FOR IMMEDIATE RELEASE
Empower Technologies™ Signs Definitive Agreement to Acquire a Telecommunication Provider
April 10, 2013 – Richmond, British Columbia, Canada – Empower Technologies Corporation (TSX.V: EPT) (“Empower” or the “Company”) is pleased to announce that it has signed a definitive share purchase agreement (“Definitive Agreement”) with a privately held corporation (the “Vendor”), to purchase 100% of its wholly owned subsidiary (the “Telco”) for Empower shares. Due to the confidentiality agreement with the Vendor and the competitive nature of their business, the name of the Vendor and its subsidiary are withheld at this time until further notice.
The Telco is a CRTC approved Long Distance Telecommunications Company in Canada. The Telco provides retail telecommunications services using Cisco’s SIP phones and devices, as well as bi-lateral wholesale long distance traffic termination for national and international carriers using multiple class 4 softswitches to transit VoIP traffic between carriers and class 5 softswitches for local and long distance telephony services and additionally it provides services such as IP PBX (“Internet Protocol Private Branch Exchange”) features, call center services, calling card platform, types of authorization to end-users and corporate clients. In general, softswitch software enables a computer to behave like a physical phone switch in a telephone network central office.
The Telco’s telephony products and services include legacy fixed line PSTN (“Public Switched Telephone Network”) and Voice-over-Internet Protocol (“VoIP”) based Long Distance telephone services, ADSL internet access service, prepaid telephone cards, postpaid long distance and international call back services. The Telco has delivered over 600 state-of-the-art Smart Business VoIP phone services to the Small Medium Enterprises (“SME”) market in Canada. The Telco currently has annual revenue of around $2 million based on existing business and is cash flow positive. Plans are now in place to deploy Managed Business Solutions to the SME market starting mid 2013 across Canada to grow revenue.
By acquiring the Telco, Empower will gain a very strong and recognizable brand in the Canadian telecommunication market, a sale and marketing platform for its embedded and video technologies, products and services and a telecommunication operating system platform. It also increases the revenue base of the Company. The acquisition will provide the Telco ability to access the growth capital from the public market when the needs arise. This ability will enable the Telco to grow its VoIP phone services and fuel its expansion to full service SME Information Technology (“IT”) and managed business solution market that include security and surveillance, cloud based applications and other IT products and services. The Telco will also leverage on Empower’s embedded hardware and software expertise to offer state-of-the-art communication, mobile and video technologies, products and services to their customers. For example, Empower’s Image Signal Correction (ISC) enabled surveillance camera can be sold through the Telco’s sales and marketing channels to shopping malls, schools, universities and commercial/industrial buildings/parks for their cloud based video surveillance network needs. The main objective of the Telco’s expansion in the near term is to achieve rapid revenue growth and market penetration in metro Vancouver, Calgary and Toronto. Over the longer term, Empower is positioning the Telco as a dominant VoIP phone service, security and surveillance, IT and managed business solutions, products and services provider for the small and medium enterprises in North America and leverage Empower’s advanced embedded and video technologies to give it the competitive advantage.
Empower will issue 3,000,000 Empower shares for the purchase of the Telco. The Vendor values the Empower share at $0.25 per share. There are no long term liabilities or significant liabilities to assume only regular trade payables that are in line with its sales and size of operation. In addition, the Company will pay a performance based earnout bonus payment up to a maximum of $400,000 (“Maximum Earnout”) within the first 3 years from the date of Closing subject to:
- a)the Telco generates positive EBITDA equal to or greater than $200,000 (“Annual Earnout”) within any of those first 3 years from the date of Closing then Empower will pay the Vendor 25% of the positive EBITDA in cash, provided that the Vendor has not received the Maximum Earnout from the cumulative Annual Earnout: or
- b)the Telco generates positive EBITDA equal to or greater than $25,000 but less than $200,000 within any of those first 3 years from the date of Closing then Empower will pay the Vendor 10% of the positive EBITDA in cash, provided that the Vendor has not received the Maximum Earnout from the cumulative Annual Earnout. The EBITDA amounts above shall be determined by the Company’s auditors calculated based solely on the audited financial statements of the Telco in each of the three year.
Earnout bonus payment, if there is any, the Vendor may elect by written notice to Empower to receive any portion of the Annual Earnout payable to the Vendor in the form of Empower Shares in lieu of cash; and the number of Empower Shares to be issued pursuant to such election shall be determined based on a conversion price that shall be the greater of the following:
- a conversion price of $0.25 per Empower Share; or,
- the Market Price of Empower Shares at the time of notice, as defined by the policies of the TSX Venture Exchange, and shall be subject to resale restrictions, with 25% of such Empower Shares being released from the restrictions every six months.
If any portion of the Annual Earnout is to be paid in cash, it must be paid from the cash flow generated from the Telco or the Business and not from capital or investment provided by Empower. Any financing arrangement to make the cash payment at once or over time must have the mutual approval of the Purchaser and the Vendor, such approval not to be unreasonably withheld.
The Closing date is on or before June 30, 2013 or such later date as the Vendor and Empower may agree upon in writing.
The completion of the purchase of the Telco by Empower is subject to due diligence, receipt of regulatory approval and acceptance by TSX Venture Exchange.
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.
This news release includes forward-looking information within the meaning of applicable securities laws. All statements included in this news release that are not historical facts are forward looking statements, including statements regarding management’s plans for the Company’s business and anticipated future performance of the Company. Such statements are based on management’s current estimates, assumptions and projections using available information. These statements are not guarantees of the Company’s future performance and are subject to risk uncertainties and other important factors, which could cause the Company’s actual performance to be different from that projected. Factors that could cause actual results to differ materially from these forward- looking statements include those risks set out in the Company’s public documents filed on SEDAR at www.sedar.com. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
About Empower Technologies™
Founded in 2000, Empower Technologies (TSX.V: EPT) has transformed from an embedded technology company to a full-fledged innovative technology, products and services and manufacturing enterprise. Empower Technologies as a group caters to security and surveillance, military, automotive and transportation, healthcare, industrial control and consumer electronics industries. Under the Empower Group, the Company has three operating divisions – Empower Embedded Engineering, Empower Imaging Laboratories and Empower Defense Systems. For more information, please visit www.empowertechnologies.com.
Empower’s brands are “LEOs®”, Linux-based embedded operating systems, “BullsEye”, Real-Time Video Stabilizer, “PowerPlay™”, smart consumer electronics.
More Information on Empower Technologies: www.empowertechnologies.com
Chairman, President and CEO
Empower Technologies Corporation
# 130-3751 Shell Road
Airport Executive Park
Richmond, BC, Canada V6X 2W2
Empower Technologies, LEOs, PowerPlay and BullsEye are the trademarks of Empower Technologies, Inc. All other brands are trademarks of their respective owners.