenced and secured by a loan agreement, a promissory note and a general security agreement with a subordinate charge security against all of the assets of Intrinsic4D.

About the Transaction

In connection with the closing of the Transaction, the Corporation will hold a special meeting of its shareholders (the "Maple Meeting") to approve, among other things (i) the board of directors of the Resulting Issuer following the completion of the Merger, (ii) the appointment of MNP LLP as auditors of the Resulting Issuer, (iii) the consolidation ("Consolidation") of its share capital on the basis of four pre-Consolidation shares of the Corporation ("Maple Shares") for one post-Consolidation Maple Share, (iv) the change of the name of the Resulting Issuer to "Intrinsic4D Inc.", (v) the creation of restricted voting common shares in the capital of the Resulting Issuer (the "Resulting Issuer Restricted Voting Common Shares"), and (vi) the approval of the Resulting Issuer's equity incentive plan. Upon completion of the Consolidation, the 11,379,125 Maple Shares currently outstanding will be consolidated into approximately 2,844,781 Maple Shares.

Details regarding the Maple Meeting and the terms of the Resulting Issuer Restricted Voting Common Shares will be contained in a management information circular, which will be sent to shareholders of the Corporation.

Immediately prior to the Merger, Intrinsic4D will complete a consolidation of its Intrinsic4D Units on the basis of one post-consolidation Intrinsic4D Unit for every two pre-consolidation Intrinisic4D Units. Under the terms of the Merger Agreement, at the effective time of the Merger, among other things:

  • The Resulting Issuer will issue to (a) holders of Intrinsic4D Shares issued pursuant to the Private Placement, an equivalent number of voting common shares in the capital of the Resulting Issuer, and (b) all other holders of Intrinsic4D Shares, a combination of voting common shares in the capital of the Resulting Issuer and Resulting Issuer Restricted Voting Common Shares.

  • The Resulting Issuer will issue to holders of Intrinsic4D Warrants economically equivalent Resulting Issuer Warrants.

  • Each holder of an outstanding unit appreciate right of Intrinsic4D (of which 13,373,491 are issued and outstanding as at the date of this press release) (each, an "Intrinsic4D UAR") immediately before the completion of the Merger shall exchange each such Intrinsic4D UAR for one common share purchase option in the Resulting Issuer (each, a "Resulting Issuer Option") with such Resulting Issuer Option having substantially the same terms and economic value as the Intrinsic4D UAR being exchanged.

  • Each Agent's Compensation Option will be exchanged (on a post- Consolidation basis) for economically equivalent compensation options of the Resulting Issuer.

Sponsorship of the Transaction is required by the Exchange unless an exemption from this requirement can be obtained in accordance with the policies of the Exchange. The Corporation intends to apply for an exemption to the sponsorship requirement. There is no assurance that an exemption from this requirement will be obtained.

The Transaction will be carried out by parties dealing at arm's length to one another. The Maple Shares are currently halted from trading, and the trading of the Maple Shares is expected to remain halted pending completion of the Transaction.

Pursuant to the terms of the Ravenna Agreement, the Company granted Ravenna (i) a success fee equal to 4.0% of the aggregate cash remaining in Maple immediately prior to the effective time of the Merger, payable in cash, and (ii) the option to purchase up to 5.0% of the fully-diluted equity interest of the Company. At the effective time of the Merger, this option will be exchanged by the Resulting Issuer for an option having substantially the same terms and economic value.

Upon completion of the Transaction, the Resulting Issuer intends to be listed, at a minimum, as a Tier 2 "technology issuer" under the rules of the TSXV.

Proposed Management and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.

Jorey Chernett - Chairman - Chief Executive Officer

Mr. Chernett is the founder and Chief Executive Officer of Intrinsic4D. Jorey is also the founder and managing partner of Pointillist Capital Management, LLC, a privately held investment fund, which is also a member of Intrnsic4D. Mr. Chernett was a co-founder and from 2003 to 2007 was the President of D4D Technologies, LLC, a medical device company providing 3D imaging and CNC milling solutions to the $60B dental crown and bridge industry. Jorey led the company in architecting and executing its business model, taking D4D through key strategic partnerships, culminating in a sale to strategic investors led by 3M Corporation (NYSE: MMM) and Henry Schein (NASDAQ: HSIC). Mr. Chernett's past employment history includes experience as a venture capitalist (IllinoisVentures, Camelot Venture Group), operator (DigitalWork, Inc.), and investment banker (Donaldson Lufkin & Jenrette). Mr. Chernett earned a B.S. degree in finance with honors from Indiana University.

Kyle Appleby - Interim Chief Financial Officer and Secretary

Mr. Appleby, CPA, CA, serves as the Interim Chief Financial Officer of Intrinsic4D. Mr. Appleby has over 15 years' experience in public accounting and has been providing part-time Chief Financial Officer and other financial accounting and compliance services to both public and private companies since 2007. Prior to 2007, Kyle worked for several public accounting firms in Canada. Mr. Appleby is a member in good standing of the Canadian Institute of Chartered Accountants and the Institute of Chartered Accountants of Ontario. Mr. Appleby obtained his Chartered Accountant designation in 2001. Mr. Appleby graduated from York University with a Bachelor of Arts in Economics. Mr. Appleby is a member of the Chartered Professional Accountants of Canada. Mr. Appleby has been Chief Financial Officer of Epcylon Technologies, Inc. since February 1, 2014 and serves as its Treasurer. Mr. Appleby has been Chief Financial Officer of Prospect Park Capital Corp. since October 23, 2014 and has been a Director of NWT Uranium Corp. since July 24, 2014. Mr. Appleby also serves as the Chief Financial Officer and Finance Director of Mercom Oil Sands Plc.

John Banta - Director

Mr. Banta serves as the Executive Director of BlueCross BlueShield Venture Partners L.P., a US$315 million corporate venture fund complex sponsored by the BlueCross BlueShield Association, and as the Managing Director of the fund's General Partner. Prior to joining BCBSA, John served as the Chief Executive Officer and Managing Director of IllinoisVentures, a premier seed and early-stage technology venture investment firm. John is the former President and Chief Operating Officer of DigitalWork, Inc., a Draper Fisher Jurvetson, TL Ventures and Dell Ventures portfolio company. Prior to DigitalWork, Inc., John served as Vice President of Corporate Services for UBS PaineWebber (formerly Kidder Peabody) and as a Director of the Investment Management Consultant's Association. John has worked with a wide variety of portfolio companies, and serves or has served on the board of directors of numerous emerging clean technology, agriculture, information technology, instrumentation and medical device businesses. Mr. Banta serves on the board of directors of the Illinois Venture Capital Association and the Argonne Venture Accelerator. John earned an MBA in finance and statistics with high honors from the University of Chicago Booth School of Business and a bachelor degree in finance from the University Of Illinois College Of Commerce.

Sandy Kronenberg - Director

Mr. Kronenberg has consulted, planned, and implemented information technology solutions for hospitals, surgical centers, pharmaceutical and medical companies throughout North America. In 1998, Mr. Kronenberg founded Netarx, Inc., a network integration and services organization providing services to large enterprises, many of which were Fortune Global 500 companies. In 2011, Netarx, Inc. was acquired by Logicalis, Inc., a subsidiary of Datatec Ltd. (LSE: DTC) and Mr. Kronenberg joined Logicalis as its Chief Technology Officer. Mr. Kronenberg is currently a partner at Ludlow Ventures and Chief Executive Officer of Locqus, LLC, a field service management company. Sandy earned a B.S. degree in biology from the University of Michigan and an M.S. degree in biology and psychology from Georgetown University.

Mark Klopp - Director

Mr. Klopp is a Managing director of Coronis Medical Ventures, LLC, a San Francisco-based venture capital firm focused on early stage medical device companies. Mark was formerly a Managing Director of Eastman Ventures, Eastman Chemical Company's corporate venture capital arm, and also a former board member of the National Venture Capital Association. Mr. Klopp has a Bachelor degree from Virginia Polytechnic Institute and State University, better known as Virginia Tech, and an MBA from Roosevelt University.

David Mitchell - Director

Mr. Mitchell is currently the managing director of 4Front Capital Partners Inc., a boutique corporate finance and advisory firm based in Toronto, Canada. Mr. Mitchell is also the founder of Stillbridge Ventures Inc., a corporate consulting firm to small and emerging businesses. Mr. Mitchell has had a career in the finance industry spanning over 28 years. In 2011, Mr. Mitchell founded and has been Chief Executive Officer of the Whiteknight Acquisitions series of Capital Pool Companies and since 2013 has been a director of the Corporation. Mr. Mitchell is also a founder and director of a private company in the sports apparel industry.

Chris Schnarr - Director

Mr. Schnarr is the Chief Financial Officer at Delivra Inc., a company involved in the development and sale of transdermal products and technologies for the topical delivery of pharmaceutical and natural molecules. Mr. Schnarr has 25 years of experience founding, managing, and advising growth companies, including strategy, corporate finance, capital markets, corporate development, M&A, financial reporting, and governance. His functional experience across executive positions spans Treasurer, Executive Vice President, Chief Financial Officer, President, and Chief Executive Officer. His broad industry experience includes technology (hardware, software, and services), communications, agriculture, food processing and food ingredients, financial services, health care, and sustainability. Mr. Schnarr has 18-years of public company Board experience across TSXV and TSX listed companies, as well as extensive committee experience. He is presently a Director and Chair of the Audit Committee and member of the Governance and Compensation Committees of Legumex Walker Inc. (TSX:LWP), and a Director and Chair of the Audit Committee and member of the Governance and Compensation Committees of Tweed Inc. (TSXV:TWD). Mr. Schnarr holds an MBA (finance) from University of British Columbia and a Bachelor of Business Administration degree from Wilfrid Laurier University.

Filing Statement

In connection with the Transaction and pursuant to TSXV requirements, the Corporation will file a filing statement on SEDAR (www.sedar.com), which will contain details regarding the Bridge Loan, the Transaction, the Merger, the Private Placement, the Corporation, Intrinsic4D and the Resulting Issuer.

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

ANY SECURITIES REFERRED TO IN THIS PRESS RELEASE WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.

Completion of the Transaction is subject to a number of conditions including, but not limited to, completion of the Private Placement, completion of the Consolidation and name change, the satisfaction of the Corporation and Intinsic4D in respect of the due diligence investigations to be undertaken by each party, receipt of Audited Financial statements of Intrinsic4D, closing conditions customary to transactions of this nature, approvals of all regulatory bodies having jurisdiction in connection with the Transaction, TSXV acceptance and, if required by the TSXV policies, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals are obtained and there can be no assurance that the Transaction will be completed as proposed or at all.

Neither the TSX Venture Exchange, Inc. nor its Regulation Services Provider (as that term is defined in the polices of the TSX Venture Exchange) has in any way passed upon the merits of the Transaction and associated transactions and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.

Investors are cautioned that, except as disclosed in the 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.

This press release includes forward-looking statements regarding the Corporation, Intrinsic4D, and their respective businesses, which may include, but is not limited to, statements with respect to the completion of the proposed Transaction and the Private Placement, the terms on which the proposed Transaction and Private Placement are intended to be completed, the ability to obtain regulatory and shareholder approvals and other factors. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of each entity, and are based on assumptions and subject to risks and uncertainties. Although the management of each entity believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this release, including completion of the proposed Transaction and the Private Placement, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding the technology industry, failure to obtain regulatory or shareholder approvals, market conditions, economic factors, the equity markets generally and risks associated with growth and competition. Although the Corporation and Intrinsic4D have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and the Corporation and Intrinsic4D undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Neither the Corporation nor Intrinsic4D undertakes any obligation to update or revise any forward-looking statements except as expressly required by applicable securities laws.

None of the information contained on, or connected to, Intrinsic4D's website is incorporated by reference in this press release.

The Corporation was incorporated in the Province of Ontario on September 7, 2010 and is a Capital Pool Company ("CPC") as defined in TSXV Policy 2.4. The Corporation is a reporting issuer in the Provinces of British Columbia, Alberta and Ontario. As a CPC, the Corporation's principal business is to identify, evaluate and acquire assets, properties or businesses which would constitute a Qualifying Transaction in accordance with TSXV Policy 2.4.

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