VendTek Systems Inc. Closes Sale of its Canadian Business to
Payment Source Inc.
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 3, 2014) -
VendTek Systems Inc. (TSX-VENTURE:VSI) (the "Company"), a developer
and licensor of software for the global prepaid and financial
services markets, announces that effective January 31, 2014 it has
closed the sale of substantially all of its Canadian business
operations (the "Canadian Business") to Payment Source Inc. ("PSI")
pursuant to an asset purchase agreement between the Company and PSI
dated December 18, 2013 (the "Agreement"). PSI is wholly-owned by
George DeMarchi, the Company's former Senior Vice President of
Canadian Operations.
Under the terms of the Agreement, the Company has sold the
Canadian Business (assets and associated liabilities) constituting
its Now Prepay division to PSI in exchange for $4,500,000 and the
assumption of up to $1,500,000 of working capital deficit,
excluding cash and cash equivalents (the "Working Capital"), for a
total consideration of $6,000,000 (the "Purchase Price"). Payment
arrangements for the Purchase Price are as follows:
(a) a deposit of $200,000, which was paid to the Company on
November 15, 2013;
(b) a cash payment of $3,850,000, and $24,142 in closing
adjustments which was paid at closing; and
(c) a further $450,000 (the "Holdback"), to be paid within 90
days following the closing of the transaction.
The Holdback is subject to further adjustment based on the
Working Capital of the Canadian Business being either (i) less than
-$1,500,000 at closing, in which case the Purchase Price will be
reduced by the amount that Working Capital is less than
-$1,500,000; or (ii) greater than -$1,000,000 at closing, in which
case the Purchase Price will be increased by the amount that
working capital is greater than -$1,000,000. Such adjustment will
take place within 90 days following the closing of the
transaction.
The transaction contemplated by the Agreement required the
approval of the shareholders of the Company by way of a special
resolution requiring two-thirds of the votes cast on the matter to
vote in favour of the transaction. The Company obtained such
shareholder approval at an annual general and special meeting of
its shareholders held on January 28, 2014, when shareholders voted
99% in favour of pursuing the transaction.
Effective on the closing, George DeMarchi has resigned as Senior
Vice-President of Canadian Operations for the Company. Mr. DeMarchi
has played a pivotal role in the operation of the Canadian
Business, and the Company anticipates a smooth transition with PSI
going forward. The Company thanks Mr. DeMarchi for his years of
service to the organization, and wishes him the very best in his
new business endeavour.
The Company intends to use the proceeds from the sale to support
its ongoing operations and to further its growth strategy in
Brazil. The Company believes that its Brazilian operation holds
tremendous potential. This proposed transaction will allow the
Company to refocus its resources on this important growth
opportunity while simplifying its overall operating structure. Over
the long-term, Vendtek's strategy is to refocus on licensing its
e-Fresh™ transaction processing software internationally and move
away from the direct operating model, while retaining its
established licensing relationships as has been accomplished with
this transaction.
In connection with this transaction, PSI has agreed to license
and use VendTek's e-Fresh™ transaction processing software for a
minimum two-year period to manage its Canadian operations for its
suppliers and merchant customers under VendTek's 'Now Prepay'
brand.
For more information about this transaction, please contact
Irwin Studen, Interim CFO at 1-800-806-4958 or
istuden@vendteksystems.com.
About VendTek
VendTek is headquartered in Vancouver, British Columbia, Canada,
and develops and licenses automated transaction system software and
supporting technologies that improve the efficiency of product
delivery, reduce costs to clients and offer superior safety
measures. VendTek's customers, its division, Now Prepay and its
subsidiaries are using e-Fresh™ software to build electronic,
prepaid services networks, which enable consumers to purchase
prepaid services via point-of-sale terminals (POS) and self-serve
terminals connected to a central e-Fresh™ server. This system
creates significant value through improved efficiencies compared to
the traditional distribution paradigm. e-Fresh™ reduces shrinkage
and inventory requirements while improving consumer access to
prepaid services by completely eliminating physical cards and
vouchers. For further information please visit the Company's
websites www.vendteksystems.com and www.nowprepay.com.
Forward-Looking Information
This news release contains statements which are not current
statements or historical facts and are "forward-looking
information" within the meaning of applicable Canadian securities
laws. All statements, other than statements of historical fact,
contained in this news release constitute forward-looking
information. Wherever possible, words such as "plans", "expects" or
"does not expect", "budget", "forecasts", "projections",
"anticipate" or "does not anticipate", "believe", "intent",
"potential", "strategy", "schedule", "estimates" and similar
expressions or statements that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved and other similar expressions have been used to identify
forward-looking information. These forward-looking statements
relate to, among other things, the anticipated use of proceeds, the
potential of the Brazilian operations, and the transition with PSI
going forward.
Although the forward-looking information in this news release
reflects the Company's current beliefs on the date of this news
release based upon information currently available to management
and based upon what management believes to be reasonable
assumptions, the Company cannot be certain that actual results,
performance, achievements, prospects and opportunities, either
expressed or implied, will be consistent with such forward-looking
information. By its very nature, forward-looking information
necessarily involves significant known and unknown risks,
assumptions, uncertainties and contingencies that may cause the
Company's actual results, assumptions, performance, achievements,
prospects and opportunities in future periods to differ materially
from those expressed or implied by such forwardlooking information.
These risks and uncertainties include, among other things, revenue
growth, operating results, the market demand for the Company's
products, product development, and litigation as well other factors
described in the Risks Related to our Business Section in
the Company's 2013 annual Management Discussion and Analysis. There
may be other factors that cause results, assumptions, performance,
achievements, prospects or opportunities in future periods not to
be as anticipated, estimated or intended.
There can be no assurances that forward-looking information and
statements will prove to be accurate, as many factors and future
events, both known and unknown could cause actual results,
performance or achievements to vary or differmaterially, from the
results, performance or achievements that are or may be expressed
or implied by such forwardlooking statements contained in this news
release. Accordingly, all such factors should be considered
carefully when making decisions with respect to the Company, and
prospective investors should not place undue reliance on
forwardlooking information. The Company assumes no obligation to
update or revise forward-looking information to reflect changes in
assumptions, changes in circumstances or any other events affecting
such forward-looking information, except as required by applicable
law.
Neither 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.
VendTek Systems Inc.Samantha White604-805-4653 or
1-800-806-4958investment@vendteksystems.comwww.vendteksystems.com /
www.nowprepay.com
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