NXA Inc.
TSX VENTURE : NXI.H
NEX BOARD : NXI.H

October 30, 2015 17:48 ET

NXA Inc. Provides Update on Reverse Take-Over

TORONTO, ONTARIO--(Marketwired - Oct. 30, 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 September 22, 2015, is pleased to provide an update on the proposed acquisition by NXA of Ellipsiz Communications Ltd. ("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.

The Transaction will be effected by way of a merger (the "Merger") between ECBVI and Hopeful Mind Group Limited, a wholly owned subsidiary of NXA ("NXABVI"), under the British Virgin Islands Business Companies Act, 2004. 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"). The Transaction constitutes a reverse take-over transaction under the policies of the TSX Venture Exchange (the "Exchange"). Further details regarding the Transaction and the parties thereto are contained in the press release of NXA dated September 22, 2015 and the management information circular of NXA dated September 21, 2015 (the "Circular"), which are accessible on SEDAR.

ECBVI Financing

On October 29, 2015, ECBVI completed 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. Completion of the ECBVI Financing is a condition to the completion of the Transaction.

The ECBVI Financing was completed pursuant to the terms of a subscription receipt agreement (the "Subscription Receipt Agreement") between ECBVI and the escrow agent named therein (the "Escrow Agent"). 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 share of ECBVI ("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.

Pursuant to the terms of the Subscription Receipt Agreement, 30% of the gross proceeds of the ECBVI Financing has been released to ECBVI on closing of the ECBVI Financing. The remaining 70% of the gross proceeds of the ECBVI Financing (the "Escrowed Proceeds") has been deposited and is being held in escrow on behalf of the ECBVI Investors by the Escrow Agent. The Subscription Receipt Agreement provides that the Escrowed Proceeds (and accrued interest, if any), less any expenses of the Escrow Agent, be released to ECBVI upon satisfaction of the Escrow Release Conditions. However, as described below under "Transaction Update", the parties, in consultation with the Exchange, now intend that ECBVI will direct the Escrow Agent to retain the Escrowed Proceeds until TIC Approval (as defined below) is obtained.

For a description of additional terms of the ECBVI Financing, including what occurs in the event that the Escrow Release Conditions are not satisfied, see the press release of NXA dated September 22, 2015.

Transaction Update

As described in the Circular, Mergeco is required to file an application with the Taiwan Investment Commission (the "TIC") for approval ("TIC Approval") of the acquisition of all of the issued and outstanding shares of ECTW as a result of the Merger. Although the parties have no reason to believe that TIC Approval will not be forthcoming, in accordance with the process for such approvals, which prescribes that the formal application be submitted following the effectiveness of the Merger, notification from TIC as to its decision is not expected to be received until the week of November 23, 2015. The Transaction is scheduled to close without prior formal TIC Approval on November 4, 2015; however, in order to be prudent and at the request of the Exchange, the post-closing common shares of NXA will not resume trading on the Exchange until the parties receive TIC Approval. Consequently, the proposed Stated Capital Distribution (as described in the Circular) and the release of Escrowed Proceeds will not be completed until TIC Approval is obtained. In the event that the parties fail to obtain TIC Approval following the closing of the Transaction, the parties may be required to unwind the Transaction and related matters, which will involve, among other things, NXA disposing of its interest in Mergeco (and indirectly, in ECTW) to the original shareholders of ECBVI and cancelling the NXA shares issued to such shareholders. At the meeting of shareholders scheduled for November 2, 2015 to consider the approval of all matters related to the Transaction, additional resolutions authorizing NXA to change its name back to "NXA Inc." and to split its securities on a 1:10 basis if the Transaction must be unwound are currently expected to be put before the shareholders.

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 expectation regarding closing of the Transaction and receipt of regulatory approval, including TIC Approval, and the proposals regarding unwinding the Transaction in the event TIC Approval is not obtained. 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.

Contact Information

  • NXA Inc.
    Paul Van Damme
    Chief Financial Officer
    (416) 847-6905