Sypher Resources Ltd.
CNSX : SYP

March 18, 2014 17:00 ET

Sypher Resources Ltd.: Proposed Reverse Take-Over by Atlas Cloud Enterprises Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 18, 2014) -

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Sypher Resources Ltd. (CSE:SYP) ("Sypher") is pleased to announce that it has entered into a Share Exchange Agreement (the "SEA") with Atlas Cloud Enterprises Ltd. ("Atlas"), a private British Columbia corporation, and the shareholders of Atlas, whereby Sypher will acquire 100% of the issued and outstanding shares of Atlas in exchange for 5,000,000 common shares (the "Payment Shares") of Sypher (the "Transaction"). The Payment Shares are to be held pursuant to an escrow agreement and released to the shareholders of Atlas in accordance with Canadian Securities Exchange ("CSE") policies. Following Sypher's acquisition of Atlas, Atlas will become a wholly-owned subsidiary of Sypher.

Atlas is a start-up company that currently has no revenue, but aims to offer tailored co-location and flexible cloud computing options for small and medium businesses in Western Canada. Atlas' target market is primarily those small and medium sized businesses requiring co-location for their IT and telecom equipment. This involves providing power, cooling and bandwidth, and providing clients with off-site computer data storage as a redundant form of back-up.

The Transaction and subsequent change of control represents a "fundamental change" for Sypher under CSE Policy 8. Sypher is currently an exploration-stage resource company with option rights to the McBride gold property located in Manitoba. Upon closing of the Transaction, Sypher will become a technology company under CSE policies. The Transaction is subject to requisite regulatory approval, including the approval of the CSE and approval from the shareholders of Sypher representing at least 51% of the issued and outstanding shares of Sypher, which is anticipated to be obtained by written consent. Sypher has scheduled an annual general and special meeting of shareholders for April 11, 2014 to approve, amongst other things, a name change to Atlas Cloud Enterprises Ltd. The shareholders of Atlas have agreed that, until completion of the Transaction or termination of the SEA, they will not solicit, initiate or encourage the sale of any of the Atlas shares to a third party. Completion of the Transaction is currently expected to occur on or prior to April 30, 2014.

New Board

At the closing of the Transaction and subject to CSE approval, the management and board of Sypher will resign and a new board comprised of Messrs. Frederick R. Stearman (CEO, Director), Laurie Sadler (CFO, Director), P. Nicholas M. Glass (Director), John E. Veltheer (Director) and Martin A. Burian (Director) will be appointed. The proposed board members are the current board members of Atlas. The following represents an overview of the experience of the proposed new board members.

Frederick W. Stearman (CEO, Director)

Mr. Stearman started his career in technology in 1983 as a technical installer and computer programmer for Triad Systems in Sunnyvale, California. Triad Systems developed an advanced point of sale system of hardware and software for the automotive supply and industrial parts industry. Mr. Stearman advanced his technology experience in areas such as Novell and Ethernet and to Storage and IP Networks. He was employed by Bell Canada in the ICT (information, computer technology) department where he focused on data centres and managed services that were central to the Cloud Computing industry. Mr. Stearman has 30 years' of IT experience.

Laurie W. Sadler (CFO, Director)

Mr. Sadler holds a Masters of Business Administration from the University of Western Ontario (1972) and was a chartered accountant. He has extensive experience as a business advisor to public and private companies. He is presently President and CEO of CCT Capital Ltd. (since April 2006), a public company listed on the TSX Venture Exchange. He is formerly CFO of Coastport Capital, Inc. (May 2006 to June 2010); interim President of PMI Gold Corporation (TSXV; January 2004 to June 2004). He founded and served as Managing Partner of Sadler, Weismiller, Spencer, Chartered Accountants (1984 to 2001). He has served as a director of a number of public companies listed on the TSXV since 2004.

P. Nicholas M. Glass (Director)

Mr. Glass is a member of the Law Society of British Columbia and of the Bar of England and Wales. He presently practices as a mediator and arbitrator in labour relations disputes and civil claims in British Columbia, Canada. He currently serves as Chairman, director and member of the Audit Committee of Calico Resources Inc. (TSXV). He is a former director of the following public companies: Belvedere Resources Ltd. (TSXV), Radius Gold Inc. (TSXV), Northland Resources Inc. (TSX and Oslo), Global Election Systems Inc. (TSX and AMEX), and Tradepoint Investment Exchange (AIM).

Dr. John E. Veltheer (Director)

Dr. Veltheer has been a director and officer of various private and public companies since 1998. He is currently a director of Echelon Petroleum Corp. and White Bear Resources Inc., both listed on the TSXV. Dr. Veltheer is also a director and/or executive officer of the following private companies - Orange Minerals Corp., a company seeking to develop a kimberlite property; Critical Minerals Inc., a holding company for unexplored mineral assets; and Innovation Metals Corp., a start-up supply chain company focused on the rare earth element sector. Dr. Veltheer obtained a Bachelor of Science degree in Chemistry (Honours) from Queen's University in 1988 and his Ph.D. (Inorganic Chemistry) from the University of British Columbia in 1993.

Martin A. Burian (Director)

Mr. Burian has over 18 years' investment banking experience. Mr. Burian was most recently Managing Director of Investment Banking for Haywood Securities Inc. (2010 to mid-2013); former President of Bolder Investment Partners (2009 until its merger with Haywood Securities Inc. in 2010). He obtained his chartered accountant and chartered business valuator designation while employed by KPMG and obtained his Bachelor of Commerce from the University of British Columbia in 1986. He is currently CFO of Cap-Ex Iron Ore Ltd. (TSXV) and a director of Alberta Star Development Corp. (TSXV, Frankfurt, OTCBB), public companies.

Proposed Name Change

Following closing of the Transaction, Sypher proposes to change the Company's name to "Atlas Cloud Enterprises Ltd.".

Sypher Private Placement

As a condition of, and concurrent with closing of the Transaction, Sypher will complete a private placement to raise a minimum of $600,000 through the sale of units ("Units") at a price of not less than $0.15 per Unit; each Unit to consist of one common share and one-half of one transferable share purchase warrant ("Warrant"), each whole Warrant entitling the holder to acquire one additional common share of Sypher at not less than $0.25 per share for 24 months. Atlas will use the net proceeds of the private placement to fund its business development, including (i) completion of leasehold improvements at its business premises in Vancouver, (ii) the purchase and installation of all back-up power sources, fibre-optic connections, energy efficient in-row cooling racks, and security systems, (iii) initial marketing costs, and (iv) general and administrative costs.

On closing of the Transaction, Sypher (Atlas Cloud Enterprises Ltd.) will have a total of 16,225,000 common shares, and 2,000,000 warrants outstanding.

Certain Conditions to Transaction

The completion of the Transaction will be subject to the satisfaction of certain conditions prior to closing, including the following:

  • Atlas completing an audit of its financial statements, and completing a business plan acceptable to Sypher and the CSE;
  • all requisite regulatory approvals relating to the Transaction, including CSE conditional acceptance, having been obtained;
  • Sypher completing the aforementioned private placement;
  • the purchase by certain shareholders of Atlas of 4,000,000 previously issued and outstanding common shares in the capital of Sypher owned by five or fewer existing shareholders of Sypher at a deemed price of $0.07 per share.

About Atlas

Atlas is a newly formed private British Columbia company with no current clients and no current revenues. Atlas was created to deliver cutting-edge, cost-effective co-location data backup and computing services initially to the metropolitan Vancouver business community. Atlas' operational site is located at 308 East 5th Ave in Vancouver. Atlas has secured all the necessary elements to provide its services, including all the requisite electrical power, high cooling capacity (which itself requires power), backup power systems (large scale battery systems and backup diesel generators), fire containment systems, Internet bandwidth, separate security system, advanced diagnostics and the personnel to maintain these operational environments.

Atlas markets itself to the small and medium market segment in terms of IT usage, specifically for industries that need hosted equipment reliant on high power and backup availability, or large bandwidth requirements that need redundancy. Users that also require short term computing power to suit their business cycle will be targeted, such as video rendering and the seasonality off-loads of e-commerce.

Further Information

All information contained in this news release, with respect to Sypher and Atlas, was supplied by the parties respectively, for inclusion herein. Each party and its directors and officers have relied on the other party for any information concerning the other party.

On behalf of the Board,

Richard Graham, President and Chief Executive Officer

Completion of the proposed transaction is subject to a number of conditions, including but not limited to, CSE acceptance. The Transaction cannot close until all such approvals have been obtained and the other necessary conditions of closing are fulfilled or waived by the parties entitled to do so. There can be no assurance that the transaction will be completed as proposed or at all.

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

Investors are cautioned that, except as disclosed in any management information circular or listing 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.

FORWARD-LOOKING INFORMATION: Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Sypher, including but not limited to, the uncertainty of the Transaction proceeding, the impact of general economic conditions, industry conditions, dependence upon regulatory and shareholder approvals, the execution of definitive documentation and the uncertainty of obtaining additional financing. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake any obligations to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.

Contact Information

  • Sypher Resources Ltd.
    Richard Graham
    (604) 488-8717