MicroPlanet Technology Corp.

MicroPlanet Technology Corp.

March 17, 2015 08:00 ET

MicroPlanet Corporate Update

SEATTLE, WASHINGTON--(Marketwired - March 17, 2015) - MicroPlanet Technology Corp. (together with its wholly owned subsidiary, MicroPlanet, Inc., "MicroPlanet" or the "Corporation") (TSX VENTURE:MP)(OTC PINK:MCTYF) a provider of smart grid and power quality technology and products, which significantly increases efficiency, quality and conservation of electricity and enables the integration of alternative energy into the power grids is providing an update of its activities and operating status.

On November 19, 2012 MicroPlanet, Inc. entered into the Integration and Commercialization Agreement with Tyree Industries Pty Ltd. (Tyree), the leading supplier of power transformers in Australia (the "Tyree Agreement"). The Tyree Agreement provided for the payment of substantial minimum royalties to MicroPlanet. As reported on September 3, 2013, MicroPlanet's prototype module was officially accepted after significant testing as provided in the Tyree Agreement. As subsequently reported, significant changes in Tyree ownership and management were expected, at a minimum, to delay the anticipated timing and amounts of revenue derived from the Tyree Agreement. With Tyree's subsequent failure to pay the minimum royalties to MicroPlanet as provided in the Tyree Agreement and Tyree's failure to effectively execute the commercialization of the RegFormer it became clear to MicroPlanet that the exclusivity provisions of the Tyree Agreement were no longer justified. Accordingly, in accordance with the terms of the Tyree Agreement, MicroPlanet officially notified Tyree that it has terminated the exclusivity provisions of the Tyree Agreement.

MicroPlanet's MD&A, presented as of November 30, 2014, and its unaudited interim consolidated financial statements for the three and nine months ended September 30, 2014 (the "Interim Financial Statements") provided that the Corporation would focus on securing additional operating capital to fund operations, including pursuing strategic alternatives. The Interim Financial Statements also indicated that there is significant risk to the Corporation's ability to raise additional capital, which presents material uncertainties that may cast significant doubt on the Corporation's ability to continue as a going concern. This Corporate Update provides the status of MicroPlanet's efforts in pursuit of its near-term objectives to fund its operations as presented in its Interim Financial Statements.

Potential Strategic Relationships. In the Interim Financial Statements, to fund its operations, the Corporation stated that it has been and intends to continue to devote resources to pursue strategic alternatives. MicroPlanet is pleased to report that it has advanced discussions to explore the possible establishment of strategic relationships with parties actively engaged in our markets. However, while management firmly believes that the sought after potential relationships would be mutually beneficial, the ultimate outcome and timing cannot be predicted at this time.

Australian Subsidiary and Director Resignation. In the Interim Financial Statements, the Corporation also stated that it intends to advance current efforts to establish a related Australian entity and to establish contractual relationships in a manner that will provide working capital to the Corporation. Management believes that the Australian and neighbouring territories represent a market wherein MicroPlanet's products and technologies can be deployed in a self sustaining and locally operated corporation. On December 17, 2014, MicroPlanet Australia Pty Ltd was registered in Queensland, Australia with MicroPlanet, Inc. as its sole shareholder. It is the Corporation's intent to engage appropriate parties in Australia to properly capitalize MicroPlanet Australia Pty Ltd whereupon MicroPlanet, Inc. would license rights to its subsidiary in return for a license fee, royalties and interim services agreements. The intended licensed customer markets would be utilities, commercial and industrial in Australia, New Zealand and neighbouring islands. As the potential strategic relationship in discussion includes the utility customer market in MicroPlanet Australia Pty Ltd's intended licensed territory, the Corporation cannot currently initiate funding efforts that would be in conflict with such potential strategic relationship. In addition, the Corporation has been engaged in discussions regarding a potential substantial commercial development contract and, subject to successful demonstrations of developed product, a potential major supply agreement. Until both the potential utility and commercial relationships are solidified, the MicroPlanet Australia Pty Ltd operations cannot be adequately defined to enable its capitalization.

An integral participant in the formation and initial go-forward plans of MicroPlanet Australia Pty Ltd is Grahame Foulger. Due to possible conflicts of interest, Mr. Foulger offered, and the Corporation's board of directors accepted, Mr. Foulger's resignation from the MicroPlanet Board of Directors. The directors have elected to defer filling the vacant director seat at this time. Mr. John M. Fluke, Director, will assume Mr. Foulger's former position as Chairman of the MicroPlanet Compensation and Corporate Governance Committee.

MicroPlanet Notes Payable. As noted, MicroPlanet's financial condition has been a significant issue in its discussions as described above as well as in potential investment discussions. The predominate financial concern expressed is MicroPlanet's default position of its secured convertible notes issued in 2009 and 2012, CDN$ $2,377,219 and CDN$1,455,923, respectively, principal and interest as of March 9, 2015. Management is in discussions with its note holders to establish an agreement that would be supportive of the Corporation's efforts to raise requisite operating capital, whether in the form of a strategic relationship, investment or otherwise. Management believes that early indications indicate a willingness of its note holders to make appropriate accommodations, but cannot predict the final resolution or its timing.

Operations. The financial condition of the Corporation continues to hamper it operations. In the Interim Financial Statements, the Corporation stated that it was in search of a new Washington operating facility and until such facility is secured, the Corporation will continue its operations on a smaller scale in temporary locations. The Corporation's financial condition has been, to date, a barrier to management's attempts to locate a replacement facility for its operations and it has been operating on a 'virtual' basis. This virtual basis level of operations is not conducive to production of product. While MicroPlanet was able to deliver three different model units in support of its strategic relationship discussions described above, without increased operating capital to secure and operate a facility for production and acquisition of components, the Corporation will not be in a position to issue requested sales quotes totaling approximately $190,000 for delivery within five months or to aggressively pursue its other active customer prospects.

The Corporation's auditors, Grant Thornton LLP submitted their resignation. MicroPlanet has an outstanding balance due to its former auditors for their audit of the Corporation's 2013 Consolidated Financial Statements. Until the Corporation obtains sufficient funds to pay for both the prior 2013 audit and the audit of its 2014 consolidated financial statements, MicroPlanet is not in a position to request Grant Thornton to be reinstalled as its auditors or to secure the services of a replacement auditor.

The Corporation will announce the date of its Annual Group Meeting ("AGM") when it obtains sufficient funds to pay for outstanding expenses related to its previous AGM and for anticipated expenses for its upcoming AGM.

While management remains optimistic that its efforts will prove successful, there remains a significant risk that the Corporation will not be able to raise adequate capital to fund operations and meet its obligations and continue as a going concern.

About MicroPlanet Technology Corp.

MicroPlanet Technology Corp. is a smart grid, energy conservation company, whose technology dynamically regulates voltage with unrivaled speed and accuracy using its patented and advanced power electronics. MicroPlanet's technology solutions have been deployed in seven countries by more than 20 utilities, the U.S military and multiple commercial customers to manage voltage on networks, save energy, improve power quality and grid efficiency and to facilitate the integration of renewable energy sources, including solar and wind. MicroPlanet is based in Seattle, WA and is listed on the TSXV and trades on the OTC under the stock symbol: MP and MCTYF, respectively. www.microplanet.com


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