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AD4 Capital, a primer

Canadian Stock News Cantech

AD4 Capital (ADJ Capital Stock Quote, Chart, News, Analysts, Financials ADJ.P:TSXV), a capital pool company incorporated on June 14, 2021 under the laws of British Columbia announced in April of 2023 that it would acquire EEL Energy Limited. The following is the press release associated with the event.

 

Vancouver, BC – TheNewswire – April 14 , 2023 – AD4 Capital Corp. (“ AD4 ” or the “ Company ”) (TSX-V:ADJ.P) is pleased to announce that it has entered into a letter of intent dated April 13, 2023 negotiated on an arm’s-length basis to acquire all of the issued and outstanding shares of EEL Energy Limited (“EEL”), the consideration to consist of the issuance of 18,000,000 post-consolidated shares of AD4, as more specifically defined below (the “Proposed Transaction”). The letter of intent provides that it will be superceded and replaced with a binding definitive agreement that will contain customary covenants, representations and warranties for agreements of a like nature. (The letter of intent and the more formal definitive agreement are hereinafter collectively referred to as the “Agreement”.)

EEL is a company incorporated under the laws of the State of Nevada and, upon the closing of the Proposed Transaction, will be the owner of certain intellectual property rights associated with the energy storage technology known as the “kCell” and related inventory. It is in the business (the “Business”) of developing, manufacturing and marketing the kCell and applications of the kCell.

One kCell is a 48 volt direct current system that can store 1.38kW of power. Four kCells (5.5 kW) are combined to create an EEL Power Stack. Presently, EEL is marketing two industrial applications of the kCell, the EEL Tower, a mobile light source, and the EEL Power, a mobile power supply. Each EEL Tower and EEL Power is assembled with one EEL Power Stack and a diesel generator within a custom enclosure. EEL is also planning to manufacture and market a golf cart which will use two kCells providing 2.75kW of power when fully charged.

Concurrent with the completion of the Proposed Transaction, AD4 will acquire (the “CAP Acquisition”) all the shares of 42256 YUKON Inc. (“CAP”) for a price of $5,250,000 (Cdn) to be satisfied with a cash payment $1,250,000 (Cdn) and the issue of 10,000,000 post consolidation shares of AD4.

Since 2005, CAP has provided engineering, construction, and project management services to clients across Canada. CAP has a staff of 50+ employees that includes 15 engineers and 18 technicians. Although CAP has an interdisciplinary team that traverses many fields, both professionally and geographically, much of CAP’s current attention is on designing, managing, and constructing utility scale power projects. It is for this reason and because the kCell is scalable, EEL has arranged the CAP Acquisition with a view to developing further applications of the kCell on a utility scale.

In addition to other terms and conditions, the following will be conditions precedent to the completion of the Proposed Transaction:

  1. AD4 will have consolidated its share capital so that, immediately prior to closing the Proposed Transaction, no more than 5,166,667 post consolidation common shares will issued and outstanding and obtained the cancellation of outstanding convertible securities such that there will not be outstanding any options, warrants or other securities convertible into shares of AD4, except for 116,666 compensation options held by Leede Jones Gable Inc. exercisable at $0.30 and expiring on June 28, 2024 (being 24 months from the date of AD4’s listing on the TSX Venture Exchange);
  2. AD4 will have no debt and cash of not less than $750,000 (Cdn) less certain fees related to the approval and completion of the Proposed Transaction:
  3. EEL will have completed an offering of convertible notes (the “Convertible Notes”) for a total amount of not less than Three Million United States Dollars ($3,000,000 USD) and, under the terms of the Convertible Notes, the same will automatically convert to Nine Million (9,000,000) units of the AD4 at the completion of the Proposed Transaction, with each unit consisting of one post consolidation common share in the capital of AD4 and one share purchase warrant exercisable for 24 months at the price of $0.33 USD;
  4. EEL will also have commenced, through an Alberta subsidiary, the manufacturing of and fulfilling orders for the EEL light towers and the EEL power units; and
  5. AD4 and its advisors will have a reasonable opportunity to perform the searches and other due diligence reviews reasonable or customary in a transaction of a similar nature to the Transaction, which shall include receiving audited statements of EEL confirming its ownership of the kCell technology and its completion of the abovementioned note offering.

Immediately following the closing of the Proposed Transaction, the only parties holding 10% or more of the issued and outstanding shares of the resulting entity (the “Resulting Issuer”) will be Triad Pro Innovators, Inc. (“Triad”) (holding 12,000,000 post consolidation shares) and The Brown Family Trust (holding 10,000,000 post consolidation shares). It will be a post-closing condition of the Proposed Transaction that, to the full extent that it is legally permitted, Triad will dividend such shares to its shareholders. Presently, Triad has in excess of one thousand shareholders.

AD4 was incorporated on June 14, 2021 under the laws of British Columbia, is a reporting issuer in the provinces of British Columbia and Alberta, and is a “capital pool company” under the policies of the TSX Venture Exchange (the “Exchange”). The transaction contemplated by the Agreement will constitute AD4’s “Qualifying Transaction” as defined under Exchange Policy 2.4. The acquisition of all of the issued and outstanding shares of EEL will be carried out by parties dealing at arm’s length to one another and therefore will not be considered to be a “Non-Arm’s Length Qualifying Transaction”, as such term is defined under the policies of the Exchange. As a result, a formal meeting of AD4’s shareholders to approve the Proposed Transaction will not be required, although receipt of Exchange acceptance will be a condition of closing.

On closing, AD4 will be listed on Tier 2 of the Exchange under the “Industrial or Technology or Life Sciences” industry segment, will change senior management and directors (details below), and will change its name to complement the business of the Resulting Issuer.

The Proposed Transaction

Subject to Exchange acceptance and the satisfaction of the conditions referred to above and other to be contained in the Agreement, AD4 will issue on closing to the shareholders of EEL 18,000,000 common shares on a post- consolidated basis at a deemed price of $0.33 USD per share, for total deemed consideration of $5,940,000 USD, and will issue to the holders of the Convertible Notes 9,000,000 units on a post consolidated basis at a deemed price of $0.33333 USD per unit, for total deemed consideration of $3,000,000 USD.

Concurrent with the above, AD4 will pay $1,250,000 CDN and issue to the shareholders of CAP 10,000,000 common shares on a post-consolidated basis at a deemed price of $0.40 CDN per share, for total consideration, including deemed consideration, of $5,250,000 CDN.

Changes to Board and Management

Upon the closing of the Proposed Transaction, it is anticipated that the Board of Directors will consist of Robert Brown, Ron Brindl, Dave Smith, Mike Nyhuis, Trevor Kramer and Kenneth Holmes. Mr. Brown will be appointed as President and Chief Executive Officer and Rob Brindl will be appointed as Chief Technology Officer. Bios for each of these individuals are presented below:

  • Robert Brown – Mr. Brown is a professional engineer and the owner and CEO of CAP, which he started in 2005, and has successfully grown it into a corporation with 50+ employees. Through that time he has acquired experience in the construction and operation of power projects in Canada and internationally.
  • Ron Bindl – Mr. Bindl is the original creator and inventor of the kCell. Throughout his career he has been involved in new product design and development with embedded systems, hardware, software and mechanical at all levels and has formulated processes for successful new product introductions. His career started at Rockwell International where he developed the first all-digital Private Exchange sold to Sprint and other companies around the world. He developed many other patented applications for Rockwell International that are still being used and sold in systems today. Some of the products that were developed under Ron’s direction: multi-card cabinet equipment, desktop and portable handheld electronic systems, power systems and supplies, design for reduced manufacturing costs, etc. Mr. Brindl has experience taking a project from concept, through design, and into production.
  • Dave Smith – Mr. Smith is the President and Owner of Polar Industrial Services Ltd, a distributor of various brands of industrial equipment and a service provider to the heavy equipment industry. He began his career in 1989 as a Red Seal, Journeyman Heavy Equipment Technician in the Power Generation and Oilfield Industry, and eventually served as Branch Manager of Simson Maxwell. In 2004, Mr Smith started Polar Industrial Services Ltd., which he has grown to a multi-divisional company with over 30 employees.
  • Trevor Kramer – Mr. Kramer served in a management role for 20+ years with Enerflex Ltd. where he obtained extensive experience in starting, turning around and maximizing efficiency of international operations, driving bottom-line profits while expanding market share. His track record includes influencing multi- million-dollar business transactions with global operational experience in over 20 different countries in 6 continents.
  • Mike Nyhius – In his current role, Mr. Nyhius has been responsible for the initial sourcing of vendors and distributor partners for the current line of EEL products. He has over 30 years of experience in marketing, fund-raising and startups. Mr. Nyhius has managed a private REIT and has developed condominium hotel / resort ownership properties in the Caribbean, Canada, and USA.
  • Kenneth Holmes –For the past thirty years Mr. Holmes has acted as corporate counsel and has held senior management roles with public and private companies in various industries and sectors. Prior to that, Mr. Holmes spent ten years in a predominantly corporate and securities law practice, which included a full complement of commercial, real estate, tax, technology, and intellectual property matters that were often inclusive of international matters.

Incentive Stock Option Plan

Pursuant to AD4’s Stock Option Plan, the Resulting Issuer will be able to grant options exercisable for common shares to directors, senior officers and employees of the Resulting Issuer and any subsidiaries and consultants retained by the Resulting Issuer and any subsidiaries. The purpose of the Stock Option Plan is to provide incentive compensation to attract, retain and motivate directors, senior officers, employees and consultants and to align their interests with the interests of the Resulting Issuer’s shareholders by providing them with the opportunity to acquire increased equity ownership in the Resulting Issuer. The Stock Option Plan will be administered by the Board of Directors of the Resulting Issuer.

The maximum number of common shares reserved for issuance pursuant to the Stock Option Plan, together with any common shares reserved for issuance pursuant to any other security-based compensation arrangements (as defined by the rules of the Exchange), will be 10% of the issued and outstanding common shares of the Resulting Issuer from time to time. As a result, any increase in the number of issued and outstanding common shares of the Resulting Issuer will result in an increase in the number of common shares available for issuance under the Stock Option Plan. In addition, the Stock Option Plan will be considered an “evergreen” plan, and any common shares covered by options which have been exercised will be available for subsequent grants thereunder.

Sponsorship of Qualifying Transaction

Sponsorship of a capital pool company’s Qualifying Transaction is required by the Exchange unless exempt in accordance with Exchange policies. AD4 and EEL are currently reviewing the Exchange requirements for sponsorship and will comply with the policies of the Exchange after discussions with the Exchange regarding sponsorship.

Additional Information

In accordance with the policies of the Exchange, AD4’s common shares are currently halted from trading and will remain halted until further notice.

AD4 and EEL will provide further details in respect of the Proposed Transaction in due course once available, by way of press releases.

All information in this press release related to EEL and the Business has been provided by the management of EEL and has not been independently verified by the management of AD4.

Completion of the Qualifying Transaction is subject to a number of conditions including, but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying 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 Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

For further information, please contact:

AD4 Capital Corp.

Alfredo De Lucrezia President, CEO and Director

Tel: (604) 619-0225

Email: AD4Capital@shaw.ca

On Behalf of the Board of Directors of AD4 Capital Corp.

Alfredo De Lucrezia

Chief Executive Officer, President and Director

This press release contains “forward-looking information” within the meaning of applicable securities laws relating to the proposal to complete the Proposed Transaction and associated transactions, including statements regarding the terms and conditions of the Proposed Transaction, the Agreement and associated transactions.  Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Proposed Transaction, the Agreement and associated transactions, that the ultimate terms of the Proposed Transaction, the Agreement and associated transactions will differ from those that are currently contemplated, and that the Proposed Transaction, the Agreement and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this press release are made as of the date of this release. AD4 undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of AD4, EEL, their securities, or their respective financial or operating results.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States. The securities disclosed herein have not been and will not be registered under the United States Securities Act 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U. S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Not for distribution to U.S. Newswire Services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. Securities laws.

Copyright (c) 2023 TheNewswire – All rights reserved.

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