VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 16, 2016) - Yuntone Capital Corp. ("Yuntone" or the "Company") (NEX:YTC.H) is pleased to announce that it has entered into a non-binding letter of intent dated September 15, 2016 (the "Letter of Intent") with Connection Services Group, Inc. ("CSG"), a company based in Colorado, USA, to complete a going public transaction for CSG (the "Proposed Transaction") by way of a reverse takeover of Yuntone, a capital pool company currently listed on the NEX. It is currently anticipated that the Proposed Transaction will be a merger whereby Yuntone and CSG would combine to form an entity (the "Resulting Issuer") whose name will be determined at a later date. The Resulting Issuer will carry on the business of CSG as currently constituted and planned. The final structure of the Proposed Transaction is subject to receipt of tax, corporate, and securities law advice by both Yuntone and CSG. The Letter of Intent was negotiated at arm's length and the Transaction is not expected to require approval of Yuntone shareholders.
Connection Services Group is a an innovative company founded by a management team with extensive experience in providing end-to-end solutions deploying wireless broadband systems, satellite, and fiber, as well as in the acquisition, creation and distribution of life-changing content, application and services to world markets.
Terms of the Transaction
Pursuant to the terms of the Letter of Intent, CSG's outstanding common shares (the "CSG Shares") at closing will be exchanged for common shares of Yuntone on a one-for-one basis, subject to a maximum of 15,375,000 CSG shares being outstanding immediately prior to completion of the Proposed Transaction, resulting in the current shareholders of CSG (the "CSG Shareholders") holding approximately 81.5% of the issued and outstanding shares of the Resulting Issuer on a post-transaction and non-diluted basis.
In addition, up to a maximum of 1,200,000 incentive stock options of CSG will also be exchanged for options of the Resulting Issuer. The CSG Shares to be issued to the shareholders of CSG will be subject to the hold period required under applicable securities legislation and may be subject to escrow restrictions imposed by the Exchange.
Pursuant to the Letter of Intent, Yuntone plans to conduct a private placement to raise up to $75,000 (the "Interim Financing") through issuance of 1,500,000 Yuntone common shares at $0.05 per share before September 30, 2016. Yuntone intends to use the proceeds of the Interim Financing to pay for costs and expenses to be incurred related to the Proposed Transaction. Contemporaneously with the completion of with the Proposed Transaction, a non-brokered concurrent financing of up to $500,000 will also be completed through issuance of 2,000,000 Yuntone common shares or CSG Shares at $0.25 per share.
If the Proposed Transaction is completed, the board of directors of the Resulting Issuer will consist of no fewer than five directors, four of whom will be nominated by CSG and one by Yuntone. In addition, if the Proposed Transaction is completed, it is expected that a new auditor of the Resulting Issuer will be appointed, and that the name of the Resulting Issuer will be changed to a name designated by CSG.
If completed, the Proposed Transaction will constitute Yuntone's Qualifying Transaction (as defined in Policy 2.4 of the TSX Venture Exchange (the "Exchange") Corporate Finance Manual). A comprehensive press release with further particulars relating to the Proposed Transaction will follow in accordance with the policies of the Exchange. Yuntone's common shares are currently halted from trading, and trading in Yuntone's common shares is expected to remain halted pending completion of the Proposed Transaction.
Completion of the Proposed Transaction is subject to a number of conditions including, but not limited to, completion of satisfactory due diligence, completion of CSG's initial capital and expansion plans, the execution of a definitive agreement in respect of the Proposed Transaction, regulatory approvals, Exchange acceptance, the approvals of the shareholders of either or both CSG and Yuntone of the Proposed Transaction (if necessary) and, if applicable pursuant to Exchange requirements, filing of a sponsorship report. There can be no assurance that the Proposed 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 Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Investment and trading in securities of a capital pool company should be considered highly speculative.
Neither the NEX nor the Exchange has in any way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release. Neither NEX, the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release. Additional information identifying risks and uncertainties is contained in filings by Yuntone with the Canadian securities regulators, which filings are available at www.sedar.com.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
ANY SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
ON BEHALF OF THE BOARD OF DIRECTORS
Stuart Wooldridge, President, CEO and Director
Notice on forward-looking statements:
This release includes forward-looking statements regarding Yuntone, CSG, and their respective businesses. Such statements are based on the current expectations of the management of each entity. The forward-looking events and circumstances discussed in this release, including completion of the Proposed Transaction, may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding economic factors and the equity markets generally. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Yuntone and CSG undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Yuntone is a capital pool company governed by the policies of the NEX and the Exchange. Yuntone's principal business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction, as referred to above.
Contact Information:
stuart@orcastrategy.com