Tilting Capital Corp.
NEX BOARD : TLL.H
TSX VENTURE : TLL.H

July 02, 2015 14:02 ET

Tilting Capital Corp. Announces Transaction with ArcScan, Inc.

CALGARY, ALBERTA--(Marketwired - July 2, 2015) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

Tilting Capital Corp. (the "Corporation" or "Tilting") (NEX:TLL.H) is pleased to announce that the Corporation has entered into a definitive agreement (the "Definitive Agreement") on June 22, 2015 with ArcScan, Inc. ("ArcScan"), a private company incorporated under the laws of the State of Delaware, whereby the parties have agreed to complete a business combination (the "Transaction") pursuant to which the Corporation will acquire all of the outstanding shares of common stock (the "ArcScan Common Shares") and shares of preferred stock (the "ArcScan Preferred Shares") of ArcScan. Pursuant to the terms of the Transaction, former stockholders of ArcScan will receive common shares of Tilting (the "Tilting Shares") on a one-for-one basis. The Transaction, when completed, will be considered a "Reverse Takeover" for the purposes of the TSX Venture Exchange (the "TSXV") and, subject to final acceptance by the TSXV, will result in the listing of the Resulting Issuer (as defined herein) as a Tier 2 Technology Issuer on the TSXV. For the purposes of this press release, the term "Resulting Issuer" means Tilting upon completion of the Transaction.

About ArcScan, Inc.

ArcScan was incorporated in early 2007 and acquired the ophthalmic imaging and measurement technology and patents then owned by another arm's length private company. ArcScan has invested approximately US$10,000,000 in capital and significant time in extending and refining this technology and positioning ArcScan for commercialization. ArcScan's goal is to develop and commercialize best-in-class imaging devices for the large ophthalmic markets, with extensions of its core high frequency ultrasound technology opening potential markets in other segments of medical imaging.

ArcScan is currently focused on the development and commercialization of the ArcScan Insight 100 device, its ultrasonic arc scanner that uses computer controlled arc scanning technology to perform comprehensive eye exams for anterior segment diagnosis and surgery. ArcScan's proprietary technology utilizes very high frequency digital ultrasound to provide precision imaging and measurement and allows repeatability and reproducibility that cannot be achieved using other existing optical or acoustic technology.

ArcScan believes that its technology has the potential to: (i) expand the number of eligible candidates for LASIK (laser-assisted in situ keratomileusis) procedures and make LASIK procedures safer; and (ii) enable the sizing and fitting of lens and other implants with much higher success rates through superior measuring and prediction of effective implant position, a major factor in the treatment of cataracts and glaucoma.

Ultimately, ArcScan's goal is to make its ArcScan Insight 100 the imaging device of choice across ophthalmology, reducing the need for multiple devices for different procedures.

The ArcScan Insight 100 uses technology and patents initially developed at Cornell University and Riverside Research Institute over which ArcScan has exclusive licenses and which it has extended and added to through an additional seven issued patents and five patents pending. The ArcScan Insight 100 is based on a prototype device (Artemis 1, which is still in use) and second generation device (Artemis 2), which received FDA 510(k) and CE (Conformité Européene) mark clearances. ArcScan is targeting late summer / early fall for its FDA and CE mark submissions for its device with commercialization currently anticipated for late 2015 / early 2016.

ArcScan operates from its head office located in Golden, Colorado, a suburb of Denver, where it leases office space in the same complex as its arm's length development and manufacturing partner, Evergreen Research Inc. ("Evergreen"). All manufacturing, production control, engineering, supplier management and quality/regulatory functions have been subcontracted to Evergreen, which is a leading contract developer and manufacturer specializing in medical devices. Evergreen works with a number of the leading companies in the medical devices sector and developed ArcScan's current operating prototypes. Evergreen's deep knowledge of the product, combined with its sourcing abilities, is expected to help drive significant cost savings as sales volumes build. Evergreen provides ArcScan with bench-strength and flexibility without the costs associated with an in-house development team.

Selected ArcScan Financial Information

The following table contains selected historical financial and operating information with respect to ArcScan and has been derived from ArcScan's management prepared unaudited financial statements as at and for the three months ended March 31, 2015 and as at and for the year ended December 31, 2014 prepared in accordance with International Financial Reporting Standards.

Unaudited
Mar. 31, 2015
(US$)
Unaudited
Dec. 31, 2014
(US$)
Operating expenses 586,044 419,416
Net loss and comprehensive loss (914,635 ) (2,360,524 )
Basic and diluted net loss per common share (0.03 ) (0.14 )
Total assets 696,124 109,636
Total liabilities 960,554 7,838,689
Share capital 18,365,534 7,563,533
Deficit (18,629,964 ) (15,292,586 )
Total shareholders' deficit (264,430 ) (7,729,053 )

Transaction Terms

The purchase price for the ArcScan Common Shares and ArcScan Preferred Shares will be satisfied by the issuance of approximately 61,432,774 Tilting Shares, exclusive of the Private Placement (as defined herein). The acquisition will be effected by way of a triangular merger in accordance with Delaware law, whereby a wholly-owned subsidiary of Tilting will merge with and into ArcScan, in consideration for which (i) each holder of ArcScan Common Shares will be issued one Tilting Share for each one ArcScan Common Share held by such holder immediately prior to the merger, and (ii) each holder of ArcScan Preferred Shares will be issued one Tilting Share for each one ArcScan Preferred Share held by such holder immediately prior to the merger.

The deemed price of each Tilting Share issued in connection with the Transaction will be Cdn$0.15/USD$0.125, resulting in an aggregate purchase price of approximately Cdn$9,214, 916 for the acquisition of ArcScan, which is exclusive of the Private Placement details of which are set out below.

In connection with the Transaction and subject to required shareholder and regulatory approvals, Tilting will be continued into Delaware under the Delaware General Corporation Law (the "Continuance") and will change its name to "ArcScan Medical Imaging Inc." (the "Name Change"). Following the completion of the Transaction, ArcScan will merge with and into a newly formed Delaware limited liability company and the resulting entity will be wholly-owned by the Resulting Issuer and the Resulting Issuer will carry on the business of ArcScan.

In order to accelerate ArcScan's current business plan and to target new markets and as a condition to the closing of the Transaction, it was agreed that a brokered equity financing (the "Private Placement") for gross proceeds of a minimum of US$3,000,000 (the "Minimum Private Placement") will be completed. Further information with respect to the Private Placement will be provided a future news release.

Conditions to the Completion of the Transaction

The obligations of Tilting and ArcScan to consummate the Transaction are subject to: (i) receipt of all requisite regulatory (including the TSXV), shareholder and third-party approvals and consents; (ii) no material adverse effect on either Tilting or ArcScan having occurred; (iii) ArcScan completing the Minimum Private Placement; and (iv) other customary conditions for a transaction of this nature.

Arm's Length Transaction

None of the insiders of Tilting or their associates or affiliates has any interest in the business of ArcScan or is otherwise an insider of, or has any relationship with, ArcScan or its direct or indirect shareholders, and the Transaction is an "Arm's Length Transaction" as defined under TSXV policies.

Outstanding Securities

As at the date hereof, there are 20,419,370 Tilting Shares, 32,053,188 ArcScan Common Shares, and 22,129,570 ArcScan Preferred Shares issued and outstanding. Prior to closing the Transaction, it is expected that an additional 7,250,016 ArcScan Preferred Shares will be issued at a price of US$0.125 per share pursuant to subscription agreements previously entered into by ArcScan with certain private investors. Following the completion of the Transaction, it is expected that the Resulting Issuer will have approximately 81,852,144 common shares issued and outstanding, exclusive of securities issued in connection with the Private Placement.

Each outstanding option to purchase ArcScan Common Shares will be exercisable into Tilting Shares on the same terms and conditions as the original option. Each currently outstanding Tilting option will be exercisable into Tilting Shares on the same terms and conditions as the original option. As of the date of this press release, there are 1,784,000 stock options of Tilting and 9,000,000 stock options of ArcScan outstanding.

It is expected that Mr. Allan Brown, a resident of the United States, will, after giving effect to the Transaction, beneficially own, control or direct, directly or indirectly, approximately 36,348,458 common shares of the Resulting Issuer, which will represent approximately 44.4% of the outstanding shares of the Resulting Issuer (exclusive of the securities to be issued in connection with the Private Placement). It is expected that Mr. Brown will be a control person of the Resulting Issuer within the meaning of applicable Canadian securities laws.

Support Agreements

ArcScan shareholders holding approximately 57% of the outstanding ArcScan Common Shares and 84% of the outstanding ArcScan Preferred Shares, and Tilting shareholders holding approximately 26.8% of the outstanding Tilting Shares, have entered into support agreements with ArcScan and Tilting pursuant to which they have agreed, among other things, to support the Transaction.

Directors and Officers of the Resulting Issuer

Upon completion of the Transaction, the directors and senior officers of the Resulting Issuer are anticipated to include:

Name Position with the Resulting Issuer Present and Principal Occupation During the Past 5 years
Andrew K. Levien President, Chief Executive Officer and Director CEO of ArcScan since April 2012. Operating Partner at Iron Range Capital, LLC (a private equity firm) since 2013. President of Norgren Fluid Controls (Norgren Limited) (a pneumatics and industrial controls company) and Global VP Operations Norgren (including Life Science business sector) 2005 to 2009. SVP and General Manager roles at Emerson Electric Co. (an electrical equipment manufacturer) 1993 to 2005.
Peter M. Ballachey Chief Financial Officer Appointed CFO of ArcScan in May 2015. Secretary-Treasurer and co-founder of CRC Rail Management Services Ltd. (a contract railroad crewing company) since 2008; Director and Chief Financial Officer of Tractive Power Corporation (a locomotive design and construction company) since 2010, and Chief Financial Officer of Underground Energy Inc. (oil and gas exploration and development company) 2007 - 2015.
Dan Z. Reinstein Chief Medical Officer Practicing ophthalmologist and co-founder and medical director at the London Vision Clinic since August 2002.
John D. Watson Vice President, Technology Chairman of ArcScan since April 2009; Director since Feb 2007; Corporate Secretary since Jan 2008; and Director of Technology Strategy since December 2014. Intellectual property and technical consultant to OSUM Oil Sands Corp. (a heavy oil exploration and development company) since 2005; ICRTec, Inc. (a gas turbine engine company) since 2009; and Tractive Power, Inc.(a locomotives design and construction company) since 2010.
Scott Hayduk Director Chief Executive Officer and Chief Financial Officer of Tilting since January 2013. 15 years corporate advisory and investment banking experience. Former investment banker and previously held senior level positions at both boutique and large-independent firms.
Craig Engelfried Director Director of ArcScan since March 2015. Co-founder and Managing Director at the London Vision Clinic since August 2002.
Michael Kobler Executive Chairman Director of ArcScan since February 2014. Senior Associate with McMillen Jacobs Associates, Inc., (an engineering and construction firm) since March 2014 and President and CEO of Underground Energy, Inc. (oil and gas exploration and development company) since January 2007.
Katrin Pucknat Director Director of ArcScan since September 2010. Currently works as Director - Marketing Sleep and Diagnostics Europe for ResMed Inc. (breathing and sleep support product company) since May 2011; previously VP Marketing for Topcon Medical Systems, Inc., (a diagnostic equipment for ophthalmology company) 2009-11.

Tilting Shareholder Meeting

The shareholders of Titling will be asked to approve the Name Change and the Continuance at the annual and special meeting to be held on July 24, 2015. Tilting intends to apply to the TSXV for a waiver from the requirement that Tilting obtain shareholder approval for the Transaction. There is no assurance that such waiver will be granted and, if not granted, Tilting will also seek shareholder approval for the Transaction.

Sponsorship

Tilting intends to apply to the TSXV for an exemption from sponsorship requirements. There is no assurance that such exemption will be granted and, if not granted, Tilting will be required to retain a sponsor for the Transaction.

Trading Halt

Trading in the Tiling Shares on the TSXV is halted and may remain so until completion of the Transaction.

Reader Advisory

Certain information set forth in this news release contains forward-looking statements or information ("forward-looking statements"), including details about the Transaction. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, operational risks, competition from other industry participants, stock market volatility, the risks that the parties will not proceed with the Transaction, that the ultimate terms of the Transaction will differ from those that currently are contemplated and the ability to access sufficient capital from internal and external sources. Although the Corporation believes that the expectations in its forward-looking statements are reasonable, its forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. Risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our public disclosure documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Corporation does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and shareholder approval (if required). The Transaction cannot close until shareholder approval is obtained (if required). 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 on. Trading in the securities of Tilting Capital Corp. should be considered highly speculative.

Neither the NEX Board nor the TSX Venture Exchange Inc. has in any way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this press release.

All information contained in this press release with respect to the Corporation and ArcScan was supplied by the Corporation and ArcScan, respectively, for inclusion herein.

This news release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States or to or for the account or benefit of U.S. persons (as such terms are defined in Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")), absent registration or an exemption from registration. The securities offered have not been and will not be registered under the U.S. Securities Act or any state securities laws and, therefore, may not be offered for sale in the United States, except in transactions exempt from registration under the U.S. Securities Act and applicable state securities laws.

Neither the NEX Board, 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 press release.

Contact Information

  • Tilting Capital Corp.
    Scott P. Hayduk
    (403) 444-7845