Veritek plans QT purchase of Omni-Lite's E-Form unit
Omni-Lite Industries Canada Inc.
May 2, 2006
Veritek Technologies Inc. has provided details outlining its proposed qualifying transaction with Omni-Lite Industries Canada Inc.'s Omni-Lite E-Form Technologies Inc. (E-Form).
The corporation has entered into a letter of intent dated April 11, 2006, for the acquisition of all the issued and outstanding shares in the capital of E-Form. In exchange for the acquisition of the E-Form shares, the corporation proposes to issue 12 million common shares at a deemed price of 25 cents per Veritek share. After the completion of the qualifying transaction, the corporation will have approximately 18.2 million common shares issued and outstanding. After the completion of the contemporaneous financing contemplated at the time of the qualifying transaction, as described below, the corporation will have approximately 22.75 million common shares issued and outstanding.
E-Form is a private company incorporated in 2005 under the California Corporations Code with offices in Cerritos, Calif. E-Form was capitalized with over $583,000 in investment from 14 investors including Formed Fast International Inc., a subsidiary of Omni-Lite Industries Canada. E-Form is developing a series of technologies to provide nanostructured materials to customers in the aerospace, military, resource development, sports and recreation, and medical industries. The largest shareholders of E-Form include Formed Fast International (approximately 25 per cent), Dr. Patrick B. Berbon (approximately 25 per cent) and David F. Grant (approximately 12 per cent). The other 11 investors of E-Form each own less than 10 per cent of the company. Dr. Berbon is a resident of the United States and Mr. Grant is a resident of Singapore.
The following financial results are from unaudited statements prepared by the management of E-Form and are presented in Canadian dollars. At Dec. 31, 2005, E-Form had over $380,260 in assets, revenues of $11,500 from its first pilot project and it reported a net loss of $38,338 for its first fiscal period. Working capital on Dec. 31, 2005, was $221,362. Since the Dec. 31 year-end, E-Form has rapidly increased its research activities and purchased the business operations of the Due Diligence Group Cryogenics (DDG) of Santa Barbara, Calif., from Dr. Berbon. The intellectual property and product experience of DDG were exchanged for 500,000 common shares of E-Form. DDG brings significant expertise in strength enhancement through grain-size reduction and, in particular, the development of thermally stable high-strength materials from the cryogenic milling of metallic and composite powders. E-Form and DDG currently have five development contracts, with a total value of approximately $100,000, with customers that include Boeing, the University of California Davis and the Alberta Research Council. DDG has recently completed projects for Rockwell and General Electric among others. E-Form's facility in Cerritos, Calif., includes approximately 3,500 square feet of office space and shared laboratory and manufacturing space with Omni-Lite Industries California Inc. As of April, 2006, the consolidated company had assets of $473,694 and working capital of over $271,465. Revenues of DDG from January, 2006, to April, 2006, were $66,556.
The proposed acquisition is subject to not less than 100 per cent of the E-Form shares being acquired by the corporation. The corporation intends that concurrently with the qualifying transaction it will conclude a non-brokered private placement of 4.55 million units at a price of 25 cents per unit. Each unit will consist of one common share of the corporation and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one common share at a price of 45 cents for a period of 18 months following the closing date. If each warrant is exercised, an additional $1,023,750 in gross proceeds will be realized upon the issuance of 2,275,000 common shares. The proceeds of the qualifying transaction and private placement will be used to further the corporation's research and development efforts into nanostructured materials. Concurrently with the completion of the qualifying transaction, the corporation plans to issue approximately 1.3 million options to directors, management and employees exercisable at a price of 25 cents per common share. The proposed transaction is not at arm's length in that David F. Grant, Donald J. Kelly, Norm Goodrich and David B. Grant are shareholders, directors and/or officers of both the corporation and E-Form.
The terms of the qualifying transaction also contemplate that Veritek will change its name to California Nanotechnologies Corp. (the publicly traded company) and E-Form would change its name to California Nanotechnologies Inc. California Nanotechnologies Inc. would be the operating subsidiary and would be headquartered in the heart of the aerospace industry in Southern California. The management of California Nanotechnologies Corp. would include David F. Grant, PEng, as the chief executive officer, Dr. Patrick Berbon as the president, and Timothy Wang, PEng, as secretary, treasurer and chief financial officer. The proposed board of directors of California Nanotechnologies Corp. would include David F. Grant, Dr. Patrick B. Berbon, Donald Kelly, Timothy Wang and David B. Grant. Mr. Grant received his bachelor of science degree in civil engineering at the University of Calgary in 1975, following which he attended graduate studies in oceanography at the University of British Columbia. Over the next 16 years, Mr. Grant worked in various management capacities in the areas of marketing and business development. While employed in the aerospace industry, Mr. Grant worked extensively in South America and North America, Africa, and Asia. Mr. Grant founded Omni-Lite Industries Inc. (which later merged to form Omni-Lite Industries Canada Inc.) in 1992. Mr. Grant was the founder of TSX Venture Exchange-listed junior capital pool company Multi-Tek Technologies Inc. which was amalgamated with Tactex Controls Inc. in July of 2000. Mr. Grant was responsible for the early development of both Omni-Lite E-Form Technologies and Veritek Technologies, and currently is president and chief executive officer of both companies. Mr. Grant is chairman of the board and chief executive officer of Omni-lite Industries Canada.
Dr. Berbon received his PhD in material science and engineering from the University of Southern California in 1998, having done his dissertation on equal-channel angular pressing, a technique used in the production of high-strength ultrafine grain materials. Over the next seven years he worked for Rockwell Scientific in California, specializing in the development of small-grain-sized materials for the aerospace and military industries. In 2005, Dr. Berbon spun DDG Cryogenics (DDG) out of Rockwell with the sponsorship of the Boeing Co. Over the last year, DDG has completed several projects with a focus on cryogenically milled metallic and composite powders. Dr. Berbon has been active in the field of nanotechnology for the past 10 years, including consulting assignments with leading United States nanotechnology companies and the organization of nanotechnology symposiums. He joined E-Form as vice-president of research and development, and principal investigator, in early 2006. Mr. Kelly is counsel with the firm Miles, Davison LLP of Calgary, Alta., and has been practising corporate and commercial law for almost 50 years. For more than 17 years, he was a director of Startech Energy Inc., a company trading on the Toronto Stock Exchange until its acquisition by Arc Resources Ltd. in January, 2001. Mr. Kelly currently sits on the board of Omni-Lite Industries Canada, Tactex Controls Inc. and Veritek Technologies Inc. Mr. Wang received his bachelor's degree in applied science in chemical engineering from the University of Waterloo in 1995. Over the next eight years, Mr. Wang worked in various roles in process and project engineering, product development, and in sales and marketing. He joined Omni-Lite in September, 2001, as sales and business development manager. During his tenure, Mr. Wang has transitioned his leadership and problem-solving skills into the area of finance and corporate affairs. As chief financial officer of Omni-Lite Industries Canada, Mr. Wang is responsible for financial reporting, overseeing accounting functions and special projects. Mr. Grant received his bachelor's degree in geology from the University of Alberta in 1951, and was active in the oil and gas industry in Western Canada and Internationally for over 35 years. Mr. Grant was on the board of Omni-Lite Industries Corp., Multi-Tek Technologies Inc., and is now on the board of Veritek Technologies.
The completion of the qualifying transaction is subject to the approval of the TSX-V and all other necessary regulatory approvals. The completion of the qualifying transaction is also subject to additional conditions precedent, including shareholder approval of the corporation, satisfactory completion of due diligence reviews by the parties, the board of director's approval of each of the corporation and E-Form, the entering into of a formal agreement and certain other conditions. Blackmont Capital Inc., subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with this transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or likelihood of completion.
It is anticipated that trading in Veritek Technologies, on the TSX-V, will resume on Thursday, May 4, 2006, at 7:30 PST.
Except for historical information contained herein this document contains forward-looking statements. These statements contain known and unknown risks and uncertainties that may cause the company's actual results or outcomes to be materially different from those anticipated and discussed herein.
THE TSX VENTURE EXCHANGE NEITHER APPROVES NOR DISAPPROVES OF THE
INFORMATION CONTAINED HEREIN.
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