NXA Inc. and Ellipsiz Communications Ltd. Enter Into Business Combination Agreement Relating to Reverse Take-Over

TORONTO, ONTARIO--(Marketwired - Sept. 22, 2015) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

NXA INC. ("NXA") (NEX:NXI.H), further to its press release dated May 20, 2015, is pleased to announce that it has entered into a business combination agreement dated September 21, 2015 (the "Business Combination Agreement") among NXA, Hopeful Mind Group Limited ("NXABVI"), which is NXA's wholly-owned subsidiary, and Ellipsiz Communications Ltd. ("ECBVI") in respect of the proposed acquisition by NXA of ECBVI (the "Transaction"). ECBVI is the parent company of its wholly-owned and operating subsidiary Ellipsiz Communications Taiwan Ltd. ("ECTW"), a private company incorporated under the laws of Taiwan.

NXA, on a post-Transaction basis, is hereinafter referred to for convenience as the "Resulting Issuer". Upon completion of the Transaction, the Resulting Issuer will carry on the business of ECTW, will become a Technology Issuer listed on Tier 2 of the TSX Venture Exchange (the "Exchange"), and will change its name to Ellipsiz Communications Ltd. (or such other name as the Resulting Issuer may determine). The Transaction constitutes a reverse-takeover transaction under the policies of the Exchange. NXA has obtained the conditional approval of the Exchange for the Transaction. Final acceptance of the Exchange is dependent on NXA satisfying the Exchange's listing conditions.

Subject to the satisfaction of closing conditions, it is anticipated that closing of the Transaction will occur during the week of November 2, 2015, or such other date as the parties will agree to, provided that such date is no later than November 16, 2015 unless the parties agree otherwise.

The Transaction

Pre-Transaction Reorganization of ECTW

In order to facilitate the ECBVI Financing (as defined below) and the Transaction and to provide for certain tax and corporate efficiencies and benefits, management of ECTW set up a British Virgin Islands ("BVI") holding company for ECTW. Effective July 22, 2015, ECBVI acquired all of the outstanding shares of ECTW from the then current shareholders of ECTW, pursuant to which ECTW became a 100% owned subsidiary of ECBVI.

Description of the Proposed Merger of NXABVI and ECBVI

The Business Combination Agreement provides that the Transaction will be effected by way of a merger (the "Merger") between ECBVI and NXABVI under the BVI Business Companies Act, 2004. NXABVI is a wholly-owned BVI subsidiary of NXA that was acquired by NXA solely for the purposes of completing the Merger and effecting the Transaction, and it has not carried on any active business.

Pursuant to the Merger, on closing of the Transaction, ECBVI will be merged with and into NXABVI after which the separate existence of ECBVI will cease and NXABVI will be the surviving entity ("Mergeco"). Mergeco will hold all the assets and liabilities of the merging entities. NXABVI may undergo a name change at or after closing to a name to be determined. Immediately upon the Merger, each issued and outstanding share of ECBVI (the "ECBVI Shares") will be automatically cancelled and the holders of ECBVI Shares (including ECBVI Investors (as defined below)) will receive post-Consolidation (as defined below) common shares of the Resulting Issuer on the basis of 143 post-Consolidation Shares for each one (1) ECBVI Share outstanding immediately prior to the closing of the Transaction. For the purposes of determining the exchange ratio, the valuation attributed to ECTW is C$14,300,000 (exclusive of the ECBVI Financing) and the valuation attributed to NXA is C$224,060. Upon completion of the Transaction, the Resulting Issuer will own 100% of the issued and outstanding shares of the NXABVI, which in turn will own 100% of the issued and outstanding shares of ECTW.

Upon completion of the Transaction and after giving effect to the Consolidation and taking into account the ECBVI Financing, of the total issued and outstanding common shares of the Resulting Issuer (the "Resulting Issuer Shares"), the current shareholders of ECBVI will hold 88.6%, the ECBVI Investors will hold 10%, and the current shareholders of NXA will hold the remaining 1.4%, on a non-diluted basis. As such, the Transaction will constitute a reverse take-over of NXA within the meaning of the policies of the Exchange.

Pursuant to the Business Combination Agreement, as additional consideration for, among other things, agreeing to extend the deadline of the Transaction beyond the original term of the letter of intent between the parties and complete the Transaction, ECBVI has agreed to pay NXA an exclusivity fee in cash of C$175,940 (the "Exclusivity Fee") on or before the closing of the Transaction. NXA intends to use the Exclusivity Fee to satisfy debts owing to existing creditors and certain other expenses, with the remainder, subject to satisfying corporate law requirements, to be distributed to current NXA shareholders on a pro rata basis as of the record date for voting (the "Record Date") at the NXA Meeting (as defined below), being September 21, 2015, as more particularly described in the Circular (as defined below). It is expected that approximately C$40,000 will be available to be distributed to the shareholders of record of NXA as of the Record Date (subject to certain minimum shareholdings and other restrictions; please see the Circular for additional details).

Consolidation and Name Change

In connection with, and as a condition to completion of, the Transaction, subject to receipt of shareholder approval, NXA will, immediately prior to closing of the Transaction, consolidate the issued and outstanding common shares of NXA on the basis of one post-consolidation share for every ten (10) pre-consolidation shares (the "Consolidation"). There are currently 22,406,001 common shares of NXA issued and outstanding. After the completion of the Consolidation, but prior to taking into effect the Transaction, there will be approximately 2,240,600 post-Consolidation common shares issued and outstanding.

Furthermore, subject to regulatory approval, NXA proposes to change its name (the "Name Change") to Ellipsiz Communications Ltd., or such other name as the board of directors of the Resulting Issuer may determine, upon closing of the Transaction.

Conditions to Completion of the Transaction

The completion of the Transaction is subject to a number of terms and conditions, including the completion of the ECBVI Financing, the completion of satisfactory due diligence investigations, the approval of the shareholders and directors of each of NXA, NXABVI, ECTW and ECBVI, as required, the final approval of the Exchange and other relevant regulatory authorities and various other customary conditions that must be satisfied prior to closing of the Transaction.

Shareholder Approvals and Meeting of the Shareholders of NXA

The Merger requires the approval of the shareholders of NXABVI and ECBVI. Furthermore, the Transaction and certain related matters require the approval of NXA shareholders, and to this end, NXA has called an annual and special meeting of shareholders (the "NXA Meeting") to be held on November 2, 2015. The matters to be approved at the NXA Meeting include the Transaction, the Consolidation, the Name Change and such other matters set out in the notice of Meeting and described in the management information circular dated September 21, 2015 prepared in connection with the NXA Meeting (the "Circular").

For further details with respect to the Transaction, the matters to be approved at the NXA Meeting and other matters in this press release, readers are encouraged to read NXA's Circular prepared in connection with the NXA Meeting which will be available for review under NXA's SEDAR profile at www.sedar.com on or about September 25, 2015.

ECBVI Financing

In connection with, and as a condition to the completion of the Transaction, ECBVI will complete a private placement (the "ECBVI Financing") of 112,900 subscription receipts (the "Subscription Receipts") at a price of US$11.00 per Subscription Receipt for aggregate gross proceeds of US$1,241,900, or such other amount as may be permitted or required by the Exchange. The ECBVI Financing will be completed pursuant to the terms of a subscription receipt agreement (the "Subscription Receipt Agreement") to be dated the closing date of the ECBVI Financing between ECBVI and Fogler, Rubinoff LLP as escrow agent (the "Escrow Agent"). The ECBVI Financing will close before the closing date of the Transaction, although the exact closing date or dates of the ECBVI Financing is not known at this time.

Each outstanding Subscription Receipt will be automatically converted and immediately thereupon cancelled, without any further action by the holder of such Subscription Receipt (the "ECBVI Investor"), and for no additional consideration, into one ECBVI Share upon the satisfaction of the following conditions (the "Escrow Release Conditions"): the receipt of all necessary regulatory approvals (including the conditional approval of the Exchange for the Transaction), and the satisfaction or waiver (if capable of being waived) of all conditions to the completion of the Transaction other than filing of the requisite documents with governmental authorities to give effect to the Transaction. The satisfaction of the Escrow Release Conditions, and the conversion of the Subscription Receipts into ECBVI Shares, is expected to occur immediately prior to closing of the Transaction.

Pursuant to the terms of the Subscription Receipt Agreement, 30% of the gross proceeds of the ECBVI Financing will be released to ECBVI on closing of the ECBVI Financing, and the remaining 70% of the gross proceeds of the ECBVI Financing (the "Escrowed Proceeds") will be deposited and held in escrow on behalf of the subscribers by the Escrow Agent. At the discretion of the Escrow Agent, the Escrowed Proceeds may be invested in short-term interest bearing obligations of, or guaranteed by, the Government of Canada or a province of Canada, or a Canadian bank. The Escrowed Proceeds (and accrued interest, if any), less any expenses of the Escrow Agent, will be released to ECBVI upon satisfaction of the Escrow Release Conditions.

If the Escrow Release Conditions are not satisfied on or before 5:00 p.m. (Toronto time) on November 16, 2015 (or such earlier date as either ECBVI or NXA terminates its obligation to complete the Transaction pursuant to the Business Combination Agreement) (the "Escrow Deadline"): (i) ECBVI shall forthwith notify the Escrow Agent thereof; and (ii) the right to receive ECBVI Shares represented by such Subscription Receipts shall be automatically terminated and cancelled and the holder of each Subscription Receipt shall be paid, as soon as reasonably possible, (A) an amount per Subscription Receipt equal to seventy percent (70%) of the purchase price and a pro rata share of interest, if any, actually earned thereon to the date of redemption, which shall be satisfied from the Escrowed Proceeds; and (B) an amount per Subscription Receipt equal to thirty percent (30%) of the purchase price, which shall be paid by ECBVI.

About ECBVI and ECTW

ECBVI is the parent company of ECTW. It was incorporated on July 8, 2013 as a BVI Business Company under the BVI Business Companies Act, 2004 and was acquired and established by ECTW solely for the purposes of completing a transaction such as the Merger and the Transaction. ECBVI's registered and head office is located at Palm Grove House, P.O. Box 438, Road Town, Tortola, BVI.

ECTW, the operating subsidiary of ECBVI, is a private Taiwanese company which was incorporated on November 21, 2007 under the laws of the Republic of China. ECTW's registered and head office is located at 8F, No. 96, Section 1, Jianguo North Road, Jhongshan District, Taipei City 10489, Taiwan, Republic of China. ECTW focuses on setting up operations support systems ("OSS"), being systems which control and monitor network activities, for many communication service providers ("Telcos"), including mobile network providers, fixed line telephone operators, cable operators and internet service providers (ISPs) in Taiwan. ECTW tailors a unique solution for each client depending on its particular needs, which involves setting up, customizing and integrating a combination of third party hardware and OSS software.

A description of the assets, business and operations of ECBVI and ECTW is presented in the Circular.

Select ECTW Financial Information

The following tables set forth certain financial information of ECTW which has been derived from the audited financial statements for the years ended June 30, 2014, 2013 and 2012 and the unaudited interim financial statements for the three and nine month periods ended March 31, 2015 and 2014, attached to the Circular as Schedule "7". Unless otherwise indicated, the information presented in the table below is presented in the reporting currency of ECTW, being New Taiwan Dollars (NT$), and prepared in accordance with IFRS.

Annual Information

Statement of Comprehensive Income Data		Year Ended June 30, 2014 (NT$)		Year Ended June 30, 2013 (NT$)		Year Ended June 30, 2012 (NT$)
Total revenues		177,027,456		133,454,489		178,619,861
Total operating expenses		36,275,382		36,434,147		31,465,721
Income from continuing operations before taxes		1,961,836		13,251,086		1,945,928
Net income		989,760		9,419,472		979,684
Balance Sheet Data		As at June 30, 2014 (NT$)		As at June 30, 2013 (NT$)		As at June 30, 2012 (NT$)
Current Assets		179,666,522		85,646,925		94,437,869
Total Assets		181,890,015		134,934,990		209,959,817
Total long term liabilities		-		-		81,424,000
Total cash dividends declared		-		-		-
Shareholders' equity		50,981,544		49,991,784		40,572,312

Quarterly Information

Statement of Comprehensive Income Data		Nine months Ended March 31, 2015 (NT$)		Nine months Ended March 31, 2014 (NT$)
Total revenues		149,629,273		131,057,902
Total operating expenses		30,059,574		24,646,245
Income from continuing operations before taxes		14,253,814		3,405,173
Net income		11,325,105		2,400,801
Balance Sheet Data		As at March 31, 2015 (NT$)		As at March 31, 2014 (NT$)
Current Assets		138,079,418		159,920,912
Total Assets		150,491,953		161,903,531
Total long term liabilities		-		-
Total cash dividends declared		18,236,383		-
Shareholders' equity		44,070,266		52,392,585

Biographies of Proposed Directors and Executive Officers of the Resulting Issuer

The following is a brief description of each of the proposed directors and executive officers of the Resulting Issuer.

Tat Lee (Michael) Koh, Age 49 - Proposed Chairman and Director

Mr. Koh is the current Chairman of ECTW and has acted in that role since 2014. In addition to his role at ECTW, since 2008, Mr. Koh has acted as Chairman to Pan Asia Mining Ltd. (a mineral exploration company listed on the Hong Kong Stock Exchange), which is Mr. Koh's current principal occupation, and its subsidiary, Blacksand Enterprise Ltd. In addition to his current role at Pan Asia Mining Ltd., Mr. Koh has in the past held director and/or officer positions at several other publically traded companies listed on the Hong Kong Stock Exchange.

Mr. Koh has over 10 years of experience in the telecommunications industry and in project management. From 1991 to 2000, Mr. Koh worked at Bell South and AT&T, most recently in the position of a technical director at AT&T. Prior thereto, through his role as Vice President at First Pacific Company Limited, Mr. Koh founded Tuntex Telecom and assumed the role of President between the years of 1995 and 1997.

Mr. Koh was educated in the United States, where he obtained a Master of Science Degree in Electrical Engineering from Columbia University and a Bachelor of Science Degree in Engineering from Rutgers University.

Chong Gin (Sam) Tan, age 50 - Proposed President and Director

Mr. Tan is the current President of ECTW and has acted in that role since July 2014. From 2007 to 2014, he served as Managing Director at Ellipsiz Communications Pte Limited, a Singaporean company that provided services to the telecommunications industry and that was the parent company to ECTW. From July 1, 2005 to June 30, 2014, Mr. Tan also served as Vice-President, Distribution and Services Solutions of Ellipsiz Ltd., a Singapore Exchange-listed service provider serving the semiconductor and electronics industries.

Mr. Tan has over 20 years of experience in sales, business development and management in the electronics industry. Mr. Tan began his career with IBM Canada as a software test engineer before joining Hewlett Packard, where he sold Electronic Manufacturing Test ("EMT") solutions. Mr. Tan then joined Agilent Technologies as Business Development Manager in 1998, where he assisted in the penetration and growth of its contract manufacturing business in China, a role he maintained for approximately two years, before being appointed as EMT General Manager for contract manufacturing in Asia. Mr. Tan acted in that role for approximately four years, until Agilent Technologies outsourced certain of its sales, support and services to iNETest Resources PTE Ltd. As a result, Mr. Tan joined iNETest Resources PTE Ltd. as General Manager, where, from 2003 to 2012, he led the company's South Asia Pacific and contract manufacturing teams in Asia.

Mr. Tan was educated in Canada, where he obtained a Bachelor of Science Degree in Engineering from Queen's University in Kingston, Ontario.

Hung-Yu (Hans) Chang, age 41 - Proposed Chief Executive Officer and Director

Mr. Chang is the current Chief Executive Officer of ECTW and has acted in that role since July 2014. Prior to his current role, he acted as General Manager of ECTW, a position he held from October 2007 until his promotion to the role of Chief Executive Officer.

Mr. Chang has over 15 years of experience in marketing and sales management within the telecommunications industry. Mr. Chang began his career at Siemens, working in Account Sales. In February 2004, he joined Agilent Technologies Taiwan Ltd. as an Account Manager within the Electronic Measurements Group, managing Taiwanese telecommunication accounts, a role which he held until joining ECTW in 2007.

Mr. Chang was educated in Taiwan, where he obtained a Bachelor's Degree in Transportation Engineering and Management and an M.B.A., both from National Chiao Tung University.

Harvey McKenzie, age 69- Proposed Chief Financial Officer (Canada) and Corporate Secretary

Mr. McKenzie is a Chartered Professional Accountant, granted by the Institute of Chartered Professional Accountants of Ontario, Canada. Mr. McKenzie's current principal occupation is the provision of consulting services primarily in financial reporting areas. Since June 2011, he has been the (part-time) CFO and Corporate Secretary of Anconia Resources Corp. (Exchange: ARA.V) and member of the Board of Directors and Chairman of the Audit Committee of Li3 Energy (listed on the OTC).

Prior thereto, Mr. McKenzie served as the CFO of several Canadian publicly listed exploration, development and producing mining companies, including Red Crescent Resources Limited from January 1, 2013 to March 2014, Martina Minerals Corp. from February 2005 to December 31 2012, Eurotin Inc. from May 2011 to September 2011, Sino Vanadium Inc. from May 2010 to March 2011, Iberian Minerals Corp. from July 2007 to June 2009, Carlisle Goldfields Limited from July 2006 to July 2007, and Asian Mineral Resources Limited from July 2006 to January 2008. From August 2005 to July 2007, he was the CFO and a director of Card One Plus, Ltd., an electronic payment solutions company. Prior thereto he was the CFO of Thistle Mining Inc. from March 1999 to August 2005 (Exchange: TMG.V).

He has also served as a consultant for several private companies and on the boards of several junior Canadian natural resource companies for over a decade. Prior thereto, he was in the financial services sector from 1987 to 1995; and from 1983 to 1987 he served as a Director of Information Services of Ernst & Young, Chartered Professional Accountants, in Toronto. From 1977 to 1983, he provided management and controllership functions for various financial institutions. From 1970 to 1977, he served as an Auditor for PricewaterhouseCoopers, Chartered Professional Accountants.

Mr. McKenzie obtained his Diploma in Alternate Dispute Resolution from the University of Toronto in 2001. He obtained his CPA designation on November 1, 2012 and prior to this he qualified as a CA from the Institute of Chartered Accountants of Ontario in 1973 and a B.Sc. (Hons.) in Mathematics from the University of Toronto in 1970.

Douglas Bolton, age 64 - Proposed Vice-President - Finance

Douglas Bolton, CPA, CA is a practicing Chartered Professional Accountant with over 36 years of public accounting experience providing audit, accounting, tax and consulting services to a wide variety of clientele. During his career in public practice, Mr. Bolton provided audit services to a number of reporting issuers involved in the extractive industries and listed on the Exchange. Mr. Bolton currently serves as part-time CFO for Laurion Mineral Exploration Inc. and interim CFO for Adex Mining Inc., both of which are listed on the Exchange.

Elliott Jacobson, FCPA, FCA, age 69 - Proposed Director

Mr. Jacobson has over 30 years of public accounting experience and has serviced a wide range of clients from Canadian corporations to multinational organizations. Since 2010, Mr. Jacobson has been a principal of Elliott M. Jacobson & Associates, Ltd., a consulting company providing corporate advice and services, including professional director services, to public and private companies.

From 2007 to 2010, Mr. Jacobson led the audit practice for entrepreneurial public companies in the Greater Toronto Area for Deloitte & Touche LLP. At that time, Mr. Jacobson and the Deloitte Entrepreneurial Public Company Service Group participated in the original listings on the Toronto Stock Exchange, the Alternative Investment Market operated by the London Stock Exchange, Swiss Stock Exchange, American Stock Exchange and the Exchange (by initial public offering or reverse take-over) of many new public companies with business operations in China and Israel as well as Canada and the United States. Mr. Jacobson led the market development for Israeli, U.S. and Chinese companies listing on the Toronto Stock Exchange and the Exchange. Previously, in 1989, Mr. Jacobson joined Mintz & Partners, a mid-sized Toronto accounting firm, where he became a partner in 1991 and led the Public Company Practice Team, which had one of the largest entrepreneurial public company practices in Canada.

Mr. Jacobson obtained his Chartered Accountant designation in 1980 and has a B.Com. (1966) from Dalhousie University as well as an M.B.A. (1969) from Queen's University. Mr. Jacobson has lectured often on public company accounting and oversight topics, particularly relating to Canadian/U.S. accounting and auditing questions, including revenue recognition. He has also written numerous articles on accounting and audit matters and has guest-lectured at a number of major university business schools on accounting matters. Mr. Jacobson currently serves on a number of corporate (reporting issuers and private) and non-profit boards of directors where he serves as Chair of the Audit Committees.

Grant Sawiak, age 60 - Proposed Director

Mr. Sawiak is a Partner in the Securities Law Group at Fogler, Rubinoff LLP, a Toronto-based law firm. Mr. Sawiak has practised securities law for over 30 years in both Vancouver and Toronto. From 1979-1982, he held a senior managerial position at The Toronto Stock Exchange after which he was the head of the securities law practice groups at two Canadian national law firms for a total of 20 years before he joined Fogler, Rubinoff LLP. He has been a director and officer of numerous public companies whose businesses were carried on throughout the world.

Mark Yin, age 45 - Proposed Director

Since 2014, Mr. Yin has been a founder and the CEO of Platina Systems Corp, a California-based company offering networking solutions. Since 2010, Mr. Yin has been a founder and partner at Jin Tao Consulting Ltd., a Shanghai-based consulting company focused on market entry and growth strategies in the clean-tech and IT industries. Prior thereto, from 2001 to 2009, Mr. Yin was a Vice-President at Infinera Corp (NASDAQ: INFN), a manufacturer of high capacity optical transmission equipment for the service provider market where he led various marketing and sales functions. Mr. Yin was educated in the United States, where he obtained a Bachelor of Science degree in Electrical Engineering from Rutgers University, New Jersey and a Master of Science degree in Operations Research from Stanford University, California.

Sponsorship

Altus Securities Inc., subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the Transaction pursuant to a letter dated June 17, 2015, whereby ECTW will pay Altus Securities Inc. a fee of $50,000 plus HST ($15,000 paid to the date of the Circular and $35,000 to be paid upon delivery of the final sponsorship report), plus reasonable fees and disbursements. An agreement to act as sponsor should not be construed as any assurance with respect to the merits of the Transaction or the likelihood of the completion thereof.

Arm's Length Transaction

The Transaction is considered an arm's length transaction in accordance with the policies of the Exchange.

Trading Halt

Trading of the common shares of NXA remains halted in accordance with Exchange policies until all required documentation with respect to the Transaction has been received and the Exchange is otherwise satisfied that the halt should be lifted.

Completion of the Transaction is subject to a number of conditions, including Exchange acceptance and shareholder approval. 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 Circular prepared in connection with the Transaction, any information released or received with respect to the reverse take-over may not be accurate or complete and should not be relied upon. Trading in the securities of NXA should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.

Neither 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.

The statements used in this press release may contain forward-looking statements, and are based on the opinions and estimates of management, or on opinions and estimates provided to, and accepted by, management. These opinions and estimates are used by management, and speak only as of the date of this press release. Forward-looking statements in this press release include, but are not limited to, the terms and conditions and closing of the Transaction, the anticipated benefits from the Transaction, the business and operations of the Resulting Issuer after the Transaction and the completion of the ECBVI Financing. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions, including with respect to the closing of the Transaction, the timing and receipt of all applicable regulatory and shareholder approvals and third party consents, the anticipated benefits from the Transaction and the satisfaction of other conditions to the completion of the Transaction. Forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ, possibly significantly. Although NXA believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual events or results will be consistent with these forward-looking statements. Except as required by applicable law, NXA does not undertake, and specifically disclaims, any obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise. Readers are therefore cautioned not to place undue reliance on any forward-looking statements.