Precision Enterprises Inc.

August 06, 2009 12:02 ET

Precision Enters into Letter Agreement for Qualifying Transaction with NPTx NeuroPsychoTherapeutics Corporation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 6, 2009) - Precision Enterprises Inc. (the "Company" or "Precision") (TSX VENTURE:PSC.P) is pleased to announce that it has entered into a letter agreement with NPTx NeuroPsychoTherapeutics Corporation ("NPTx") dated July 31, 2009, pursuant to which Precision and NPTx have proposed a business combination (the "Transaction") by way of share exchange or other similar form of transaction. Pursuant to the Transaction, the shareholders of NPTx will exchange all of their Class "A" Voting Shares of NPTx (the "NPTx Shares") for common shares of Precision (the "PSC Shares") on the basis of 336 PSC Shares for one (1) NPTx Share. As part of the Transaction, Precision intends to change its name to "NeuroGate Medical Health Inc.".

There are currently 7,900,000 PSC Shares issued and outstanding, and incentive stock options outstanding to acquire up to 600,000 additional PSC Shares. Prior to completion of the Transaction, there will be 119,034 NPTx Shares issued and outstanding (which will be exchanged for 39,995,424 PSC Shares pursuant to the Transaction), with no incentive stock options or other convertible securities outstanding. After completion of the Transaction, it is contemplated that additional stock options will be granted to directors and officers of the resulting issuer in accordance with PSC's stock option plan and subject to the rules and policies (the "Policies") of the TSX Venture Exchange (the "Exchange").

Precision is defined as a "capital pool company" under the Policies of the Exchange. The Transaction will represent Precision's qualifying transaction and is not a related party transaction under the Policies of the Exchange, as none of the insiders of Precision are insiders of NPTx or own, directly or indirectly, any of the NPTx Shares, and vice versa. The Transaction will constitute an arms' length transaction, and it is not anticipated that the Transaction will require approval of the shareholders of Precision. All or a portion of the PSC Shares to be issued to holders of NPTx Shares upon completion of the Transaction will be subject to resale restrictions and escrow requirements under applicable securities laws and the Policies of the Exchange, as applicable.

Upon completion of the Transaction, the resulting issuer will be engaged in the field of medical treatment for psychiatric and neurological diseases. The resulting issuer intends to seek a listing as a "Technology and/or Industrial" Tier 2 Issuer on the Exchange.

Precision expects trading in its common shares on the TSX Venture Exchange to remain halted until the completion of the Transaction.

Information about NPTx

NPTx is a private corporation incorporated under the laws of British Columbia, owned by 10 shareholders (the "NPTx Shareholders") including Iain Glass, the founder, President/CEO and a director of NPTx.

NPTx was founded to establish a network of licensed and corporate-owned MindCare Centres to treat a wide spectrum of neurological diseases using advanced "rTMS" and brain stimulation therapies. The stimulators used by NPTx are wholly owned by them, and are not under any license.

NPTx is a leader in an evolving field of medical treatment for psychiatric and neurological diseases, such as depression and epilepsy, using a medical device to deliver high powered electro magnetic pulses to discreet brain regions. The treatment, referred to as rTMS - repetitive Transcranial Magnetic Stimulation, is non-invasive, requires no general anesthetic and has few or no known side effects as compared to electro convulsive therapy, which is the current "gold standard" treatment for depression.

Commercial operations began in Canada with the opening of the Vancouver MindCare Centre in November 2002, followed by the opening of an additional centre in Toronto in 2003 and a licensed centre in Ottawa in 2007. MindCare Centres of Canada ("MCC Canada"), a 75%-owned subsidiary of NPTx, anticipates opening clinics across Canada in association with public and private hospitals, which employ psychiatrists or provide facilities for psychiatric treatment (at least 30 such hospitals in Canada). The three Canadian clinics have provided management of NPTx with valuable data with respect to treatment protocols and operating procedures.

In April 2008, NPTx entered into an agreement with The Centre for Addiction and Mental Health (CAMH) in Toronto to develop a centre of excellence for providing rTMS, which NPTx expects will allow it to operate rTMS clinics established in the Greater Toronto Area at controllable costs. The centre will also provide opportunities for expanded collaborative rTMS research.

Financial coverage of the treatment at MindCare Centres has been incurred on a case-by-case basis by the following providers: Sun Life Financial, Desjardins Financials, Great-West Life and Unim Provident.

Over the past seven years, NPTx has been working with leading academics worldwide to evolve the protocols for treatment at MindCare Centres, and also has been working with manufacturing companies to improve the quality and efficacy of its current rTMS technology. With over 600 patients treated, an established set of clinic protocols and proprietary technology in place, NPTx intends to run clinical trials to gain regulatory approval in the United States and to introduce its clinic model to the U.S. market. NPTx believes that the U.S. market represents a significant opportunity given its aging population, the private healthcare system, and sizes of the epilepsy, depression and post-traumatic stress disorder treatment markets, among other neurological diseases. NPTx also intends to continue to expand the number of clinics in Canada.

During the process of treating over 600 patients, NPTx has built an impressive database of information on depression. As the number of MindCare Centres increases, this database will grow to include data on other neurological diseases such as epilepsy and post-traumatic stress disorder, and NPTx expects that the knowledge it provides on these disorders will continue to increase in value. Over the medium- to longer-term, NPTx intends to continue to evaluate rTMS and brain stimulation for the treatment of diseases beyond epilepsy, depression, and post-traumatic stress disorder.

Through use of the existing rTMS devices at its MindCare Centres, NPTx has gained the knowledge and experience necessary to develop a patent portfolio around rTMS technology. While the existing medical devices used at the MindCare Centres are highly effective in certain disease states, the existing technology has limitations and is public domain. NPTx is developing a new technology for a "next generation" rTMS stimulator, and anticipates filing several patent applications in the United States over the next 60 days. NPTx has been working with leading U.S. medical device patent attorneys to assist in evolving protection of its intellectual property and freedom to operate.

NPTx's current core objectives are: (1) to use its knowledge and experience with the existing medical device in order to create a superior rTMS device, owned by MindCare Centres; (2) to establish a network of MindCare Centres across Canada, the United States and other countries offering rTMS and brain stimulation treatment for a diverse set of neurological disorders; and (3) to use its superior medical device in ongoing clinical trials to explore rTMS and its efficacy on other, less explored, neurological disease states, thus expanding its market laterally. NPTx hopes to launch U.S. clinics once Food and Drug Administration ("FDA") approval is secured for treating epilepsy using rTMS, followed by treating depression. Thereafter, NPTx intends to seek regulatory approval for rTMS and brain stimulation for additional disease states such as anxiety disorders, tinnitus, addiction and chronic pain.

Financial information relating to NPTx is being prepared and will be disclosed in the filing statement to be prepared and filed on SEDAR by Precision in respect of the Transaction.

Mr. Iain Glass, of Vancouver, B.C., the founder, CEO/President and sole director of NPTx, currently holds a 69% interest in NPTx, and Mr. Bruce Hosford, of Shoreline, Washington, holds an 18% interest in NPTx.

Concurrent Financing

Concurrently with the completion of the Transaction, Precision intends to complete a private placement for gross proceeds of up to $3,000,000, with a minimum of $500,000 being completed through a broker/dealer, by the issuance of up to 12,000,000 units at a price of $0.25 per unit, subject to Exchange approval (the "Private Placement"). Each unit will consist of one common share and one half of one share purchase warrant, each whole warrant entitling the holder to purchase one additional common share for a period of one year from the date of issuance at a price of $0.50 per share. Further details regarding the Private Placement, including the name of the broker/dealer involved in the Private Placement, will be disclosed in a subsequent news release and in the filing statement to be prepared and filed on SEDAR by Precision in respect of the Transaction.

The Company will pay finders' fees in connection with the private placement, which will be payable in accordance with Exchange Policies in cash and share purchase warrants.

The Company anticipates that up to approximately 10% of the units under the Private Placement will be subscribed for by non arm's length parties (consisting of current insiders of Precision, persons who will be insiders on closing of the Transaction and members of their immediate families).

The resulting issuer intends to use up to $2,500,000 of the funds available to the resulting issuer following the completion of the Transaction, including from the Private Placement, to develop and produce a superior, MindCare Centres branded rTMS unit, to continue patent work, and to establish additional clinics.

Closing Conditions for the Transaction

Completion of the Transaction is subject to a number of conditions, including, without limitation (a) completion of satisfactory due diligence reviews by each of Precision and NPTx, as applicable; (b) the execution of a definitive agreement for the Transaction on or before September 23, 2009; (c) completion of the concurrent Private Placement; (d) NPTx having not more than 119,034 NPTx Shares issued and outstanding on the closing of the Transaction; (e) availability of prospectus and registration exemptions under applicable securities laws for the Transaction; (f) receipt of all required governmental, regulatory or third party consents or approvals, including the Exchange acceptance of the Transaction and any applicable shareholder approvals; (g) completion of the Transaction on or before December 31, 2009; (h) the absence of any material adverse change in NPTx's financial condition, assets or liabilities before the closing of the Transaction; and (i) certain other conditions.

Precision will pay finders' fees in connection with the Transaction by the issuance of a total of 1,000,000 shares of Precision to be issued on closing of the Transaction, subject to regulatory approval. The finders, who are at arm's length to Precision, introduced NPTx to Precision.

Directors of the Resulting Issuer Post-Transaction

It is anticipated that, upon completion of the Transaction, the Board of Directors of the resulting issuer will be comprised of the sole current director of NPTx, four associates or advisors of NPTx, and two current directors of Precision, as follows:

Iain Glass, B.Sc., B.Sc.P., President, CEO and Director

Mr. Glass is the founder of NPTx and has an educational background in neurophysiology, nuclear medicine (brain imaging) and neuropharmacology. He has been the CEO of MindCare Centres in Vancouver, B.C. since April 2000, and devotes 100% of his time to NPTx.

Edgar Kaiser, B.A., M.B.A., OBC, LL.D, Director

Mr. Kaiser has been Chairman and CEO of the Kaiser Foundation (a company committed to assisting those who face the challenge of addiction). He also acts as co-Chair of the Canadian/U.S. Business Economic Round Table on Mental Health. Mr. Kaiser has received numerous awards and honors, including an appointment as an Officer of the Order Of British Columbia.

Bruce Hosford, B.Sc.Eng., MBA, Director

Mr. Hosford was a founder of Spieker Properties, which was launched on the New York Stock Exchange through an IPO (NYSE:SPK), and served as Executive VP and Chief Investment Officer for Spieker Properties from 1993 to 1999. From May 2005 to December 2007, Mr. Hosford was Senior Vice-President and a share holder with Kennedy Associates Real Estate Counsel. Prior thereto and since January of 2008 he has been an investor in a number of entrepreneurial private companies.

Julia Levy, Ph.D, Director

Ms. Levy was a co-Founder and former CEO of Quadra Logic Technologies (a global biopharmaceutical company specializing in photodynamic therapy, a field of medicine utilizing light-activated drugs in the treatment of disease), and has obtained numerous awards and honors, including appointment as an Officer of the Order of Canada. She serves as a director on number of early-stage health science company boards.

Bill Wilkerson, Director

Mr. Wilkerson was the co-founder, and served as the CEO and President of, the Global Business and Roundtable on Mental Health and Addiction, a federal non-profit corporation, from May 1998 to April 2009. He is the author of Mental Health: The Ultimate Productivity Weapon in a Brain-Based Economy, and is a respected authority in the mental health field in Canada, the United States and the United Kingdom. Mr. Wilkerson has received several national awards for his work in the mental health field. Currently, he is a national special advisor to the RCMP on mental health issues.

Joe DeVries, Director

Mr. DeVries, the founder and current President and CEO of Precision, has over 20 years of experience as a self-employed business manager assisting public companies with start-up and development. Mr. DeVries has been the CEO and a director of TSX Venture Exchange listed Odyssey Petroleum Corp. since August 2005, and a director of TSX Venture Exchange listed Altima Resources Ltd. since May 2006.

Whitney Pansano, Director

Mr. Pansano, a current director of Precision, has 30 years of experience managing public and private companies, and was formerly the President of a publicly-traded financial institution. Mr. Pansano has been the President of Odyssey Petroleum Corp. since August 2005 and a director of Altima Resources Ltd. since May 2006. He was been President of Pan Southern Petroleum (his privately owned consulting company) located in Mississippi since 2001.

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.



Joe DeVries, President and CEO


Iain Glass, President and CEO

Forward-Looking Statements:

Certain statements in this news release may constitute "forward-looking statements" under applicable Canadian securities laws, including but not limited to: statements regarding the business and future plans of NPTx, including establishing additional MindCare Centres, obtaining FDA approvals, and creating an rTMS device; the change of name of the Company; completion of the Private Placement; obtaining Exchange and any other required approvals; and closing of the Transaction. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate" and other similar words, or statements that certain events "may" or "will" occur. These forward-looking statements are based on the opinions and estimates of management of the Company as of the date hereof, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied in the forward-looking statements, many of which are beyond the control of the Company. These risks, uncertainties and other factors include, without limitation, the Company's ability to obtain Exchange and other necessary approvals of the Transaction; the conditions to completion of the Transaction being met, including completion of satisfactory due diligence by each of the parties; ability to obtain subscribers to, and complete, the Private Placement; general economic factors; and other specific factors identified in this news release. The Company undertakes no obligation to update forward-looking statements, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release, and the TSX Venture Exchange has in no way passed upon the merits of the proposed Transaction.

Contact Information

  • Precision Enterprises Inc.
    Joe DeVries
    (604) 718-2800
    (604) 718-2808 (FAX)